What changed in this filing

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Item 1. Financial Statements

2022-11-18 compared with 2022-05-20 · 194 added, 283 removed, 390 unchanged (55% of the section changed)

3 unchanged sentences

(in millions, except per share data)

April 30, 2022 July 31, 2021

October 31, 2022 July 31, 2022

Current assets:

1 unchanged sentence

Short-term investments 1,736.5 1,516.0

Accounts receivable, net of allowance for credit losses of $ 9.6 and $ 11.2 at April 30, 2022 and July 31, 2021, respectively

Accounts receivable, net of allowance for credit losses of $ 8.4 and $ 8.9 at October 31, 2022 and July 31, 2022, respectively

1,238.1 2,142.5

10 unchanged sentences

Total assets $ 12,543.8 $ 12,253.6

Liabilities, temporary equity and stockholders’ equity

Liabilities and stockholders’ equity

Current liabilities:

5 unchanged sentences

Total current liabilities 8,195.1 8,306.3

Convertible senior notes, net — 1,668.1

Long-term deferred revenue 3,438.3 3,352.8

1 unchanged sentence

Other long-term liabilities 119.3 108.4

Total liabilities 12,035.8 12,043.6

Commitments and contingencies (Note 9)

Temporary equity — 129.1

Stockholders’ equity:

2 unchanged sentences

100.0 shares authorized;

none issued and outstanding at April 30, 2022 and July 31, 2021

none issued and outstanding at October 31, 2022 and July 31, 2022

Common stock and additional paid-in capital;

1 unchanged sentence

1,000.0 shares authorized;

99.6 and 97.3 shares issued and outstanding at April 30, 2022 and July 31, 2021, respectively

302.3 and 298.8 shares issued and outstanding at October 31, 2022 and July 31, 2022, respectively

2,266.2 1,932.7

2 unchanged sentences

Total stockholders’ equity 508.0 210.0

Total liabilities, temporary equity and stockholders’ equity $ 11,100.0 $ 10,241.6

Total liabilities and stockholders’ equity $ 12,543.8 $ 12,253.6

See notes to condensed consolidated financial statements.

3 unchanged sentences

(Unaudited, in millions, except per share data)

Three Months Ended Nine Months Ended

April 30, April 30,

2022 2021 2022 2021

Three Months Ended

Product $ 330.0 $ 295.5

11 unchanged sentences

Total operating expenses 1,086.3 949.5

Operating loss ( 47.6 ) ( 110.4 ) ( 204.2 ) ( 243.7 )

Operating income (loss) 15.2 ( 82.7 )

Interest expense ( 6.8 ) ( 6.9 )

Other income, net 1.9 1.0 0.2 2.9

Loss before income taxes ( 52.5 ) ( 150.4 ) ( 224.5 ) ( 362.7 )

Provision for (benefit from) income taxes 20.7 ( 5.3 ) 45.8 16.9

Net loss $ ( 73.2 ) $ ( 145.1 ) $ ( 270.3 ) $ ( 379.6 )

Net loss per share, basic and diluted $ ( 0.74 ) $ ( 1.50 ) $ ( 2.75 ) $ ( 3.95 )

Weighted-average shares used to compute net loss per share, basic and diluted 98.9 96.9 98.2 96.1

Other income (expense), net 26.0 ( 1.6 )

Income (loss) before income taxes 34.4 ( 91.2 )

Provision for income taxes 14.4 12.4

Net income (loss) $ 20.0 $ ( 103.6 )

Net income (loss) per share, basic $ 0.07 $ ( 0.35 )

Net income (loss) per share, diluted $ 0.06 $ ( 0.35 )

Weighted-average shares used to compute net income (loss) per share, basic 299.8 292.9

Weighted-average shares used to compute net income (loss) per share, diluted 338.4 292.9

See notes to condensed consolidated financial statements .

3 unchanged sentences

(Unaudited, in millions)

Three Months Ended Nine Months Ended

April 30, April 30,

2022 2021 2022 2021

Net loss $ ( 73.2 ) $ ( 145.1 ) $ ( 270.3 ) $ ( 379.6 )

Three Months Ended

Net income (loss) $ 20.0 $ ( 103.6 )

Other comprehensive income (loss), net of tax:

Change in unrealized gains (losses) on investments ( 27.8 ) ( 2.2 )

Change in unrealized gains (losses) on cash flow hedges ( 13.5 ) ( 5.5 ) ( 22.8 ) ( 4.5 )

Other comprehensive income (loss) ( 28.1 ) ( 6.3 ) ( 48.4 ) ( 6.9 )

Cash flow hedges:

Change in unrealized gains (losses) ( 42.5 ) ( 1.9 )

Net realized (gains) losses reclassified into earnings 14.8 2.7

Net change on cash flow hedges ( 27.7 ) 0.8

Other comprehensive loss ( 55.5 ) ( 1.4 )

Comprehensive loss $ ( 35.5 ) $ ( 105.0 )

4 unchanged sentences

(Unaudited, in millions)

Three Months Ended April 30, 2022

Additional Paid-In Capital Accumulated

Comprehensive Income (Loss) Accumulated

Deficit Total

Stockholders’

Shares Amount

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

Net loss — — — ( 73.2 ) ( 73.2 )

