What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-08-29 compared with 2024-05-30 · 138 added, 113 removed, 740 unchanged (25% of the section changed)

3 unchanged sentences

(in millions)

April 30, 2024 January 31, 2024

July 31, 2024 January 31, 2024

Assets (unaudited)

39 unchanged sentences

(in millions, except per share data)

1 Three Months Ended April 30,

2 Three Months Ended July 31, Six Months Ended July 31,

2024 2023 2024 2023

Subscription and support $ 8,764 $ 8,006 $ 17,349 $ 15,648

13 unchanged sentences

Income from operations 1,783 1,476 3,492 1,888

Gains (losses) on strategic investments, net 37 ( 141 )

Losses on strategic investments, net ( 37 ) ( 29 ) 0 ( 170 )

Other income 91 45 212 100

7 unchanged sentences

(1) Amounts include amortization of intangible assets acquired through business combinations, as follows:

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

2024 2023 2024 2023

Cost of revenues $ 231 $ 250 $ 469 $ 498

1 unchanged sentence

(2) Amounts include stock-based compensation expense, as follows:

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

2024 2023 2024 2023

Cost of revenues $ 132 $ 112 $ 251 $ 215

7 unchanged sentences

(in millions)

1 Three Months Ended April 30,

2 Three Months Ended July 31, Six Months Ended July 31,

2024 2023 2024 2023

Net income $ 1,429 $ 1,267 $ 2,962 $ 1,466

10 unchanged sentences

(in millions)

Three Months Ended April 30, 2024

Three and Six Months Ended July 31, 2024

Common Stock Treasury Stock Additional

10 unchanged sentences

Balance at April 30, 2024 1,042 $ 1 ( 71 ) $ ( 13,860 ) $ 60,946 $ ( 270 ) $ 12,866 $ 59,683

Three Months Ended April 30, 2023

Common stock issued 5 0 0 0 384 0 0 384

Common stock repurchased 0 0 ( 18 ) ( 4,322 ) 0 0 0 ( 4,322 )

Stock-based compensation 0 0 0 0 813 0 0 813

Other comprehensive income, net of tax 0 0 0 0 0 34 0 34

Cash dividends declared 0 0 0 0 0 0 ( 388 ) ( 388 )

Net income 0 0 0 0 0 0 1,429 1,429

Balance at July 31, 2024 1,047 1 ( 89 ) ( 18,182 ) 62,143 ( 236 ) 13,907 57,633

Three and Six Months Ended July 31, 2023

Common Stock Treasury Stock Additional

9 unchanged sentences

Balance at April 30, 2023 1,016 $ 1 ( 39 ) $ ( 6,144 ) $ 56,026 $ ( 255 ) $ 7,784 $ 57,412

Common stock issued 7 0 0 0 595 0 0 595

Common stock repurchased 0 0 ( 9 ) ( 1,913 ) 0 0 0 ( 1,913 )

Stock-based compensation 0 0 0 0 724 0 0 724

Other comprehensive loss, net of tax 0 0 0 0 0 ( 3 ) 0 ( 3 )

Net income 0 0 0 0 0 0 1,267 1,267

Balance at July 31, 2023 1,023 1 ( 48 ) ( 8,057 ) 57,345 ( 258 ) 9,051 58,082

See accompanying Notes.

2 unchanged sentences

(in millions)

1 Three Months Ended April 30,

2 Three Months Ended July 31, Six Months Ended July 31,

2024 2023 2024 2023

Operating activities:

4 unchanged sentences

Stock-based compensation expense 810 724 1,560 1,420

(Gains) losses on strategic investments, net ( 37 ) 141

Losses on strategic investments, net 37 29 0 170

Changes in assets and liabilities, net of business combinations:

23 unchanged sentences

Effect of exchange rate changes ( 7 ) 11 ( 9 ) 28

Net increase in cash and cash equivalents 1,486 2,139

Net decrease in cash and cash equivalents ( 2,276 ) ( 2,383 ) ( 790 ) ( 244 )

Cash and cash equivalents, beginning of period 9,958 9,155 8,472 7,016

6 unchanged sentences

(in millions)

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

2024 2023 2024 2023

Supplemental cash flow disclosure:

10 unchanged sentences

With the Customer 360 platform, the Company delivers a single source of truth, connecting customer data with integrated artificial intelligence across systems, apps and devices to help companies sell, service, market and conduct commerce from anywhere.

Since its founding in 1999, the Company has pioneered innovations in cloud, mobile, social, analytics and artificial intelligence, enabling companies of every size and industry to transform their businesses in the all-digital, work-from-anywhere era.

