Zscaler, Inc.

Previous wording

We operate our business as one reportable segment. Our revenue has experienced significant growth in recent periods. For the six months ended January 31, 2026 and 2025, our revenue was $1,603.9 million and$1,275.9 million, respectively. We have incurred net losses in all annual periods since our inception. For the six months ended January 31, 2026 and 2025, ournet loss was $45.9 million and $19.8 million, respectively. We expect we will continue to incur net losses for the foreseeable future, as we continue to invest in our sales and marketing organization to maximize our market opportunity, to invest in research and development efforts to enhance the functionality of our cloud platform and to address any legal matters and related accruals, as further described in Note 12, Commitments and Contingencies, of the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Current wording

We operate our business as one reportable segment. Our revenue has experienced significant growth in recent periods. For the nine months ended April 30, 2026 and 2025, our revenue was $2,454.3 million and$1,953.9 million, respectively. We have incurred net losses in all annual periods since our inception. For the nine months ended April 30, 2026 and 2025, ournet loss was $59.8 million and $23.9 million, respectively. We expect we will continue to incur net losses for the foreseeable future, as we continue to invest in our sales and marketing organization to maximize our market opportunity, to invest in research and development efforts to enhance the functionality of our cloud platform and to address any legal matters and related accruals, as further described in Note 12, Commitments and Contingencies, of the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Previous wording

Changes in macroeconomic and geopolitical conditions can cause uncertainty in our business. We continue to see customer scrutiny of and elongated approval processes for transactions, particularly larger deals, as customers continue to carefully consider purchasing decisions and are requiring multiple approvals for large expenditures in response to the uncertain economic environment. Macroeconomic conditions may impact the future demand for subscriptions of our cloud platform.

Current wording

Changes in macroeconomic and geopolitical conditions, including but not limited to global conflicts, inflation and responses to inflation, tariffs or retaliatory measures due to tariffs, supply chain disruptions, energy shortages and the emergence of AI, can cause uncertainty in our business. We continue to see customer scrutiny of and elongated approval processes for transactions, particularly larger deals, as customers continue to carefully consider purchasing decisions and are requiring multiple approvals for large expenditures in response to the uncertain economic environment. Macroeconomic conditions may impact the future demand for subscriptions of our cloud platform.

Previous wording

ARR is a non-GAAP financial measure that we believe is a key metric to measure our periodic performance. ARR refers to the next 12 months of revenue from subscription contracts as of the measurement date. To establish ARR for a customer, we assume that any contract expiring during the next 12 months will be renewed under the existing terms, excluding Red Canary's subscription contracts expiring in fiscal year 2026. ARR as of January 31, 2026 and 2025 was $3,359 million and $2,683 million, respectively.

Current wording

ARR is a non-GAAP financial measure that we believe is a key metric to measure our periodic performance. ARR refers to the next 12 months of revenue from subscription contracts as of the measurement date. To establish ARR for a customer, we assume that any contract expiring during the next 12 months will be renewed under the existing terms, excluding Red Canary's subscription contracts expiring in fiscal year 2026. ARR as of April 30, 2026 and 2025 was $3,525 million and $2,817 million, respectively.

Previous wording

We generate revenue primarily from sales of subscriptions to access our cloud platform, together with related support services. Subscription and related support services accounted for approximately 98% of our revenue for the three and six months ended January 31, 2026, respectively, and 98% and 97% of our revenue for the three and six months ended January 31, 2025, respectively. Our contracts with our customers do not at any time provide the customer with the right to take possession of the software that runs our cloud platform. Our customers may also purchase professional services, such as mapping, implementation, network design and training. Professional services account for an immaterial portion of our revenue.

Current wording

We generate revenue primarily from sales of subscriptions to access our cloud platform, together with related support services. Subscription and related support services accounted for approximately 98% of our revenue for each of the three and nine months ended April 30, 2026 and 2025, respectively. Our contracts with our customers do not at any time provide the customer with the right to take possession of the software that runs our cloud platform. Our customers may also purchase professional services, such as mapping, implementation, network design and training. Professional services account for an immaterial portion of our revenue.

Previous wording

As our customers expand and increase the use of our cloud platform, driven by additional applications and connected devices, our cost of revenue will increase due to higher bandwidth and data center expenses. However, we expect to continue to benefit from economies of scale as our customers increase the use of our cloud platform. We intend to continue to invest additional resources in our cloud platform and our customer support organizations as we grow our business. The level and timing of investment in these areas could affect our cost of revenue in the future.