Other comprehensive loss — — ( 28.1 ) — ( 28.1 )

Issuance of common stock in connection with employee equity incentive plans 1.1 77.8 — — 77.8

Taxes paid related to net share settlement of equity awards — ( 11.2 ) — — ( 11.2 )

Share-based compensation for equity-based awards — 254.5 — — 254.5

Balance as of April 30, 2022 99.6 $ 2,066.3 $ ( 58.3 ) $ ( 1,670.4 ) $ 337.6

Three Months Ended April 30, 2021

Additional Paid-In Capital Accumulated

Comprehensive Income (Loss) Accumulated

Deficit Total

Stockholders’

Shares Amount

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

Net loss — — — ( 145.1 ) ( 145.1 )

Other comprehensive loss — — ( 6.3 ) — ( 6.3 )

Issuance of common stock in connection with employee equity incentive plans 1.2 58.0 — — 58.0

Taxes paid related to net share settlement of equity awards — ( 6.6 ) — — ( 6.6 )

Share-based compensation for equity-based awards — 248.7 — — 248.7

Repurchase and retirement of common stock ( 1.0 ) ( 350.0 ) — — ( 350.0 )

Temporary equity reclassification — 161.2 — — 161.2

Balance as of April 30, 2021 97.4 $ 2,541.1 $ 3.6 $ ( 1,547.5 ) $ 997.2

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Nine Months Ended April 30, 2022

Three Months Ended October 31, 2022

Additional Paid-In Capital Accumulated

4 unchanged sentences

Balance as of July 31, 2022 298.8 $ 1,932.7 $ ( 55.6 ) $ ( 1,667.1 ) $ 210.0

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

Net loss — — — ( 270.3 ) ( 270.3 )

Net income — — — 20.0 20.0

Other comprehensive loss — — ( 55.5 ) — ( 55.5 )

2 unchanged sentences

Share-based compensation for equity-based awards — 279.2 — — 279.2

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

Balance as of April 30, 2022 99.6 $ 2,066.3 $ ( 58.3 ) $ ( 1,670.4 ) $ 337.6

Nine Months Ended April 30, 2021

Balance as of October 31, 2022 302.3 $ 2,266.2 $ ( 111.1 ) $ ( 1,647.1 ) $ 508.0

Three Months Ended October 31, 2021

Additional Paid-In Capital Accumulated

4 unchanged sentences

Balance as of July 31, 2021 291.9 $ 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 — — — ( 103.6 ) ( 103.6 )

3 unchanged sentences

Share-based compensation for equity-based awards — 265.7 — — 265.7

Repurchase and retirement of common stock ( 3.1 ) ( 850.0 ) — — ( 850.0 )

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

Balance as of April 30, 2021 97.4 $ 2,541.1 $ 3.6 $ ( 1,547.5 ) $ 997.2

See notes to condensed consolidated financial statements.

Balance as of October 31, 2021 296.0 $ 2,033.9 $ ( 11.3 ) $ ( 1,503.7 ) $ 518.9

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2 unchanged sentences

(Unaudited, in millions)

Nine Months Ended

Three Months Ended

Cash flows from operating activities

Net income (loss)

$ 20.0 $ ( 103.6 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Share-based compensation 771.5 664.5

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Share-based compensation for equity-based awards 266.0 259.1

Depreciation and amortization 70.7 69.0

1 unchanged sentence

Amortization of debt discount and debt issuance costs 1.8 1.8

Amortization of operating lease right-of-use assets 37.5 32.6

Reduction of operating lease right-of-use assets 12.1 12.7

Amortization of investment premiums, net of accretion of purchase discounts 1.7 3.6

1 unchanged sentence

Accounts receivable, net

( 0.1 ) 301.3

Deferred contract costs ( 60.1 ) ( 63.8 )

18 unchanged sentences

Repurchases of common stock

( 550.0 ) ( 850.0 )

Proceeds from sales of shares through employee equity incentive plans

Payments for taxes related to net settlement of equity awards

Payments for taxes related to net share settlement of equity awards

( 13.9 ) ( 20.0 )

Payments for debt issuance costs

Net cash used in financing activities ( 453.5 ) ( 768.4 )

Net cash provided by financing activities 31.1 38.7

Net increase (decrease) in cash, cash equivalents, and restricted cash ( 52.0 ) 397.7

6 unchanged sentences

Total cash, cash equivalents, and restricted cash $ 2,072.8 $ 2,277.8

Non-cash investing and financing activities

Equity consideration for business acquisitions $ ( 2.5 ) $ ( 365.4 )

See notes to condensed consolidated financial statements .

5 unchanged sentences

(the “Company,” “we,” “us,” or “our”), headquartered in Santa Clara, California, was incorporated in March 2005 under the laws of the State of Delaware and commenced operations in April 2005.

We empower enterprises, service providers, and government entities to secure all users, applications, data, networks, clouds and devices with comprehensive visibility and context, continuously across all locations.

We empower enterprises, organizations, service providers, and government entities to secure their users, networks, clouds, and endpoints by delivering comprehensive cybersecurity backed by artificial intelligence and automation.

