Zscaler, Inc.

Note 1. Business and Summary of Significant Accounting Policies

Description of Business

Zscaler, Inc. ("Zscaler," the "Company," "we," "us," or "our") is a cloud security company. Our Zscaler Zero Trust Exchange TM platformis a cloud native, multi-tenant, distributed security platform that applies zero trust principles to securely connect users, devices, workloads, AI agents, IoT/OT devices, and branches to applications and data based on identity and business policy, rather than network location. We deliver our solutions using a software-as-a-service ("SaaS") business model and sell subscriptions to customers to access our cloud platform together with related support services. Our platform provides customers with flexible and scalable solutions to secure operations, optimize user experience, eliminate complexity, reduce costs and address the risks and opportunities created by AI and emerging technologies. We were incorporated in Delaware in September 2007 and conduct business worldwide, with presence in North America, South America, Europe and Asia. Our headquarters is in San Jose, California.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States ("GAAP").

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Fiscal Year

Our fiscal year ends on July 31. References to fiscal 2026, for example, refer to our fiscal year ending July 31, 2026.

Reclassification of Prior Year Amounts

Certain prior year amounts have been reclassified to conform to the current year presentation or disclosure.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates, judgments and assumptions that affect the amounts reported and disclosed in our consolidated financial statements and accompanying notes. We evaluate these estimates and assumptions on a regular basis. Such estimates and assumptions include, but are not limited to, revenue recognition, allowance for doubtful accounts, period of benefit of deferred contract acquisition costs, capitalized internal-use software, useful lives of long-lived assets, fair value of assets acquired and liabilities assumed in a business combination, recoverability of goodwill, stock-based compensation, valuation of deferred tax assets and liabilities, loss contingencies, fair value of convertible senior notes and the discount rate used for operating leases. We base our estimates and assumptions on historical experience and various other assumptions that are believed to be reasonable. Actual results could differ from these estimates, and such differences may be material to our consolidated financial statements.

Foreign Currency

The U.S. dollar is the functional currency of our foreign subsidiaries. Monetary assets and liabilities denominated in foreign currencies are remeasured into U.S. dollars at period-end exchange rates, while non-monetary assets and liabilities are re-measured at historical rates. Remeasurement gains and losses are recorded in other expense, net in the consolidated statements of operations and were not material to the consolidated financial statements for all periods presented.

Concentration of Credit Risks

Our financial instruments that are exposed to concentrations of credit risk primarily consist of cash, cash equivalents, short-term investments, derivative contracts, and accounts receivable.

We deposit cash across multiple financial institutions, though balances may at times exceed federally insured limits, exposing us to credit risk if those institutions or the issuers of securities in our investment portfolio default. Our investment policy limits concentration risk from any single issuer or institution. Similarly, our derivative contracts carry counterparty credit risk, which we mitigate by transacting with major financial institutions that maintain high credit ratings. We periodically reassess the creditworthiness of our counterparties to confirm they continue to meet our credit quality requirements.

We grant credit to our customers in the normal course of business and generally do not require collateral. We monitor the financial condition of our customers to reduce credit risk. Refer to Note 2, Revenue Recognition, for information regarding customers with concentration of 10% or more of the total balance of accounts receivable, net.

Revenue Recognition

In accordance with Accounting Standards Codification ("ASC") Topic 606, Revenue From Contracts With Customers ("ASC 606"), revenue is recognized when a customer obtains control of promised services. The amount of revenue recognized reflects the consideration we expect to receive in exchange for these services. To achieve the core principle of this standard, we apply the following five steps:

1. Identify the contract with a customer

We consider the terms and conditions of the contracts and our customary business practices in identifying our contracts under ASC 606. We determine we have a contract with a customer when the contract is approved, we can identify each party’s rights regarding the services to be transferred, we can identify the payment terms for the services, we have determined the customer has the ability and intent to pay and the contract has commercial substance. We apply judgment in determining the customer’s ability and intent to pay, which is based on a variety of factors, including the customer’s historical payment experience or, in the case of a new customer, credit and financial information pertaining to the customer.

2. Identify the performance obligations in the contract

Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from us, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. Our performance obligations consist of (i) our subscription and support services and (ii) professional and other services.

3. Determine the transaction price

The transaction price is determined based on the consideration to which we expect to be entitled in exchange for transferring services to the customer. Variable consideration is included in the transaction price if, in our judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. None of our contracts contain a significant financing component.

4. Allocate the transaction price to performance obligations in the contract

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price ("SSP").

5. Recognize revenue when or as we satisfy a performance obligation

Revenue is recognized at the time the related performance obligation is satisfied by transferring the promised service to a customer. Revenue is recognized when control of the services is transferred to our customers, in an amount that reflects the consideration that we expect to receive in exchange for those services. We generate all our revenue from contracts with customers and apply judgment in identifying and evaluating any terms and conditions in contracts which may impact revenue recognition.

Subscription and Support Revenue

We generate revenue primarily from sales of subscriptions to access our cloud platform, together with related support services to our customers. Our subscription pricing is calculated on a per-user and metered-usage basis. Arrangements with customers do not provide the customer with the right to take possession of our software operating our cloud platform at any time. Instead, customers are granted continuous access to our cloud platform over the contractual period. A time-elapsed output method is used to measure progress because we transfer control evenly over the contractual period. Accordingly, the fixed consideration related to subscription and support revenue is generally recognized on a straight-line basis over the contract term beginning on the date that our service is made available to the customer.

The typical subscription and support term isone tofive years. Most of our contracts are non-cancelable over the contractual term. Some contracts provide customers the option to purchase additional subscription and support services at a stated price. These options generally do not provide a material right as they are priced at SSP.

Professional and Other Services Revenue

Professional and other services revenue consists of fees associated with providing deployment advisory services that educate and assist our customers on the best use of our solutions, as well as advise customers on best practices as they deploy our solution. These services are distinct from subscription and support services. Revenue from professional services provided on a time and materials basis is recognized as the services are performed. Total professional and other services revenue has historically not been material.

Contracts with Multiple Performance Obligations

Most of our contracts with customers contain multiple promised services consisting of: (i) our subscription and support services and (ii) professional and other services that are distinct and accounted for separately. The transaction price is allocated to the separate performance obligations on a relative SSP basis. We determine SSP based on our overall pricing objectives, taking into consideration the type of subscription and support services and professional and other services, the geographical region of the customer and the number of users.

Variable Consideration

Revenue from sales is recorded at the net sales price, which is the transaction price, and includes estimates of variable consideration. The amount of variable consideration that is included in the transaction price is constrained and included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue will not occur when the uncertainty is resolved.

If our services do not meet certain service level commitments, our customers are entitled to receive service credits, and in certain cases, refunds, each representing a form of variable consideration. We have historically not experienced any significant incidents affecting the defined levels of reliability and performance as required by our subscription contracts. Accordingly, estimated refunds related to these agreements were not material to the periods presented.

We provide rebates and other credits within our contracts with certain customers, which are estimated based on the value expected to be earned or claimed on the related sales transaction. Overall, the transaction price is reduced to reflect our estimate of the amount of consideration to which we are entitled based on the terms of the contract. Estimated rebates and other credits were not material during the periods presented.

Accounts Receivable, Net

We receive payments from customers based upon contractual billing schedules and accounts receivable are recorded when the right to consideration becomes unconditional. Payment terms on invoiced amounts are typically 30 days but may be up to 90 days for certain channel partners. Accounts receivable are recorded at the invoiced amount and are non-interest bearing. Accounts receivable are stated at their net realizable value, net of an allowance for doubtful accounts.

