What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-18 compared with 2025-03-18 · 102 added, 102 removed, 384 unchanged (35% of the section changed)

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Docusign solutions bring agreements to life, accelerating and simplifying the process of doing business .

Docusign’s core offerings — our IAM platform, the world’s leading eSignature solution, and CLM solution — allow organizations to boost productivity, accelerate contract review cycles, and transform agreement data into insights and actions, while providing a better customer experience.

For example, Docusign’s innovative IAM platform automates agreement workflows, uncovers actionable insights, and leverages AI capabilities, which enables organizations to create, commit to, and manage agreements, from virtually anywhere in the world, securely.

As of January 31, 2025 , nearly 1.7 million customers and more than a billion users worldwide utilize Docusign to accelerate and simplify the process of doing business.

We generate substantially all our revenue from sales of subscriptions, which accounted for 97% of our revenue in each of the years ended January 31, 2025, 2024 and 2023.

Docusign’s core offerings — our IAM platform, the world’s leading e-signature solution, and CLM solution — allow organizations to boost productivity, accelerate contract review cycles, and transform agreement data into insights and actions, while providing a customer-centric experience.

The Docusign IAM platform is a system of record that enables customers of all sizes to ingest a vast, complex body of agreements into a single repository, build agreement workflows that operate at scale, and take action on high-accuracy insights from agreement data.

As of January 31, 2026 , over 1.8 million customers and more than a billion users worldwide utilize Docusign to accelerate and simplify the process of doing business.

We generate substantially all our revenue from sales of subscriptions, which accounted for 98%, 97% and 97% of our revenue in each of the years ended January 31, 2026, 2025 and 2024.

Our subscription fees include the use of our products and access to customer support.

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We also generate revenue from professional and other non-subscription services, which consists primarily of fees associated with providing new customers with deployment and integration services.

Other revenue includes amounts derived from sales of on-premises solutions.

Professional services and other revenue accounted for the remainder of total revenue in each of the years ended January 31, 2026, 2025 and 2024.

We anticipate continuing to invest in customer success through our professional services offerings as we believe it plays an important role in accelerating our customers’ adoption of our products, which helps drive customer retention and expansion.

One pillar of our long-term strategy is to evolve our GTM channels from the historically direct sales-driven approach.

We are currently investing in three routes to market, including direct sales, partner-assisted sales, and digital self-service purchasing.

We anticipate placing a greater focus on investing in customer success through professional services offered by partners.

We believe it plays an important role in accelerating our customers’ adoption of our products, which helps drive customer retention and expansion.

One pillar of our long-term strategy is to evolve our go-to-market (“GTM”) channels from the historically direct sales-driven approach.

We are currently investing in three routes to market, including direct sales, our partner channel, and digital self-service purchasing.

We expect that Docusign’s IAM platform will increasingly be offered across all three channels.

We offer subscriptions to our products to businesses at all scales, from global enterprise down to local VSBs.

We offer subscriptions to our products to businesses of all sizes, from global enterprises down to local, very small businesses (“VSBs”).

We offer more than 1,100 active partner integrations with the applications that many of our customers already use so that they can create, commit and manage agreements directly within these applications.

We have a diverse customer base spanning across virtually all industries and around the world with no significant customer concentration.

No single customer accounted for more than 10% of total revenue in any of the years presented.

No single customer accounted for more than 10% of total revenue in any of the periods presented.

We focused initially on selling our products to commercial businesses and VSBs and later expanded our focus to target enterprise customers.

The number of our customers with greater than $300,000 in annualized contract value was 1,131 customers as of January 31, 2025 compared to 1,060 customers as of January 31, 2024.

The number of our customers with greater than $300,000 in annualized contract value was 1,205 as of January 31, 2026 compared to 1,131 as of January 31, 2025.

Each of our customer types has a different purchasing pattern.

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This includes supporting a community of developers, builders, and partners to create new solutions that extend the capabilities of our IAM platform.

The second growth pillar is to strengthen our omnichannel go-to-market by refining our direct sales, partner, and digital e-commerce and self-service channels to better address customer needs.

By optimizing these routes with a more efficient cost structure, we aim to target growth opportunities and expand our reach in the market.

The second growth pillar is to strengthen our omnichannel GTM by evolving our direct sales, partner, and self-service routes to market to better meet evolving customer needs.

