What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-08-29 compared with 2024-09-06 · 299 added, 274 removed, 1027 unchanged (36% of the section changed)

4 unchanged sentences

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive Income

Consolidated Statements of Stockholders’ Equity

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We have audited the accompanying consolidated balance sheets of Palo Alto Networks, Inc.

(the Company) as of July 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended July 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

(the Company) as of July 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended July 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at July 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended July 31, 2025, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of July 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated September 6, 2024 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of July 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated August 29, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

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Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

REVENUE RECOGNITION

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We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s process and controls to identify and determine the distinct performance obligations and the timing of revenue recognition.

To test the identification and determination of the distinct performance obligations and the timing of revenue recognition, our audit procedures included, among others, reading the executed contract and purchase order to understand the contract, identifying the performance obligation(s), determining the distinct performance obligations, and evaluating the timing of revenue recognition for a sample of individual sales transactions.

To test the identification and determination of the distinct performance obligations and the timing of revenue recognition, our audit procedures included, among others, reading the executed contract and other contractual documents to understand the contract, identifying the performance obligation(s), determining the distinct performance obligations, and evaluating the timing of revenue recognition for a sample of individual sales transactions.

We evaluated the accuracy of the Company’s contract summary documentation, specifically related to the identification and determination of distinct performance obligations and the timing of revenue recognition.

VALUATION OF CONTINGENT CONSIDERATION LIABILITY IN CONNECTION WITH THE ACQUISITION OF IBM QRADAR ASSETS

of the Matter

As described in Note 8 to the consolidated financial statements, the Company completed the acquisition of certain IBM QRadar assets on August 31, 2024, for which the purchase consideration included contingent consideration.

The Company has determined the fair value of contingent consideration liability to be $513.6 million as of July 31, 2025, using a discounted cash flow valuation technique including an estimate of future cash payments related to customers entering into qualified new transactions with the Company as well as a risk-adjusted discount rate used to present value the expected cash flows.

Auditing the Company’s accounting for contingent consideration liability was complex due to estimation uncertainty in the Company’s determination of the fair value due to the significant assumption about customer transactions that will qualify for cash payments under the arrangement.

The significant assumption is forward-looking, dependent upon customer behavior, and could be affected by various factors including future economic and market conditions.

How We Addressed

the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s process and controls to estimate fair value of the contingent consideration liability.

We also tested controls regarding management’s review of assumptions used in the valuation model.

To test the estimated fair value of this contingent consideration liability, our audit procedures included, among others, assessing the valuation methodology with the assistance of a valuation specialist, and testing the significant assumption about customer transactions that will qualify for cash payments under the arrangement and the completeness and accuracy of the underlying data used by the Company.

We also performed a sensitivity analysis to evaluate the changes in the fair value of this contingent consideration liability that would result from changes in the significant assumption.

We also considered whether the assumption was consistent with evidence obtained in other areas of the audit.

/s/ Ernst & Young LLP

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San Mateo, California

September 6, 2024

August 29, 2025

Report of Independent Registered Public Accounting Firm

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(the Company) maintained, in all material respects, effective internal control over financial reporting as of July 31, 2025, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of July 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended July 31, 2024, and the related notes and our report dated September 6, 2024 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of July 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended July 31, 2025, and the related notes and our report dated August 29, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

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San Mateo, California

September 6, 2024

August 29, 2025

PALO ALTO NETWORKS, INC.

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Deferred tax assets

2,424.2 2,399.0

Other assets 421.8 352.9

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5,291.9 3,821.1

Accumulated other comprehensive loss ( 1.6 ) ( 43.2 )

Retained earnings (accumulated deficit)

Accumulated other comprehensive income (loss)

Retained earnings

2,484.1 1,350.2

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Total operating expenses 5,527.0 5,284.4 4,595.7

Operating income (loss)

Operating income

1,242.9 683.9 387.3

1 unchanged sentence

Other income, net 355.8 312.7 206.2

Income (loss) before income taxes

Income before income taxes

1,595.7 988.3 566.3

1 unchanged sentence

461.8 ( 1,589.3 ) 126.6

Net income (loss)

$ 1,133.9 $ 2,577.6 $ 439.7

Net income (loss) per share, basic $ 8.07 $ 1.45 $ ( 0.90 )

Net income (loss) per share, diluted $ 7.28 $ 1.28 $ ( 0.90 )

Weighted-average shares used to compute net income (loss) per share, basic 319.2 303.2 295.6

Weighted-average shares used to compute net income (loss) per share, diluted 354.0 342.3 295.6

Net income per share, basic

$ 1.71 $ 4.04 $ 0.73

Net income per share, diluted

$ 1.60 $ 3.64 $ 0.64

Weighted-average shares used to compute net income per share, basic

662.5 638.5 606.4

Weighted-average shares used to compute net income per share, diluted

709.3 707.9 684.5

See notes to consolidated financial statements.

PALO ALTO NETWORKS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

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2025 2024 2023

Net income (loss) $ 2,577.6 $ 439.7 $ ( 267.0 )

Other comprehensive income (loss), net of tax:

$ 1,133.9 $ 2,577.6 $ 439.7

Other comprehensive income, net of tax:

Change in unrealized gains (losses) on investments 18.5 48.2 ( 13.0 )

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Net change on cash flow hedges 31.5 ( 6.6 ) 25.4

Other comprehensive income (loss) 41.6 12.4 ( 45.7 )

Comprehensive income (loss) $ 2,619.2 $ 452.1 $ ( 312.7 )

Other comprehensive income

50.0 41.6 12.4

Comprehensive income

$ 1,183.9 $ 2,619.2 $ 452.1

See notes to consolidated financial statements.