The Company’s fiscal year ends on January 31.

1 unchanged sentence

Basis of Presentation

The accompanying condensed consolidated balance sheet as of April 30, 2024 and the condensed consolidated statements of operations, comprehensive income, statements of stockholders' equity and statements of cash flows for the three months ended April 30, 2024 and 2023, respectively, are unaudited.

The accompanying condensed consolidated balance sheet as of July 31, 2024 and the condensed consolidated statements of operations, comprehensive income, stockholders' equity and cash flows for the three and six months ended July 31, 2024 and 2023, respectively, are unaudited.

These financial statements have been prepared in accordance with U.S.

3 unchanged sentences

GAAP for complete financial statements.

In the opinion of the Company’s management, the unaudited condensed consolidated financial statements include all adjustments necessary for the fair presentation of the Company’s balance sheet as of April 30, 2024 and its results of operations, including its comprehensive income, stockholders' equity and cash flows for the three months ended April 30, 2024 and 2023.

In the opinion of the Company’s management, the unaudited condensed consolidated financial statements include all adjustments necessary for the fair presentation of the Company’s balance sheet as of July 31, 2024 and its results of operations, including its comprehensive income, stockholders' equity and cash flows for the three and six months ended July 31, 2024 and 2023.

All adjustments are of a normal recurring nature.

The results for the three months ended April 30, 2024 are not necessarily indicative of the results to be expected for any subsequent quarter or for the fiscal year ending January 31, 2025.

The results for the three and six months ended July 31, 2024 are not necessarily indicative of the results to be expected for any subsequent quarter or for the fiscal year ending January 31, 2025.

These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2024, filed with the Securities and Exchange Commission (the “SEC”) on March 6, 2024.

28 unchanged sentences

Receivables are written off and charged against the recorded allowance when the Company has exhausted collection efforts without success.

No single customer accounted for ten percent or more of accounts receivable as of April 30, 2024 and January 31, 2024.

No single customer accounted for ten percent or more of total revenue during the three months ended April 30, 2024 and 2023.

As of April 30, 2024 and January 31, 2024, assets located outside the Americas were 14 percent and 16 percent of total assets, respectively.

As of April 30, 2024 and January 31, 2024, assets located in the United States were 84 percent and 82 percent of total assets, respectively.

No single customer accounted for ten percent or more of accounts receivable as of July 31, 2024 and January 31, 2024.

No single customer accounted for ten percent or more of total revenue during the three and six months ended July 31, 2024 and 2023.

As of July 31, 2024 and January 31, 2024, assets located outside the Americas were 15 percent and 16 percent of total assets, respectively.

As of July 31, 2024 and January 31, 2024, assets located in the United States were 83 percent and 82 percent of total assets, respectively.

The Company is also exposed to concentrations of risk in its strategic investment portfolio, including within specific industries, as the Company primarily invests in enterprise cloud companies, technology st artups and system integrators.

As of April 30, 2024, the Company held two investments, both privately held, with carrying values that were individually greater than five percent of its total strategic investments portfolio and represented approximately 15 percent of the portfolio in the aggregate.

As of July 31, 2024, the Company held two investments, both privately held, with carrying values that were individually greater than five percent of its total strategic investments portfolio and represented approximately 15 percent of the portfolio in the aggregate.

As of January 31, 2024 , the Company held two investments, both privately held, with carrying values that were individually greater than five percent of its strategic investments portfolio and represented approximately 16 percent of the portfolio in the aggregate.

57 unchanged sentences

Amortization of capitalized costs to obtain revenue contracts is included in sales and marketing expense in the accompanying condensed consolidated statements of operations.

There were no impairments of costs to obtain revenue contracts for the three months ended April 30, 2024 and 2023.

There were no impairments of costs to obtain revenue contracts for the three and six months ended July 31, 2024 and 2023.

Cash and Cash Equivalents

13 unchanged sentences

Privately held equity securities not accounted for under the equity method are recorded at cost and adjusted only for observable transactions for same or similar investments of the same issuer or impairment events (referred to as the measurement alternative).

All gains and losses on privately held equity securities, realized and unrealized, are recorded through gains (losses) on strategic investments, net on the condensed consolidated statements of operations.

All gains and losses on privately held equity securities, realized and unrealized, are recorded through losses on strategic investments, net on the condensed consolidated statements of operations.

Privately held debt securities are recorded at fair value with changes in fair value recorded through accumulated other comprehensive loss on the condensed consolidated balance sheet.

Other privately held investments not classified as debt or equity securities are recorded at cost and adjusted for impairment events, with any associated gains and losses recorded through gains (losses) on strategic investments, net on the consolidated statements of operations.