Current wording

As our customers expand and increase the use of our cloud platform, driven by additional applications, workloads, AI agents, and connected devices, our cost of revenue will increase due to higher bandwidth and data center expenses. Our cost of revenue may also increase as a result of higher market prices for data center equipment supporting our cloud platform. However, we expect to continue to benefit from economies of scale as our customers increase the use of our cloud platform. We intend to continue to invest additional resources in our cloud platform and our customer support organizations as we grow our business. The level and timing of investment in these areas could affect our cost of revenue in the future.

Previous wording

Gross profit, or revenue less cost of revenue, and gross margin, or gross profit as a percentage of revenue, have been and will continue to be affected by various factors, including the timing of our acquisition of new customers and our renewals of and follow-on sales to existing customers, the average sales price of our services, mix of services offered in our solutions, including new product introductions, the data center and bandwidth costs associated with operating our cloud platform, the extent to which we expand our customer support and cloud operations organizations and the extent to which we can increase the efficiency of our technology, infrastructure and data centers through technological improvements. We expect our gross profit to increase in absolute dollars and our gross margin to increase slightly over the long term, although our gross profit and gross margin could fluctuate from period to period depending on the interplay of the above factors.

Current wording

Gross profit, or revenue less cost of revenue, and gross margin, or gross profit as a percentage of revenue, have been and will continue to be affected by various factors. These include the timing of our acquisition of new customers and our renewals of and follow-on sales to existing customers, the average sales price of our services, the mix of services offered in our solutions, including new product introductions, the data center and bandwidth costs associated with operating our cloud platform to support additional applications, workloads, AI agents, and connected devices, the extent to which we expand our customer support and cloud operations organizations and the extent to which we can increase the efficiency of our technology, infrastructure and data centers through technological improvements. Although we expect our gross profit to increase in absolute dollars and our gross margin to remain relatively consistent, our gross profit and gross margin could fluctuate from period to period depending on the interplay of the above factors.

Previous wording

Provision for (benefit from) income taxes consists of state income taxes in the United States ("U.S."), foreign income taxes, and withholding taxes related to customer payments in certain foreign jurisdictions in which we conduct business. We weigh all available positive and negative evidence, including but not limited to our earnings history and results of recent operations, scheduled reversals of deferred tax liabilities, projected future taxable income and tax planning strategies and the nature of each deferred tax assets in assessing the extent to which a valuation allowance should be applied against our U.S. and foreign deferred tax assets.

Current wording

Provision for income taxes consists of state income taxes in the United States ("U.S."), foreign income taxes, and withholding taxes related to customer payments in certain foreign jurisdictions in which we conduct business. We weigh all available positive and negative evidence, including but not limited to our earnings history and results of recent operations, scheduled reversals of deferred tax liabilities, projected future taxable income and tax planning strategies and the nature of each deferred tax assets in assessing the extent to which a valuation allowance should be applied against our U.S. and foreign deferred tax assets.

Previous wording

(6) During the three months ended January 31, 2025, we recognized a tax benefit of $17.2 million attributable to the release of the valuation allowance on United Kingdom (U.K.) deferred tax assets.

Current wording

(6) During the three and nine months ended April 30, 2025, we recognized a tax benefit of $0.2 million and $17.4 million, respectively attributable to the release of the valuation allowance on United Kingdom (U.K.) deferred tax assets.

Previous wording

Revenue increased by $167.9 million, or 26%, for the three months ended January 31, 2026, compared to the three months ended January 31, 2025. The change in revenue was driven primarily by sales of additional subscriptions to existing customers, which contributed $96.9 million in additional revenue. The remainder of the increase was primarily attributable to the addition of new customers, as we increased our customer base by 15%from January 31, 2025 to January 31, 2026.

Current wording

Revenue increased by $172.4 million, or 25%, for the three months ended April 30, 2026, compared to the three months ended April 30, 2025. The change in revenue was driven primarily by sales of additional subscriptions to existing customers, which contributed $102.7 million in additional revenue. The remainder of the increase was primarily attributable to the addition of new customers, as we increased our customer base by 17%from April 30, 2025 to April 30, 2026.

Previous wording

Cost of revenue increased by $42.8 million, or 29%, for the three months ended January 31, 2026, compared to the three months ended January 31, 2025. The overall increase in cost of revenue was driven primarily by the expanded use of our cloud platform by existing and new customers, which led to an increase of $26.9 million for data center and equipment-related costs for hosting and operating our cloud platform. The remainder of the increase was primarily attributable to employee-related expenses of $12.4 million, inclusive of an increase of $5.6 million in stock-based compensation expense, driven primarily by an increase in headcount, and higher amortization of acquired intangible assets of $3.1 million.