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Balance as of July 31, 2022 597.7 $ 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 — — — ( 267.0 ) ( 267.0 )

Other comprehensive loss — — ( 45.7 ) — ( 45.7 )

— — — 439.7 439.7

Other comprehensive income

— — 12.4 — 12.4

Issuance of common stock in connection with employee equity incentive plans 22.6 259.7 — — 259.7

2 unchanged sentences

Repurchase and retirement of common stock ( 3.6 ) ( 250.0 ) — — ( 250.0 )

Settlement of convertible notes 22.9 — — — —

Settlement of note hedges

( 22.9 ) — — — —

Balance as of July 31, 2023 616.7 3,019.0 ( 43.2 ) ( 1,227.4 ) 1,748.4

9 unchanged sentences

( 14.0 ) — — — —

Settlement of warrants 18.0 — — — —

Balance as of July 31, 2024 650.2 3,821.1 ( 1.6 ) 1,350.2 5,169.7

4 unchanged sentences

Share-based compensation for equity-based awards — 1,285.3 — — 1,285.3

Repurchase and retirement of common stock ( 2.0 ) ( 566.7 ) — — ( 566.7 )

Settlement of convertible notes 14.0 — — — —

Settlement of note hedges ( 14.0 ) — — — —

Settlement of warrants 9.0 — — — —

Balance as of July 31, 2025 667.9 $ 5,291.9 $ 48.4 $ 2,484.1 $ 7,824.4

6 unchanged sentences

Cash flows from operating activities

Net income (loss) $ 2,577.6 $ 439.7 $ ( 267.0 )

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

$ 1,133.9 $ 2,577.6 $ 439.7

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

Share-based compensation for equity-based awards 1,295.1 1,075.4 1,074.5

3 unchanged sentences

Amortization of debt issuance costs

Change in fair value of contingent consideration liability

( 135.3 ) — —

Reduction of operating lease right-of-use assets 65.4 55.3 49.9

34 unchanged sentences

Equity consideration for business acquisitions $ ( 27.1 ) $ ( 27.4 ) $ ( 0.3 )

Contingent consideration for a business acquisition

$ ( 648.9 ) $ — $ —

Supplemental disclosures of cash flow information

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(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, organizations, service providers, and government entities to secure their users, networks, clouds and endpoints by delivering comprehensive cybersecurity enabled by artificial intelligence and automation.

Our cybersecurity platforms and services help 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

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

Reclassification

Certain prior period amounts in the consolidated financial statements and accompanying notes have been reclassified to conform to the current period presentation.

Use of Estimates

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We evaluate our estimates on an ongoing basis.

Management estimates include, but are not limited to, the standalone selling price for our products and services, share-based compensation, fair value of assets acquired and liabilities assumed in business combinations, the assessment of recoverability of our intangibles and goodwill, valuation allowance against deferred tax assets, manufacturing partner and supplier liabilities, deferred contract cost benefit period, and loss contingencies.

Management estimates include, but are not limited to, the standalone selling price for our products and services, share-based compensation, fair value of assets acquired and liabilities assumed in business combinations, fair value of our contingent consideration liability, the assessment of recoverability of our intangibles and goodwill, valuation allowance against deferred tax assets, valuation of inventory and manufacturing partner and supplier liabilities, deferred contract costs benefit period, and loss contingencies.

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.

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.

Actual results could differ materially from those estimates due to risks and uncertainties.

On December 12, 2024, we effected a two -for-one stock split of our outstanding shares of common stock through an amendment to our restated certificate of incorporation (“Stock Split”), which also effected a proportionate increase in the number of authorized shares of our common stock from 1.0 billion to 2.0 billion.

The par value per share of our common stock remains unchanged at $ 0.0001 per share after the Stock Split.

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

Concentrations

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

Concentrations of Risks

Financial instruments that subject us to concentrations of credit risk consist primarily of cash and cash equivalents, investments, derivative contracts, accounts receivable and financing receivables.

We invest only in high-quality credit instruments and our cash and cash equivalents and available-for-sale investments consist primarily of fixed income securities.

Management believes that the financial institutions that hold our investments are financially sound and, accordingly, are subject to minimal credit risk.

We invest only in high-quality credit instruments and our cash and cash equivalents and available-for-sale investments consist primarily of fixed income securities held at large, diverse financial institutions to reduce the credit risk exposure to any single financial institution.

Deposits held with banks may exceed the amount of insurance provided on such deposits.

Our derivative contracts expose us to credit risk to the extent that the counterparties may be unable to meet the terms of the arrangement.

We mitigate this credit risk by transacting with major financial institutions with high credit ratings and also enter into master netting arrangements, which permit net settlement of transactions with the same counterparty.

Our derivative contracts expose us to credit risk to the extent that the counterparties are unable to meet the terms of the arrangement.

We mitigate credit risk by transacting with multiple major financial institutions with high credit ratings and also enter into master netting arrangements, which permit net settlement of transactions with the same counterparty.

We are not required to pledge, and are not entitled to receive, cash collateral related to these derivative instruments.

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We perform ongoing credit evaluations and generally do not require collateral on accounts receivable or financing receivables.

As of July 31, 2024, two distributors individually represented 10% or more of our gross accounts receivable, and in the aggregate represented 31.5 % of our gross accounts receivable.

As of July 31, 2025, three distributors individually represented 10% or more of our gross accounts receivable, and in the aggregate represented 44.8 % of our gross accounts receivable.

As of July 31, 2025, no end-customers or channel partners represented 10% or more of our gross financing receivables.

For fiscal 2024, four distributors represented 10% or more of our total revenue, representing 21.2 %, 13.2 %, 13.2 %, and 11.4 %, respectively.

For fiscal 2025, three distributors represented 10% or more of our total revenue, representing 18.8 %, 14.4 %, and 11.0 % respectively.