Other privately held investments not classified as debt or equity securities are recorded at cost and adjusted for impairment events, with any associated gains and losses recorded through losses on strategic investments, net on the consolidated statements of operations.

Valuations of privately held securities are inherently complex and require judgment due to the lack of readily available market data.

3 unchanged sentences

If the investment is considered impaired, the Company estimates the fair value of the investment and recognizes any resulting impairment through the condensed consolidated statements of operations.

Publicly held equity securities are measured at fair value with changes recorded through gains (losses) on strategic investments, net on the condensed consolidated statements of operations.

The Company may enter into strategic investments or other investments that are considered variable interest entities (“VIEs”).

If the Company is a primary beneficiary of a VIE, it is required to consolidate the entity.

To determine if the Company is the primary beneficiary of a VIE, the Company evaluates whether it has (1) the power to direct the activities that most significantly impact the VIE’s economic performance and (2) the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.

The assessment of whether the Company is the primary beneficiary of its VIE investments requires significant assumptions and judgments.

VIEs that are not consolidated are accounted for under the measurement alternative, equity method, amortized cost, or other appropriate methodology based on the nature of the interest held.

The Company did not consolidate any VIEs as of April 30, 2024 and April 30, 2023.

Publicly held equity securities are measured at fair value with changes recorded through losses on strategic investments, net on the condensed consolidated statements of operations.

Fair Value Measurement

8 unchanged sentences

While the contract or notional amount is often used to express the volume of foreign currency derivative contracts, the amounts potentially subject to credit risk are generally limited to the amounts, if any, by which the counterparties’ obligations under the agreements exceed the obligations of the Company to the counterparties.

The notional amount of outstanding foreign currency derivative contracts as of April 30, 2024 and January 31, 2024 was $ 9.1 billion and $ 8.6 billion, respectively.

The notional amount of outstanding foreign currency derivative contracts as of July 31, 2024 and January 31, 2024 was $ 8.7 billion and $ 8.6 billion, respectively.

Outstanding foreign currency derivative contracts are recorded at fair value on the condensed consolidated balance sheets.

21 unchanged sentences

The Company reassesses the lease term if and when a significant event or change in circumstances occurs within the control of the Company.

As most of the Company’s leases do not provide an implicit rate, the net present value of future minimum lease payments is determined using the Company’s incremental borrowing rate.

As most of the Company’s leases do not provide an

implicit rate, the net present value of future minimum lease payments is determined using the Company’s incremental borrowing rate.

The Company's incremental borrowing rate is an estimate of the interest rate the Company would have to pay to borrow on a collateralized basis with similar terms and payments, in the economic environment where the leased asset is located.

24 unchanged sentences

Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the Company’s condensed consolidated statements of operations.

In the event the Company acquires an entity with which the Company has a preexisting relationship, the Company will generally recognize a gain or loss to settle that relationship as of the acquisition date within operating income on the condensed

consolidated statements of operations.

In the event that the Company acquires an entity in which the Company previously held a strategic investment, the difference between the fair value of the shares as of the date of the acquisition and the carrying value of the strategic investment is recorded as a gain or loss and recorded within net gains (losses) on strategic investments in the condensed consolidated statements of operations.

In the event that the Company acquires an entity in which the Company previously held a strategic investment, the difference between the fair value of the shares as of the date of the acquisition and the carrying value of the strategic investment is recorded as a gain or loss and recorded within net losses on strategic investments in the condensed consolidated statements of operations.

Restructuring

The Company generally recognizes employee severance costs when payments are probable and amounts are estimable or when notification occurs, depending on the region an employee works.

Costs related to contracts without future benefit or contract termination are recognized at the earlier of the contract termination or the cease-use dates.

Costs related to contracts without future benefit or

contract termination are recognized at the earlier of the contract termination or the cease-use dates.

Other exit-related costs are recognized as incurred.

1 unchanged sentence

Stock-based compensation expense is measured based on grant date at fair value using the grant date closing stock price for restricted stock units and restricted stock awards and using the Black-Scholes option pricing model for stock options.

The Company recognizes stock-based compensation expense related to restricted stock units, restricted stock awards, and stock options and restricted stock awards on a straight-line basis, net of estimated forfeitures, over the requisite service period of the awards, which is generally the vesting term of four years .

The Company recognizes stock-based compensation expense related to restricted stock units, restricted stock awards, and stock options on a straight-line basis, net of estimated forfeitures, over the requisite service period of the awards, which is generally the vesting term of four years .

The estimated forfeiture rate applied is based on historical forfeiture rates.