We have a well-established collections history from our customers. Credit is extended to customers based on an evaluation of their financial condition and other factors. We generally do not require collateral from our customers. In determining the necessary allowance for doubtful accounts, we estimate the lifetime expected credit losses against the existing accounts receivable balance. Our estimate is based on certain factors including the age of outstanding invoices, historical loss rates, credit quality of the customer, current economic conditions, reasonable and supportable forecasts of future economic conditions, and customer-specific circumstances. The allowance for doubtful accounts has historically not been material. There were no material write-offs recognized in the periods presented. Accordingly, the movements in the allowance for doubtful accounts were not material for any of the periods presented. We do not have any off-balance-sheet credit exposure related to our customers.

Contract Assets and Liabilities

We recognize contract assets related to our contractual right to consideration for both completed and partially completed performance obligations that may not have been invoiced under contracts with customers. Such amounts have historically not been material.

We recognize contract liabilities or deferred revenue for payments received in advance of performance under contracts with customers. Such amounts are recognized as revenue over the contractual period of a customer contract as we satisfy related performance obligations. In certain instances, customers may enter into non-cancellable and non-refundable drawdown commitments where discrete drawdown orders combined with the arrangement are treated as separate revenue contracts. As these committed arrangements are non-cancellable, and non-refundable, any payments received in advance of drawdown are recorded in deferred revenue.

Deferred Contract Acquisition Costs

We capitalize sales commissions and associated payroll taxes paid to sales personnel that are incremental to the acquisition of customer contracts. These costs are recorded as deferred contract acquisition costs in the consolidated balance sheets. We determine whether costs should be deferred based on our sales compensation plans, if the commissions are in fact incremental and would not have occurred absent the customer contract.

Sales commissions paid upon the initial acquisition of a contract are amortized over an estimated period of benefit offive years while commissions paid for renewal contracts are amortized over the contractual term of the renewals as commission rates paid on renewals are not commensurate with those paid on initial contracts. Amortization of deferred contract acquisition costs is recognized on a straight-line basis commensurate with the pattern of revenue recognition and included in sales and marketing expense in the consolidated statements of operations.

We determine the period of benefit for commissions paid for the acquisition of the initial contract by taking into consideration the expected subscription term and expected renewals of our customer contracts, the duration of our relationships with our customers, customer retention data, our technology development life cycle and other factors. We periodically review the carrying amount of deferred contract acquisition costs to determine whether events or changes in circumstances have occurred that could impact the period of benefit of these deferred costs. We did not recognize any impairment losses of deferred contract acquisition costs during the periods presented.

Cash Equivalents and Short-Term Investments

We classify investments with an original maturity of 90 days or less from the date of purchase as cash equivalents and all other investments as short-term investments. Our cash equivalents and short-term investments consist of highly liquid money market funds, U.S. treasury securities, U.S. government agency securities, corporate debt securities, asset-backed securities, non-U.S. government securities and certificates of deposits, which are invested through financial institutions.

We classify short-term investments as available-for-sale and present them in current assets as we have the ability and intent, if necessary, to liquidate in order to meet our liquidity needs or to grow our business, including for potential business acquisitions or other strategic transactions. Our investments are carried at fair value, with unrealized gains and losses unrelated to credit loss factors reported in accumulated other comprehensive income (loss) ("AOCI(L)").

We evaluate our investments for impairment when the fair value of a security declines below its amortized cost basis. We consider our intent to sell and whether it is more likely than not that we will be required to sell the securities before the recovery of its cost basis. Neither of these criteria were met in any period presented. If either of these criteria are triggered, the amortized cost basis of the debt security is written down to fair value through other expense, net. If neither criteria is met, we evaluate whether the decline in fair value below the amortized cost basis is related to credit-related factors or other factors such as interest rate fluctuations. The factors considered in this analysis include the extent the fair value is less than the amortized cost basis, whether there were changes to the rating of the security by a ratings agency, whether the issuer has failed to make scheduled interest payments and other adverse conditions as applicable.

Credit-related impairment losses, limited by the amount that the fair value is less than the amortized cost basis, are recorded through an allowance for credit losses in other expense, net. For purposes of identifying and measuring credit-related impairments, our policy is to exclude the applicable accrued interest from both the fair value and amortized cost basis of the related debt security. Accrued interest receivable, net of the allowance for credit losses, if any, is recorded to prepaid expenses and other current assets in the consolidated balance sheets. There wereno credit-related impairments recognized on our investments during the periods presented.

Interest income, accretion of investments purchased at a discount and realized gains and losses are included in interest income in the consolidated statements of operations.

Strategic Investments

Our strategic investments consist of non-marketable equity investments in privately held companies without readily determinable fair values where we do not have the ability to exercise significant influence. We account for non-marketable equity investments using the measurement alternative and adjust carrying values based on observable price changes from orderly transactions for identical or similar investments of the same issuer and impairments when events or circumstances indicate a decline in value has occurred. Non-marketable equity investments remeasured due to an observable event or impairment are classified within Level 3 in the fair value hierarchy. Our strategic investments are included in other noncurrent assets in the consolidated balance sheets and adjustments to their carrying amounts are recorded in other expense, net in the consolidated statements of operations. As of July 31, 2026 and 2025, the carrying amount of our strategic investments was$17.3 million and$10.6 million, respectively.

Fair Value Measurement

Our financial instruments consist of cash equivalents, short-term investments, accounts receivable, accounts payable, accrued liabilities, derivative instruments andconvertible senior notes. Cash equivalents, short-term investments and derivative instruments are recorded at fair value. Accounts receivable, accounts payable and accrued liabilities are stated at their carrying value, which approximates fair value due to the short-time to the expected receipt or payment date. We carry the convertible senior notes at face value less debt issuance costs and fair value hedge adjustments on our consolidated balance sheet and present their fair value at each reporting period for disclosure purposes only.

Fair value is defined as the exchange price that would be received from the sale of an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. We measure our financial assets and liabilities at fair value at each reporting period using a fair value hierarchy which requires us to maximize the use of observable inputs and minimize the use of unobservable inputs. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement, determined using the following level of inputs:

•Level I - Observable inputs are unadjusted quoted prices in active markets for identical assets or liabilities;

•Level II - Observable inputs are quoted prices for similar assets and liabilities in active markets or inputs other than quoted prices that are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments; and

•Level III - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. These inputs are based on our own assumptions used to measure assets and liabilities at fair value and require significant management judgment or estimation.

Our money market funds are classified within Level I due to the highly liquid nature of these assets and have quoted prices in active markets. Our investments in U.S. treasury securities, U.S. government agency securities, corporate debt securities, asset-backed securities, non-U.S. government securities and certificates of deposit as well as assets and liabilities arising from our foreign currency forward contracts and interest rate swap contracts, are classified within Level II. The fair value of our Level II financial assets and liabilities is determined by using inputs based on non-binding market consensus prices that are primarily corroborated by observable market data or quoted market prices for similar instruments, for substantially the full term of the financial assets and liabilities. We did not have transfers between levels of the fair value hierarchy of assets measured at fair value for all periods presented.

Property and Equipment, Net

Property and equipment are stated at historical cost net of accumulated depreciation. Property and equipment, excluding leasehold improvements, are depreciated using the straight-line method over the estimated useful lives of the respective assets, generally ranging from three tofive years. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful lives of the respective assets or the lease term. Expenditures for maintenance and repairs are expensed as incurred and significant improvements and betterments that substantially enhance the life of an asset are capitalized.

Capitalized Software Development

We capitalize certain costs incurred during the application development stage in connection with software development for our cloud security platform. The costs capitalized primarily consist of employee compensation and related benefits, including stock-based compensation, for employees directly involved in software development, as well as external direct costs incurred during the application development stage. Capitalization ceases when the software is substantially complete and ready for its intended use, including the completion of all significant testing. Costs related to preliminary project activities, post-implementation activities, along with maintenance and training are expensed as incurred. Capitalized costs are recorded as part of property and equipment, net in the consolidated balance sheets. Capitalized internal-use software is amortized on a straight-line basis over its estimated useful life which is generally three tofive years, and is recorded as cost of revenue in the consolidated statements of operations.