By strengthening our direct sales, partner, and self-service routes to market, we aim to simultaneously accelerate our ability to scale while reducing our customer acquisition and managements costs.

Finally, our third growth pillar is to enhance operational and financial efficiency to scale effectively and sustainably.

This includes prioritizing the infrastructure and technology investments that best serve our diverse customer base, as well as generating incremental revenue and growth with a lower cost profile.

This includes prioritizing the infrastructure and technology investments that best serve our diverse customer base, including our migration to cloud-based infrastructure.

Additionally, we continue to evaluate strategic acquisitions and partnerships that align with our growth objectives and expand our product offerings.

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Growing Customer Base

As of January 31, 2025, we had a total of nearly 1.7 million customers, including over 260,000 small and medium-sized businesses (“SMBs”), mid-market companies, and large enterprise customers served by our direct sales force.

We had a total of over 1.5 million customers and approximately 242,000 customers served by our direct sales force as of January 31, 2024.

We define enterprise customers as companies generally included in the Global 2000.

We define mid-market customers as companies outside the Global 2000 that have more than 250 employees, and define SMBs as companies with between 10 and 249 employees, in each case excluding any enterprise customers.

We define very small businesses (“VSBs”) as companies with fewer than 10 employees.

VSBs are our most numerous group of customers, and we typically serve them through digital and self-service resources outside of our direct sales channels.

We refer to total customers as all enterprises, mid-market, SMBs, and VSBs.

As of January 31, 2026, we had a total of over 1.8 million customers, including approximately 280,000 small and medium-sized businesses (“SMBs”), mid-market companies, and large enterprise customers served by our direct sales force.

We had a total of nearly 1.7 million customers, including over 260,000 customers served by our direct sales force as of January 31, 2025.

In fiscal 2026, we defined enterprise customers as companies generally included in the Global 2000.

We have defined mid-market customers as companies outside the Global 2000 that have more than 250 employees and defined SMBs as companies with between 10 and 249 employees, in each case excluding any enterprise customers.

We defined VSBs as companies with fewer than 10 employees.

VSBs were our most numerous group of customers, and we typically served them through digital and self-service resources outside of our direct sales channels.

We referred to total customers as all enterprises, mid-market, SMBs, and VSBs.

In fiscal 2027, we plan to distinguish between enterprise, commercial mid-market and SMB customers on the basis of annual recurring revenue.

We believe that our ability to increase the number of customers using our products, particularly the number of enterprise and commercial customers, is an indicator of our market penetration, the growth of our business, and our potential future business opportunities.

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Increasing International Revenue

International revenue increased by 13% in the year ended January 31, 2026, compared to the year ended January 31, 2025.

Our international revenue represented 29%, 28% and 26% of our total revenue in each of the years ended January 31, 2026, 2025, and 2024.

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We have experienced increased demand across multiple regions and are focusing our sales and marketing resources to capitalize on the potential growth of these markets.

Additionally, we expect to continue to develop and enhance our strategic partnerships in key international markets as we grow internationally.

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| 2025 Form 10-K | 44

Additionally, we expect to continue to develop and enhance our strategic partnerships in key international markets as we grow internationally, with a particular focus on IAM.

Components of Results of Operations

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As such, these allocated overhead costs are reflected in each cost of revenue and operating expense category.

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| 2026 Form 10-K | 45

Cost of Revenue

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We expect that gross profit and gross margin will continue to be affected by various factors including our pricing, timing and amount of investment to maintain or expand our hosting capability, the growth of our software platform support and professional services team, stock-based compensation expenses, amortization of costs associated with capitalized internal use software and acquired intangible assets and allocated overhead costs.

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| 2025 Form 10-K | 45

Operating Expenses

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We expect general and administrative expense to increase in absolute dollars to support the overall growth of our operations.

Restructuring and Other Related Charges Restructuring and other related charges consist primarily of costs associated with restructuring plans approved by our board of directors.

Restructuring and Other Related Charges

Restructuring and other related charges consist primarily of costs associated with restructuring plans approved by our board of directors.

In connection with these restructuring actions or other exit actions, which were undertaken to improve operating margin and support our growth, scale and profitability objectives, we recognize costs related to termination benefits for former employees whose positions were eliminated, the write-off of facility-related balances, and other costs.