Basis of Presentation and Principles of Consolidation

3 unchanged sentences

All significant intercompany balances and transactions have been eliminated in consolidation.

Our condensed consolidated financial statements are unaudited but include all adjustments of a normal recurring nature necessary for a fair presentation of our quarterly results.

Certain prior period amounts have been reclassified to conform to our current period presentation.

The condensed consolidated financial statements are unaudited but include all adjustments of a normal recurring nature necessary for a fair presentation of our quarterly results.

Our condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes in our Annual Report on Form 10-K for the fiscal year ended July 31, 2022.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

We base our estimates on historical experience and also on assumptions that we believe are reasonable.

Actual results could differ materially from those estimates due to risks and uncertainties, including uncertainty in the economic environment such as the global impact of the coronavirus disease discovered in 2019 (“COVID-19”).

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the condensed consolidated financial statements and the accompanying notes.

We base our estimates on assumptions, both historical and forward looking, that we believe are reasonable.

Actual results could differ materially from those estimates due to risks and uncertainties, including uncertainty in the current economic environment.

Summary of Significant Accounting Policies

There have been no material changes to our significant accounting policies as of and for the nine months ended April 30, 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.

Recently Adopted Accounting Pronouncements

Acquired Contract Assets and Contract Liabilities

In October 2021, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance that requires companies to apply revenue guidance to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination on the acquisition date, instead of measuring them at fair value.

We early adopted this guidance in our first quarter of fiscal 2022 on a prospective basis.

The adoption of this standard did not have a material impact on our condensed consolidated financial statements.

Debt with Conversion Options

In August 2020, the FASB issued authoritative guidance that simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instrument.

The standard reduces the number of models used to account for convertible instruments and simplifies the classification of debt on the balance sheet.

We adopted this standard in our first quarter of fiscal 2022 using the modified-retrospective approach, under which financial results reported in periods prior to fiscal 2022 were not adjusted.

The adoption of this standard resulted in an increase to convertible senior notes, net of $ 444.3 million, a decrease to accumulated deficit of $ 266.7 million, and a decrease to additional paid-in capital and temporary equity of $ 711.0 million upon adoption.

Below is the update to our Summary of Significant Accounting Policies in our Annual Report on Form 10-K for the fiscal year ended July 31, 2021 as a result of the adoption of the above guidance.

Business Combinations

We include the results of operations of the businesses that we acquire as of the respective dates of acquisition.

We generally allocate the fair value of the purchase price of our acquisitions to the assets acquired and liabilities assumed based on their estimated

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The excess of the purchase price over the values of these identifiable assets and liabilities is recorded as goodwill.

Additional information existing as of the acquisition date but unknown to us may become known during the remainder of the measurement period, not to exceed 12 months from the acquisition date, which may result in changes to the amounts and allocations recorded.

Convertible Senior Notes

Prior to August 1, 2021, our convertible senior notes were separated into a liability and an equity component.

The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that did not have an associated convertible feature, using a discounted cash flow model with a risk-adjusted yield.

The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the par value of the notes as a whole.

This difference represented a debt discount that was amortized to interest expense using the effective interest method over the term of the notes.

The equity component was not remeasured as it continued to meet the conditions for equity classification.

Transaction costs related to the issuance of the notes were allocated to the liability and equity components using the same proportions as the proceeds from the notes.

Transaction costs attributable to the liability component were netted with the liability component and amortized to interest expense using the effective interest method over the term of the notes.

Transaction costs attributable to the equity component were netted with the equity component of the notes in additional paid-in capital.

Upon the notes becoming convertible, the net carrying amount of the liability component was classified as a current liability and a portion of the equity component representing the conversion option was reclassified to temporary equity.

The portion of the equity component classified as temporary equity was measured as the difference between the principal and net carrying amount of the notes, excluding debt issuance costs.

Upon adoption of the new debt guidance on August 1, 2021, our convertible senior notes are accounted for entirely as a liability and measured at their amortized cost.

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.

Refer to Note 9.

Debt for additional information.

There have been no material changes to our significant accounting policies as of and for the three months ended October 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, 2022.

Stock Split Effected in the Form of a Stock Dividend (“Stock Split”)

On September 13, 2022, we executed a three -for-one stock split of our common stock, effected in the form of a stock dividend.

The par value per share of our common stock remains unchanged at $ 0.001 per share after the Stock Split.

All references made to share or per share amounts on the accompanying condensed consolidated financial statements and applicable disclosures have been retroactively adjusted to reflect the effects of the Stock Split.

Disaggregation of Revenue

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

Three Months Ended April 30, Nine Months Ended April 30,

2022 2021 2022 2021

Three Months Ended October 31,

United States $ 1,006.3 $ 811.7

4 unchanged sentences

Total revenue $ 1,563.4 $ 1,247.4

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

Three Months Ended April 30, Nine Months Ended April 30,

2022 2021 2022 2021

Three Months Ended October 31,

Product $ 330.0 $ 295.5

5 unchanged sentences

Deferred Revenue

During the nine months ended April 30, 2022 and 2021, we recognized approximately $ 2.2 billion and $ 1.6 billion of revenue pertaining to amounts that were deferred as of July 31, 2021 and 2020, respectively.