We also capitalize qualifying implementation costs incurred to configure, customize, or implement cloud computing hosting arrangements. Qualifying costs consist primarily of direct costs for internal employee compensation and benefits, including stock-based compensation, and direct third-party consulting fees. These costs were not material for all periods presented.

Business Combinations

We account for our business combinations using the acquisition method of accounting, which requires, among other things, allocation of the fair value of purchase consideration to the tangible and intangible assets acquired and liabilities assumed at their estimated fair values on the acquisition date. The excess of the fair value of purchase consideration over the values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair value of assets acquired and liabilities assumed, we make estimates and assumptions, especially with respect to intangible assets. Our estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, not to exceed one year from the date of acquisition, we may record adjustments to the assets acquired and liabilities assumed, with a corresponding offset to goodwill if new information is obtained related to facts and circumstances that existed as of the acquisition date. After the measurement period, any subsequent adjustments are reflected in the consolidated statements of operations. Acquisition costs, such as legal and consulting fees, are expensed as incurred.

Acquired Intangible Assets

Acquired intangible assets consist of identifiable intangible assets, including developed technology, customer relationships and trademarks resulting from business combinations. Acquired finite-lived intangible assets are initially recorded at fair value and are amortized on a straight-line basis over their estimated useful lives. Amortization expense of developed technology is included in cost of revenue, and amortization expense of customer relationships and trademarks is included primarily in sales and marketing expenses, in the consolidated statements of operations.

Long-lived Asset Impairment

Long-lived assets, except for goodwill, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, we assess recoverability of the assets held and used by comparing the carrying amount of the asset group to the estimated undiscounted future cash flows that are expected to result from use of the asset group and its eventual disposition. If the total of the future undiscounted cash flows is less than the carrying amount of the asset group, we record an impairment charge for the amount by which the carrying amount of the asset group exceeds its fair value.

Goodwill

Goodwill represents the excess of the fair value of purchase consideration in a business combination over the fair value of the assets acquired and liabilities assumed. Goodwill is not amortized, but rather tested for impairment at the reporting unit level annually during our fourth quarter or more often if circumstances indicate that the carrying value may not be recoverable. If we determine it is more likely than not the fair value of our reporting unit is less than its carrying amount based on qualitative factors, a quantitative analysis is performed to identify goodwill impairment. If the carrying amount of the reporting unit exceeds its fair value, an impairment charge is recognized for the excess, limited to the amount of goodwill allocated to the reporting unit.

Derivative Instruments

We enter into foreign currency forward contracts to manage risks related to fluctuations in exchange rates. We designate certain of these instruments as cash flow hedges to mitigate the impact of currency fluctuations on forecasted operating expenses, typically with maturities of up to 21 months. We also utilize non-designated forward contracts to manage exposure from the remeasurement of monetary assets and liabilities, typically with maturities ofone tothree months.

We also use interest rate swaps to economically convert a certain tranche of our fixed interest rate convertible senior notes to floating interest rates, in order to match the floating rate nature of a portion of our cash, cash equivalents, and short-term investments. These interest rate swaps are designated as fair value hedges, and changes in fair value of the interest rate swaps offset the changes in fair market value of the convertible senior notes due to benchmark interest rate movements. Gains or losses related to our fair value hedges are included within interest expense in the consolidated statement of operations in the period of change together with the offsetting loss or gain on the hedged item attributed to the risk being hedged. We measure hedge effectiveness of the interest rate swaps using regression analysis at inception and periodically thereafter.

Gains or losses related to our cash flow hedges are recorded as a component of AOCI(L) in the consolidated statements of stockholders' equity until the forecasted transaction occurs in earnings. When the forecasted transaction occurs, the related gains and losses are reclassified into earnings within the financial statement line item associated with the underlying hedged transaction. If the underlying hedged transaction does not occur, or it becomes probable that the hedged transaction will not occur, the cumulative unrealized gain or loss is reclassified immediately from AOCI(L) into earnings within the financial statement line item associated with the underlying hedged transaction. We measure hedge effectiveness using regression analysis at hedge inception and periodically thereafter. We include time value in our effectiveness assessment. We recognize changes in the fair value of non-designated derivative instruments within other expense, net in the consolidated statements of operations in the same period that the fair value measurement occurs.

All of our derivative instruments are measured at fair value. We enter into master netting agreements with our counterparties, which permit net settlement of transactions with the same counterparty. However, we have elected to present the derivative assets and derivative liabilities on a gross basis on the consolidated balance sheets as the potential impact of these rights of set-off was not material as of July 31, 2026 and July 31, 2025. We are not required to pledge, and are not entitled to receive, cash collateral related to these derivative instruments. We do not enter into derivative contracts for trading or speculative purposes. Derivative instruments are classified in the consolidated statements of cash flows as cash from operating activities, which reflect the classification of the underlying hedged transactions.

Operating Leases

We enter into operating lease arrangements for real estate assets related to office space and co-location assets. We determine if an arrangement contains a lease at its inception by assessing whether there is an identified asset and whether the arrangement conveys the right to control the use of the identified asset in exchange for consideration. We account for lease and non-lease components as a single lease component for all assets classes. Leases with a term of twelve months or less are not recognized on the consolidated balance sheets. Operating lease related balances are included in operating lease right-of-use assets, operating lease liabilities, and operating lease liabilities, noncurrent in the consolidated balance sheets.

Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make payments arising from the lease. Operating lease right-of-use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. We generally use the non-cancelable lease term when determining the lease term, unless it is reasonably certain that a renewal or termination option will be exercised. Lease payments consist of the fixed payments under the arrangement. The operating lease liabilities are adjusted for any unpaid lease incentives, such as tenant improvement allowances. Variable costs, such as maintenance and utilities based on actual usage, are not included in the measurement of right-to-use assets and lease liabilities but are expensed when the event determining the amount of variable consideration to be paid occurs. As the implicit rate of our leases is not determinable, we use an incremental borrowing rate ("IBR") based on the information available at the lease commencement date in determining the present value of lease payments. The lease expense is recognized on a straight-line basis over the lease term.

Convertible Senior Notes

We account for each series of convertible senior notes as a single liability in its entirety, measured at amortized cost. Debt issuance costs incurred in connection with convertible senior notes are reflected in the consolidated balance sheets as a direct deduction from the carrying amount of the outstanding convertible senior notes. These costs are amortized using the effective interest rate method over the terms of the convertible senior notes and are included in interest expense in the consolidated statements of operations.

Upon conversion, at our election, we may satisfy the conversion obligation by paying or delivering cash, shares of common stock, or a combination of both. The net carrying amount of the convertible senior notes is classified as a non-current liability unless the notes are contractually due within twelve months, or holders have the unconditional right to convert and we do not have the right to settle the obligation through the issuance of shares.

In connection with the issuance of the convertible senior notes, we entered into privately negotiated capped call transactions with certain financial institution counterparties. The capped call transactions are generally expected to offset potential dilution of our common stock, resulting from conversion of the convertible senior notes, or offset any cash payments made in excess of principal amounts of the converted notes, subject to a cap. The capped call transactions are classified in stockholders' equity, are not accounted for as derivatives, and the premiums paid are recorded as a reduction to additional paid-in capital in the consolidated balance sheets.

Segment Information

We operate globally as a single operating and reportable segment with one primary business activity. Our chief operating decision maker ("CODM") is our chief executive officer. Consolidated financial information, including revenue and significant adjusted segment expenses, is regularly provided to the CODM for purposes of allocating resources and evaluating financial performance. This information is also used in our annual budgeting and forecasting processes to establish goals and compare actual results against both budgeted targets and historical performance. Our CODM uses consolidated net loss as the measure of our segment profit or loss. The measure of our segment assets is reported as total assets in the consolidated balance sheets.