20 unchanged sentences

Future realization of deferred tax assets ultimately depends on the existence of sufficient taxable income of the appropriate character (for example, ordinary income or capital gain) within the carryback or carryforward periods available under the applicable tax law.

regularly reviews the deferred tax assets for recoverability based on historical taxable income, projected future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies.

The Company regularly reviews the deferred tax assets for recoverability based on historical taxable income, projected future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies.

The Company’s judgments regarding future profitability may change due to many factors, including future market conditions and the ability to successfully execute its business plans.

10 unchanged sentences

Warranties and Indemnification

The Company’s enterprise cloud computing services are typically warranted to perform in a manner consistent with general industry standards that are reasonably applicable and materially in accordance with the Company’s online help documentation under normal use and circumstances.

The Company’s arrangements generally include certain provisions for indemnifying customers against liabilities if its products or services infringe a third party’s intellectual property rights.

The Company’s arrangements generally include certain provisions for indemnifying customers against liabilities if its products or services infringe on a third party’s intellectual property rights.

To date, the Company has not incurred any material costs as a result of such obligations and has not accrued any material liabilities related to such obligations in the accompanying condensed consolidated financial statements.

2 unchanged sentences

The Company may also be subject to indemnification obligations by law with respect to the actions of its employees under certain circumstances and in certain jurisdictions.

New Accounting Pronouncement Pending Adoption

New Accounting Pronouncements Pending Adoption

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No.

11 unchanged sentences

Subscription and support revenues consisted of the following (in millions):

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

2024 2023 2024 2023

Sales $ 2,071 $ 1,895 $ 4,069 $ 3,705

7 unchanged sentences

Revenues by geographical region consisted of the following (in millions):

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

2024 2023 2024 2023

Americas $ 6,201 $ 5,769 $ 12,263 $ 11,251

3 unchanged sentences

Revenues by geography are determined based on the region of the Company's contracting entity, which may be different than the region of the customer.

Americas revenue attributed to the United States was approximately 93 percent during the three months ended April 30, 2024 and 2023.

No other country represented more than ten percent of total revenue during the three months ended April 30, 2024 and 2023.

Americas revenue attributed to the United States was approximately 93 percent during the three and six months ended July 31, 2024 and 2023.

No other country represented more than ten percent of total revenue during the three and six months ended July 31, 2024 and 2023.

Contract Balances

1 unchanged sentence

The Company records a contract asset when revenue recognized on a contract exceeds the billings.

Contract assets were $ 828 million as of April 30, 2024 as compared to $ 758 million as of January 31, 2024, and are included in prepaid expenses and other current assets and deferred tax assets and other assets, net on the condensed consolidated balance sheets.

Contract assets were $ 885 million as of July 31, 2024 as compared to $ 758 million as of January 31, 2024, and are included in prepaid expenses and other current assets and deferred tax assets and other assets, net on the condensed consolidated balance sheets.

Unearned Revenue

3 unchanged sentences

The change in unearned revenue was as follows (in millions):

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

2024 2023 2024 2023

Unearned revenue, beginning of period $ 16,061 $ 15,121 $ 19,003 $ 17,376

20 unchanged sentences

Current Noncurrent Total

As of April 30, 2024 $ 26.4 $ 27.5 $ 53.9

As of July 31, 2024 $ 26.5 $ 27.0 $ 53.5

As of January 31, 2024 $ 27.6 $ 29.3 $ 56.9

Marketable Securities

At April 30, 2024, marketable securities consisted of the following (in millions):

At July 31, 2024, marketable securities consisted of the following (in millions):

Cost Unrealized

24 unchanged sentences

The contractual maturities of the investments classified as marketable securities were as follows (in millions):

April 30, 2024 January 31, 2024

July 31, 2024 January 31, 2024

Due within 1 year $ 2,889 $ 2,523

3 unchanged sentences

Strategic Investments

Strategic investments by form and measurement category as of April 30, 2024 were as follows (in millions):

Strategic investments by form and measurement category as of July 31, 2024 were as follows (in millions):

Measurement Category

2 unchanged sentences

Debt securities and other investments 0 0 100 100

Balance as of April 30, 2024

Balance as of July 31, 2024

$ 65 $ 4,726 $ 226 $ 5,017

6 unchanged sentences

$ 80 $ 4,557 $ 211 $ 4,848

The Company holds investments in, or management agreements with, VIEs which the Company does not consolidate because it is not considered the primary beneficiary of these entities.

The carrying value of VIEs within strategic investments was $ 436 million and $ 382 million, as of April 30, 2024 and January 31, 2024, respectively.