Current wording

Cost of revenue increased by $36.7 million, or 24%, for the three months ended April 30, 2026, compared to the three months ended April 30, 2025. The overall increase in cost of revenue was driven primarily by the expanded use of our cloud platform by existing and new customers, which led to an increase of $26.4 million for data center and equipment-related costs for hosting and operating our cloud platform. The remainder of the increase was primarily attributable to employee-related expenses of $6.9 million, inclusive of an increase of $3.7 million in stock-based compensation expense, and higher amortization of acquired intangible assets of $3.4 million.

Previous wording

Gross margin remained flat from 77% for the three months ended January 31, 2026, compared to the three months ended January 31, 2025.

Current wording

Gross margin remained flat at 77% for the three months ended April 30, 2026, compared to the three months ended April 30, 2025.

Previous wording

Sales and marketing expenses increased by $61.1 million, or 20%, for the three months ended January 31, 2026, compared to the three months ended January 31, 2025. The change was driven primarily by an increase of$48.6 million in employee-related expenses, inclusive of an increase of $11.6 million instock-based compensation expense and$9.2 million in sales commissions expense. The increase in employee-related expenses was primarily due to an increase in headcount. The remainder of the increase was primarily attributable to $5.6 million in facility related expenses, $3.8 million in amortization of acquired intangible assets and $2.9 million in travel expenses.

Current wording

Sales and marketing expenses increased by $57.3 million, or 18%, for the three months ended April 30, 2026, compared to the three months ended April 30, 2025. The change was driven primarily by an increase of$46.2 million in employee-related expenses, inclusive of an increase of $11.1 million in sales commissions expense and $8.9 million instock-based compensation expense, primarily due to an increase in headcount. The remainder of the increase was primarily attributable to $6.2 million infacility, software and equipment-related expenses and $3.8 million in amortization of acquired intangible assets.

Previous wording

Research and development expenses increased by $58.3 million, or 34%, for the three months ended January 31, 2026, compared to the three months ended January 31, 2025, as we continue to develop and enhance the functionality of our cloud platform and integrate technologies acquired through our business acquisitions. The change was driven primarily by an increase of $40.6 million in employee-related expenses, inclusive of an increase of $19.1 million in stock-based compensation expense, primarily due to an increase in headcount. The remainder of the increase was primarily attributable to increased expenses of $13.7 million in facility, cloud hosting, software and equipment-related expenses to support our growth and lower capitalized internal-use software development costs of $3.8 million.

Current wording

Research and development expenses increased by $62.5 million, or 37%, for the three months ended April 30, 2026, compared to the three months ended April 30, 2025, as we continue to develop and enhance the functionality of our cloud platform and integrate acquired technologies. The change was driven primarily by an increase of $46.8 million in employee-related expenses, inclusive of an increase of $25.3 million in stock-based compensation expense, primarily due to an increase in headcount. The remainder of the increase was primarily attributable to increased expenses of $16.2 million in facility, cloud hosting, software and equipment-related expenses to support our growth.

Previous wording

General and administrative expenses increased by $17.4 million, or 29%, for the three months ended January 31, 2026, compared to the three months ended January 31, 2025. The change was driven primarily by an increase of $13.0 million in employee-related expenses, inclusive of an increase of$8.2 million in stock-based compensation expense, primarily due to an increase in headcount. The remainder of the increase was primarily attributable to increased expenses of $1.2 million in acquisition-related expenses and the rise of miscellaneous expenses to support the growth of our business.

Current wording

General and administrative expenses increased by $20.1 million, or 32%, for the three months ended April 30, 2026, compared to the three months ended April 30, 2025. The change was driven primarily by an increase of $13.4 million in employee-related expenses, inclusive of an increase of$7.9 million in stock-based compensation expense, primarily due to an increase in headcount. The remainder of the increase was primarily attributable to increased expenses of $1.8 million in acquisition-related expenses and the rise of miscellaneous expenses to support the growth of our business.

Previous wording

Interest income increased by $3.0 million, or 10%, for the three months ended January 31, 2026, compared to the three months ended January 31, 2025. The change was driven primarily by our increased balance of cash equivalents and short-term investments.