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During the three months ended October 31, 2022 and 2021, we recognized approximately $ 1.1 billion and $ 840.0 million of revenue pertaining to amounts that were deferred as of July 31, 2022 and 2021, respectively.

Remaining Performance Obligations

Revenue expected to be recognized from remaining performance obligations was $ 6.9 billion as of April 30, 2022, of which we expect to recognize approximately $ 3.6 billion over the next 12 months and the remainder thereafter.

Remaining performance obligations were $ 8.3 billion as of October 31, 2022, of which we expect to recognize as revenue approximately $ 4.2 billion over the next 12 months and the remainder thereafter.

Fair Value Measurements

We categorize assets and liabilities recorded or disclosed at fair value on our condensed consolidated balance sheets based upon the level of judgment associated with inputs used to measure their fair value.

The categories are as follows:

• Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

• Level 2—Inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments.

• Level 3—Inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value.

The inputs require significant management judgment or estimation.

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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 April 30, 2022 and July 31, 2021 (in millions):

April 30, 2022 July 31, 2021

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

October 31, 2022 July 31, 2022

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

5 unchanged sentences

government and agency securities — 159.9 — 159.9 — 10.0 — 10.0

government and agency securities — — — — — 5.1 — 5.1

Total cash equivalents 933.2 686.2 — 1,619.4 1,205.2 259.0 — 1,464.2

7 unchanged sentences

Long-term investments:

Certificates of deposit — — — — — 5.0 — 5.0

Corporate debt securities — 1,623.8 — 1,623.8 — 761.2 — 761.2

3 unchanged sentences

Total long-term investments — 2,094.7 — 2,094.7 — 1,051.9 — 1,051.9

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October 31, 2022 July 31, 2022

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

Prepaid expenses and other current assets:

4 unchanged sentences

Total other assets — 0.2 — 0.2 — 0.7 — 0.7

— — — — — 0.1 — 0.1

Total assets measured at fair value $ 933.2 $ 4,518.1 $ — $ 5,451.3 $ 1,205.2 $ 2,830.0 $ — $ 4,035.2

6 unchanged sentences

Total liabilities measured at fair value $ — $ 56.6 $ — $ 56.6 $ — $ 33.2 $ — $ 33.2

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Refer to Note 8.

Debt for the carrying amount and estimated fair value of our convertible senior notes as of April 30, 2022 and July 31, 2021.

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

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 April 30, 2022 and July 31, 2021 (in millions):

April 30, 2022

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, 2022 and July 31, 2022 (in millions):

October 31, 2022

Amortized Cost Unrealized Gains Unrealized Losses Fair Value

3 unchanged sentences

Corporate debt securities 37.3 — ( 0.1 ) 37.2

government and agency securities 159.9 — — 159.9

Total available-for-sale cash equivalents $ 686.3 $ — $ ( 0.1 ) $ 686.2

6 unchanged sentences

Total available-for-sale investments $ 3,882.4 $ 0.4 $ ( 51.6 ) $ 3,831.2

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July 31, 2022

2 unchanged sentences

Certificates of deposit $ 155.3 $ — $ — $ 155.3

Commercial paper 69.1 — — 69.1

Corporate debt securities 19.5 — — 19.5

government and agency securities 10.0 — — 10.0

government and agency securities 5.0 0.1 — 5.1

Total available-for-sale cash equivalents $ 258.9 $ 0.1 $ — $ 259.0

Certificates of deposit $ 116.5 $ — $ ( 0.1 ) $ 116.4

Commercial paper 79.1 — ( 0.1 ) 79.0

Corporate debt securities 1,276.8 1.3 ( 11.9 ) 1,266.2

1 unchanged sentence

government and agency securities 17.6 — ( 0.2 ) 17.4

Asset-backed securities $ 173.4 $ 0.2 $ ( 1.1 ) $ 172.5

Total available-for-sale investments $ 2,591.5 $ 1.6 $ ( 25.2 ) $ 2,567.9

As of October 31, 2022, the gross unrealized losses that have been in a continuous unrealized loss position for less than 12 months were $ 45.7 million, which were related to $ 3.5 billion of available-for-sale debt securities, and the gross unrealized losses that have been in a continuous unrealized loss position for more than 12 months were not material.

As of July 31, 2022 the gross unrealized losses that have been in a continuous unrealized loss position for less than 12 months were $ 24.8 million, which were related to $ 2.0 billion of available-for-sale debt securities, and the gross unrealized losses that have been in a continuous unrealized loss position for more than 12 months were not material.

Unrealized losses related to our available-for-sale debt securities are due to interest rate fluctuations as opposed to credit quality.

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 and nine months ended April 30, 2022 and 2021.

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The following table summarizes the amortized cost and fair value of our available-for-sale debt securities as of April 30, 2022, 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 months ended October 31, 2022 and 2021.

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

Amortized Cost Fair Value

6 unchanged sentences

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

As of April 30, 2022 and July 31, 2021, the carrying values of our marketable equity securities were $ 923.0 million and $ 124.2 million, respectively.

There were no unrealized gains or losses recognized for these securities during the three and nine months ended April 30, 2022 and 2021.

As of October 31, 2022 and July 31, 2022, the carrying values of our marketable equity securities were $ 933.2 million and $ 1.2 billion, respectively.