Stock-Based Compensation

We grant equity incentive awards to certain employees, non-employee directors, and other service providers. We generally grant restricted stock units ("RSUs"), performance stock awards ("PSAs"), restricted stock, stock options and purchase rights granted under our Employee Stock Purchase Plan ("ESPP"). We account for forfeitures of equity incentive awards as they occur.

Stock options and ESPP are measured using the Black-Scholes option pricing model with ESPP measured based on the fair value of the number of awards estimated at the beginning of the offering period. RSUs and restricted stock with only service conditions are measured at fair value based on the market closing price of our common stock on the grant date. Stock-based compensation expense is recognized on a straight-line basis generally over three tofour years for stock options, RSUs and restricted shares, and over thetwo-year offering period for ESPP.

PSAs that have the same grant date and service inception date, and are subject to both service and performance conditions, are measured based on the probable number of shares to be attained and the market closing price of our common stock on the grant date. Stock-based compensation expense is recognized using the accelerated attribution method over the requisite service period. For PSAs where the service inception date precedes the grant date, expense is recognized based on the quantity of PSAs for which it is probable the performance condition will be met, using the accelerated attribution method and the market closing price of our common stock at each reporting date up to the grant date. The quantity of PSAs for which it is probable the performance condition will be met is determined at the end of each reporting period. At completion of the performance period, any earned PSAs are granted upon approval of the compensation committee of our board of directors.

Our research and development expenses support our efforts to add new products, new features to our existing offerings and to ensure the reliability, availability and scalability of our solutions. Our cloud security platform is software-driven, and our research and development teams employ software engineers in the design, development, testing, certification and support of our solutions. Accordingly, the majority of our research and development expenses result from employee-related costs, including salaries, bonuses, benefits, stock-based compensation and costs associated with technology tools.

Advertising Expenses

Advertising costs are expensed as incurred and included in sales and marketing expenses in the consolidated statements of operations. Advertising expense was $29.5 million, $29.9 million and $25.0 million in fiscal 2026, fiscal 2025 and fiscal 2024, respectively.

Income Taxes

We account for income taxes using the asset and liability method. Deferred income taxes are recognized by applying the enacted statutory tax rates applicable to future years to differences between the carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss and tax credit carryforwards. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance to amounts that are more likely than not to be realized.

We recognize tax benefits from uncertain tax positions only if we believe that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. We recognize interest and penalties associated with our unrecognized tax benefits as a component of our income tax expense.

Net Loss Per Share

Basic net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period, less shares subject to restriction. Diluted earnings per share adjusts basic earnings per share for all potentially dilutive common stock equivalents outstanding during the period to the extent they are dilutive. Potentially dilutive securities consist primarily of stock options, share purchase rights under the ESPP, unvested RSUs, unvested PSAs, unvested common stock and shares issuable upon of our convertible senior notes. The dilutive effect of equity awards (stock options, restricted stock, RSUs, PSAs, and ESPP rights) is computed using the treasury stock method. The dilutive effect of shares issuable upon conversion of our convertible senior notes is computed using the if-converted method, under which the convertible senior notes are assumed to be converted into shares of common stock at the beginning of the reporting period and the related interest expense, net of tax, is added back to net loss. In connection with the issuance of the convertible senior notes, we entered into capped call transactions that are generally expected to reduce the potential dilution to our common stock upon any conversion of the convertible senior notes.

Comprehensive Loss

Comprehensive loss is comprised of the net loss and other comprehensive income (loss). Our other comprehensive income (loss) includes net changes in unrealized gains and losses on available-for-sale securities, and for our cash flow hedges, net changes in unrealized gains and losses, and net realized gains and losses reclassified from accumulated other comprehensive income (loss) into net loss when the underlying hedged transactions affect earnings, as reflected in the consolidated statements of comprehensive loss.

Recently Adopted Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendment requires additional income tax disclosure. Specifically, it requires public entities, on an annual basis, to provide disclosure of defined categories in the income tax rate reconciliation, as well as disclosure of income taxes paid, disaggregated by jurisdiction. We adopted this standard on a prospective basis for fiscal 2026. Refer to Note 15, Income Taxes for further information.

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis. We adopted this standard during fiscal 2025. Refer to Note 17, Segment and Geographic Information for further information.

Recently Issued Accounting Pronouncements Not Yet Adopted

In September 2025, the FASB issued ASU No. 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This standard is intended to make targeted improvements to the accounting and application of guidance related to costs incurred to develop software for internal use. This standard is effective for us in the interim and annual periods beginning in the first quarter of fiscal 2029. Early adoption is permitted. We are currently evaluating the potential impact of this standard on our consolidated financial statements.

In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This standard amends guidance on measuring expected credit losses for current accounts receivable and contract assets arising from revenue contracts. This amended guidance requires to estimate credit losses for these short-term assets based on the economic conditions that exist as of the balance sheet date, without forecasting future economic conditions. We will adopt this standard effective beginning fiscal 2027. We do not expect the adoption to have a material impact on our consolidated financial statements.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), Disaggregation of Income Statement Expenses. This standard requires disclosures of additional information about specific expense categories in the notes to the financial statements for interim and annual reporting periods. This standard is effective for us in the annual period beginning in fiscal 2028 and interim periods beginning in the first quarter of fiscal 2029. Early adoption is permitted. We are currently evaluating the potential impact of this standard on our consolidated financial statements.

Note 2. Revenue Recognition

Disaggregation of Revenue

Subscription and support revenue accounted for approximately 98%,98% and 97% of our revenue for each of fiscal 2026, fiscal 2025 and fiscal 2024, respectively.

Revenue by geographical region based on the shipping address of our customers consisted of the following:

Revenue by sales channel consisted of the following:

Significant Customers

No customer accounted for 10% or more of total revenue during the periods presented. As of July 31, 2026 and July 31 2025, one channel partner accounted for 13% and 12% of total accounts receivable, net, respectively.

Contract Liabilities

In fiscal 2026, fiscal 2025 and fiscal 2024 we recognized revenue of $2,053.4 million, $1,643.1 million and $1,277.8 million, respectively, that was included in the corresponding contract liability balance at the beginning of the related fiscal year.

Remaining Performance Obligations

The typical subscription and support term isone tofive years. Most of our subscription and support contracts are non-cancelable over the contractual term. As of July 31, 2026, the aggregate amount of the transaction price allocated to remaining performance obligations was $7,365.4 million. We expect to recognize 45% of the transaction price over the next 12 months and 90% of the transaction price over the next three years, with the remainder recognized thereafter.

Costs to Obtain and Fulfill a Contract

Deferred contract acquisition costs consisted of the following:

Note 3. Cash Equivalents and Short-Term Investments

Cash equivalents and short-term investments consisted of the following as of July 31, 2026:

Cash equivalents and short-term investments consisted of the following as of July 31, 2025:

Amortized cost and fair value of our short-term investments based on their stated maturities consisted of the following as of July 31, 2026:

Short-term investments in continuous unrealized loss position consisted of the following:

None of our short-term investments were in a continuous unrealized loss position for 12 months or longer as of July 31, 2026 and July 31, 2025.

We determined that unrealized losses of the above securities were primarily attributable to changes in interest rates and non credit-related factors. Accordingly, we determined that an allowance for credit losses was unnecessary for our short-term investments as of July 31, 2026 and 2025.

As of July 31, 2026 and 2025, we recorded $26.7 million and $17.9 million, respectively, of accrued interest receivable in prepaid expenses and other current assets in the consolidated balance sheets.

Note 4. Fair Value Measurements

Assets and liabilities measured at fair value on a recurring basis consisted of the following as of July 31, 2026:

(1)Included in prepaid expenses and other current assets in the consolidated balance sheets.

(2)Included in other noncurrent assets in the consolidated balance sheets.

(3)Included in accrued expenses and other current liabilities in the consolidated balance sheets.