No single end-customer accounted for more than 10% of our total revenue in fiscal 2025, 2024, or 2023.

We rely on an electronics manufacturing services provider (“EMS provider”) to assemble most of our products and sole source component suppliers for certain components.

Comprehensive Income (Loss)

Comprehensive income (loss) is comprised of net income (loss) and other comprehensive income (loss).

Our other comprehensive income (loss) includes unrealized gains and losses on available-for-sale investments and unrealized gains and losses on cash flow hedges, net of tax effects.

Comprehensive Income

Comprehensive income is comprised of net income and other comprehensive income.

Our other comprehensive income includes unrealized gains and losses on available-for-sale investments and unrealized gains and losses on cash flow hedges, net of tax effects.

Foreign Currency Transactions

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The inputs require significant management judgment or estimation.

Our financial assets and liabilities that are measured at fair value on a recurring basis include marketable securities and derivative financial instruments.

Our financial assets and liabilities that are measured at fair value on a recurring basis include marketable securities, derivative financial instruments, and contingent consideration liability.

Goodwill, intangible assets, and other long-lived assets are measured at fair value on a nonrecurring basis, only if impairment is indicated.

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We provide financing arrangements for certain qualified end-customers and channel partners to purchase our products and services.

Payment terms on these financing arrangements are up to five years .

Payment terms on these financing arrangements are generally two to five years .

Financing receivables are recorded at amortized cost, which approximates fair value.

We may sell, in certain instances, these financing arrangements on a non-recourse basis to third-party financial institutions.

The financing receivables are derecognized upon transfer as these sales qualify as true sales.

As part of our financing credit risk management policy, we may sell financing receivables with an internal risk rating of 5 or greater on a non-recourse basis to third-party financial institutions when the outstanding balance of our financing receivables exceeds preestablished thresholds.

The financing receivables are derecognized upon sale as these transactions qualify as true sales.

We classify the proceeds from these sales as cash flows from operating activities on our consolidated statements of cash flows.

We evaluate the allowance for credit losses by assessing the risks and losses inherent in our financing receivables on either an individual or a collective basis.

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Financing receivables deemed uncollectible are charged against the allowance for credit losses.

We are exposed to foreign currency exchange risk, and we use derivative financial instruments to manage our foreign currency exchange risk.

We are exposed to foreign currency exchange risk, which we manage through the use of derivative financial instruments.

Our derivative financial instruments are recorded at fair value, on a gross basis, as either assets or liabilities on our consolidated balance sheets.

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 24 months or less, which we designate as cash flow hedges, to manage the foreign currency exchange risk associated with our operating expenditures.

Gains or losses related to the effective portion of our cash flow hedges are recorded as a component of AOCI on our consolidated balance sheets and are reclassified into the financial statement line item associated with the underlying hedged transaction on our consolidated statements of operations when the underlying hedged transaction is recognized in earnings.

In the event the underlying hedged transactions do not occur, or it becomes probable that they will not occur within the defined hedge period, the gains or losses on these related cash flow hedges are recognized in other income, net on our consolidated statements of operations.

Our sales contracts are primarily denominated in U.S.

A portion of our operating expenditures are denominated in foreign currencies, making them subject to fluctuations in foreign currency exchange rates.

Gains and losses related to the effective portion of our cash flow hedges are recorded as a component of AOCI on our consolidated balance sheets and are reclassified into the financial statement line item associated with the underlying hedged transaction on our consolidated statements of operations when the underlying hedged transaction is recognized in earnings.

In the event the underlying hedged transaction does not occur, or it becomes probable that it will not occur within the defined hedge period, the gains or losses on the related cash flow hedges are recognized in other income, net on our consolidated statements of operations.

Cash flows from foreign currency derivative contracts designated as cash flow hedges are classified on our consolidated statements of cash flows in the same manner as the underlying hedged transaction, primarily within cash flows from operating activities.

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These derivatives are not designated as hedging instruments for accounting purposes, and the related gains and losses are recorded in other income, net on our consolidated statements of operations.

Inventory and Manufacturing Partner and Supplier Liabilities

Inventory consists primarily of raw materials and service-related spares, and is stated at the lower of average cost and net realizable value.

Inventory is included in prepaid expenses and other current assets on our consolidated balance sheets.

Inventory that is obsolete or in excess of forecasted demand is written down to its estimated realizable value.

Once inventory has been written down, a new, lower-cost basis for that inventory is established.

We outsource most of our manufacturing, repair, and supply chain management operations to our EMS provider and payments to it are a significant portion of our cost of product revenue.

Although we are contractually obligated to purchase manufactured products and components, we generally do not own the components and manufactured products.

Product title transfers from our EMS provider to us and immediately to our customers upon shipment.

We record a liability for manufacturing purchase commitments in excess of our forecasted demand.

We use consistent demand forecasts for our valuation of excess and obsolete inventory and manufacturing partner and supplier liabilities.

These forecasts are based upon historical trends and analysis, adjusted for overall market conditions.

Inventory write-downs and excess manufacturing purchase commitment charges are included in cost of product revenue on our consolidated statements of operations.

Property and Equipment

5 unchanged sentences

Computers, equipment, and software

3 years - 5 years

Demonstration units

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

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

We allocate the fair value of the purchase price of our acquisitions to the assets acquired and liabilities assumed, including contingent consideration, generally based on their estimated fair values.

The excess of the purchase price over the fair 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.

Contingent consideration obligation incurred in connection with a business combination is recorded at fair value on the acquisition date and remeasured at each subsequent reporting period until the related contingencies have been resolved, with the change in fair value recognized in general and administrative expense on our consolidated statements of operations.

Payments not made soon after the acquisition date to settle a contingent consideration liability are classified as cash flows from financing activities up to the amount of the contingent consideration liability recognized at the acquisition date.