Gains (Losses) on Strategic Investments, Net

The components of gains and losses on strategic investments were as follows (in millions):

1 Three Months Ended April 30,

Unrealized gains recognized on publicly traded equity securities, net $ 3 $ 0

The Company holds investments in, or management agreements with, variable interest entities (“VIEs”) which the Company does not consolidate because it is not considered the primary beneficiary of these entities.

The carrying value of VIEs within strategic investments was $ 429 million and $ 382 million, as of July 31, 2024 and January 31, 2024, respectively.

Losses on Strategic Investments, Net

The components of losses on strategic investments, net were as follows (in millions):

2 Three Months Ended July 31, Six Months Ended July 31,

2024 2023 2024 2023

Unrealized gains (losses) recognized on publicly traded equity securities, net $ ( 22 ) $ 2 $ ( 19 ) $ 2

Unrealized gains recognized on privately held equity securities, net 44 13 149 51

1 unchanged sentence

Unrealized losses, net ( 38 ) ( 65 ) ( 60 ) ( 204 )

Realized gains (losses) on sales of securities, net 59 ( 2 )

Gains (losses) on strategic investments, net $ 37 $ ( 141 )

Realized gains on sales of securities, net 1 36 60 34

Losses on strategic investments, net $ ( 37 ) $ ( 29 ) $ 0 $ ( 170 )

Unrealized gains and losses recognized on privately held equity securities, net includes upward and downward adjustments from equity securities accounted for under the measurement alternative, as well as gains and losses from private equity securities in other measurement categories.

For privately held securities accounted for under the measurement alternative, the Company recorded upward adjustments of $ 116 million and $ 46 million and impairments and downward adjustments of $ 139 million and $ 175 million for the three months ended April 30, 2024 and 2023 , respectively .

For privately held securities accounted for under the measurement alternative, the Company recorded upward adjustments of $ 44 million and $ 6 million and impairments and downward adjustments of $ 51 million and $ 81 million for the three months ended July 31, 2024 and 2023 , respectively, and upward adjustments of $ 160 million and $ 52 million and impairments of $ 190 million and $ 256 million for the six months ended July 31, 2024 , and 2023 , respectively.

Realized gains on sales of securities, net reflects the difference between the sale proceeds and the carrying value of the security at the beginning of the period or the purchase date, if later.

5 unchanged sentences

All of the Company’s cash equivalents, marketable securities and foreign currency derivative contracts are classified within Level 1 or Level 2 because these assets are valued using quoted market prices or alternative pricing sources and models utilizing observable market inputs.

The following table presents information about the Company’s assets that were measured at fair value as of April 30, 2024 and indicates the fair value hierarchy of the valuation (in millions):

The following table presents information about the Company’s assets that were measured at fair value as of July 31, 2024 and indicates the fair value hierarchy of the valuation (in millions):

Description Quoted Prices in

20 unchanged sentences

Total assets $ 4,158 $ 6,593 $ 0 $ 10,751

(1) Included in “cash and cash equivalents” in the accompanying condensed consolidated balance sheets in addition to $ 1.8 billion of cash, as of April 30, 2024.

(1) Included in “cash and cash equivalents” in the accompanying condensed consolidated balance sheets in addition to $ 2.0 billion of cash, as of July 31, 2024.

The following table presents information about the Company’s assets that were measured at fair value as of January 31, 2024 and indicates the fair value hierarchy of the valuation (in millions):

30 unchanged sentences

When indicators of impairment are observed for privately held equity securities, the Company generally uses the market approach to estimate the fair value of its investment, giving consideration to the latest observable transactions, as well as the investee's current and projected financial performance and other significant inputs and assumptions, including estimated time to exit, selection and analysis of guideline public companies and the rights and obligations of the securities the Company holds.

The Company's privately held debt and equity securities and other investments amounted to $ 4.9 billion and $ 4.8 billion as of April 30, 2024 and January 31, 2024, respectively.

The Company's privately held debt and equity securities and other investments amounted to $ 5.0 billion and $ 4.8 billion as of July 31, 2024 and January 31, 2024, respectively.

Leases and Other Commitments

The Company has leases for corporate offices, data centers and equipment under noncancellable operating and finance leases with various expiration dates.

Total operating lease costs were $ 158 million and $ 469 million for the three months ended April 30, 2024 and 2023, respectively.

Total operating lease costs were $ 193 million and $ 191 million for the three months ended July 31, 2024 and 2023, respectively, and were $ 351 million and $ 660 million for the six months ended July 31, 2024 and 2023, respectively.

Included in operating lease costs are amounts related to restructuring charges, which are discussed in Note 9 “Restructuring.”