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

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Financing Receivables

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

The following table summarizes our short-term and long-term financing receivables as of April 30, 2022 and July 31, 2021 (in millions):

April 30, 2022 July 31, 2021

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

October 31, 2022 July 31, 2022

Short-term financing receivables, gross

8 unchanged sentences

$ 162.1 $ 192.1

There was no significant activity in allowance for credit losses during the three and nine months ended April 30, 2022 and 2021.

Past due amounts on financing receivables were immaterial as of April 30, 2022 and July 31, 2021.

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

Past due amounts on financing receivables were not material as of October 31, 2022 and July 31, 2022.

Derivative Instruments

As a global business, we are exposed to currency exchange rate risk.

We are exposed to foreign currency exchange risk.

Substantially all of our revenue is transacted in U.S.

dollars, however, a portion of our operating expenditures are incurred outside of the United States and are denominated in foreign currencies, making them subject to fluctuations in foreign currency exchange rates.

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 April 30, 2022 and July 31, 2021, the total notional amount of our outstanding foreign currency forward contracts including designated and non-designated derivative instruments was $ 886.7 million and $ 531.9 million, respectively.

We enter into foreign currency derivative contracts with maturities of 24 months or less, which we designate as cash flow hedges, to manage the foreign currency exchange risk associated with our operating expenditures.

As of October 31, 2022 and July 31, 2022, the total notional amount of our outstanding foreign currency forward contracts was $ 1.3 billion and $ 856.9 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 April 30, 2022 and July 31, 2021.

During the three and nine months ended April 30, 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 April 30, 2022 and July 31, 2021 were not material.

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

(“Gamma”), a privately-held AI powered company, for total consideration of $ 20.4 million, primarily in cash.

We expect the acquisition will enhance and expand our data loss prevention offerings.

We have accounted for this transaction as a business combination.

We allocated the purchase consideration to the assets acquired and liabilities assumed, with the remainder of $ 21.2 million recorded as goodwill.

The goodwill is primarily attributable to the assembled workforce and expected post-acquisition synergies from integrating Gamma technology into our platforms.

The goodwill is not deductible for income tax purposes.

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Goodwill, Intangible Assets and Other Long-lived Assets

The following table presents details of our goodwill during the nine months ended April 30, 2022 (in millions):

Balance as of July 31, 2021 $ 2,710.1

Goodwill acquired 21.2

Balance as of April 30, 2022 $ 2,731.3

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

As of October 31, 2022, unrealized losses in accumulated other comprehensive income (“AOCI”) related to our cash flow hedges were $ 52.5 million, of which $ 44.2 million of losses are expected to be recognized into earnings within the next 12 months.

As of July 31, 2022, unrealized losses in AOCI related to our cash flow hedges were $ 24.8 million, of which $ 22.0 million of losses are expected to be recognized into earnings within the next 12 months.

Intangible Assets

Purchased Intangible Assets

The following table presents details of our purchased intangible assets as of April 30, 2022 and July 31, 2021 (in millions):

April 30, 2022 July 31, 2021

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

October 31, 2022 July 31, 2022

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

5 unchanged sentences

Other 0.9 ( 0.2 ) 0.7 0.9 ( 0.1 ) 0.8

Total intangible assets subject to amortization 795.0 ( 443.5 ) 351.5 795.0 ( 414.4 ) 380.6

Intangible assets not subject to amortization:

In-process research and development 3.9 — 3.9 3.9 — 3.9

Total purchased intangible assets $ 798.9 $ ( 443.5 ) $ 355.4 $ 798.9 $ ( 414.4 ) $ 384.5

We recognized amortization expense of $ 31.8 million and $ 95.3 million for the three and nine months ended April 30, 2022, respectively, and $ 32.8 million and $ 86.1 million for the three and nine months ended April 30, 2021, respectively.

The following table summarizes estimated future amortization expense of our intangible assets as of April 30, 2022 (in millions):

We recognized amortization expense of $ 29.1 million and $ 31.8 million for the three months ended October 31, 2022 and 2021, respectively.

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

Fiscal years ending July 31,

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Future amortization expense $ 351.5 $ 72.0 $ 91.1 $ 77.4 $ 55.6 $ 28.5 $ 26.9

Other Long-lived Assets

During the nine months ended April 30, 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 April 30, 2022.

Convertible Senior Notes

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We may redeem for cash all or any portion of the 2025 Notes, at our option, on or after June 5, 2023, and prior to the 31st scheduled trading day immediately preceding the maturity date if the last reported sale price of our common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days during any 30 consecutive trading day period ending on and including the trading day preceding the date on which we provide notice of redemption.

The redemption will be at a price equal to 100 % of the

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principal amount of the 2025 Notes and adjusted for interest.

The redemption will be at a price equal to 100 % of the principal amount of the 2025 Notes and adjusted for interest.

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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Holders of the Notes of a series who convert their Notes of such series in connection with certain corporate events that constitute a “make-whole fundamental change” under the applicable Indenture are, under certain circumstances, entitled to an increase in the conversion rate for such series of Notes.

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 April 30, 2022, and as a result, holders may convert their Notes at any time during the fiscal quarter ending July 31, 2022.