Current wording

Interest income increased by $2.8 million, or 9%, for the three months ended April 30, 2026, compared to the three months ended April 30, 2025. The change was driven primarily by our increased balance of cash equivalents and short-term investments.

Previous wording

Interest expense increased by $1.9 million for the three months ended January 31, 2026, compared to the three months ended January 31, 2025. The change was driven primarily by higher amortization of debt issuance costs.

Current wording

Interest expense increased by $0.7 million for the three months ended April 30, 2026, compared to the three months ended April 30, 2025. The change was driven primarily by higher amortization of debt issuance costs.

Previous wording

Other income (expense), net increased by $5.7 million for the three months ended January 31, 2026 compared to the three months ended January 31, 2025. The change was driven primarily by fluctuations in foreign currency transactions gains and losses.

Current wording

Other income (expense), net increased by $4.8 million for the three months ended April 30, 2026 compared to the three months ended April 30, 2025. The change was driven primarily by fluctuations in foreign currency transactions gains and losses.

Previous wording

Our provision for (benefit from) income taxes increased by $21.8 million for the three months ended January 31, 2026, compared to the three months ended January 31, 2025. The change is primarily attributable to the prior year's non-recurring release of valuation allowance on United Kingdom deferred tax assets.

Current wording

Our provision for income taxes increased by $2.8 million for the three months ended April 30, 2026, compared to the three months ended April 30, 2025. The change is primarily driven by the increase in our pre-tax income in non-U.S. jurisdictions in which we conduct business.

Previous wording

Our provision for (benefit from) income taxes for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that arise during the period. Each fiscal quarter, we update our estimate of the annual effective tax rate, and if the estimated annual effective tax rate changes, we make a cumulative adjustment in such period.

Current wording

Our provision for income taxes for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that arise during the period. Each fiscal quarter, we update our estimate of the annual effective tax rate, and if the estimated annual effective tax rate changes, we make a cumulative adjustment in such period.

Previous wording

Our quarterly tax provision for (benefit from), and estimate of our annual effective tax rate, is subject to variation due to several factors, including variability in pre-tax income (or loss), the mix of jurisdictions to which such income relates, changes in our business operations and changes in tax laws. Our estimated annual effective tax rate for the year differs from the U.S. statutory rate of 21% as a result of our U.S. losses for which no tax benefit will be realized, as well as our foreign operations which are subject to tax rates that differ from those in the United States.

Current wording

Our quarterly tax provision for, and estimate of, our annual effective tax rate, is subject to variation due to several factors, including variability in pre-tax income (or loss), the mix of jurisdictions to which such income relates, changes in our business operations and changes in tax laws. Our estimated annual effective tax rate for the year differs from the U.S. statutory rate of 21% as a result of our U.S. losses for which no tax benefit will be realized, as well as our foreign operations which are subject to tax rates that differ from those in the United States.

Previous wording

Revenue increased by$328.0 million, or 26%, for thesix months ended January 31, 2026, compared to thesix months ended January 31, 2025. The change in revenue was driven primarily by sales of additional subscriptions to existing customers, which contributed$195.8 million in additional revenue. The remainder of the increase was primarily attributable to the addition of new customers, as we increased our customer base by 15%from January 31, 2025 to January 31, 2026.

Current wording

Revenue increased by$500.4 million, or 26%, for thenine months ended April 30, 2026, compared to thenine months ended April 30, 2025. The change in revenue was driven primarily by sales of additional subscriptions to existing customers, which contributed$321.2 million in additional revenue. The remainder of the increase was primarily attributable to the addition of new customers, as we increased our customer base by 17%from April 30, 2025 to April 30, 2026.

Previous wording

Cost of revenue increased by$86.1 million, or 30%, for thesix months ended January 31, 2026, compared to thesix months ended January 31, 2025. The overall increase in cost of revenue was driven primarily by the expanded use of our cloud platform by existing and new customers, which led to an increase of $53.8 million for data center and equipment-related costs for hosting and operating our cloud platform. The remainder of the increase was primarily attributable to employee-related expenses of $23.8 million, inclusive of an increase of $10.3 million in stock-based compensation expense, driven primarily by an increase in headcount, higher amortization of acquired intangible assets of $5.1 million and facility related expenses of $2.2 million.