As of April 30, 2024, the maturities of lease liabilities under noncancellable operating and finance leases were as follows (in millions):

As of July 31, 2024, the maturities of lease liabilities under noncancellable operating and finance leases were as follows (in millions):

Operating Leases Finance Leases

Fiscal Period:

Remaining nine months of fiscal 2025 $ 489 $ 291

Remaining six months of fiscal 2025 $ 316 $ 190

Fiscal 2026 601 341

7 unchanged sentences

Other Balance Sheet Accounts

Accounts payable, accrued expenses and other liabilities as of April 30, 2024 included approximately $ 1.5 billion of accrued compensation as compared to $ 2.5 billion as of January 31, 2024.

Accounts payable, accrued expenses and other liabilities as of July 31, 2024 included approximately $ 1.7 billion of accrued compensation as compared to $ 2.5 billion as of January 31, 2024.

Business Combinations

15 unchanged sentences

Remaining Useful Life (Years)

January 31, 2024 Additions and retirements, net April 30, 2024 January 31, 2024 Expense and retirements, net April 30, 2024 January 31, 2024 April 30, 2024 April 30, 2024

January 31, 2024 Additions and retirements, net July 31, 2024 January 31, 2024 Expense and retirements, net July 31, 2024 January 31, 2024 July 31, 2024 July 31, 2024

Acquired developed technology $ 4,624 $ 44 $ 4,668 $ ( 3,208 ) $ ( 469 ) $ ( 3,677 ) $ 1,416 $ 991 1.9

3 unchanged sentences

(1) Included in Other are in-place leases, trade names, trademarks and territory rights.

Amortization of intangible assets resulting from business combinations for the three months ended April 30, 2024 and 2023 was $ 461 million, and $ 471 million, respectively.

The expected future amortization expense for intangible assets as of April 30, 2024 was as follows (in millions):

Amortization of intangible assets resulting from business combinations for the three months ended July 31, 2024 and 2023 was $ 454 million and $ 472 million, respectively, and for the six months ended July 31, 2024 and 2023 was $ 915 million, and $ 943 million, respectively.

The expected future amortization expense for intangible assets as of July 31, 2024 was as follows (in millions):

Fiscal Period:

Remaining nine months of fiscal 2025 $ 1,153

Remaining six months of fiscal 2025 $ 699

Fiscal 2026 1,372

9 unchanged sentences

Adjustments (1) ( 2 )

Balance as of April 30, 2024 $ 48,940

Balance as of July 31, 2024 $ 48,941

(1) Adjustments include the effect of foreign currency translation .

The components of the Company's borrowings were as follows (in millions):

Instrument Date of Issuance Maturity Date Contractual Interest Rate Outstanding Principal as of April 30, 2024

Carrying Value as of April 30, 2024 Carrying Value as of January 31, 2024

Instrument Date of Issuance Maturity Date Contractual Interest Rate Outstanding Principal as of July 31, 2024

Carrying Value as of July 31, 2024 Carrying Value as of January 31, 2024

2024 Senior Notes (1) July 2021 July 2024 0.625 % 0 0 999

8 unchanged sentences

Total noncurrent debt $ 8,430 $ 8,427

The Company was in compliance with all debt covenants as of April 30, 2024.

The total estimated fair value of the Company's outstanding senior unsecured notes (the “Senior Notes”) above was $ 7.4 billion and $ 7.8 billion as of April 30, 2024 and January 31, 2024 , respectively.

The fair value was determined based on the closing trading price per $ 100 of the Senior Notes as of the last day of trading of the first quarter of fiscal 2025 and the last day of trading of fiscal 2024, respectively, and are deemed Level 2 liabilities within the fair value measurement framework.

The contractual future principal payments for all borrowings as of April 30, 2024 were as follows (in millions):

(1) The Company repaid in full the 2024 Senior Notes in the second quarter of fiscal 2025.

The Company was in compliance with all debt covenants as of July 31, 2024.

The total estimated fair value of the Company's outstanding senior unsecured notes (the “Senior Notes”) above was $ 6.7 billion and $ 7.8 billion as of July 31, 2024 and January 31, 2024 , respectively.

The fair value was determined based on the closing trading price per $ 100 of the Senior Notes as of the last day of trading of the second quarter of fiscal 2025 and the last day of trading of fiscal 2024, respectively, and are deemed Level 2 liabilities within the fair value measurement framework.