Accordingly, the net carrying amount of the Notes was classified as a current liability on our condensed consolidated balance sheet as of April 30, 2022.

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The following table sets forth the components of the Notes as of April 30, 2022 and July 31, 2021 (in millions):

April 30, 2022 (1)

July 31, 2021

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, 2022, and as a result, holders may convert their Notes at any time during the fiscal quarter ending January 31, 2023.

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

The following table sets forth the components of the Notes (in millions):

October 31, 2022 July 31, 2022

2023 Notes 2025 Notes Total 2023 Notes 2025 Notes Total

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Net carrying amount $ 1,690.0 $ 1,988.6 $ 3,678.6 $ 1,689.3 $ 1,987.5 $ 3,676.8

Equity component (including amounts classified as temporary equity) $ — $ — $ — $ 315.0 $ 403.0 $ 718.0

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(1) As described in Note 1.

Description of Business and Summary of Significant Accounting Policies, we adopted new debt guidance effective August 1, 2021, using a modified retrospective method, under which financial results reported in prior periods were not adjusted.

Upon adoption, our convertible senior notes are accounted for entirely as a liability and measured at their amortized cost.

The total estimated fair value of the 2023 Notes and 2025 Notes were $ 3.6 billion and $ 4.0 billion at April 30, 2022, 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 $ 3.5 billion at October 31, 2022, respectively, and $ 3.2 billion and $ 3.5 billion at July 31, 2022, 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 April 30, 2022 and July 31, 2021 to be a Level 2 measurement.

We consider the fair value of the Notes at October 31, 2022 and July 31, 2022 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 April 30, Nine Months Ended April 30,

2022 2021 2022 2021

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

Three Months Ended October 31,

2023 Notes 2025 Notes Total 2023 Notes 2025 Notes Total

Contractual interest expense $ 3.2 $ 1.8 $ 5.0 $ 3.2 $ 1.9 $ 5.1

Amortization of debt discount (1)

— — — 16.0 18.6 34.6 — — — 47.4 55.3 102.7

Amortization of debt issuance costs 0.7 1.1 1.8 0.7 1.1 1.8

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Effective interest rate 0.9 % 0.6 % 0.9 % 0.6 %

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(1) Upon adoption of the new debt guidance, the conversion option is no longer separately accounted for as debt discount.

Our convertible senior notes are accounted for entirely as a liability.

To minimize the impact of potential economic dilution upon conversion of our Notes, we entered into separate convertible note hedge transactions (the “2023 Note Hedges,” with respect to the 2023 Notes, the “2025 Note Hedges,” with respect to the 2025 Notes, and the 2023 Notes Hedges together with 2025 Note Hedges, the “Note Hedges”) with respect to our common stock concurrent with the issuance of each series of the Notes.

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The Note Hedges will expire upon maturity of the applicable series of the Notes.

The Note Hedges are

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separate transactions and are not part of the terms of the applicable series of the Notes.

The Note Hedges are separate transactions and are not part of the terms of the applicable series of the Notes.

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

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

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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.

The 2023 Warrants and 2025 Warrants are exercisable beginning October 2023 and September 2025, respectively.

The following table presents details of the Warrants (in millions, except per share data):

The following table presents details of our Warrants (in millions, except per share data):

Initial Number

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We are obligated to pay an ongoing commitment fee on undrawn amounts at a rate of 0.125 % to 0.250 %, depending on our leverage ratio.

In March 2021, the ICE Benchmark Administration, the administrator of LIBO Rate, announced that it will cease publication of LIBO rate by June 2023.

In March 2021, the ICE Benchmark Administration, the administrator of LIBO Rate, announced that it will cease publication of the LIBO Rate by June 2023.

Under the terms of our Credit Facility, in the event of the discontinuance of the LIBO Rate, a mutually agreed-upon alternative benchmark rate will be established to replace the LIBO Rate, which may include the Secured Overnight Financing Rate (“SOFR”).

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

As of April 30, 2022, there were no amounts outstanding and we were in compliance with all covenants under the Credit Agreement.

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

Commitments and Contingencies

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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 April 30, 2022 (in millions):

The following table presents details of the aggregate future minimum or fixed purchase commitments under these arrangements, excluding obligations under contracts that we can cancel as of October 31, 2022 (in millions):

Fiscal years ending July 31,

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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 April 30, 2022 (in millions):

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

Fiscal years ending July 31,

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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 April 30, 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.

As of October 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.

Stockholders’ Equity

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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 additional $ 700.0 million and $ 676.1 million increases, 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.

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

Three Months Ended April 30, Nine Months Ended April 30,

2022 2021 2022 2021

Number of shares repurchased — 1.0 1.0 3.1

Weighted average price per share (1)

$ — $ 321.97 $ 533.80 $ 269.89

Aggregate purchase price (1)

$ — $ 350.0 $ 550.0 $ 850.0

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(1) Includes transaction costs

As of April 30, 2022, $ 450.0 million remained available for future share repurchases under our current repurchase authorization.

In December 2020, August 2021, and August 2022, our board of directors authorized additional $ 700.0 million, $ 676.1 million, and $ 915.0 million increases to this share repurchase program, respectively, bringing the total authorization under this share repurchase program to $ 3.3 billion (our “current authorization”).