(4)Included in other noncurrent liabilities in the consolidated balance sheets.

Assets and liabilities measured at fair value on a recurring basis consisted of the following as of July 31, 2025:

(1) Included in prepaid expenses and other current assets in the consolidated balance sheets.

(2) Included in other noncurrent assets in the consolidated balance sheets.

(3) Included in accrued expenses and other current liabilities in the consolidated balance sheets.

(4) Included in other noncurrent liabilities in the consolidated balance sheets.

Refer to Note 10, Convertible Senior Notes, for the carrying amount and estimated fair value of our convertible senior notes as of July 31, 2026 and 2025.

Note 5. Balance Sheet Components

Property and Equipment, Net

Property and equipment, net consisted of the following:

(1) Includes purchased equipment not been placed in service, totaling $235.4 million and $163.5 million as of July 31, 2026 and 2025, respectively.

We recognized depreciation and amortization expense on property and equipment of $146.2 million, $102.6 million and $65.0 million in fiscal 2026, fiscal 2025 and fiscal 2024, respectively.

Capitalized internal-use software activity consisted of the following:

Purchased Intangible Assets

Purchased intangible assets are amortized on a straight-line basis over an estimated useful life of 10 years. These assets are included in other noncurrent assets in the consolidated balance sheets.

Purchased intangible assets consisted of the following:

We recognized amortization expense on purchased intangible assets of $2.3 million, $1.8 million and $1.3 million in fiscal 2026, fiscal 2025 and fiscal 2024, respectively.

Accrued Compensation

Accrued compensation consisted of the following:

Note 6. Business Combinations

Symmetry Systems, Inc.

On May 27, 2026, we acquired all outstanding equity of Symmetry Systems, Inc. ("Symmetry"), a technology company, for cash consideration of $152.9 million. The acquisition is expected to enhance our AI security offerings and our Zero Trust Exchange security platform.

In connection with the acquisition, we issued $16.9 million in restricted stock subject to post-combination service vesting conditions. The preliminary purchase price was primarily allocated $31.5 million to developed technology and $3.4 million to customer relationships, both valued using the replacement cost approach each with an estimated useful life offive years and goodwill of $122.7 million primarily attributable to the assembled workforce and anticipated operational synergies which is not expected to be deductible for income tax purposes. The purchase price allocation for Symmetry is preliminary and subject to adjustment during a measurement period of up to one year from the acquisition date.

SquareX Holdings, Inc.

On February 5, 2026, we acquired all outstanding equity of SquareX Holdings, Inc. (“SquareX”), a browser security company, for cash consideration of $112.8 million. The acquisition is expected to extend our browser capabilities, including on unmanaged devices. In connection with the acquisition, we issued $37.4 million in restricted stock subject to post-combination service vesting conditions.

The preliminary purchase price was primarily allocated $9.8 million to developed technology, valued using the replacement cost approach with an estimated useful life offive years, and goodwill of $93.0 million primarily attributable to the assembled workforce and anticipated operational synergies which is not expected to be deductible for income tax purposes. The purchase price allocation for SquareX is preliminary and subject to adjustment during the measurement period of up to one year from the acquisition date.

SPLXAI Inc.

On October 31, 2025, we acquired all outstanding equity of SPLXAI Inc. ("SPLX"), an early-stage AI technology company, for cash consideration of $40.6 million. In connection with the acquisition, we also issued $16.6 million in restricted stock subject to post-combination service vesting conditions. The acquisition is expected to extend our AI security capabilities.

During the second quarter of our fiscal 2026, and within the measurement period, we revised the valuation of acquired developed technology from $14.1 million to $3.3 million, resulting in an increase of goodwill from $32.2 million to $39.2 million, net of tax adjustment. The change in valuation of the developed technology resulted from transitioning from a benchmarking valuation approach to a replacement cost approach, The acquired developed technology has an estimated useful life offour years. Goodwill resulting from the acquisition is primarily attributable to the assembled workforce and anticipated operational synergies and is not expected to be deductible for income tax purposes.

The purchase price allocation for SPLX is preliminary and subject to adjustment during the measurement period of up to one year from the acquisition date.

Red Canary, Inc.

On August 1, 2025, we acquired all outstanding equity of Red Canary, Inc. ("Red Canary"), a managed detection and response technology company, for cash consideration of$651.4 million. The acquisition is expected to accelerate innovation in Agentic AI-driven security operations.

In connection with the acquisition, we issued$20.2 million in restricted stock subject to post-combination service vesting conditions. We estimated the fair value of acquired intangible assets using the income approach, including the multi- period excess earnings method for the customer relationships and relief from royalty method for the developed technology. Significant assumptions used in valuing these intangible assets included the customer attrition rate and revenue growth rates for the customer relationships and the royalty rate for the developed technology.

Goodwill is primarily attributable to the assembled workforce and anticipated operational synergies and is not expected to be deductible for income tax purposes. During the fourth quarter of our fiscal 2026, we recorded a measurement period adjustment of $0.9 million to deferred tax liability and goodwill.

Allocation of the purchase price consideration consisted of the following:

Airgap Networks Inc.

On April 12, 2024, we acquired all outstanding equity of Airgap Networks Inc. ("Airgap"), an early-stage technology company, for cash consideration of$124.4 million. Airgap's technology has been integrated into our cloud platform. In connection with the acquisition, we issued$20.3 million in restricted stock subject to post-combination service vesting conditions, along with$6.2 million in replacement stock awards, of which$1.4 million wasallocated to purchase price consideration and the remainder recognized as post-combination compensation expense over the requisite service period of the award.

The purchase price was allocated $28.7 million to developed technology, $3.1 million to customer relationships, both valued using the replacement cost approach with an estimated useful life offive years, andgoodwill of$95.5 million primarily attributable to the assembled workforce and anticipated operational synergies which is not expected to be deductible for income tax purposes.

Avalor Technologies Ltd.

On March 8, 2024, we acquired all outstanding equity of Avalor Technologies Ltd. ("Avalor"), an early-stage technology company, for cash consideration of $256.7 million. Avalor's technology has been integrated into our cloud platform. In connection with the acquisition, we issued$46.5 million in restricted stock subject to post-combination service vesting conditions, along with$14.4 million in replacement equity incentive awards, of which $2.4 million was allocated to purchase price consideration and the remainder recognized as post-combination compensation expense over the requisite service period of the award.

The purchase price was allocated $14.7 million to developed technology, $3.3 million to customer relationships, both valued using the replacement cost approach with an estimated useful life offive years, andgoodwill of$229.2 million primarily attributable to the assembled workforce and anticipated operational synergies which is not expected to be deductible for income tax purposes.

Note 7. Goodwill and Acquired Intangible Assets

Goodwill

Changes in goodwill consisted of the following:

Acquired Intangible Assets

Changes in acquired intangible assets consisted of the following:

As of July 31, 2025, the weighted-average remaining useful life for developed technology, customer relationships was 3.3 years and 3.5 years, respectively.

Amortization expense of acquired intangible assets was $43.5 million, $16.8 million and $14.6 million in fiscal 2026, fiscal 2025 and fiscal 2024, respectively.

Future amortization expense of acquired intangible assets as of July 31, 2026 consisted of the following:

Note 8. Derivative Instruments

Foreign Currency Forward Contracts

As of July 31, 2026 and July 31, 2025, the total notional amount of our outstanding designated foreign currency forward contracts was $757.7 million and $693.1 million, respectively, and for our outstanding non-designated foreign currency forward contracts was $566.1 million and $549.5 million, respectively. As of July 31, 2026, an estimated $6.9 million of the unrealized loss related to our cash flow hedges are expected to be released into earnings over the next 12 months. Refer to Note 4, Fair Value Measurements, for the fair value of our derivative instruments as reported in the consolidated balance sheets.