The contractual future principal payments for all borrowings as of July 31, 2024 were as follows (in millions):

Fiscal Period:

Remaining nine months of fiscal 2025 $ 1,000

Remaining six months of fiscal 2025 $ 0

Fiscal 2026 0

8 unchanged sentences

The Company amended the Revolving Loan Credit Agreement in April 2022 and May 2023, in each case to reflect certain administrative changes.

There were no outstanding borrowings under the Credit Facility as of April 30, 2024.

There were no outstanding borrowings under the Credit Facility as of July 31, 2024.

Restructuring

2 unchanged sentences

The actions associated with the employee restructuring under the Restructuring Plan were substantially completed in fiscal 2024 and the actions associated with the real estate portion of the Restructuring Plan are expected to be substantially complete in fiscal 2026.

In the first quarter of fiscal 2025, the Company approved an initiative focused on driving further operational efficiencies, optimizing our management structure and increasing cost optimization efforts to realize long-term sustainable growth through a targeted workforce reduction.

The actions associated with this initiative are expected to be substantially complete in fiscal 2025.

The following tables summarize the activities related to the Company’s restructuring initiatives for the three months ended April 30, 2024 and 2023 (in millions):

Three Months Ended April 30, 2024

In the first half of fiscal 2025, the Company approved restructuring initiatives focused on driving further operational efficiencies, optimizing our management structure and increasing cost optimization efforts to realize long-term sustainable growth through a targeted workforce reduction.

The actions associated with these initiatives are expected to be substantially complete in fiscal 2025.

The following tables summarize the activities related to the Company’s restructuring initiatives for the three and six months ended July 31, 2024 and 2023 (in millions):

Three Months Ended July 31, 2024 Six Months Ended July 31, 2024

Workforce Reduction

Office Space Reductions

Workforce Reduction Office Space Reductions Total

4 unchanged sentences

Liability, end of the period $ 69 $ 0 $ 69 $ 69 $ 0 $ 69

Three Months Ended April 30, 2023

Workforce Reduction Office Space Reductions Total

Three Months Ended July 31, 2023 Six Months Ended July 31, 2023

Workforce Reduction Office Space Reductions Total Workforce Reduction Office Space Reductions Total

Liability, beginning of the period $ 614 $ 0 $ 614 $ 607 $ 0 $ 607

7 unchanged sentences

Stockholders’ Equity

Stock option activity for the three months ended April 30, 2024 was as follows:

Stock option activity for the six months ended July 31, 2024 was as follows:

Options Outstanding

4 unchanged sentences

Exercised ( 2 ) 171.10

Balance as of April 30, 2024 11 $ 190.70 $ 1,222

Balance as of July 31, 2024 10 $ 191.95 $ 738

Vested or expected to vest 10 $ 191.54 $ 725

Exercisable as of April 30, 2024 7 $ 175.19 $ 874

Restricted stock activity for the three months ended April 30, 2024 was as follows:

Exercisable as of July 31, 2024 7 $ 179.24 $ 576

Restricted stock activity for the six months ended July 31, 2024 was as follows:

Restricted Stock Outstanding

6 unchanged sentences

Vested and converted to shares ( 8 ) 200.12

Balance as of April 30, 2024 33 $ 239.08 $ 8,801

Balance as of July 31, 2024 30 $ 242.17 $ 7,873

Expected to vest 26 $ 6,686

The aggregate expected stock-based compensation expense remaining to be recognized as of April 30, 2024 was as follows (in millions):

The aggregate expected stock-based compensation expense remaining to be recognized as of July 31, 2024 was as follows (in millions):

Fiscal Period:

Remaining nine months of fiscal 2025 $ 2,483

Remaining six months of fiscal 2025 $ 1,721

Fiscal 2026 2,543

3 unchanged sentences

Total stock-based compensation expense $ 7,091

The aggregate expected stock-based compensation expense remaining to be recognized reflects only outstanding stock awards as of April 30, 2024 and assumes no forfeiture activity and no changes in the expected level of attainment of performance share grants based on the Company’s financial performance relative to certain targets.

The aggregate expected stock-based compensation expense remaining to be recognized reflects only outstanding stock awards as of July 31, 2024 and assumes no forfeiture activity and no changes in the expected level of attainment of performance share grants based on the Company’s financial performance relative to certain targets.

Share Repurchase Program

9 unchanged sentences

Three months ended April 30 7 $ 293.00 $ 2,168 11 $ 188.17 $ 2,143

Three months ended July 31 18 $ 246.14 $ 4,288 9 $ 211.83 $ 1,913

All repurchases were made in open market transactions.

As of April 30, 2024, the Company was authorized to purchase a remaining $ 16.2 billion of its common stock under the Share Repurchase Program.