Current wording

Cost of revenue increased by$122.7 million, or 28%, for thenine months ended April 30, 2026, compared to thenine months ended April 30, 2025. The overall increase in cost of revenue was driven primarily by the expanded use of our cloud platform by existing and new customers, which led to an increase of $80.2 million for data center and equipment-related costs for hosting and operating our cloud platform. The remainder of the increase was primarily attributable to employee-related expenses of $30.7 million, inclusive of an increase of $13.9 million in stock-based compensation expense, higher amortization of acquired intangible assets of $8.5 million and facility related expenses of $3.4 million.

Previous wording

Gross margin remained flat from 77% for the six months ended January 31, 2026, compared to the six months ended January 31, 2025.

Current wording

Gross margin remained flat at 77% for the nine months ended April 30, 2026, compared to the nine months ended April 30, 2025.

Previous wording

Sales and marketing expenses increased by$128.5 million, or 21%, for the six months ended January 31, 2026, compared to the six months ended January 31, 2025. The change was driven primarily by an increase of$87.3 million in employee-related expenses, inclusive of an increase of $18.8 million in sales commissions expense and $17.1 million instock-based compensation expense. The increase in employee-related expenses was primarily due to an increase in headcount. The remainder of the increase was primarily attributable to $12.6 million in facility related expenses, $10.2 million in marketing and advertisement expenses, $9.7 million in travel expenses and $6.3 million in amortization of acquired intangible assets.

Current wording

Sales and marketing expenses increased by$185.9 million, or 20%, for the nine months ended April 30, 2026, compared to the nine months ended April 30, 2025. The change was driven primarily by an increase of$133.5 million in employee-related expenses, inclusive of an increase of $30.0 million in sales commissions expense and $25.9 million instock-based compensation expense, primarily due to an increase in headcount. The remainder of the increase was primarily attributable to $18.8 million infacility, software and equipment-related expenses, $12.7 million in marketing and advertisement expenses, $10.1 million in amortization of acquired intangible assets, $8.9 million in travel expenses and $4.1 million in professional services.

Previous wording

Research and development expenses increased by$104.5 million, or 32%, for the six months ended January 31, 2026, compared to the six months ended January 31, 2025, as we continue to develop and enhance the functionality of our cloud platform and integrate technologies acquired through our business acquisitions. The change was driven primarily by an increase of$69.6 million in employee-related expenses, inclusive of an increase of$34.6 million in stock-based compensation expense, primarily due to an increase in headcount. The remainder of the increase was primarily attributable to increased expensesof $24.2 million in facility, cloud hosting, software and equipment-related expenses to support our growth and lower capitalized internal-use software development costs of$8.6 million.

Current wording

Research and development expenses increased by$167.0 million, or 34%, for the nine months ended April 30, 2026, compared to the nine months ended April 30, 2025, as we continue to develop and enhance the functionality of our cloud platform and integrate technologies acquired through our business acquisitions. The change was driven primarily by an increase of$116.4 million in employee-related expenses, inclusive of an increase of$59.9 million in stock-based compensation expense, primarily due to an increase in headcount. The remainder of the increase was primarily attributable to increased expensesof $40.4 million in facility, cloud hosting, software and equipment-related expenses to support our growth and lower capitalized internal-use software development costs of$8.3 million.

Previous wording

General and administrative expenses increased by$26.2 million, or 22%, for the six months ended January 31, 2026, compared to the six months ended January 31, 2025. The change was driven primarily by an increase of$21.2 million in employee-related expenses, inclusive of an increase of$14.0 million in stock-based compensation expense, primarily due to an increase in headcount. The remainder of the increase was primarily attributable to increased expenses of$2.3 million in acquisition-related expenses and the rise of miscellaneous expenses to support the growth of our business.

Current wording

General and administrative expenses increased by$46.4 million, or 26%, for the nine months ended April 30, 2026, compared to the nine months ended April 30, 2025. The change was driven primarily by an increase of$34.6 million in employee-related expenses, inclusive of an increase of$21.9 million in stock-based compensation expense, primarily due to an increase in headcount. The remainder of the increase was primarily attributable to increased expenses of$4.1 million in acquisition-related expenses,$2.8 millionin facility-related expenses and the rise of miscellaneous expenses to support the growth of our business.

Previous wording

Interest income increased by$6.1 million, or 10%, for the six months ended January 31, 2026, compared to the six months ended January 31, 2025. The change was driven primarily by our increased balance of cash equivalents and short-term investments.

Current wording

Interest income increased by$8.9 million, or 10%, for the nine months ended April 30, 2026, compared to the nine months ended April 30, 2025. The change was driven primarily by our increased balance of cash equivalents and short-term investments.