Intangible Assets

Purchased intangible assets with finite lives are carried at cost, less accumulated amortization.

Amortization is computed using the straight-line method over the estimated useful lives of the respective assets.

Acquisition-related in-process research and development represents the fair value of incomplete research and development projects that have not reached technological feasibility as of the date of acquisition.

Initially, these assets are not subject to amortization.

Assets related to projects that have been completed are transferred to developed technology, which are subject to amortization.

Amortization is computed using the straight-line method over the estimated useful lives of the assets.

Impairment of Goodwill, Intangible Assets, and Other Long-Lived Assets

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We evaluate events and changes in circumstances that could indicate carrying amounts of purchased intangible assets and other long-lived assets may not be recoverable.

When such events or changes in circumstances occur, we assess the recoverability of these assets or asset groups by determining whether or not the carrying amount will be recovered through undiscounted expected future cash flows.

When such events or changes in circumstances occur, we assess the recoverability of an asset or asset group by determining whether or not the carrying amount will be recovered through undiscounted expected future cash flows.

If the total of the future undiscounted cash flows is less than the carrying amount of an asset or asset group, we record an impairment loss for the amount by which the carrying amount exceeds the fair value of the asset or asset group.

We did not recognize any impairment losses on our goodwill, intangible assets, or other long-lived assets during the years ended July 31, 2025, 2024, and 2023.

Manufacturing Partner and Supplier Liabilities

We outsource most of our manufacturing, repair, and supply chain management operations to our EMS provider and payments to it are a significant portion of our cost of product revenue.

Although we are contractually obligated to purchase manufactured products and components, we generally do not own the components and manufactured products.

Product title transfers from our EMS provider to us and immediately to our customers upon shipment.

Our EMS provider assembles our products using design specifications, quality assurance programs, and standards that we establish, and it procures components and assembles products based on our demand forecasts.

These forecasts represent our estimates of future demand for our products based upon historical trends and analysis from our sales and product management functions as adjusted for overall market conditions.

If the actual component usage and product demand are significantly lower than forecast, we record a liability for manufacturing purchase commitments in excess of our forecasted demand, including costs for excess components or for carrying costs incurred by our manufacturing partners and component suppliers.

Through July 31, 2024, we have not accrued any significant costs associated with this exposure.

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.

We adopted the new debt guidance using the modified-retrospective approach.

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, a decrease to additional paid-in capital of $ 581.9 million, and a decrease to temporary equity of $ 129.1 million on August 1, 2021.

Our convertible senior notes were fully settled upon maturity as of July 31, 2025.

Prior to settlement, our convertible senior notes were accounted for as a liability and measured at their amortized cost.

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

Revenue Recognition

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Product Revenue

Product revenue is derived primarily from sales of our appliances.

Product revenue also includes revenue derived from software licenses of Panorama, SD-WAN, and the VM-Series.

Our appliances and software licenses include a broad set of built-in networking and security features and functionalities.

Product revenue is derived from sales of our hardware products and software licenses.

Our hardware products and software licenses include a broad set of built-in networking and security features and functionalities.

We recognize product revenue at the time of hardware shipment or delivery of software license.

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The majority of our contracts with our customers include various combinations of our products and subscriptions and support.

Our appliances and software licenses have significant standalone functionalities and capabilities.

Accordingly, these appliances and software licenses are distinct from our subscriptions and support services as the customer can benefit from the product without these services and such services are separately identifiable within the contract.

Our hardware products and software licenses are distinct from our subscriptions and support services as the customer can benefit from the product without these services and such services are separately identifiable within the contract.

We account for multiple agreements with a single customer as a single contract if the contractual terms and/or substance of those agreements indicate that they may be so closely related that they are, in effect, parts of a single contract.

The amount of consideration we expect to receive in exchange for delivering on the contract is allocated to each performance obligation based on its relative standalone selling price.

We establish standalone selling price using the prices charged for a deliverable when sold separately.

If the standalone selling price is not observable through past transactions, we estimate the standalone selling price based on our pricing model and our go-to-market strategy, which include factors such as type of sales channel (channel partner or end-customer), the geographies in which our offerings were sold (domestic or international), and offering type (products, subscriptions, or support).

When estimating standalone selling price, we first consider the prices charged for a deliverable when sold separately.

If the standalone selling price is not observable through past transactions, we estimate it based on our pricing model and our go-to-market strategy, which include factors such as type of sales channel (channel partner or end-customer), the geographies in which our offerings were sold (domestic or international), and offering type (products, subscriptions, or support).

Deferred Revenue

We record deferred revenue when cash payments are received or due in advance of our performance.

We record deferred revenue when customers are invoiced or cash payments are received in advance of our performance.

Our payment terms typically require payment within 30 to 45 days of the date we issue an invoice.

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Contract costs, which primarily consist of sales commissions, are amortized on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the asset relates.

Sales commissions paid for initial contracts are generally not commensurate with the commissions paid for renewal contracts, given the substantive difference in commission rates in proportion to their respective contract values.

Certain sales commissions for initial contracts are not commensurate with the commissions for renewal contracts, given the substantive difference in commission rates in proportion to their respective contract values.

Sales commissions for initial contracts that are not commensurate are amortized over a benefit period of five years .

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Internally developed software includes security software developed to deliver our cloud-based subscription offerings to our end-customers.

These capitalized costs consist of internal compensation-related costs and external direct costs incurred during the application development stage and will be amortized over a useful life of three years .

We capitalize internal compensation-related costs and external direct costs incurred during the application development stage and amortize these costs over a useful life of three years .

As of July 31, 2025 and 2024, we capitalized as other assets on our consolidated balance sheets $ 167.3 million and $ 129.2 million in costs, respectively, net of accumulated amortization, for security software developed to deliver our cloud-based subscription offerings.