The expiration date of our current authorization was extended to December 31, 2023, and our repurchase program may be suspended or discontinued at any time.

Repurchases may 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, 2022 and 2021.

During the three months ended October 31, 2022, we paid $ 22.7 million related to share repurchases of our common stock that were not settled as of July 31, 2022.

As of October 31, 2022, $ 1.0 billion remained available for future share repurchases under our current repurchase authorization.

The total price of the shares repurchased and related transaction costs are reflected as a reduction to common stock and additional paid-in capital on our condensed consolidated balance sheets.

Equity Award Plans

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 “2012 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.

Our 2012 Plan continues to govern the terms of outstanding equity awards that were granted thereunder prior to the adoption of the 2021 Plan.

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

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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.

To the extent that the market condition has been met, one-fourth of the PSOs will vest on each anniversary date of the grant date for such PSOs, subject to continued service.

All outstanding PSOs may be exercised prior to vesting (“early exercise”).

Shares of common stock issued upon early exercise of the PSOs will be restricted and, at our option, subject to repurchase if the option holder ceases to be a service provider.

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

As of April 30, 2022, all stock price targets for our outstanding PSOs have been satisfied.

A total of 4.7 million shares of our common stock are reserved for issuance pursuant to our 2021 Plan as of April 30, 2022.

PSO Activities

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

PSOs Outstanding

Number of Shares Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Term

(Years) Aggregate Intrinsic Value

Balance—July 31, 2021 2.8 $ 194.14 4.2 $ 566.8

Forfeited ( 0.1 ) $ 184.24

Balance—April 30, 2022 2.7 $ 194.55 3.4 $ 974.6

Exercisable—April 30, 2022 2.7 $ 194.55 3.4 $ 974.6

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):

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

The following table summarizes the RSU and PSU activity under our stock plans during the three months ended October 31, 2022 (in millions, except per share amounts):

RSUs Outstanding PSUs Outstanding

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1.0 $ 174.04 2.6 $ 140.41

Vested ( 2.3 ) $ 251.42 ( 0.4 ) $ 249.70

( 1.9 ) $ 99.25 ( 1.1 ) $ 117.42

Forfeited ( 0.4 ) $ 113.23 ( 0.1 ) $ 124.01

Balance—April 30, 2022 5.6 $ 328.61 $ 3,131.9 1.1 $ 313.09 $ 632.9

Balance—October 31, 2022 13.5 $ 122.57 $ 2,311.7 4.5 $ 123.10 $ 772.7

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(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.

During the nine months ended April 30, 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.

In addition to this grant, we have also approved the future grant of 0.1 million shares of PSUs with similar terms, which will be considered granted at the time their related vesting conditions are established in the next two years.

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:

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Three Months Ended April 30, 2022 Nine Months Ended April 30, 2022

Our RSUs generally vest over a period of three to four years from the date of grant.

Until vested, RSUs do not have the voting and dividend participation rights of common stock and the shares underlying the awards are not considered issued and outstanding.

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 certain performance conditions such as revenue growth, billings and operating margin, or individual performance for the fiscal year, or market conditions, or a combination of performance and market conditions for certain awards.

During the three months ended October 31, 2022, we granted 0.8 million shares of PSUs with both service and market conditions to certain employees.

The market conditions are satisfied when the price of our common stock is equal to or exceeds stock price targets of $ 233.33 , $ 266.67 , $ 300.00 , and $ 333.33 based on the average closing price for 30 consecutive trading days during the three - or four-year period following the date of grant.

To the extent that the market conditions have been met, one-fourth of the awards will vest on each anniversary date of the grant date, subject to continued service.

As of October 31, 2022, the stock price targets for these PSU awards have not been met.

During the three months ended October 31, 2022 and 2021, we granted 1.6 million and 0.6 million shares of PSUs, respectively, which contain service, performance and market conditions, to certain employees.

The service conditions are satisfied over a period of one to three years .

The performance conditions are based on revenue growth or billing growth.

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

As of October 31, 2022, we have approved 2.3 million shares of PSUs, which will be granted upon the performance condition being established during the next two years.

The fair value of the PSUs subject to market conditions 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 these PSUs granted:

Three Months Ended

Volatility 39.6 % - 44.8 %

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$ 137.16 - $ 140.22

Performance Stock Option (“PSO”) Activities

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

The market conditions were achieved when certain stock price targets were met.

As of October 31, 2022, all stock price targets for our outstanding PSOs have been satisfied.

One-fourth of the PSOs will vest on each anniversary date of the grant date, subject to continued service.

The contractual term for the PSOs outstanding ranges from seven to seven and a half years following the date of grant in fiscal year 2018 and 2019.