Interest Expense

In fiscal 2023 and 2024, interest expense consisted primarily of contractual interest expense and amortization of debt issuance costs on our Convertible Senior Notes due 2023 (the “2023 Notes”) and our Convertible Senior Notes due 2024 (the “2024 Notes”).

In fiscal 2024, interest expense consisted primarily of contractual interest expense and amortization of debt issuance costs on our Convertible Senior Notes due 2023 (the “2023 Notes”) and our Convertible Senior Notes due 2024 (the “2024 Notes”).

The 2023 Notes and the 2024 Notes (collectively, the “Notes”) were extinguished during fiscal 2024.

In fiscal 2025, interest expense consisted primarily of commitment fees on the undrawn balance of our revolving credit facility and the amortization of the associated issuance costs.

In fiscal 2025 and 2026, interest expense consists primarily of commitment fees on the undrawn balance of our revolving credit facility and the amortization of the associated issuance costs.

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Interest Income and Other Income, Net

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Provision for (Benefit from) Income Taxes

Our income tax benefit consisted primarily of the release of a valuation allowance related to our U.S.

deferred tax assets.

Our income tax provision consists primarily of U.S.

federal, state and foreign income taxes.

The difference between the effective tax rate and the federal statutory tax rate is primarily related to the U.S.

federal research tax credit and discrete benefits from stock-based compensation.

We regularly assess the need for a valuation allowance on our deferred tax assets.

In making this assessment we consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more likely than not that some or all the deferred tax assets will not be realized.

As of January 31, 2025, based on all available positive and negative evidence, having demonstrated sustained U.S.

profitability, which is objective and verifiable, and taking into account anticipated future earnings, we have concluded it is more likely than not that we will realize our U.S.

federal and U.S.

states deferred tax assets, with the exception of certain federal deferred tax assets subject to limitation on use and our California deferred tax assets.

We continue to maintain a valuation allowance against these deferred tax assets as they have not met the “more likely than not” realization criterion.

In the event we change our determination as to the amount of deferred tax assets that can be realized, we will adjust our valuation allowance with a corresponding impact to the provision for income taxes in the period in which such determination is made.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States.

The legislation includes significant tax law changes, including the restoration of immediate deduction of domestic research and development costs.

The legislation has multiple effective dates with certain provisions effective in 2025 and others implemented through 2027.

The impact of changes effective during fiscal 2026 are included in our tax provision and have resulted in additional tax expense.

Docusign, Inc.

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Subscription revenue increased $249.2 million, or 9%, in the year ended January 31, 2026.

The increase was due to the expansion of revenue from existing customers, primarily within our commercial and enterprise segments and the addition of new customers, primarily from our digital channel.

The increase was primarily due to the expansion of revenue from our commercial and enterprise accounts, as well as our digital channel.

We continue to invest in a variety of customer programs and initiatives, which, along with expanded customer use cases, have helped increase our subscription revenue over time.

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Increases primarily consisted of:

• $42.1 million in information technology costs, including a $33.8 million increase in hosting costs as we transition from co-located data centers to public cloud infrastructure to support future growth;

• $18.0 million in personnel costs and $6.7 million in stock-based compensation expense due to higher headcount;

• $7.9 million in depreciation and amortization of our capitalized software projects and technology acquired in the Lexion acquisition.

Cost of professional services revenue decreased by $23.5 million, or 21% , in the year ended January 31, 2025, primarily driven by lower headcount resulting in lower personnel costs and stock-based compensation expense.

In the year ended January 31, 2025, stock-based compensation expense decreased by $9.7 million, and personnel costs decreased by $7.7 million.

• $30.5 million in information technology costs, particularly hosting costs as we continued our transition from co-located data centers to public cloud infrastructure to support future growth of our platform, including IAM;

• $10.7 million in partner and reseller fees to support our customer base due to higher transaction volume and merchant processing fees;

• $6.7 million in personnel costs due to an increase in commissions as part of our ongoing focus on expansion and driving customer acquisition.

Sales and Marketing

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Percentage of revenue 37 % 39 %

Sales and marketing expenses decreased $7.1 million, or 1%, in the year ended January 31, 2025, primarily due to a decrease in marketing and advertising costs due to shifts in line with our go-to-market strategy.

Sales and marketing expenses increased $42.9 million, or 4%, in the year ended January 31, 2026, primarily due to investments in our workforce.