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We recognize share-based compensation expense for awards with only service conditions on a straight-line basis over the requisite service period.

We recognize share-based compensation expense for awards with market conditions and awards with performance conditions on a straight-line basis over the requisite service period for each separately vesting portion of the award.

We recognize share-based compensation expense for awards with performance conditions when it is probable that the performance condition will be achieved.

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The interest rate used to determine the present value of the future lease payments is our incremental borrowing rate, because the interest rates implicit in our leases are not readily determinable.

Our incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located.

Our incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in similar economic environments.

Operating lease right-of-use assets also include adjustments related to lease incentives, prepaid or accrued rent and initial direct lease costs.

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Our lease terms may include periods under options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

We generally use the base, non-cancelable lease term when determining the lease right-of-use assets and lease liabilities.

Operating lease cost is recognized on a straight-line basis over the lease term.

We generally use the base, non-cancelable lease term when determining our operating lease right-of-use assets and lease liabilities.

Operating lease costs are recognized on a straight-line basis over the lease term.

We account for lease and non-lease components as a single lease component and do not recognize right-of-use assets and lease liabilities for leases with a term of 12 months or less.

Payments under our lease arrangements are primarily fixed, however, certain lease agreements contain variable payments, which are expensed as incurred and not included in the operating lease right-of-use assets and liabilities.

Variable lease payments primarily consist of real estate taxes, common area maintenance charges, and insurance costs.

Payments under our lease arrangements are primarily fixed, however, certain lease agreements contain variable payments, which are expensed as incurred and not included in operating lease right-of-use assets and liabilities.

Our variable lease payments primarily consist of real estate taxes, common area maintenance charges, and insurance costs.

We account for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our consolidated financial statements or tax returns.

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

We recognize liabilities for uncertain tax positions based on a two-step process.

The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any.

The second step requires us to estimate and measure the tax benefit as the largest amount that is more likely than not to be realized upon ultimate settlement.

We recognize liabilities for uncertain tax positions based on a two-step process which includes evaluating if a tax position is more likely than not to be sustained on audit and then measuring the tax benefit as the largest amount that is more likely than not to be realized upon ultimate settlement.

Loss Contingencies

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We regularly evaluate current information available to us to determine whether an accrual is required, an accrual should be adjusted, or a range of possible loss should be disclosed.

Recently Issued Accounting Pronouncements

Recently Adopted Accounting Pronouncement

Segment Reporting

In November 2023, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance that expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses.

The standard is effective for our annual periods beginning in fiscal 2025 and interim periods beginning in the first quarter of fiscal 2026, and requires retrospective application for all prior periods presented in the financial statements.

Early adoption is permitted.

We are currently evaluating the impact of this standard on our disclosures in the consolidated financial statements.

We adopted the standard in our fourth quarter of fiscal 2025.

Refer to Note 19.

Segment Information for more details.

Recently Issued Accounting Pronouncements

Income Tax Disclosures

In December 2023, the FASB issued authoritative guidance that requires consistent categories and greater disaggregation of information in the effective tax rate reconciliation and additional disclosures of income taxes paid by jurisdiction.

The standard is effective for our annual periods beginning in fiscal 2026 and could be applied either prospectively or retrospectively.

The standard is effective for our fiscal 2026 and could be applied either prospectively or retrospectively.

We are currently evaluating the impact of this standard on our disclosures in the consolidated financial statements.

Expense Disaggregation Disclosures

In November 2024, the FASB issued authoritative guidance that expands annual and interim disclosure of specified information about certain costs and expenses in the notes to financial statements.

The standard is effective for our annual period in fiscal 2028 and interim period in our first quarter of fiscal 2029, and could be applied either prospectively or retrospectively.

Early adoption is permitted.

We are currently evaluating the impact of this standard on our disclosures in the consolidated financial statements.

Measurement of Credit Losses for Accounts Receivable and Contract Assets

In July 2025, the FASB issued authoritative guidance that provides a practical expedient for estimating expected credit losses on accounts receivable and contract assets.

The standard is effective for us in our first quarter of fiscal 2027 and will be applied on a prospective basis.

Early adoption is permitted.

We are currently evaluating the impact of this standard on our consolidated financial statements.

Disaggregation of Revenue

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Total long-term investments — 5,555.6 — 5,555.6 — 4,173.2 — 4,173.2

July 31, 2025 July 31, 2024

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

Prepaid expenses and other current assets:

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Total prepaid expenses and other current assets — 57.9 — 57.9 — 4.1 — 4.1

July 31, 2024 July 31, 2023

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

Other assets:

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Foreign currency forward contracts $ — $ 3.6 $ — $ 3.6 $ — $ 15.3 $ — $ 15.3

Contingent consideration

— — 276.0 276.0 — — — —

Total accrued and other liabilities — 3.6 276.0 279.6 — 15.3 — 15.3

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Foreign currency forward contracts — 0.1 — 0.1 — 0.9 — 0.9

Contingent consideration

— — 237.6 237.6 — — — —

Total other long-term liabilities — 0.1 237.6 237.7 — 0.9 — 0.9

Total liabilities measured at fair value $ — $ 3.7 $ 513.6 $ 517.3 $ — $ 16.2 $ — $ 16.2

The fair value of our contingent consideration liability is estimated using a discounted cash flow valuation technique.

We consider the fair value of our contingent consideration liability to be a Level 3 measurement as we use unobservable inputs in determining discounted cash flows to estimate the fair value.

The significant unobservable inputs include an estimate of future cash payments related to customers entering into qualified new transactions as well as a risk-adjusted discount rate used to present value the expected cash flows.

A significant change in any of these assumptions could have a material impact to the fair value of our contingent consideration liability.