Previous wording

Interest expense increased by$0.9 million for the six months ended January 31, 2026, compared to the six months ended January 31, 2025.

Current wording

Interest expense increased by$1.6 million for the nine months ended April 30, 2026, compared to the nine months ended April 30, 2025. The change was driven primarily by higher amortization of debt issuance costs.

Previous wording

Other expense, net decreased by$3.4 million for the six months ended January 31, 2026 compared to the six months ended January 31, 2025. The change was driven primarily by fluctuations in foreign currency transactions gains and losses.

Current wording

Other expense, net increased by$1.4 million for the nine months ended April 30, 2026 compared to the nine months ended April 30, 2025. The change was driven primarily by fluctuations in foreign currency transactions gains and losses.

Previous wording

Our provision for (benefit from) income taxes increased by $17.4 million for thesix months ended January 31, 2026, compared to thesix months ended January 31, 2025. The change is primarily attributable to the prior year's non-recurring release of valuation allowance on United Kingdom deferred tax assets.

Current wording

Our provision for income taxes increased by $20.3 million for thenine months ended April 30, 2026, compared to thenine months ended April 30, 2025. The change is primarily attributable to the prior year's non-recurring release of valuation allowance on United Kingdom deferred tax assets.

Previous wording

Our provision for (benefit from) income taxes for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that arise during the period. Each fiscal quarter, we update our estimate of the annual effective tax rate, and if the estimated annual effective tax rate changes, we make a cumulative adjustment in such period.

Current wording

Our provision for income taxes for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that arise during the period. Each fiscal quarter, we update our estimate of the annual effective tax rate, and if the estimated annual effective tax rate changes, we make a cumulative adjustment in such period.

Previous wording

Our quarterly tax provision for (benefit from), and estimate of our annual effective tax rate, is subject to variation due to several factors, including variability in pre-tax income (or loss), the mix of jurisdictions to which such income relates, changes in our business operations and changes in tax laws. Our estimated annual effective tax rate for the year differs from the U.S. statutory rate of 21% as a result of our U.S. losses for which no tax benefit will be realized, as well as our foreign operations which are subject to tax rates that differ from those in United States.

Current wording

Our quarterly tax provision for, and estimate of, our annual effective tax rate, is subject to variation due to several factors, including variability in pre-tax income (or loss), the mix of jurisdictions to which such income relates, changes in our business operations and changes in tax laws. Our estimated annual effective tax rate for the year differs from the U.S. statutory rate of 21% as a result of our U.S. losses for which no tax benefit will be realized, as well as our foreign operations which are subject to tax rates that differ from those in United States.

Previous wording

Many non-U.S. countries are beginning to implement legislation and other guidance to align their international tax rules with the Organization for Economic Cooperation and Development’s (“OECD”) Base Erosion and Profit Shifting recommendations, an action plan that aims to standardize and modernize global corporate tax policy, including changes to cross-border tax, transfer pricing documentation rules and nexus-based tax incentive practices. The OECD is also continuing discussions surrounding fundamental changes in allocation of profits among tax jurisdictions in which companies do business, as well as the implementation of “Pillar Two”, a global minimum tax. We have analyzed the impact of the enacted tax laws regarding Pillar Two and have determined there is an immaterial impact on the income tax provision for the six months ended January 31, 2026.

Current wording

Many non-U.S. countries are beginning to implement legislation and other guidance to align their international tax rules with the Organization for Economic Cooperation and Development’s (“OECD”) Base Erosion and Profit Shifting recommendations, an action plan that aims to standardize and modernize global corporate tax policy, including changes to cross-border tax, transfer pricing documentation rules and nexus-based tax incentive practices. The OECD is also continuing discussions surrounding fundamental changes in allocation of profits among tax jurisdictions in which companies do business, as well as the implementation of “Pillar Two”, a global minimum tax. We have analyzed the impact of the enacted tax laws regarding Pillar Two and have determined there is an immaterial impact on the income tax provision for the nine months ended April 30, 2026.

Previous wording

As of January 31, 2026, our principal sources of liquidity were cash, cash equivalents and short-term investments totaling $3,512.8 million, which were held for working capital and general corporate purposes. Our cash equivalents and investments consist of highly liquid investments in money market funds, U.S. treasury securities, U.S. government agency securities, certificates of deposit, corporate debt securities and asset-backed securities.