The following table summarizes the PSO activity under our stock plans during the three months ended October 31, 2022 (in millions, except per share amounts):

PSOs Outstanding

Number of Shares Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Term

(Years) Aggregate Intrinsic Value

Balance—July 31, 2022 8.0 $ 64.85 3.2 $ 809.3

Balance—October 31, 2022 8.0 $ 64.85 2.9 $ 851.0

Exercisable—October 31, 2022 8.0 $ 64.85 2.9 $ 851.0

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Share-Based Compensation

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

Three Months Ended Nine Months Ended

April 30, April 30,

2022 2021 2022 2021

Three Months Ended

Cost of product revenue

$ 2.3 $ 1.6 $ 6.9 $ 4.7

Cost of subscription and support revenue

27.4 23.3 81.8 69.3

Research and development

112.7 118.2 361.9 317.2

Sales and marketing

75.7 69.2 228.8 203.8

General and administrative

29.2 30.6 93.3 101.9

Total share-based compensation $ 266.0 $ 260.3

As of April 30, 2022, total compensation cost related to unvested share-based awards not yet recognized was $ 2.0 billion.

As of October 31, 2022, total compensation cost related to unvested share-based awards not yet recognized was $ 2.0 billion.

This cost is expected to be amortized over a weighted-average period of approximately 2.5 years .

For the three and nine months ended April 30, 2022, our provision for income taxes reflected an effective tax rate of negative 39.4 % and negative 20.4 % , respectively.

For the three and nine months ended April 30, 2021, our provision for income taxes reflected an effective tax rate of 3.5 % and negative 4.7 %, respectively.

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

For the three months ended October 31, 2022 and 2021, our provision for income taxes reflected an effective tax rate of 41.9 % and negative 13.6 %, respectively.

Our income taxes for the three months ended October 31, 2022 were primarily due to U.S.

taxes, withholding taxes, and foreign income taxes.

Our effective tax rate increased compared to the same period last year primarily due to an increase in current U.S.

taxes as a result of mandatory capitalization and amortization of research and development expenditures incurred in fiscal year 2023, as required by the 2017 Tax Cuts and Jobs Act (“TCJA”).

There is no offsetting deferred benefit due to our valuation allowance.

Our income taxes for the three months ended October 31, 2021 were primarily due to foreign income taxes and withholding taxes.

Our effective tax rates differed from the U.S.

statutory tax rate primarily due to changes in our valuation allowance.

Net Loss Per Share

Basic net loss per share is computed by dividing net loss by basic weighted-average shares outstanding during the period.

Diluted net loss per share is computed by dividing net loss by diluted weighted-average shares outstanding, including potentially dilutive securities.

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 Nine Months Ended

April 30, April 30,

2022 2021 2022 2021

$ ( 73.2 ) $ ( 145.1 ) $ ( 270.3 ) $ ( 379.6 )

Weighted-average shares used to compute net loss per share, basic and diluted 98.9 96.9 98.2 96.1

Net loss per share, basic and diluted $ ( 0.74 ) $ ( 1.50 ) $ ( 2.75 ) $ ( 3.95 )

Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss) by basic weighted-average shares outstanding during the period.

Diluted net income (loss) per share is computed by dividing net income (loss) by diluted weighted-average shares outstanding during the period giving effect to all potentially dilutive securities to the extent they are dilutive.

Potentially dilutive securities include shares issuable upon conversion of our convertible senior notes using the if-converted method.

Potentially dilutive securities also include warrants related to the issuance of convertible senior notes and equity awards under our employee equity incentive plans using the treasury stock method.

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

Three Months Ended

Net income (loss) $ 20.0 $ ( 103.6 )

Weighted-average shares used to compute net income (loss) per share, basic 299.8 292.9

Weighted-average effect of potentially dilutive securities:

Convertible senior notes 17.8 —

Warrants related to the issuance of convertible senior notes 7.8 —

Employee equity incentive plans 13.0 —

Weighted-average shares used to compute net income (loss) per share, diluted 338.4 292.9

Net income (loss) per share, basic $ 0.07 $ ( 0.35 )

Net income (loss) per share, diluted $ 0.06 $ ( 0.35 )

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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 and Nine Months Ended

The following securities were excluded from the computation of diluted net income (loss) per share of common stock as their effect would have been antidilutive or issuance of such shares is contingent upon the satisfaction of certain conditions which were not satisfied by the end of the applicable period (in millions):

Three Months Ended

Convertible senior notes — 39.2

Warrants related to the issuance of convertible senior notes — 39.2

RSUs and PSUs 6.7 8.3

Options to purchase common stock, including PSOs 2.7 2.8

Restricted stock awards and performance-based stock awards 0.2 0.4

ESPP shares 0.1 0.1

Employee equity incentive plans 2.7 34.5

Total 2.7 112.9

Other Income (Expense), Net

The following table sets forth the components of other income (expense), net (in millions):

Three Months Ended

Interest income $ 29.4 $ 1.4

Foreign currency exchange gains (losses), net 4.4 ( 3.9 )

Other ( 7.8 ) 0.9

Total other income (expense), net $ 26.0 $ ( 1.6 )

Subsequent Event

Business Combination

On November 17, 2022, we entered into a definitive agreement to acquire Cider Security Ltd., a privately-held cyber security company, for total consideration of approximately $ 250.0 million, including approximately $ 194.6 million in cash and approximately $ 55.4 million in replacement equity awards, subject to adjustment.

We expect the acquisition will support Prisma Cloud’s platform approach to securing the entire application security lifecycle from code-to-cloud.

The proposed acquisition is expected to close during our second quarter of fiscal 2023, subject to the satisfaction of customary closing conditions.

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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