In June 2025, we amended the terms of our contingent consideration arrangement with International Business Machines Corporation (“IBM”).

During the three months ended July 31, 2025, we reduced our estimate of future cash payments based on the amended terms and our quarterly assessment of assumptions, including the magnitude and likelihood of customers entering into qualified new transactions, the competitive industry environment, and current market conditions.

The following table presents a reconciliation of our contingent consideration liability (in millions):

Year Ended July 31, 2025

Contingent consideration liability at the beginning of the period

Initial valuation on the acquisition date

Change in fair value

Contingent consideration liability at the end of the period

The total estimated fair value of our financing receivables approximates their carrying amounts as of July 31, 2025 and 2024.

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Refer to Note 11.

Debt, for the carrying amount and estimated fair value of our convertible senior notes as of July 31, 2024 and 2023.

Debt, for the carrying amount and estimated fair value of our convertible senior notes as of July 31, 2024.

Cash Equivalents and Investments

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Commercial paper $ 168.5 $ — $ — $ 168.5

Corporate debt securities 18.2 — — 18.2

government and agency securities 149.6 — — 149.6

Total available-for-sale cash equivalents $ 168.5 $ — $ — $ 168.5

Certificates of deposit $ 20.6 $ — $ — $ 20.6

Commercial paper $ 14.8 $ — $ — $ 14.8

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Commercial paper $ 299.6 $ — $ — $ 299.6

Corporate debt securities 18.2 — — 18.2

government and agency securities 149.6 — — 149.6

Total available-for-sale cash equivalents $ 467.4 $ — $ — $ 467.4

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Total available-for-sale investments $ 5,188.9 $ 35.4 $ ( 7.5 ) $ 5,216.8

As of July 31, 2024, the gross unrealized losses that have been in a continuous unrealized loss position for less than 12 months were $ 1.5 million, which were related to $ 949.4 million 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 $ 6.0 million, which were related to $ 915.3 million of available-for-sale debt securities.

As of July 31, 2023, the gross unrealized losses that have been in a continuous unrealized loss position for less than 12 months were $ 30.7 million, which were related to $ 3.4 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 $ 7.3 million, which were related to $ 481.8 million of available-for-sale debt securities.

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

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

As of July 31, 2024 and 2023, the carrying amounts of our marketable equity securities were $ 494.0 million and $ 476.1 million, respectively.

As of July 31, 2025 and 2024, the carrying values of our marketable equity securities were $ 1.2 billion and $ 494.0 million, respectively.

There were no unrealized gains or losses recognized for these securities during the years ended July 31, 2025, 2024, and 2023.

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July 31, 2025 July 31, 2024

Fiscal Years Ended July 31,

2024 2023 2022 2021 Total

2023 2022 2021 2020 Total

$ 885.9 $ 477.3 $ 14.7 $ 44.4 $ 1,422.3 $ 595.8 $ 50.6 $ 114.5 $ 1.2 $ 762.1

272.2 172.0 21.1 1.1 466.4 219.4 40.1 4.4 1.5 265.4

3.2 25.0 0.3 9.1 37.6 5.6 0.6 17.9 — 24.1

Fiscal Years Ended July 31, Fiscal Years Ended July 31,

2025 2024 2023 2022 2021 Total 2024 2023 2022 2021 Total

1 to 4 $ 260.9 $ 732.1 $ 242.4 $ 9.2 $ 17.8 $ 1,262.4 $ 885.9 $ 477.3 $ 14.7 $ 44.4 $ 1,422.3

5 to 6 174.3 226.1 49.8 — — 450.2 272.2 172.0 21.1 1.1 466.4

7 to 10 0.1 3.9 14.0 — — 18.0 3.2 25.0 0.3 9.1 37.6

Amortized cost basis of financing receivables $ 435.3 $ 962.1 $ 306.2 $ 9.2 $ 17.8 $ 1,730.6 $ 1,161.3 $ 674.3 $ 36.1 $ 54.6 $ 1,926.3

$ 1,161.3 $ 674.3 $ 36.1 $ 54.6 $ 1,926.3 $ 820.8 $ 91.3 $ 136.8 $ 2.7 $ 1,051.6

(1) Internal risk ratings are categorized as 1 through 10, with the lowest rating representing the highest quality.

We sold $ 37.8 million of our financing receivables during the year ended July 31, 2025.

The associated gains and losses were not material.

There was no significant activity in allowance for credit losses during the years ended July 31, 2025 and 2024.

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Fair Value Measurements for the fair value of our derivative instruments as reported on our consolidated balance sheets as of July 31, 2025 and 2024.

As of July 31, 2024, unrealized gains and losses in AOCI related to our cash flow hedges were a $ 10.6 million net loss, of which $ 7.9 million in losses are expected to be recognized into earnings within the next 12 months.

As of July 31, 2023, unrealized gains and losses in AOCI related to our cash flow hedges were a $ 0.7 million net gain.

As of July 31, 2025, unrealized gains and losses in AOCI related to our cash flow hedges were a $ 39.8 million net gain, of which $ 38.4 million in gains are expected to be recognized into earnings within the next 12 months.

As of July 31, 2024, unrealized gains and losses in AOCI related to our cash flow hedges were a $ 10.6 million net loss.

As of July 31, 2025 and 2024, the notional amount of our outstanding foreign currency forward contracts not designated as hedging instruments was $ 504.2 million and $ 375.6 million, respectively.

As of July 31, 2025 and 2024, our inventory balance was $ 113.4 million and $ 115.9 million, respectively.

For the years ended July 31, 2025 and 2024, inventory write-downs and excess manufacturing purchase commitment charges were $ 71.2 million and $ 24.9 million, respectively.

For the year ended July 31, 2023, inventory write-downs and excess manufacturing purchase commitment charges was not significant.