Main drivers primarily consisted of:

• $12.4 million decrease in marketing and advertising costs, including a reduction in paid search, in line with cost efficiency measures;

• $54.1 million increase in personnel costs, primarily due to higher commissions reflecting our continued focus on expansion and driving customer acquisition, as well as annual salary increases and greater incentive compensation tied to improved performance on certain company metrics;

partially offset by

• $9.0 million increase in depreciation on our capitalized software projects.

• $13.0 million decrease in stock-based compensation expense mainly due to executive transitions that occurred in fiscal 2025.

Research and Development

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Percentage of revenue 21 % 20 %

Research and development expenses increased $49.0 million, or 9%, in the year ended January 31, 2025, primarily due to investments in our workforce and product innovation.

Research and development expenses increased $76.5 million, or 13%, in the year ended January 31, 2026, primarily due to investments in our workforce to support product innovation, including expansion due to our acquisition of Lexion in fiscal 2025 .

Increases primarily consisted of:

• $23.6 million in personnel costs due to higher headcount, including the Lexion acquisition;

• $20.0 million in stock-based compensation expense due to annual merit increases, and higher headcount, offset partially by lower executive costs.

• $39.8 million in personnel costs due to higher headcount, including our acquisition of Lexion, and higher incentive compensation driven by higher performance on certain company metrics;

• $32.5 million in stock-based compensation expense due to annual merit increases and higher headcount.

Docusign, Inc.

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Percentage of revenue 12 % 12 %

General and administrative expenses decreased $43.6 million, or 10%, in the year ended January 31, 2025.

Decreases primarily consisted of:

• $23.9 million in professional fees and related expenses, including the receipt of insurance reimbursements for defense costs and the release of litigation related accruals in the current year;

• $22.1 million in stock-based compensation expense mainly due to executive transitions that occurred in fiscal 2024 and lower headcount.

Other Income and Expense

Year Ended January 31, 2025 vs 2024

(in thousands) 2025 2024

Interest expense $ (1,550) $ (6,844) (77) %

Percentage of revenue — % — %

Interest income and other income, net $ 49,563 $ 68,889 (28) %

Percentage of revenue 1 % 2 %

Interest income and other income, net decreased by $19.3 million in the year ended January 31, 2025.

Decreases primarily consisted of $13.1 million decrease in interest income due to lower average investment balances.

General and administrative expenses increased $13.0 million, or 3%, in the year ended January 31, 2026, primarily due to an increase in personnel expense related to higher headcount and annual merit increases.

Provision for (benefit from) Income Taxes

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Percentage of revenue 1 % (28) %

The change in income tax benefit for the year ended January 31, 2025 was primarily due to the release of $837.3 million of valuation allowance related to U.S.

federal and certain state deferred tax assets.

Provision for income taxes increased $858.2 million or 105% in the year ended January 31, 2026.

The increase is primarily attributable to the $837.3 million benefit recognized during the year ended January 31, 2025 for the release of our U.S.

federal and state valuation allowances, as well as higher profit before taxes in fiscal 2026.

Docusign, Inc.

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We finance our operations primarily through payments by our customers for use of our product offerings and related services, and we have additional borrowing capacity available from our credit facility.

In January 2021 we entered into a $500.0 million credit facility, as amended in May 2023, which may be increased by an additional $250.0 million subject to customary terms and conditions.

The credit facility is available until January 11, 2026 to optimize our capital structure and strengthen our balance sheet.

In May 2025, we entered into an agreement with a syndicate of banks, which provides for a secured revolving credit facility (“Credit Facility”) in the aggregate principal amount of $750.0 million and may be increased by an additional $250.0 million subject to customary terms and conditions.

The Credit Facility superseded and replaced the revolving credit facility that we previously entered into in January 2021.

As of January 31, 2026, there were no outstanding borrowings under the Credit Facility, and we were in compliance with related covenants.

The Credit Facility matures in May 2030 and is available to optimize our capital structure and strengthen our balance sheet.

We have included additional information in Note 8 to the Condensed Consolidated Financial Statements, included in Part II, Item 8 of this Annual Report on Form 10-K.

We believe that our sources of liquidity, including our cash, cash equivalents and investments, and expected future operating cash flows, and borrowing capacity available to us from our Credit Facility, are adequate to meet our potential cash commitments as well as meet our working capital and capital expenditure needs for the foreseeable future, including upcoming maturities of our contractual obligations over the next 12 months.