The changes in AOCI(L) related to our cash flow hedges consisted of the following:

(1)(Gains) losses related to our cash flow hedges reclassified from AOCI(L) into the consolidated statements of operations consisted of the following:

We also enter into master netting arrangements, which permit net settlement of transactions with the same counterparty. The potential impact of these rights of set-off associated with our derivative instruments was not material as of July 31, 2026 and July 31, 2025.

Interest Rate Swap Contracts

During fiscal 2026, we entered into interest rate swap contracts covering the interest rate applicable on a portion of the outstanding 2028 Notes (as defined below), maturing on July 15, 2028, and designated as fair value hedges. The interest rate swap contracts are intended to hedge a portion of our fair value risk exposure related to changing interest rates by effectively converting the fixed interest rate of a portion of our 2028 Notes to a floating interest rate. The interest rate swap contracts related to the 2025 Notes (as defined below) matured on July 1, 2025. As of July 31, 2026, the carrying amount of the hedged 2028 Notes was$744.5 million and the total notional amount of outstanding interest rate swaps was$750.0 million. As of July 31, 2026, the cumulative amount of fair value hedge adjustments included in the carrying amount of the convertible senior notes was $12.5 million.

The gains and losses effect of derivative instruments consisted of the following:

Note 9. Restructuring and Other Charges

During fiscal 2026 and fiscal 2025, we carried out restructuring plans as part of planned efforts to streamline operations and to align people, roles and projects to our strategic priorities. As a result, we recognized restructuring charges related to employee termination benefits of $10.3 million and $4.9 million in fiscal 2026 and fiscal 2025, respectively. The restructuring plans were substantially complete at the end of each respective fiscal year.

The components of restructuring and other charges recognized in the consolidated statements of operations consisted of the following:

As of July 31, 2026 and 2025, $4.4 million and $3.8 million, respectively, of accrued restructuring obligations were included in accrued compensation in the consolidated balance sheets.

Note 10. Convertible Senior Notes

2028 Convertible Senior Notes

On July 3, 2025, we issued $1,725.0 million in aggregate principal amount 0.0% convertible senior notes (the "2028 Notes"), including the exercise in full by the initial purchasers of the 2028 Notes of their option to purchase an additional $225.0 million principal amount of the 2028 Notes. The 2028 Notes are unsecured, do not bear cash interest, and the principal amount will not accrete. Net proceeds, after deducting initial purchase discounts and other debt issuance costs, was $1,700.0 million. The 2028 Notes do not contain any financial covenants or restrictions on the payments of dividends, the incurrence of indebtedness or the issuance or repurchase of securities by us or any of our subsidiaries. The 2028 Notes mature on July 15, 2028, unless earlier converted, redeemed or repurchased.

Details of the 2028 Notes consisted of the following:

The 2028 Notes are convertible at the holders' option prior to April 15, 2028, only upon satisfaction of certain conditions, including:

•During any fiscal quarter commencing after the fiscal quarter ending on October 31, 2025 (and only during such fiscal quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price of the 2028 Notes on each applicable trading day;

•During thefive-business day period after anyfive consecutive trading day period in which the trading price per $1,000 principal amount of the 2028 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate of the 2028 Notes on each such trading day;

•If we call the 2028 Notes for redemption, the 2028 Notes called for redemption (or, at our election all Notes) may be submitted for conversion at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or

•Upon the occurrence of specified corporate events as set forth within the indenture governing the 2028 Notes.

Holders may convert, all or any portion of the 2028 Notes in multiples of $1,000 principal amount, at any time on or after April 15, 2028 through the second scheduled trading day immediately preceding maturity. Settlement may be in cash, common stock, or a combination. We will also increase the conversion rate for holders who elect to convert in connection with a qualifying corporate event or notice of redemption prior to maturity. Upon a fundamental change, as defined in the indenture governing the notes, holders of the 2028 Notes may require cash repurchases of all or any portion of the 2028 Notes at 100% of principal plus any accrued and unpaid special interest.

Our current intent is to settle the principal amount of the 2028 Notes in cash. Conversion conditions were not met during the three months ended July 31, 2026. Given our cash settlement election, the 2028 Notes are classified as a noncurrent liability as of July 31, 2026 and July 31, 2025.

The net carrying amount of the 2028 Notes consisted of the following:

The fair value of the 2028 Notes was$1,601.8 million and$1,686.5 million as of July 31, 2026 and July 31, 2025, respectively, determined based on the closing trading price per $1,000 of the 2028 Notes as of the last day of trading for the period. We considered the fair value of the 2028 Notes as of July 31, 2026 to be a Level II measurement as the notes are not actively traded. Fair value of the 2028 Notes is primarily affected by the trading price of our common stock and market interest rates.

2028 Capped Call Transactions

In connection with the 2028 Notes, we entered into capped call transactions (the "2028 Capped Calls") with certain financial institutions ("the Option Counterparties"). The 2028 Capped Calls have an initial strike price of $439.52 per share of our common stock, subject to certain adjustments, which corresponds to the initial conversion price of the 2028 Notes. The 2028 Capped Calls have an initial cap price of $784.85 per share, subject to certain adjustments.

The 2028 Capped Calls cover, subject to anti-dilution adjustments, the number of shares of our common stock underlying the 2028 Notes. The 2028 Capped Calls transactions are generally expected to offset potential dilution of our common stock, resulting from conversion of the 2028 Notes, or offset any cash payments made in excess of principal amounts of converted 2028 Notes, subject to a cap. The 2028 Capped Calls are subject to adjustment upon the occurrence of specified extraordinary events affecting us, including merger events, tender offers and the announcement of such events. In addition, the 2028 Capped Calls are subject to certain specified additional disruption events that may give rise to a termination of the 2028 Capped Calls, including nationalization, insolvency or delisting, changes in law, failures to deliver, insolvency filings and hedging disruptions.

The 2028 Capped Calls are accounted for separate from the 2028 Notes. As the 2028 Capped Calls qualify for a scope exception from derivative accounting for instruments indexed to the issuer's own stock and classified in stockholders' equity, the premium of $196.8 million paid to purchase the 2028 Capped Calls was recorded as a reduction to additional paid-in capital in the consolidated balance sheets, and will not be remeasured. We have not exercised the 2028 Capped Call options for any periods presented.

2025 Convertible Senior Notes and 2025 Capped Call Transactions

On June 25, 2020, we issued $1,150.0 million in aggregate principal amount 0.125% convertible senior notes (the "2025 Notes"). The 2025 Notes were unsecured obligations and bore semiannually interest at a rate of 0.125% per year. The total net proceeds from the offering, after deducting initial purchase discounts and other debt issuance costs, was $1,130.5 million.

The 2025 Notes matured on July 1, 2025. We fully repaid the 2025 Notes by paying the principal amount of$1,150.0 million in cash and settled the premium amount by issuing 3.8 million new shares of our common stock. Additionally, we received 2.4 million shares of our common stock from the capped call transactions related to the 2025 Notes (the "2025 Capped Calls").

Interest expense related to the 2028 Notes and 2025 Notes consisted of the following:

Note 11. Operating Leases

We primarily lease office space and co-location assets including space and racks at data center facilities around the world under operating and short-term lease agreements. These lease agreements have original terms not exceeding seven years and may contain multi-year renewal options that are not considered reasonably certain of exercise. Our leases do not contain any material restrictive covenants or residual value guarantees.

The components of lease cost and other supplemental information consisted of the following:

Maturities of operating lease liabilities consisted of the following as of July 31, 2026:

As of July 31, 2026, we entered into leases which have yet to commence. These leases have lease terms ranging from approximately 2 years to 4 years and are expected to commence during fiscal 2027 with total undiscounted lease payments of $27.5 million.