IBM QRadar Assets

On August 31, 2024, we completed the acquisition of certain IBM QRadar assets, including certain intellectual property rights, customer relationships, and software as a service customer contracts.

The total purchase consideration for the acquisition was $ 1.1 billion, which consisted of the following (in millions):

Fair value of contingent consideration liability on the acquisition date

Return of purchase consideration ( 6.3 )

Total $ 1,142.6

As part of the acquisition, we agreed to make post-closing payments to IBM contingent upon customers entering into qualified new transactions through June 30, 2028.

We also expect to receive a return of purchase consideration of $ 6.3 million due to timing of transition of certain underlying customer contracts, of which $ 2.9 million was received during the year ended July 31, 2025.

In addition, we have entered into a transition services arrangement with IBM, under which IBM will perform certain services supporting the acquired assets and customers for a period of time that ends in the fiscal quarter ending October 2026.

Payments related to the contingent consideration liability are expected to begin in the fiscal quarter ending October 2025 and continue through the fiscal quarter ending October 2028.

The estimated range of undiscounted contingent consideration is between $ 0.4 billion and $ 0.6 billion.

Refer to Note 3.

Fair Value Measurements, for more information on the fair value of our contingent consideration liability.

We have accounted for this transaction as a business combination and allocated the purchase consideration to assets acquired and liabilities assumed based on estimated fair values, as presented in the following table (in millions):

Goodwill $ 700.7

Identified intangible assets 476.0

Net liabilities assumed ( 34.1 )

Total $ 1,142.6

Goodwill generated from this business combination is primarily attributable to the expected post-acquisition synergies from increased market penetration to support the growth of our Cortex Security Operations business.

The goodwill is deductible for U.S.

income tax purposes.

The following table presents details of the identified intangible assets acquired (in millions, except years):

Fair Value Estimated Useful Life

Customer relationships $ 464.0 12 years

Developed technology 12.0 2 years

Total $ 476.0

Protect AI, Inc.

On July 22, 2025, we completed our acquisition of Protect AI, Inc.

(“Protect AI”), a privately-held cyber security company focused on AI security.

The total purchase consideration for the acquisition of Protect AI was $ 634.5 million, which consisted of the following (in millions):

Fair value of replacement awards 27.1

Total $ 634.5

As part of the acquisition, we issued $ 106.5 million of replacement awards, of which the portion attributable to services performed prior to the acquisition date was allocated to purchase consideration.

The remaining fair value was allocated to future services and will be expensed over the remaining service periods as share-based compensation.

We have accounted for this transaction as a business combination and allocated the purchase consideration to assets acquired and liabilities assumed based on preliminary estimated fair values, as presented in the following table (in millions):

Identified intangible assets

Net liabilities assumed

Total $ 634.5

Goodwill generated from this business combination is primarily attributable to the assembled workforce and expected post-acquisition synergies from integrating Protect AI technology into our platforms.

The goodwill is not deductible for U.S.

income tax purposes.

The following table presents details of the identified intangible asset acquired (in millions, except years):

Fair Value Estimated Useful Life

Developed technology $ 70.0 5 years

CyberArk Software Ltd.

On July 30, 2025, we entered into a definitive agreement to acquire CyberArk Software Ltd., an identity security company (“CyberArk”).

The acquisition is expected to close during the second half of our fiscal 2026, subject to the satisfaction of customary closing conditions, including the receipt of CyberArk shareholder approval, the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and receipt of other approvals under specified antitrust and foreign investment laws.

Under the terms of the agreement, CyberArk shareholders will receive $ 45.00 in cash and 2.2005 shares of our common stock for each CyberArk share.

This represents an equity value of approximately $ 25 billion for CyberArk based on the unaffected 10-day average daily volume-weighted average trading prices of our common stock as of July 25, 2025.

We expect to fund the cash portion of the consideration with our cash on hand.

The agreement also provides that we will assume certain unvested outstanding equity awards held by CyberArk employees.

We and CyberArk each have certain termination rights under the definitive acquisition agreement.

A termination fee of $ 1.0 billion may be payable by us to CyberArk, or a fee of $ 750.0 million may be payable by CyberArk to us, upon termination of the definitive acquisition agreement under specified circumstances.

Dig Security Solutions Ltd.

On December 5, 2023, we completed our acquisition of Dig Security Solutions Ltd.

(“Dig”), a privately-held cyber security company.

We expect the acquisition will enhance our Prisma Cloud capabilities with a data security posture management solution that is intended to provide customers with visibility into, and secure data stored across, their multi-cloud environments.

(“Dig”), a privately-held cyber security company providing a data security posture management solution for multi-cloud environments.

The total purchase consideration for the acquisition of Dig was $ 255.4 million, which consisted of the following (in millions):

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The remaining fair value was allocated to future services and will be expensed over the remaining service periods as share-based compensation.

Goodwill $ 186.4

Identified intangible assets

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Net assets acquired

Total $ 255.4

Goodwill generated from this business combination is primarily attributable to the assembled workforce and expected post-acquisition synergies from integrating Dig technology into our platforms.

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On December 28, 2023, we completed our acquisition of Talon Cyber Security Ltd.

(“Talon”), a privately-held cyber security company.

We expect the acquisition will support Prisma SASE’s approach to provide secure access to business applications for unmanaged and personal devices with an enterprise browser.

(“Talon”), a privately-held cyber security company providing a secure enterprise browser solution.

The total purchase consideration for the acquisition of Talon was $ 458.6 million, which consisted of the following (in millions):

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The remaining fair value was allocated to future services and will be expensed over the remaining service periods as share-based compensation.

Goodwill $ 236.9

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(“Cider”), a privately-held cloud security company.

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

The total purchase consideration for the acquisition of Cider was $ 198.3 million, which consisted of the following (in millions):

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The goodwill is not deductible for income tax purposes.