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In addition to our contractual commitments, our board of directors has authorized a stock repurchase program, which commenced in March 2022.

During the year ended January 31, 2025, we repurchased 11.0 million shares of common stock for $685.0 million through our stock repurchase program.

Included in the repurchase amount is the 1% excise tax as a result of the IRA.

During the year ended January 31, 2026, we repurchased and settled 11.8 million shares of common stock for $869.1 million through our stock repurchase program.

The program has no minimum purchase and no mandated end date.

The repurchase program may be suspended or discontinued at any time at our discretion.

We expect that our existing sources of liquidity, including our existing cash, cash equivalents and investments, expected future operating cash flows, and borrowing capacity of our credit facility, will finance the repurchase of common stock at management’s discretion.

We expect that our existing sources of liquidity, including our existing cash, cash equivalents and investments, expected future operating cash flows, and the borrowing capacity of our credit facility, will finance the repurchase of common stock at management’s discretion.

The timing and amount of any repurchases of common stock will be determined by management based on its evaluation of market conditions and other factors.

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Our primary sources of cash provided by operating activities were billings and the related cash collections in addition to interest income.

Our primary uses of cash include the payment of employee salaries and benefits, including the payment of termination benefits under the restructuring plan authorized in fiscal 2025 (the “2025 Restructuring Plan”), in addition to vendor payments.

Our primary uses of cash include the payment of employee salaries and benefits in addition to vendor payments.

Cash provided by operating activities was $1.0 billion for the year ended January 31, 2025.

Our primary sources of cash provided by operating activities were billings and the related cash collections in addition to interest income.

Our primary uses of cash include payment of employee salaries and benefits, including the payment of termination benefits under the 2025 Restructuring Plan implemented in the first quarter of fiscal 2025, in addition to vendor payments.

Additionally, in connection with the acquisition of Lexion, we agreed to pay $19.1 million in deferred compensation for key employees, which we paid into an escrow account.

Cash provided by operating activities was $979.5 million for the year ended January 31, 2024.

Our primary sources of cash provided by operating activities were billings and the related cash collections in addition to interest income due to favorable interest rates.

Our primary uses of cash include the payment of employee salaries and benefits, including the payment of termination benefits under the restructuring plan authorized during fiscal 2024 (the “2024 Restructuring Plan”), in addition to vendor payments.

Cash Flows from Investing Activities

For the year ended January 31, 2025, net cash used in investing activities of $312.9 million was primarily driven by the acquisition of Lexion, which totaled $143.6 million, net of acquired cash.

For the year ended January 31, 2026, net cash used in investing activities of $126.8 million was primarily driven by $106.4 million in purchases of property and equipment as we continued to invest in capitalized software development projects and to support operations at our data centers in addition to $19.6 million net purchase of marketable securities.

For the year ended January 31, 2025, net cash used in investing activities of $312.9 million was primarily driven by the acquisition of Lexion, which totaled $143.6 million, net of cash acquired.

Additionally, net purchases of marketable securities were $70.9 million, and purchases of property and equipment were $97.0 million as we continued to support operations at our data centers and invest in capitalized software development projects.

For the year ended January 31, 2024, net cash provided by investing activities of $44.6 million was primarily driven by $137.6 million net maturities of marketable securities.

These inflows were partially offset by purchases of property and equipment of $92.4 million as we continued to support operations at our data centers and invest in capitalized software development projects.

Cash Flows from Financing Activities

For the year ended January 31, 2025, net cash used in financing activities of $838.8 million was primarily driven by $683.5 million to repurchase 11.0 million shares of common stock through our stock repurchase program and $155.3 million payments for tax withholding on share settlements, net of proceeds associated with our equity plans.

For the year ended January 31, 2024, net cash used in financing activities of $946.0 million was primarily driven by the maturity of the Notes, our stock repurchase program, and payments related to our equity plans.

We fully repaid the 2023 Notes and 2024 Notes during fiscal 2024 for $727.0 million.

We also used $145.5 million to repurchase 3.1 million shares of common stock through our stock repurchase program.

In addition, we made $97.2 million payments for tax withholding on share settlements, net of proceeds associated with our equity plans.

These cash outflows were partially offset by $23.7 million received in connection with the settlement of capped call transactions in relation to our 2023 Notes.

For the year ended January 31, 2026, net cash used in financing activities of $1.1 billion was primarily driven by $869.1 million to repurchase 11.8 million shares of common stock through our stock repurchase program and $227.7 million payments for tax withholding on share settlements, net of proceeds associated with equity plans.

For the year ended January 31, 2025, net cash used in financing activities of $838.8 million was primarily driven by $683.5 million to repurchase 11.0 million shares of common stock through our stock repurchase program, and $155.3 million payments for tax withholding on share settlements, net of proceeds associated with equity plans.

Docusign, Inc.

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Critical Accounting Policies and Estimates

W e prepare our financial statements in accordance with U.S.

W e prepare our financial statements in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”).

Preparing these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures.

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Our actual results could differ from these estimates.

The critical accounting estimates, assumptions and judgments that we believe to have the most significant impact on our consolidated financial statements are revenue recognition, deferred contract acquisition costs, stock-based compensation, income taxes and loss contingencies.

Revenue Recognition

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For some of our services, such as delivery of on-premises solutions, we satisfy our performance obligations at a point in time.

We apply significant judgment in identifying and evaluating any terms and conditions in contracts which may impact revenue recognition.

We identify and evaluate terms and conditions in contracts which may impact revenue recognition.

Period of Benefit of Deferred Contract Acquisition Costs

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Periodically, we evaluate these factors and review whether events or changes in circumstances have occurred that could impact the period of benefit.

Any future changes in circumstances around our customer life and weighted average contractual terms of renewal contracts may materially change the periods of benefit and therefore the amortization amounts recognized in our consolidated statement of operations and comprehensive income (loss).

Stock-based Compensation

We issue stock-based awards to employees, including restricted stock units (“RSUs”), purchase rights granted under our Employee Stock Purchase Plan (“ESPP”) and stock options.

We issue stock-based awards to employees, including restricted stock units (“RSUs”) and purchase rights granted under our Employee Stock Purchase Plan (“ESPP“).

We measure the fair value of these awards at the grant date and recognize such fair value as expense over the service period.

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For RSUs granted with a market condition, we use a Monte Carlo option-pricing model to determine the fair value of the RSUs.

The fair value of stock options and ESPP purchase rights is estimated on the date of grant using a Black-Scholes option pricing model.

The fair value of ESPP purchase rights is estimated on the date of grant using a Black-Scholes option pricing model.

Judgment is required to estimate the expected life of the stock awards, the volatility of the underlying common stock, forfeiture rates, and probability of achievement of performance conditions.

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Changes to the estimates we make from time to time may have a significant impact on our stock-based compensation expense and could materially impact our results of operations.

We recognize compensation expense net of forfeitures that are estimated at the time of grant based on historical experience and our expectations regarding future pre-vesting termination behavior of employees and revise in

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subsequent periods if actual forfeitures differ from those estimates.

To the extent our actual forfeiture rate is different from our estimate, stock-based compensation expense is adjusted accordingly.

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In making this assessment, we weigh both positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and results of recent operations, to determine whether it is more likely than not that a deferred tax asset will be realized.

This assessment requires significant judgement and is performed for each jurisdiction in which we operate.

This assessment requires significant judgment and is performed for each jurisdiction in which we operate.

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Non-GAAP Financial Measures and Other Key Metrics

To supplement our consolidated financial statements, which are prepared and presented in accordance with U.S.

GAAP, we use certain non-GAAP financial measures, as described below, to understand and evaluate our core operating performance.

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use certain non-GAAP financial measures, as described below, to understand and evaluate our core operating performance.

These non-GAAP financial measures, which may be different than similarly titled measures used by other companies, are presented to enhance investors’ overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

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Non-GAAP gross profit, non-GAAP gross margin, non-GAAP income from operations, non-GAAP operating margin and non-GAAP net income :

We define these non-GAAP financial measures as the respective GAAP measures, excluding expenses related to stock-based compensation, employer payroll tax on employee stock transactions, amortization of acquisition-related intangibles, amortization of debt discount and issuance costs, acquisition-related expenses, fair value adjustments to strategic investments, executive transition costs, lease-related impairment and lease-related charges, restructuring and other related charges, as these costs are not reflective of ongoing operations, and, as applicable, other special items.