Current wording

As of April 30, 2026, our principal sources of liquidity were cash, cash equivalents and short-term investments totaling $3,539.1 million, which were held for working capital and general corporate purposes. Our cash equivalents and investments consist of highly liquid investments in money market funds, U.S. treasury securities, U.S. government agency securities, certificates of deposit, corporate debt securities, asset-backed securities and non-U.S. government securities.

Previous wording

We have generated significant losses from operations, as reflected in our accumulated deficit of $1,235.5 million as of January 31, 2026. We expect to continue to incur operating losses and have in the past and may in the future generate negative cash flows due to expected investments to grow our business, including potential business acquisitions and other strategic transactions.

Current wording

We have generated significant losses from operations, as reflected in our accumulated deficit of $1,249.4 million as of April 30, 2026. We expect to continue to incur operating losses and have in the past and may in the future generate negative cash flows due to expected investments to grow our business, including potential business acquisitions and other strategic transactions.

Previous wording

We typically invoice our customers annually in advance, and to a lesser extent quarterly in advance, monthly in advance or multi-year in advance. Therefore, a substantial source of our cash is from such prepayments, which are included on our consolidated balance sheets as a contract liability. Deferred revenue consists of the unearned portion of billed fees for our subscriptions, which is subsequently recognized as revenue in accordance with our revenue recognition policy. As of January 31, 2026, we had deferred revenue of $2,355.4 million, of which $1,983.6 million was recorded as a current liability and is expected to be recorded as revenue in the next 12 months, provided all other revenue recognition criteria have been met. Subscriptions that are invoiced annually in advance or multi-year in advance contribute significantly to our short-term and long-term deferred revenue in comparison to our invoices issued quarterly in advance or monthly in advance.

Current wording

We typically invoice our customers annually in advance, and to a lesser extent quarterly in advance, monthly in advance or multi-year in advance. Therefore, a substantial source of our cash is from such prepayments, which are included on our consolidated balance sheets as a contract liability. Deferred revenue consists of the unearned portion of billed fees for our subscriptions, which is subsequently recognized as revenue in accordance with our revenue recognition policy. As of April 30, 2026, we had deferred revenue of $2,477.2 million, of which $2,097.1 million was recorded as a current liability and is expected to be recorded as revenue in the next 12 months, provided all other revenue recognition criteria have been met. Subscriptions that are invoiced annually in advance or multi-year in advance contribute significantly to our short-term and long-term deferred revenue in comparison to our invoices issued quarterly in advance or monthly in advance.

Previous wording

Net cash provided by operating activities during the six months ended January 31, 2026 was $652.4 million, which was driven by a net loss of $45.9 million, adjusted for non-cash charges of $629.1 million and net cash inflows of $69.1 million from changes in operating assets and liabilities. Non-cash charges primarily consisted of $405.1 million for stock-based compensation expense, $97.6 million for amortization of deferred contract acquisition costs, $67.6 million for depreciation and amortization expense, $38.8 million for non-cash operating lease costs, $19.7 million for amortization expense of acquired intangible assets, and $4.1 million in amortization of debt issuance costs. These non-cash charges were partially offset primarily by $3.6 million in accretion of investments purchased at a discount. Net cash inflows from changes in operating assets and liabilities were primarily attributable to $461.5 million decrease in accounts receivable, primarily due to the timing of billings and collections, as well as an $6.3 million increase in accrued expenses and other current and noncurrent liabilities. These cash inflows were partially offset by cash outflows resulting from a decrease of $187.1 million in deferred revenue, an increase of $107.4 million in deferred contract acquisition costs, an increase of $30.2 million in prepaid expenses, other current and noncurrent assets, a decrease of $29.5 million in accrued compensation, a decrease of $22.3 million in operating lease liabilities and a decrease of $22.1 million in accounts payable.

Current wording

Net cash provided by operating activities during the nine months ended April 30, 2026 was $850.4 million, which was driven by a net loss of $59.8 million, adjusted for non-cash charges of $965.0 million and net cash outflows of $54.8 million from changes in operating assets and liabilities. Non-cash charges primarily consisted of $610.3 million for stock-based compensation expense, $149.7 million for amortization of deferred contract acquisition costs, $105.6 million for depreciation and amortization expense, $60.4 million for non-cash operating lease costs, $31.2 million for amortization expense of acquired intangible assets, and $6.1 million in amortization of debt issuance costs. These non-cash charges were partially offset primarily by $4.6 million in accretion of investments purchased at a discount. Net cash outflows from changes in operating assets and liabilities were primarily attributable from an increase of $184.7 million in deferred contract acquisition costs, a decrease of $65.9 million in deferred revenue, a decrease of $44.0 million in operating lease liabilities, an increase of $29.1 million in prepaid expenses, other current and noncurrent assets, a decrease of $20.0 million in accounts payable and a decrease of $9.4 million in accrued compensation. Net outflows were partially offset by cash inflows resulting from decrease in accounts receivable, primarily due to the timing of billings and collections of $280.0 million as well as an $18.2 million increase in accrued expenses and other current and noncurrent liabilities.