In February 2024, the Company announced a cash dividend of $ 0.40 per share of the Company’s outstanding common stock to stockholders of record as of the close of business on March 14, 2024, which was paid on April 11, 2024 in the amount of approximately $ 388 million.

As of July 31, 2024, the Company was authorized to purchase a remaining $ 11.9 billion of its common stock under the Share Repurchase Program.

The Company announced the following dividends (in millions, except dividend per share):

Record Date Payment Date Dividend per Share Amount

March 14, 2024 April 11, 2024 $ 0.40 $ 388

July 9, 2024 July 25, 2024 $ 0.40 $ 388

Effective Tax Rate

The Company computes its year-to-date provision for income taxes by applying the estimated annual effective tax rate to year-to-date pretax income or loss and adjusts the provision for discrete tax items recorded in the period.

For the three months ended April 30, 2024, the Company reported a tax provision of $ 334 million on pretax income of $ 1.9 billion, which resulted in an effective tax rate of 18 percent.

For the six months ended July 31, 2024, the Company reported a tax provision of $ 742 million on pretax income of $ 3.7 billion, which resulted in an effective tax rate of 20 percent.

The Company’s effective tax rate differed from the U.S.

statutory rate of 21 percent primarily due to research and development credits and excess tax benefits from stock-based compensation.

For the three months ended April 30, 2023, the Company reported a tax provision of $ 127 million on pretax income of $ 326 million, which resulted in an effective tax rate of 39 percent.

For the six months ended July 31, 2023, the Company reported a tax provision of $ 352 million on pretax income of $ 1.8 billion, which resulted in an effective tax rate of 19 percent.

The Company’s effective tax rate differed from the U.S.

statutory rate of 21 percent primarily due to profitable jurisdictions outside of the United States subject to tax rates greater than 21 percent and withholding taxes.

statutory rate of 21 percent primarily due to discrete benefits from foreign tax credits attributable to the IRS Notice 2023-55 and certain adjustments resulted from a transfer pricing agreement in a foreign tax jurisdiction, partially offset by profitable jurisdictions outside of the United States subject to tax rates greater than 21 percent and withholding taxes.

Unrecognized Tax Benefits and Other Considerations

6 unchanged sentences

Net Income Per Share

Basic earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding for the fiscal period.

Diluted earnings per share is computed by giving effect to all potential weighted average dilutive common stock, including options and restricted stock units.

The dilutive effect of outstanding awards is reflected in diluted earnings per share by application of the treasury stock method.

A reconciliation of the denominator used in the calculation of basic and diluted earnings per share is as follows (in millions):

1 Three Months Ended April 30,

Basic net income per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding for the fiscal period.

Diluted net income per share is computed by giving effect to all potential weighted average dilutive common stock, including options and restricted stock units.

The dilutive effect of outstanding awards is reflected in diluted net income per share by application of the treasury stock method.

A reconciliation of the denominator used in the calculation of basic and diluted net income per share is as follows (in millions):

2 Three Months Ended July 31, Six Months Ended July 31,

2024 2023 2024 2023

Net income $ 1,429 $ 1,267 $ 2,962 $ 1,466

Weighted-average shares outstanding for basic earnings per share 970 980

Weighted-average shares outstanding for basic net income per share 964 975 967 977

Effect of dilutive securities:

Employee stock awards 9 11 12 10

Weighted-average shares outstanding for diluted earnings per share 985 988

The weighted-average number of shares outstanding used in the computation of diluted earnings per share does not include the effect of the following potentially outstanding common stock.

The effects of these potentially outstanding shares were not included in the calculation of diluted earnings per share because the effect would have been anti-dilutive (in millions):

Three Months Ended April 30,

Weighted-average shares outstanding for diluted net income per share 973 986 979 987

The weighted-average number of shares outstanding used in the computation of diluted net income per share does not include the effect of the following potentially outstanding common stock.

The effects of these potentially outstanding shares were not included in the calculation of diluted net income per share because the effect would have been anti-dilutive (in

Three Months Ended July 31, Six Months Ended July 31,

2024 2023 2024 2023

Employee stock awards 13 13 9 18

8 unchanged sentences

In management’s opinion, resolution of all current matters, including those described below, is not expected to have a material adverse impact on the Company’s financial statements.

However, depending on the nature and timing of any such

dispute, payment or other contingency, the resolution of a matter could materially affect the Company’s current or future results of operations or cash flows, or both, in a particular quarter.

However, depending on the nature and timing of any such dispute, payment or other contingency, the resolution of a matter could materially affect the Company’s current or future results of operations or cash flows, or both, in a particular quarter.

Slack Litigation

29 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements