What changed in this filing

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Item 1. Financial Statements

2022-02-23 compared with 2021-11-19 · 160 added, 93 removed, 503 unchanged (33% of the section changed)

3 unchanged sentences

(in millions, except per share data)

October 31, 2021 July 31, 2021

January 31, 2022 July 31, 2021

Current assets:

1 unchanged sentence

Short-term investments 1,417.6 1,026.9

Accounts receivable, net of allowance for credit losses of $ 13.5 and $ 11.2 at October 31, 2021 and July 31, 2021, respectively

Accounts receivable, net of allowance for credit losses of $ 13.0 and $ 11.2 at January 31, 2022 and July 31, 2021, respectively

952.2 1,240.4

28 unchanged sentences

100.0 shares authorized;

none issued and outstanding at October 31, 2021 and July 31, 2021

none issued and outstanding at January 31, 2022 and July 31, 2021

Common stock and additional paid-in capital;

1 unchanged sentence

1,000.0 shares authorized;

98.7 and 97.3 shares issued and outstanding at October 31, 2021 and July 31, 2021, respectively

98.5 and 97.3 shares issued and outstanding at January 31, 2022 and July 31, 2021, respectively

1,745.2 2,311.2

8 unchanged sentences

(Unaudited, in millions, except per share data)

Three Months Ended

Three Months Ended Six Months Ended

January 31, January 31,

2022 2021 2022 2021

Product $ 308.0 $ 254.7 $ 603.5 $ 492.0

24 unchanged sentences

(Unaudited, in millions)

Three Months Ended

Three Months Ended Six Months Ended

January 31, January 31,

2022 2021 2022 2021

Net loss $ ( 93.5 ) $ ( 142.3 ) $ ( 197.1 ) $ ( 234.5 )

2 unchanged sentences

Change in unrealized gains (losses) on cash flow hedges ( 10.1 ) 7.0 ( 9.3 ) 1.0

Other comprehensive loss ( 1.4 ) ( 7.3 )

Other comprehensive income (loss) ( 18.9 ) 6.7 ( 20.3 ) ( 0.6 )

Comprehensive loss $ ( 112.4 ) $ ( 135.6 ) $ ( 217.4 ) $ ( 235.1 )

4 unchanged sentences

(Unaudited, in millions)

Three Months Ended October 31, 2021

Three Months Ended January 31, 2022

Additional Paid-In Capital Accumulated

3 unchanged sentences

Shares Amount

Balance as of July 31, 2021 97.3 $ 2,311.2 $ ( 9.9 ) $ ( 1,666.8 ) $ 634.5

Cumulative-effect adjustment from adoption of new accounting pronouncement — ( 581.9 ) — 266.7 ( 315.2 )

Balance as of October 31, 2021 98.7 $ 2,033.9 $ ( 11.3 ) $ ( 1,503.7 ) $ 518.9

Net loss — — — ( 93.5 ) ( 93.5 )

3 unchanged sentences

Share-based compensation for equity-based awards — 269.6 — — 269.6

Repurchase and retirement of common stock ( 1.0 ) ( 550.0 ) — — ( 550.0 )

Balance as of January 31, 2022 98.5 $ 1,745.2 $ ( 30.2 ) $ ( 1,597.2 ) $ 117.8

Three Months Ended January 31, 2021

Additional Paid-In Capital Accumulated

Comprehensive Income (Loss) Accumulated

Deficit Total

Stockholders’

Shares Amount

Balance as of October 31, 2020 95.2 $ 2,003.9 $ 3.2 $ ( 1,260.1 ) $ 747.0

Three Months Ended October 31, 2020

Net loss — — — ( 142.3 ) ( 142.3 )

Other comprehensive loss — — 6.7 — 6.7

Issuance of common stock in connection with employee equity incentive plans 0.7 0.1 — — 0.1

Taxes paid related to net share settlement of equity awards — ( 5.7 ) — — ( 5.7 )

Share-based compensation for equity-based awards — 252.0 — — 252.0

Issuance of common and restricted common stock in connection with acquisitions 1.3 340.7 — — 340.7

Temporary equity reclassification — ( 161.2 ) — — ( 161.2 )

Balance as of January 31, 2021 97.2 $ 2,429.8 $ 9.9 $ ( 1,402.4 ) $ 1,037.3

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Six Months Ended January 31, 2022

Additional Paid-In Capital Accumulated

4 unchanged sentences

Balance as of July 31, 2021 97.3 $ 2,311.2 $ ( 9.9 ) $ ( 1,666.8 ) $ 634.5

Cumulative-effect adjustment from adoption of new accounting pronouncement — ( 581.9 ) — 266.7 ( 315.2 )

Net loss — — — ( 197.1 ) ( 197.1 )

Other comprehensive loss — — ( 7.3 ) — ( 7.3 )

Other comprehensive income — — ( 20.3 ) — ( 20.3 )

Issuance of common stock in connection with employee equity incentive plans 2.2 59.2 — — 59.2

2 unchanged sentences

Repurchase and retirement of common stock ( 1.0 ) ( 550.0 ) — — ( 550.0 )

Balance as of October 31, 2020 95.2 $ 2,003.9 $ 3.2 $ ( 1,260.1 ) $ 747.0

Balance as of January 31, 2022 98.5 $ 1,745.2 $ ( 30.2 ) $ ( 1,597.2 ) $ 117.8

Six Months Ended January 31, 2021

Additional Paid-In Capital Accumulated

Comprehensive Income (Loss) Accumulated

Deficit Total

Stockholders’

Shares Amount

Balance as of July 31, 2020 96.3 $ 2,259.2 $ 10.5 $ ( 1,167.9 ) $ 1,101.8

Net loss — — — ( 234.5 ) ( 234.5 )

Other comprehensive income — — ( 0.6 ) — ( 0.6 )

Issuance of common stock in connection with employee equity incentive plans 1.7 45.7 — — 45.7

Taxes paid related to net share settlement of equity awards — ( 15.4 ) — — ( 15.4 )

Share-based compensation for equity-based awards — 460.8 — — 460.8

Repurchase and retirement of common stock ( 2.1 ) ( 500.0 ) — — ( 500.0 )

Issuance of common and restricted common stock in connection with acquisitions 1.3 340.7 — — 340.7

Temporary equity reclassification — ( 161.2 ) — — ( 161.2 )

Balance as of January 31, 2021 97.2 $ 2,429.8 $ 9.9 $ ( 1,402.4 ) $ 1,037.3

See notes to condensed consolidated financial statements.

3 unchanged sentences

(Unaudited, in millions)

Three Months Ended

Six Months Ended

Cash flows from operating activities

30 unchanged sentences

Repurchases of common stock

( 550.0 ) ( 500.0 )

Proceeds from sales of shares through employee equity incentive plans

2 unchanged sentences

Payments for debt issuance costs

Net cash provided by (used in) financing activities 38.7 ( 464.5 )

Net cash used in financing activities ( 519.8 ) ( 469.9 )

Net increase (decrease) in cash, cash equivalents, and restricted cash 47.5 ( 841.1 )

27 unchanged sentences

Summary of Significant Accounting Policies

There have been no material changes to our significant accounting policies as of and for the three months ended October 31, 2021, as compared to the significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended July 31, 2021, except for the change in our accounting policies due to our adoption of recently issued guidance.

There have been no material changes to our significant accounting policies as of and for the six months ended January 31, 2022, as compared to the significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended July 31, 2021, except for the change in our accounting policies due to our adoption of recently issued guidance.

Refer to “Recently Adopted Accounting Pronouncements” below.

33 unchanged sentences

The following table presents revenue by geographic theater (in millions):

Three Months Ended October 31,

Three Months Ended January 31, Six Months Ended January 31,

2022 2021 2022 2021

United States $ 858.6 $ 642.8 $ 1,670.3 $ 1,267.2

5 unchanged sentences

The following table presents revenue for groups of similar products and services (in millions):

Three Months Ended October 31,

Three Months Ended January 31, Six Months Ended January 31,

2022 2021 2022 2021

Product $ 308.0 $ 254.7 $ 603.5 $ 492.0

5 unchanged sentences

Deferred Revenue

During the three months ended October 31, 2021 and 2020, we recognized approximately $ 840.0 million and $ 630.0 million of revenue pertaining to amounts that were deferred as of July 31, 2021 and 2020, respectively.

During the six months ended January 31, 2022 and 2021, we recognized approximately $ 1.6 billion and $ 1.2 billion of revenue pertaining to amounts that were deferred as of July 31, 2021 and 2020, respectively.

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Remaining Performance Obligations

Revenue expected to be recognized from remaining performance obligations was $ 6.0 billion as of October 31, 2021, of which we expect to recognize approximately $ 3.2 billion over the next 12 months and the remainder thereafter.

Revenue expected to be recognized from remaining performance obligations was $ 6.3 billion as of January 31, 2022, of which we expect to recognize approximately $ 3.4 billion over the next 12 months and the remainder thereafter.

Fair Value Measurements

6 unchanged sentences

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The following table presents the fair value of our financial assets and liabilities measured at fair value on a recurring basis as of October 31, 2021 and July 31, 2021 (in millions):

October 31, 2021 July 31, 2021

The following table presents the fair value of our financial assets and liabilities measured at fair value on a recurring basis as of January 31, 2022 and July 31, 2021 (in millions):

January 31, 2022 July 31, 2021

Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

7 unchanged sentences

Certificates of deposit — 305.6 — 305.6 — 12.4 — 12.4

Commercial paper — 1.2 — 1.2 — — — —

Corporate debt securities — 325.1 — 325.1 — 208.9 — 208.9

7 unchanged sentences

government and agency securities — 8.8 — 8.8 — 28.5 — 28.5

Asset-backed securities — 25.3 — 25.3 — — — —

Total long-term investments — 851.0 — 851.0 — 888.3 — 888.3

14 unchanged sentences

Total liabilities measured at fair value $ — $ 17.3 $ — $ 17.3 $ — $ 6.9 $ — $ 6.9

Refer to Note 9.

Debt for the carrying amount and estimated fair value of our convertible senior notes as of October 31, 2021 and July 31, 2021.

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Refer to Note 9.

Debt for the carrying amount and estimated fair value of our convertible senior notes as of January 31, 2022 and July 31, 2021.

Cash Equivalents and Investments

Available-for-sale Debt Securities

The following tables summarize the amortized cost, unrealized gains and losses, and fair value of our available-for-sale debt securities as of October 31, 2021 and July 31, 2021 (in millions):

October 31, 2021

The following tables summarize the amortized cost, unrealized gains and losses, and fair value of our available-for-sale debt securities as of January 31, 2022 and July 31, 2021 (in millions):

January 31, 2022

Amortized Cost Unrealized Gains Unrealized Losses Fair Value

Cash equivalents:

Certificates of deposit $ 150.5 $ — $ — $ 150.5

Corporate debt securities $ 8.7 $ — $ — $ 8.7

government and agency securities 70.0 — — 70.0

Total available-for-sale cash equivalents $ 8.7 $ — $ — $ 8.7

Certificates of deposit $ 305.6 $ — $ — $ 305.6

Commercial paper 1.2 — — 1.2

Corporate debt securities 782.8 0.1 ( 3.7 ) 779.2

1 unchanged sentence

government and agency securities 60.5 — ( 0.2 ) 60.3

Asset-backed securities 25.4 — ( 0.1 ) 25.3

Total available-for-sale investments $ 2,278.1 $ 0.2 $ ( 9.7 ) $ 2,268.6

12 unchanged sentences

We do not intend to sell any of the securities in an unrealized loss position and it is not likely that we would be required to sell these securities before recovery of their amortized cost basis, which may be at maturity.

We did not recognize any credit losses related to our available-for-sale debt securities during the three months ended October 31, 2021 and 2020.

The following table summarizes the amortized cost and fair value of our available-for-sale debt securities as of October 31, 2021, by contractual years-to-maturity (in millions):

We did not recognize any credit losses related to our available-for-sale debt securities during the three and six months ended January 31, 2022 and 2021.

The following table summarizes the amortized cost and fair value of our available-for-sale debt securities as of January 31, 2022, by contractual years-to-maturity (in millions):

Amortized Cost Fair Value

1 unchanged sentence

Due between one and three years 839.2 832.7

Due between three to five years 18.4 18.3

Total $ 2,286.8 $ 2,277.3

1 unchanged sentence

Marketable equity securities consist of money market funds and are included in cash and cash equivalents on our condensed consolidated balance sheets.

As of October 31, 2021 and July 31, 2021, the carrying values of our marketable equity securities were $ 161.8 million and $ 124.2 million, respectively.

There were no unrealized gains or losses recognized for these securities during the three months ended October 31, 2021 and 2020.

As of January 31, 2022 and July 31, 2021, the carrying values of our marketable equity securities were

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$ 475.0 million and $ 124.2 million, respectively.

There were no unrealized gains or losses recognized for these securities during the three and six months ended January 31, 2022 and 2021.

Financing Receivables

We provide financing arrangements, primarily loans, for qualified end-user customers to purchase our products and services.

The following table summarizes our short-term and long-term financing receivables as of October 31, 2021 and July 31, 2021 (in millions):

October 31, 2021 July 31, 2021

The following table summarizes our short-term and long-term financing receivables as of January 31, 2022 and July 31, 2021 (in millions):

January 31, 2022 July 31, 2021

Short-term financing receivables, gross

8 unchanged sentences

$ 175.8 $ 194.3

There was no significant activity in allowance for credit losses during the three months ended October 31, 2021 and 2020.

Past due amounts on financing receivables were immaterial as of October 31, 2021 and July 31, 2021.

There was no significant activity in allowance for credit losses during the three and six months ended January 31, 2022 and 2021.

Past due amounts on financing receivables were immaterial as of January 31, 2022 and July 31, 2021.

Derivative Instruments

3 unchanged sentences

We enter into foreign currency derivative contracts with maturities of 16 months or less, which we designate as cash flow hedges, to manage the foreign currency exchange rate risk associated with these expenditures.

As of October 31, 2021 and July 31, 2021, the total notional amount of our outstanding foreign currency forward contracts including designated and non-designated derivative instruments was $ 564.0 million and $ 531.9 million, respectively.

As of January 31, 2022 and July 31, 2021, the total notional amount of our outstanding foreign currency forward contracts including designated and non-designated derivative instruments was $ 584.4 million and $ 531.9 million, respectively.

Refer to Note 3.

Fair Value Measurements for the fair value of our foreign currency derivative instruments as reported on our condensed consolidated balance sheets as of October 31, 2021 and July 31, 2021.

During the three months ended October 31, 2021 and 2020, both unrealized gains and losses recognized in AOCI related to our cash flow hedges and amounts reclassified into earnings were not material.

Unrealized gains and losses in AOCI related to our cash flow hedges as of October 31, 2021 and July 31, 2021 were not material.

Fair Value Measurements for the fair value of our foreign currency derivative instruments as reported on our condensed consolidated balance sheets as of January 31, 2022 and July 31, 2021.

During the three and six months ended January 31, 2022 and 2021, both unrealized gains and losses recognized in accumulated other comprehensive income (loss) (“AOCI”) related to our cash flow hedges and amounts reclassified into earnings were not material.

Unrealized gains and losses in AOCI related to our cash flow hedges as of January 31, 2022 and July 31, 2021 were not material.

On August 11, 2021, we completed our acquisition of Gamma Networks, Inc.

5 unchanged sentences

The goodwill is not deductible for income tax purposes.

Goodwill and Intangible Assets

The following table presents details of our goodwill during the three months ended October 31, 2021 (in millions):

Goodwill, Intangible Assets and Other Long-lived Assets

The following table presents details of our goodwill during the six months ended January 31, 2022 (in millions):

Balance as of July 31, 2021 $ 2,710.1

Goodwill acquired 21.2

Balance as of October 31, 2021 $ 2,732.3

Balance as of January 31, 2022 $ 2,731.3

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Purchased Intangible Assets

The following table presents details of our purchased intangible assets as of October 31, 2021 and July 31, 2021 (in millions):

October 31, 2021 July 31, 2021

The following table presents details of our purchased intangible assets as of January 31, 2022 and July 31, 2021 (in millions):

January 31, 2022 July 31, 2021

Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount

6 unchanged sentences

Total purchased intangible assets $ 795.0 $ ( 351.1 ) $ 443.9 $ 788.0 $ ( 289.4 ) $ 498.6

We recognized amortization expense of $ 31.8 million and $ 23.6 million for the three months ended October 31, 2021 and 2020, respectively.

The following table summarizes estimated future amortization expense of our intangible assets as of October 31, 2021 (in millions):

We recognized amortization expense of $ 31.7 million and $ 63.5 million for the three and six months ended January 31, 2022, respectively, and $ 29.7 million and $ 53.3 million for the three and six months ended January 31, 2021, respectively.

The following table summarizes estimated future amortization expense of our intangible assets as of January 31, 2022 (in millions):

Fiscal years ending July 31,

1 unchanged sentence

Future amortization expense $ 443.9 $ 63.4 $ 101.1 $ 91.1 $ 77.4 $ 55.6 $ 55.3

Other Long-lived Assets

During the six months ended January 31, 2022, we purchased 4.6 acres of land adjacent to our headquarters in Santa Clara, California, along with the associated buildings, for $ 39.5 million to accommodate future expansion of our headquarters.

This amount was recorded in property and equipment, net on our condensed consolidated balance sheet as of January 31, 2022.

Convertible Senior Notes

10 unchanged sentences

If we call any or all of the 2025 Notes for redemption, holders may convert such 2025 Notes called for redemption at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date.

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The following table presents details of our Notes (number of shares in millions):

4 unchanged sentences

• during any fiscal quarter commencing after the fiscal quarters ending on October 31, 2018 and October 31, 2020 for the 2023 Notes and the 2025 Notes, respectively (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 the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130 % of the applicable conversion price for the respective Notes on each applicable trading day (the “sale price condition”);

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• during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of the applicable series of 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 applicable conversion rate for the respective Notes on each such trading day;

5 unchanged sentences

Additionally, upon the occurrence of a corporate event that constitutes a “fundamental change” under the applicable Indenture, holders of the Notes of such series may require us to repurchase for cash all or a portion of the Notes of such series at a repurchase price equal to 100 % of the principal amount of the Notes of such series plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The sale price condition for the Notes was met during the fiscal quarter ended October 31, 2021, and as a result, holders may convert their Notes at any time during the fiscal quarter ending January 31, 2022.

Accordingly, the net carrying amount of the Notes was classified as a current liability on our condensed consolidated balance sheet as of October 31, 2021.

The following table sets forth the components of the Notes as of October 31, 2021 and July 31, 2021 (in millions):

October 31, 2021 (1)

The sale price condition for the Notes was met during the fiscal quarter ended January 31, 2022, and as a result, holders may convert their Notes at any time during the fiscal quarter ending April 30, 2022.

Accordingly, the net carrying amount of the Notes was classified as a current liability on our condensed consolidated balance sheet as of January 31, 2022.

The following table sets forth the components of the Notes as of January 31, 2022 and July 31, 2021 (in millions):

January 31, 2022 (1)

July 31, 2021

10 unchanged sentences

Transaction costs related to the issuance of the notes are netted with the liability and are amortized on a straight-line basis, which approximates the effective interest rate method, to interest expense over the term of the notes.

The total estimated fair value of the 2023 Notes and 2025 Notes were $ 3.2 billion and $ 3.4 billion at October 31, 2021, respectively and $ 2.6 billion and $ 2.9 billion at July 31, 2021, respectively.

The total estimated fair value of the 2023 Notes and 2025 Notes were $ 3.3 billion and $ 3.6 billion at January 31, 2022, respectively and $ 2.6 billion and $ 2.9 billion at July 31, 2021, respectively.

The fair value was determined based on the closing trading price per $100 of the applicable series of the Notes as of the last day of trading for the period.

We consider the fair value of the Notes at October 31, 2021 and July 31, 2021 to be a Level 2 measurement.

The fair value of the Notes is primarily affected by the trading price of our common stock and market interest rates.

We consider the fair value of the Notes

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at January 31, 2022 and July 31, 2021 to be a Level 2 measurement.

The fair value of the Notes is primarily affected by the trading price of our common stock and market interest rates.

The following table sets forth interest expense recognized related to the Notes (dollars in millions):

Three Months Ended October 31,

2023 Notes 2025 Notes Total 2023 Notes 2025 Notes Total

Three Months Ended January 31, Six Months Ended January 31,

2022 2021 2022 2021

2023 Notes 2025 Notes Total 2023 Notes 2025 Notes Total 2023 Notes 2025 Notes Total 2023 Notes 2025 Notes Total

Contractual interest expense $ 3.1 $ 1.9 $ 5.0 $ 3.1 $ 1.9 $ 5.0 $ 6.3 $ 3.8 $ 10.1 $ 6.3 $ 3.8 $ 10.1

17 unchanged sentences

Any shares of our common stock receivable by us under the Note Hedges are excluded from the calculation of diluted earnings per share as they are antidilutive.

The aggregate amounts paid for the Note Hedges are included in additional paid-in capital in our condensed consolidated balance sheets.

The aggregate amounts paid for the Note Hedges are included in additional paid-in capital on our condensed consolidated balance sheets.

Separately, but concurrently with the issuance of each series of our Notes, we entered into transactions whereby we sold warrants (the “2023 Warrants,” with respect to the 2023 Notes, the “2025 Warrants,” with respect to the 2025 Notes, and the 2023 Warrants together with the 2025 Warrants, the “Warrants”) to acquire shares of our common stock, subject to anti-dilution adjustments.

9 unchanged sentences

Holders of the Notes of either series will not have any rights with respect to the Warrants.

The aggregate proceeds received from the sale of the Warrants are included in additional paid-in capital in our condensed consolidated balance sheets.

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aggregate proceeds received from the sale of the Warrants are included in additional paid-in capital on our condensed consolidated balance sheets.

Revolving Credit Facility

On September 4, 2018, we entered into a credit agreement (the “Credit Agreement”) with certain institutional lenders that provides for a $ 400.0 million unsecured revolving credit facility (the “Credit Facility”), with an option to increase the amount of the Credit Facility by up to an additional $ 350.0 million, subject to certain conditions.

The Credit Facility matures on the earlier of (i) September 4, 2023 and (ii) the date that is 91 days prior to the stated maturity of our 2023 Notes if (a) any of the 2023 Notes are

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still outstanding and (b) our unrestricted cash and cash equivalents are less than the then outstanding principal amount of our 2023 Notes plus $ 400.0 million.

The Credit Facility matures on the earlier of (i) September 4, 2023 and (ii) the date that is 91 days prior to the stated maturity of our 2023 Notes if (a) any of the 2023 Notes are still outstanding and (b) our unrestricted cash and cash equivalents are less than the then outstanding principal amount of our 2023 Notes plus $ 400.0 million.

The borrowings under the Credit Facility currently bear interest, at our option, at a base rate plus a spread of 0.00 % to 0.75 %, or an adjusted LIBO Rate plus a spread of 1.00 % to 1.75 %, in each case with such spread being determined based on our leverage ratio.

3 unchanged sentences

We do not anticipate that the discontinuance of the LIBO Rate will materially impact our liquidity or financial position.

As of October 31, 2021, there were no amounts outstanding and we were in compliance with all covenants under the Credit Agreement.

As of January 31, 2022, there were no amounts outstanding and we were in compliance with all covenants under the Credit Agreement.

Commitments and Contingencies

2 unchanged sentences

In order to reduce manufacturing lead times and plan for adequate supply, we enter into agreements with manufacturing partners and component suppliers to procure inventory based on our demand forecasts.

The following table presents details of the aggregate future purchase commitments under these arrangements excluding obligations under contracts that we can cancel without a significant penalty as of October 31, 2021 (in millions):

The following table presents details of the aggregate future purchase commitments under these arrangements, excluding obligations under contracts that we can cancel without a significant penalty as of January 31, 2022 (in millions):

Fiscal years ending July 31,

4 unchanged sentences

We have entered into various non-cancelable agreements with certain service providers, under which we are committed to minimum or fixed purchases.

The following table presents details of the aggregate future non-cancelable purchase commitments under these agreements as of October 31, 2021 (in millions):

The following table presents details of the aggregate future non-cancelable purchase commitments under these agreements as of January 31, 2022 (in millions):

Fiscal years ending July 31,

3 unchanged sentences

Additionally, we have a $ 162.9 million minimum purchase commitment with a service provider through September 2027 with no specified annual commitments.

Land Purchase Agreement

During the three months ended October 31, 2021, we entered into an agreement to purchase 4.6 acres of land adjacent to our headquarters in Santa Clara, California for $ 38.9 million in cash.

If consummated, the transaction would be expected to close during our fiscal quarter ending January 31, 2022.

We are subject to legal proceedings, claims, and litigation arising in the ordinary course of business, including intellectual property litigation.

2 unchanged sentences

To the extent there is a reasonable possibility that a loss exceeding amounts already recognized may be incurred and the amount of such additional loss would be material, we will either disclose the estimated additional loss or state that such an estimate cannot be made.

As of October 31, 2021, we have not recorded any significant accruals for loss contingencies associated with such legal proceedings, determined that an unfavorable outcome is probable or reasonably possible, or determined that the amount or range of any possible loss is reasonably estimable.

As of January 31, 2022, we have not recorded any significant accruals for loss contingencies associated with such legal proceedings, determined that an unfavorable outcome is probable or reasonably possible, or determined that the amount or range of any possible loss is reasonably estimable.

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Stockholders’ Equity

1 unchanged sentence

In February 2019, our board of directors authorized a $ 1.0 billion share repurchase program, which is funded from available working capital.

In December 2020 and August 2021, our board of directors authorized an additional $ 700.0 million and

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$ 676.1 million increase, respectively, bringing the total authorization under this share repurchase program to $ 2.4 billion.

In December 2020 and August 2021, our board of directors authorized an additional $ 700.0 million and $ 676.1 million increase, respectively, bringing the total authorization under this share repurchase program to $ 2.4 billion.

The expiration date of this repurchase authorization was extended to December 31, 2022, and our repurchase program may be suspended or discontinued at any time.

Repurchases under our program are to be made at management’s discretion from time to time on the open market, through privately negotiated transactions, transactions structured through investment banking institutions, block purchase techniques, 10b5-1 trading plans, or a combination of the foregoing.

We did not repurchase shares of our common stock during the three months ended October 31, 2021.

During the three months ended October 31, 2020, we repurchased and retired 2.1 million shares of our common stock under our current repurchase authorization for an aggregate purchase price of $ 500.0 million, including transaction costs, at an average price of $ 242.44 .

As of October 31, 2021, $ 1.0 billion remained available for future share repurchases under our current repurchase authorization.

The following table summarizes the share repurchase activity under our share repurchase program (in millions, except per share amounts):

Three Months Ended January 31, Six Months Ended January 31,

2022 2021 2022 2021

Number of shares repurchased 1.0 — 1.0 2.1

Weighted average price per share (1)

$ 533.80 $ — $ 533.80 $ 242.44

Aggregate purchase price (1)

$ 550.0 $ — $ 550.0 $ 500.0

______________

(1) Includes transaction costs

As of January 31, 2022, $ 450.0 million remained available for future share repurchases under our current repurchase authorization.

Equity Award Plans

Performance Stock Option (“PSO”) Activities

We have granted PSOs with both a market condition and a service condition to certain executives.

2021 Equity Incentive Plan

Our 2021 Equity Incentive Plan (our “2021 Plan”) became effective in December 2021 and replaced the 2012 Equity Incentive Plan.

Our 2021 Plan provides for the granting of stock options, stock appreciation rights, restricted stock awards (“RSA”), restricted stock units (“RSU”), performance share awards (“PSAs”), performance stock units (“PSUs”) and performance stock options (“PSOs”) to our employees, directors, and consultants.

The majority of our equity awards are RSUs, which generally vest over a period of three to four years from the date of grant.

We grant PSUs to certain employees, which vest over a period of one to four years from the date of grant.

The actual number of PSUs earned and eligible to vest is determined based on the level of achievement against revenue growth, pre-established billings and operating margin goals, or pre-defined individual performance targets for the fiscal year, and market conditions, if applicable.

We have also granted PSOs with both a market condition and a service condition to certain executives.

The market condition for PSOs granted in fiscal 2018 and fiscal 2019 requires the price of our common stock to equal or exceed $ 297.75 , $ 397.00 , $ 496.25 , and $ 595.50 based on the average closing price for 30 consecutive trading days during the four -, five -, six -, and seven-and-a-half-year periods following the date of grant in fiscal 2018 and 2019, respectively.

3 unchanged sentences

The maximum contractual term of our PSOs is seven and a half years from the date of grant, depending on vesting period.

A total of 4.5 million shares of our common stock are reserved for issuance pursuant to our 2021 Plan as of January 31, 2022.

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PSO Activities

The following table summarizes the PSO activity under our stock plans during the reporting period (in millions, except per share amounts):

4 unchanged sentences

Forfeited ( 0.1 ) $ 184.24

Balance—October 31, 2021 2.7 $ 194.55 3.9 $ 835.9

Exercisable—October 31, 2021 2.7 $ 194.55 3.9 $ 835.9

Restricted Stock Unit (“RSU”) and Performance-Based Stock Unit (“PSU”) Activities

Balance—January 31, 2022 2.7 $ 194.55 3.7 $ 858.0

Exercisable—January 31, 2022 2.7 $ 194.55 3.7 $ 858.0

RSU and PSU Activities

The following table summarizes the RSU and PSU activity under our stock plans during the reporting period (in millions, except per share amounts):

5 unchanged sentences

Forfeited ( 0.4 ) $ 263.25 ( 0.1 ) $ 313.10

Balance—October 31, 2021 7.2 $ 299.53 $ 3,644.7 1.2 $ 311.24 $ 628.6

Balance—January 31, 2022 6.3 $ 311.58 $ 3,245.6 1.2 $ 311.95 $ 605.2

______________

(1) For PSUs, shares granted represent the aggregate maximum number of shares that may be earned and issued with respect to these awards over their full terms.

Our PSUs generally vest over a period of one to four years from the date of grant.

The actual number of PSUs earned and eligible to vest is determined based on the level of achievement against performance conditions such as revenue growth, pre-established billings and operating margin goals, or pre-defined individual performance targets for the fiscal year, and market conditions, if applicable.

Table of Content

During the three months ended October 31, 2021, we granted 0.1 million shares of PSUs, which contain service, performance and market conditions.

During the six months ended January 31, 2022, we granted 0.1 million shares of PSUs, which contain service, performance and market conditions.

The performance condition is based on revenue growth, whereas the market condition measures our total shareholder return (“TSR”) relative to the TSR of the companies listed in the Standard & Poor’s 500 index.

1 unchanged sentence

The fair value of the PSUs subject to the market condition is estimated on the grant date using a Monte Carlo simulation model.

The following table summarizes the assumptions used and the grant-date fair value of our PSUs granted during the three months ended October 31, 2021:

The following table summarizes the assumptions used and the grant-date fair value of our PSUs granted during the six months ended January 31, 2022:

Volatility 31.6 % - 38.0 %

5 unchanged sentences

$ 387.82 - $ 420.66

Table of Content

Share-Based Compensation

The following table summarizes share-based compensation included in costs and expenses (in millions):

Three Months Ended

Three Months Ended Six Months Ended

January 31, January 31,

2022 2021 2022 2021

Cost of product revenue

$ 2.3 $ 1.6 $ 4.6 $ 3.1

Cost of subscription and support revenue

27.7 23.8 54.4 46.0

Research and development

123.6 103.6 249.2 199.0

Sales and marketing

79.8 69.7 153.1 134.6

General and administrative

31.7 42.4 64.1 71.3

Total share-based compensation $ 265.1 $ 241.1 $ 525.4 $ 454.0

As of October 31, 2021, total compensation cost related to unvested share-based awards not yet recognized was $ 2.3 billion.

As of January 31, 2022, total compensation cost related to unvested share-based awards not yet recognized was $ 2.1 billion.

This cost is expected to be amortized over a weighted-average period of approximately 2.7 years .

For the three months ended October 31, 2021 and 2020, our provision for income taxes reflected an effective tax rate of negative 13.6 % and negative 12.0 %, respectively.

Our effective tax rates for the three months ended October 31, 2021 and 2020 were negative as we recorded provision for income taxes on year-to-date losses.

For the three and six months ended January 31, 2022, our provision for income taxes reflected an effective tax rate of negative 15.7 % and negative 14.6 % , respectively.

For the three and six months ended January 31, 2021, our provision for income taxes reflected an effective tax rate of negative 9.5 % and negative 10.5 %, respectively.

Our effective tax rates for the three and six months ended January 31, 2022 and 2021 were negative as we recorded provision for income taxes on year-to-date losses.

Our taxes are primarily due to foreign income tax and withholding tax.

5 unchanged sentences

The following table presents the computation of basic and diluted net loss per share of common stock (in millions, except per share data):

Three Months Ended

Three Months Ended Six Months Ended

January 31, January 31,

2022 2021 2022 2021

$ ( 93.5 ) $ ( 142.3 ) $ ( 197.1 ) $ ( 234.5 )

Weighted-average shares used to compute net loss per share, basic and diluted 98.2 95.9 97.9 95.7

Net loss per share, basic and diluted $ ( 0.95 ) $ ( 1.48 ) $ ( 2.01 ) $ ( 2.45 )

Table of Content

The following securities were excluded from the computation of diluted net loss per share of common stock for the periods presented as their effect would have been antidilutive (in millions):

Three Months Ended

Three and Six Months Ended

Convertible senior notes 13.1 13.1

7 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