Note 12. Commitments and Contingencies

Purchase and Other Commitments

In the normal course of business, we enter into non-cancelable purchase commitments with various third parties to purchase products and services such as cloud infrastructure capacity, subscription-based cloud service arrangements, technology equipment, corporate and marketing events and consulting services.

The maturities of non-cancelable purchase obligations with a remaining term in excess of one year as of July 31, 2026 consisted of the following:

As of July 31, 2026 and 2025, we had outstanding irrevocable standby unsecured letters of credit and a guarantee, which serve as security for certain leases as described in Note 11, Operating Leases. The aggregate value of these commitments was not material for all periods presented.

Legal Matters

We are a party to various litigation matters from time to time and subject to claims that arise in the ordinary course of business, including patent, commercial, product liability, employment, class action, whistleblower and other litigation and claims, as well as governmental and other regulatory investigations and proceedings. In addition, third parties may from time to time assert claims against us in the form of letters and other communications.

We record a liability when we believe that it is both probable that a loss has been incurred and the amount can be reasonably estimated. We expense legal fees as incurred. There is no pending or threatened legal proceeding to which we are a party that, in our opinion, is likely to have a material adverse effect on our future financial results or operations; however, the results of litigation and claims are inherently unpredictable. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. The expense of litigation and the timing of this expense from period to period are difficult to estimate, subject to change and could adversely affect our results of operations.

Warranties and Indemnification

Our cloud security platform is generally warranted to be free of defects under normal use and to perform substantially in accordance with the subscription agreement. Additionally, our contracts generally include provisions for indemnifying customers and channel partners against liabilities if our services infringe or misappropriate a third party’s intellectual property rights. We also provide indemnification to our directors, officers and certain key employees in connection with their service in those roles. Costs and liabilities incurred as a result of warranties and indemnification obligations were not material for all periods presented.

Note 13. Stock-Based Compensation

Equity Incentive Plan

Equity incentive awards which may be granted to eligible participants under our Amended and Restated FY 2018 Equity Incentive Plan (the "2018 Plan") include restricted stock units ("RSUs"), performance stock awards ("PSAs"), restricted stock, stock options, and stock appreciation rights.

As of July 31, 2026, a total of 68.7 million shares of common stock were reserved for the issuance of equity awards under the 2018 Plan, of which 39.2 million shares remained available for grant. The shares of common stock available for issuance under the 2018 Plan includes an annual increase on the first day of each fiscal year pursuant to its automatic annual increase provision.

Stock Options

The activity of stock options for fiscal 2026 consisted of the following:

The weighted-average grant-date fair value per share for stock options granted was$144.58 and $117.41 during fiscal 2025 and fiscal 2024, respectively.

The total grant-date fair value of stock options vested was $7.8 million, $3.6 million and $1.4 million during fiscal 2026, fiscal 2025 and fiscal 2024, respectively. The total intrinsic value of stock options exercised was $3.7 million, $65.2 million and $157.8 million, during fiscal 2026, fiscal 2025 and fiscal 2024, respectively.

The assumptions used to fair value stock options using the Black-Scholes option pricing model consisted of the following:

The expected term was estimated using the simplified method. The expected volatility was determined using a weighted-average of historical volatility of our common stock and peer volatility. Peer volatility was calculated as the average of historical volatilities of selected industry peers corresponding to the expected term of the awards. The risk-free interest rate was based on the U.S. Treasury yield curve in effect at the time of grant for the expected term of the stock-based award. Our expected dividend yield was zero, as we have not and do not currently intend to declare dividends in the foreseeable future.

Restricted Stock Units, Restricted Shares and Performance Stock Awards

The right to earn PSAs is subject to the achievement of defined and approved performance metrics and rendering of continuous service through the vest date. The performance metrics are defined and approved by the compensation committee of our board of directors or by our senior management for certain types of awards. Generally, earned PSAs are subject to additional time-based vesting.

The activity of RSUs and PSAs consisted of the following for fiscal 2026:

The aggregate fair value, as of respective vesting dates, of combined RSUs and PSAs vested was $771.3 million, $808.0 million and $684.4 million, during fiscal 2026, fiscal 2025 and fiscal 2024, respectively.

In connection with certain business combinations discussed in Note 6, Business Combinations, we issued an aggregate total of 0.5 million and 0.3 million shares of our common stock subject to post-combination service vesting conditions in fiscal 2026 and 2024, respectively. No restricted shares were issued in fiscal 2025. Restricted shares are legally issued and outstanding and are therefore included in total issued and outstanding common stock; however, such shares are not considered outstanding for accounting purposes until the applicable vesting conditions are met. As of July 31, 2026, 2025 and 2024,0.5 million,0.2 million and 0.4 million shares remained unvested, respectively.

Employee Stock Purchase Plan

In fiscal 2018, we adopted the Fiscal Year 2018 Employee Stock Purchase Plan (the "ESPP"). Through the end of fiscal 2026, a total of 13.4 million shares of common stock have been reserved for issuance under the ESPP. As of July 31, 2026,7.2 million shares were available for future grant. The number of shares reserved includes an annual increase on the first day of each fiscal year pursuant to the ESPP's automatic annual increase provision. The ESPP provides for consecutive offering periods that have a typical duration of approximately 24 months in length and are comprised offour purchase periods of approximatelysix month increments. The offering periods are scheduled to start on the first trading day on or after June 15 and December 15 of each fiscal year. The ESPP contains a reset provision under which the offering period resets if the fair market value of our common stock on the purchase date is less than the fair market value on the first day of the offering period. During fiscal 2026, fiscal 2025 and fiscal 2024, under the ESPP, employees purchased approximately 0.5 million,0.4 million and 0.5 million shares of common stock, respectively, at an average purchase price of $127.82, $146.31 and $106.46, respectively, with cash proceeds of $59.4 million, $63.6 million and $52.0 million, respectively.

ESPP employee payroll contributions accrued as of July 31, 2026 and 2025, were $8.0 million and $9.4 million, respectively, and are included in accrued compensation in the consolidated balance sheets. Payroll contributions accrued as of July 31, 2026 will be used to purchase shares at the end of the current ESPP purchase period ending on December 15, 2026. Payroll contributions ultimately used to purchase shares are reclassified to stockholders' equity on the purchase date.

In fiscal 2026 and 2024, certain outstanding ESPP offering periods were reset and automatically rolled over into new ESPP offering periods. The resets were accounted for as modifications; the resulting incremental stock-based compensation expense was immaterial in both periods and will be recognized over the remaining terms of the modified ESPP offering periods, ranging from approximately 6 months to 18 months.

The assumptions used to fair value the purchase rights for the ESPP using the Black-Scholes option-pricing model consisted of the following:

The expected term represents the term from the first day of the offering period to the purchase dates within each offering period. The expected volatility was based on the historical volatility of our common stock. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for the expected term of the stock-based award. Our expected dividend yield was zero, as we have not and do not currently intend to declare dividends in the foreseeable future.

Stock-based Compensation Expense

The components of stock-based compensation expense recognized in the consolidated statements of operations, inclusive of amortization of previously capitalized internal-use software costs (Note 5, Balance Sheet Components), consisted of the following:

As of July 31, 2026, unrecognized stock-based compensation expense related to outstanding equity-based awards, including awards for which the service inception date has been met but the grant date has not been met, was $1,806.5 million, which we expect to be amortized over a weighted-average period of 2.5 years.

Note 14. Common Stock

Holders of common stock are entitled toone vote for each share of common stock held and are not entitled to receive dividends unless declared by our board of directors.

The shares of common stock reserved for future issuance consisted of the following:

(1) Committed unvested PSAs represent the difference between the maximum number of shares issuable if maximum performance is achieved and the number of shares issuable at 100% of target performance.

Note 15. Income Taxes

The geographical breakdown of income (loss) before the provision for income taxes consisted of the following:

The provision for income taxes consisted of the following:

A reconciliation of U.S. federal statutory income tax rates to our effective tax rate for fiscal 2026 is as follows:

(1) The states and local jurisdictions that contribute to the majority (greater than 50%) of the tax effect in this category are Illinois and New Jersey.