We define these non-GAAP financial measures as the respective GAAP measures, excluding expenses related to stock-based compensation, employer payroll tax on employee stock transactions, amortization of acquisition-related intangibles, amortization of debt discount and issuance costs, acquisition-related expenses, fair value adjustments to strategic investments, lease-related impairment and lease-related charges, restructuring and other related charges, and, as applicable, other special items.

The amount of employer payroll tax-related items on employee stock transactions is dependent on our stock price and other factors that are beyond our control and do not correlate to the operation of the business.

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We utilize a fixed long-term projected tax rate in our computation of the non-GAAP income tax provision to provide better consistency across the reporting periods.

For each of the years ended January 31, 2025, 2024 and 2023, we have determined the projected non-GAAP tax rate to be 20%.

For the years ended January 31, 2026, 2025 and 2024, we have determined the projected non-GAAP tax rate to be 21%, 20%, and 20%, respectively.

Free cash flow :

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Only amounts invoiced to a customer in a given period are included in billings.

We believe billings can be used to measure our periodic performance, when taking into consideration the timing aspects of customer renewals, which represents a large component of our business.

Given that most of our customers pay in annual installments one year in advance, but we typically recognize a majority of the related revenue ratably over time, we use billings to measure and monitor our ability to provide our business with the working capital generated by upfront payments from our customers.

We considered billings to measure our periodic performance, when taking into consideration the timing aspects of customer renewals, which represent a large component of our business.

Given that most of our customers pay in annual installments one year in advance, but we typically recognize a majority of the related revenue ratably over time, we used billings to measure and monitor our ability to provide our business with the working capital generated by upfront payments from our customers.

Beginning in the first fiscal quarter of 2027, we will no longer report or guide to billings.

Annual Recurring Revenue:

We calculate Annual Recurring Revenue (“ARR”) as the annualized value of active customer contracts as of the measurement date.

This calculation assumes that any contract expiring within the next 12 months renews on its existing terms, and excludes non-recurring revenue streams recognized at a point in time.

When evaluating ARR on a product basis for contracts spanning multiple product lines, we allocate the support contract value to each product offering based on its proportional share of the total contract value.

To annualize contracts, we divide the total committed contract value by the number of months in the subscription term and multiply by twelve.

For international contracts denominated in foreign currencies, ARR is translated into U.S.

dollars using a fixed exchange rate set at the beginning of each fiscal year.

We adjust previously reported ARR annually to reflect these exchange rate changes for comparative purposes.

We believe ARR measures our business performance and serves as a leading indicator of future revenue growth.

ARR is an operating metric and should be viewed independently of revenue, deferred revenue, and

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remaining performance obligations;

it does not represent revenue under U.S.

GAAP on an annual basis.

ARR was $3,272 million as of January 31, 2026, $3,030 million as of January 31, 2025, and $2,805 million as of January 31, 2024.

As of January 31, 2026, IAM represented 10.8% of our total ARR as of January 31, 2026, and 2.3% of our total ARR as of January 31, 2025 .

Reconciliation of gross profit (loss) and gross margin:

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| 2026 Form 10-K | 56

Reconciliation of income (loss) from operations and operating margin:

Reconciliation of income from operations and operating margin:

Year Ended January 31,

(in thousands) 2026 2025 2024

GAAP income (loss) from operations $ 199,928 $ 31,634 $ (88,031)

GAAP income from operations $ 298,579 $ 199,928 $ 31,634

Stock-based compensation 622,321 605,499 611,835

4 unchanged sentences

Lease-related impairment and lease-related charges — — 4,460

Executive transition costs — — 2,634

Non-GAAP income from operations $ 967,937 $ 885,998 $ 711,367

2 unchanged sentences

Non-GAAP operating margin 30.1 % 29.8 % 25.8 %

Reconciliation of net income (loss):

Reconciliation of net income:

Year Ended January 31,

1 unchanged sentence

2026 2025 2024

GAAP net income (loss) $ 1,067,885 $ 73,980 $ (97,454)

GAAP net income $ 309,085 $ 1,067,885 $ 73,980

Stock-based compensation 622,321 605,499 611,835

6 unchanged sentences

Lease-related impairment and lease-related charges — — 4,460

Executive transition costs — — 2,634

Income tax and other tax adjustments

25 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-K

Item 7. Management’s Discussion and Analysis