Previous wording

Net cash provided by operating activities during the six months ended January 31, 2025 was $510.8 million, which resulted from a net loss of $19.8 million, adjusted for non-cash charges of$473.3 million and net cash inflows of$57.3 million from changes in operating assets and liabilities. Non-cash charges primarily consisted of $329.3 million for stock-based compensation expense, $79.2 million for amortization of deferred contract acquisition costs, $45.9 million for depreciation and amortization expense, $31.6 million for non-cash operating lease costs and $8.5 million for amortization expense of acquired intangible assets and unrealized losses on hedging transactions of $3.0 million. Non-cash charges were partially offset by deferred income taxes of $17.4 million and an accretion of investments purchased at a discount of $10.1 million. Net cash inflows from changes in operating assets and liabilities were primarily the result of $222.0 million in accounts receivable. Net cash inflows were partially offset by cash outflows resulting from an increase of $74.2 million in deferred contract acquisition costs, a decrease of $30.2 million in operating lease liabilities, a decrease of $20.4 million in accrued compensation, a decrease of $16.5 million in deferred revenue, an increase of $12.1 million in prepaid expenses, other current and noncurrent assets and a decrease of $11.5 million in accrued expenses.

Current wording

Net cash provided by operating activities during the nine months ended April 30, 2025 was $721.8 million, which resulted from a net loss of $23.9 million, adjusted for non-cash charges of$716.4 million and net cash inflows of$29.4 million from changes in operating assets and liabilities. Non-cash charges primarily consisted of $488.7 million for stock-based compensation expense, $121.5 million for amortization of deferred contract acquisition costs, $74.1 million for depreciation and amortization expense, $47.9 million for non-cash operating lease costs and $12.7 million for amortization expense of acquired intangible assets. Non-cash charges were partially offset by deferred income taxes of $17.8 million and an accretion of investments purchased at a discount of $13.9 million. Net cash inflows from changes in operating assets and liabilities were primarily the result of a decrease of $120.5 million in accounts receivable, primarily due to timing of billings and collections, an increase of $90.0 million in deferred revenue, and an increase of $28.9 million in accounts payable. Net cash inflows were partially offset by cash outflows resulting from an increase of $140.0 million in deferred contract acquisition costs, a decrease of $45.2 million in operating lease liabilities, an increase of $12.2 million in prepaid expenses, other current and noncurrent assets, a decrease of $7.0 million in accrued expenses, other current and noncurrent liabilities and $5.7 million decrease in accrued compensation.

Previous wording

Net cash used in investing activities during the six months ended January 31, 2026, totaled $1,863.1 million. This was primarily driven by purchases of short-term investments of $1,401.5 million, payments for business acquisitions, net of cash acquired, of $672.8 million and capital expenditures of $69.9 million to support the growth and expansion of our cloud platform. These outflows were partially offset by proceeds of$283.1 million from sales and maturities of short-term investments.

Current wording

Net cash used in investing activities during the nine months ended April 30, 2026, totaled $2,281.8 million. This was primarily driven by purchases of short-term investments of $1,971.7 million, payments for business acquisitions, net of cash acquired, of $770.0 million and capital expenditures of $132.0 million to support the growth and expansion of our cloud platform and expenditures on strategic investments of $4.2 million. These outflows were partially offset by proceeds of$596.2 million from sales and maturities of short-term investments.

Previous wording

Net cash used in investing activities during the six months ended January 31, 2025 of $201.1 million was primarily attributable to purchases of short-term investments of $729.1 million and capital expenditures of $75.5 million to support the growth and expansion of our cloud platform. These activities were partially offset by proceeds from maturities of short-term investments of $605.0 million.

Current wording

Net cash used in investing activities during the nine months ended April 30, 2025 of $179.4 million was primarily attributable to purchases of short-term investments of $886.6 million and capital expenditures of $167.1 million to support the growth and expansion of our cloud platform. These activities were partially offset by proceeds from maturities of short-term investments of $875.9 million.