A reconciliation of U.S. federal statutory income tax rates to our effective tax rate for fiscal 2025 and fiscal 2024 is as follows:

Cash paid for income taxes, net of refunds received for fiscal 2026, consisted of the following:

Our effective tax rate differed from the U.S. statutory rate in fiscal 2026, 2025, and 2024, primarily due to earnings being taxed at different rates in foreign jurisdictions, the tax benefit from stock-based compensation, withholding taxes related to customer payments in certain foreign jurisdictions in which we conduct business, and the ongoing impact of valuation allowances against our deferred tax assets. In fiscal 2026 the rate was also impacted by internal restructuring for the integration of a former acquired business into its existing corporate structure. In fiscal 2025 the rate was also impacted by the release of the UK valuation allowance. In fiscal 2024 the rate was impacted by certain tax planning actions which reduced the amount of waived deductions under Section 59A related to our fiscal 2023.

During fiscal 2026 and 2024 we recognized an income tax benefit of $4.5 million and $5.2 million as a result of a release in our valuation allowance on deferred tax assets due to deferred taxes recorded as part of the acquisition accounting of business combinations. Refer to Note 6, Business Combinations, for further information.

The tax effects of temporary differences that give rise to significant portions of our deferred tax assets and liabilities consisted of the following:

A deferred tax liability has not been recognized on the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries that are indefinitely reinvested outside the U.S. Income taxes are generally incurred upon a repatriation of assets, a sale, or a liquidation of the subsidiary. The excess of the amount for financial reporting over the tax basis in the investments in foreign subsidiaries, as well as the unrecognized deferred tax liability, are not material for the periods presented.

The change in the valuation allowance consisted of the following:

The realization of deferred tax assets is dependent upon the generation of sufficient taxable income of the appropriate character in future periods. We regularly assess our ability to realize the deferred tax assets on a quarterly basis and we establish a valuation allowance if it is more-likely-than-not that some portion of the deferred tax assets will not be realized. We weigh all available positive and negative evidence, including our earnings history and results of recent operations, scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies. Due to the weight of objectively verifiable negative evidence, including our history of losses, we believe that it is more likely than not that our

U.S. federal and state deferred tax assets will not be realized as of July 31, 2026 and 2025. Accordingly, we have maintained a full valuation allowance against such deferred tax assets. The portion of the valuation allowance for deferred tax assets for which subsequently recognized tax benefits will be credited directly to contributed capital was $48.0 million in fiscal 2025.

Based on our assessment of current income and anticipated future earnings, there is a reasonable possibility that we will have sufficient evidence to release a significant portion of the valuation allowance in the U.S. within the next 12 months. However, our judgment regarding future earnings and the exact timing and amount of any valuation allowance release are subject to change due to many factors, including future market conditions, the ability to successfully execute our business plans, and the amount of stock-based compensation tax deductions available in the future. Release of the valuation allowance would result in the recognition of net deferred tax assets on our consolidated balance sheet and would decrease income tax expense in the period the release is recorded.

The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as our projections for growth. In the event we determine that we will be able to realize all or part of our net deferred tax assets in the future, the valuation allowance against our deferred tax assets will be reversed in the period in which we make such determination.

As of July 31, 2026, we have net operating loss carryforwards for U.S. federal income tax purposes of$1,062.9 million, which are available to offset future federal taxable income. These net operating losses will carry forward indefinitely. As of July 31, 2026, we have net operating loss carryforwards for state income tax purposes of$600.4 million. Beginning in 2026,$531.5 millionof state net operating losses will begin to expire at different periods. The remaining$68.9 million of state net operating losses will carry forward indefinitely. As of July 31, 2026, we had foreign net operating loss carryforward of$71.0 million, all of which will be carried forward indefinitely.

As of July 31, 2026, we also had U.S. federal, and California research and development and other tax credit carryforwards of $188.8 million and $122.6 million, respectively. If not utilized, the federal research and development tax credit carryforwards will begin expiring at different periods beginning in 2037. Our California research and development tax credits may be carried forward indefinitely.

In the event we experience an ownership change within the meaning of Section 382 of the Internal Revenue Code (“IRC”), our ability to utilize net operating losses, tax credits and other tax attributes may be limited. The annual limitation would not automatically result in the loss of net operating loss carryforwards but may limit the amount available in any given future period.

We are subject to income taxes in the U.S. and various foreign jurisdictions. As of July 31, 2026, all years are open for examination and may become subject to examination in the future. Significant judgment is required in evaluating our tax positions and determining our income tax expense for the fiscal year. During the ordinary course of business, there are transactions and calculations for which the ultimate tax determination is uncertain. Our estimate of the potential outcome of any tax position is subject to management’s assessment of relevant risks, facts and circumstances existing at that time. These unrecognized tax benefits are established when we believe that certain positions might be challenged despite the belief that our tax return positions are fully supportable. We recognize interest and penalties associated with our unrecognized tax benefits as a component of our income tax expense. For the periods presented, we did not have material interest or penalties associated with the unrecognized tax benefits in the consolidated financial statements.

We had $117.0 million of gross unrecognized tax benefits as of July 31, 2026, of which $17.5 million would affect our effective tax rate if recognized. The remaining gross unrecognized tax benefits relate to income tax positions which, if recognized, would be in the form of additional deferred tax assets that would be offset by a valuation allowance. The amount of interest and penalties accrued as of July 31, 2026 was insignificant.

The changes in our gross unrecognized tax benefits consisted of the following:

Note 16. Net Loss Per Share

The computation of basic and diluted net loss per share consisted of the following:

As we reported net losses for all periods presented, we excluded all potentially dilutive securities from the calculation of diluted net loss per share as their effect would have been antidilutive. The potentially dilutive securities that were excluded from the computation of diluted net loss per share as their effect would be antidilutive consisted of the following:

(1) Unvested PSAs are presented at the target number of shares, reflecting 100% attainment of applicable performance conditions, with no shares assumed above target levels. Unvested PSAs exclude awards for which performance conditions have not been established as of July 31, 2026, as they are not considered outstanding for accounting purposes.

(2)Based on the initial conversion price, the total outstanding principal amount of the 2028 Notes and 2025 Notes as of July 31, 2026, 2025 and 2024 would have been convertible into approximately 3.9 million,3.9 million and 7.6 million shares, respectively of our common stock.

Note 17. Segment and Geographic Information

The segment revenue, significant adjusted segment expenses and other segment items to reconcile to net loss in the consolidated statements of operations consisted of the following:

(1) Adjusted to exclude stock-based compensation and related employer payroll taxes, amortization of acquired intangible assets, restructuring and other charges, and acquisition-related expenses (general and administrative expense only).

(2) Other segment items, net includes interest income, interest expense, other expense, net and provision for income taxes.

The long-lived assets by geographical area, inclusive of property and equipment, net and operating lease right-of-use assets, consisted of the following:

Refer to Note 2, Revenue Recognition for information on revenue by geography.

Note 18. Retirement Benefit Plan

We sponsor a qualified defined contribution plan intended to qualify under Section 401 of the Internal Revenue Code. For fiscal 2026, fiscal 2025 and fiscal 2024, we incurred expenses of $16.6 million, $13.5 million and $9.5 million related to the matching contributions, respectively.

Note 19. Subsequent Events

On September 1, 2026, we committed to a plan to restructure and reduce our workforce, strategically reallocating resources to provide additional capacity to support our AI and growth initiatives. In connection with these actions, we expect to reduce our worldwide headcount by approximately 3% and incur aggregate non-recurring charges of approximately

$30.0 million to $33.0 million, consisting primarily of employee severance and benefit costs. We expect to recognize the majority of these charges in the first half of fiscal 2027.