During the year ended July 31, 2022, we completed acquisitions for a combined total purchase consideration of $ 40.1 million, which was primarily cash.

We have accounted for these transactions as business combinations, and recorded goodwill of $ 37.6 million.

The goodwill is not deductible for income tax purposes.

Additional Acquisition-Related Information

Pro forma results of operations have not been presented because the effects of the acquisitions were not material to our consolidated statements of operations.

Additional information related to our acquisitions completed in fiscal 2024, such as that related to income tax and other contingencies, existing as of the acquisition date may become known during the remainder of the measurement period, not to exceed 12 months from the respective acquisition date, which may result in changes to the amounts and allocations recorded.

Additional information related to our Protect AI acquisition, such as that related to income tax and other contingencies, existing as of the acquisition date 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.

Goodwill and Intangible Assets

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Other 0.9 ( 0.8 ) 0.1 0.9 ( 0.6 ) 0.3

Total intangible assets subject to amortization 1,015.1 ( 640.2 ) 374.9 830.8 ( 519.3 ) 311.5

Intangible assets not subject to amortization:

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

Total purchased intangible assets $ 1,169.6 $ ( 406.9 ) $ 762.7 $ 1,015.1 $ ( 640.2 ) $ 374.9

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The 2025 Notes bear interest at a fixed rate of 0.375 % per year, payable semi-annually in arrears on June 1 and December 1 of each year, beginning on December 1, 2020.

The 2025 Notes are governed by an indenture between us, as the issuer, and U.S.

Bank National Association, as Trustee (the “Indenture”).

The 2025 Notes are unsecured, unsubordinated obligations and the Indenture governing the 2025 Notes does not contain any financial covenants or restrictions on the payments of dividends, the incurrence of indebtedness, or the issuance or repurchase of securities by us or any of our subsidiaries.

The 2025 Notes mature on June 1, 2025.

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 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.

The 2025 Notes were converted prior to or settled on the maturity date of June 1, 2025 in accordance with their terms.

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

Conversion Rate per $1,000 Principal Initial Conversion Price Convertible Date Initial Number of Shares

2023 Notes (1)

22.5270 $ 44.39 April 1, 2023 38.1

2025 Notes 20.1612 $ 49.60 March 1, 2025 40.3

(1) The 2023 Notes were converted prior to or settled on the maturity date of July 1, 2023.

Holders of the 2025 Notes may surrender their 2025 Notes for conversion at their option at any time prior to the close of business on the business day immediately preceding March 1, 2025 only under the following circumstances:

• during any fiscal quarter commencing after the fiscal quarter ending on October 31, 2020 (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 conversion price for the 2025 Notes on each applicable trading day (the “sale price condition”);

• 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 2025 Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of our common stock and the conversion rate for the 2025 Notes on each such trading day;

• upon the occurrence of specified corporate events.

On or after March 1, 2025, holders may surrender all or any portion of their 2025 Notes for conversion at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date regardless of the foregoing conditions, and such conversions will be settled upon the maturity date.

Upon conversion, holders of the 2025 Notes will receive cash equal to the aggregate principal amount of the 2025 Notes to be converted, and, at our election, cash and/or shares of our common stock for any amounts in excess of the aggregate principal amount of the 2025 Notes being converted.

The conversion price will be subject to adjustment in some events.

Holders of the 2025 Notes who convert their 2025 Notes in connection with certain corporate events that constitute a “make-whole fundamental change” under the Indenture are, under certain circumstances, entitled to an increase in the conversion rate.

Additionally, upon the occurrence of a corporate event that constitutes a “fundamental change” under the Indenture, holders of the 2025 Notes may require us to repurchase for cash all or a portion of the 2025 Notes at a repurchase price equal to 100 % of the principal amount of the 2025 Notes plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

Holders of the 2023 Notes were able to early convert their 2023 Notes in fiscal 2023 up to April 1, 2023 as the sales price condition had been met.

Conversion requests for the 2023 Notes received on or after April 1, 2023 were settled upon maturity of the 2023 Notes.

Holders of the 2025 Notes were able to early convert their 2025 Notes in fiscal 2024 and 2023 as the sales price condition was met.

During the years ended July 31, 2024 and 2023, holders of the Notes converted $ 1.0 billion and $ 1.7 billion, respectively, in aggregate principal amount of the Notes, which we repaid in cash.

We also issued 7.0 million and 11.4 million shares of our common stock to the holders of the Notes during the years ended July 31, 2024 and 2023, respectively, for the conversion value in excess of the principal amount.

Holders of the 2023 Notes were able to early convert their 2023 Notes in fiscal 2023 up to April 1, 2023 and conversion requests received on or after April 1, 2023 were settled upon maturity of the 2023 Notes.

Holders of the 2025 Notes were able to early convert their 2025 Notes in fiscal 2023, fiscal 2024, and fiscal 2025 up to March 1, 2025 and conversion requests received on or after March 1, 2025 were settled upon maturity of the 2025 Notes.

During the years ended July 31, 2025, 2024, and 2023, we repaid in cash $ 965.6 million, $ 1.0 billion, and $ 1.7 billion, respectively, in aggregate principal amount of the Notes.

We also issued 14.0 million, 14.0 million, and 22.9 million shares of our common stock to the holders of the Notes during the years ended July 31, 2025, 2024, and 2023, respectively, for the conversion value in excess of the principal amount.

These shares were fully offset by shares we received from the corresponding exercise of the associated note hedges.

Refer to Note 19.

Subsequent Events for additional information regarding conversion of the 2025 Notes after July 31, 2024 through the filing date of this Annual Report on Form 10-K.

The sale price condition for the 2025 Notes was met during the fiscal quarters ended July 31, 2024 and 2023, and as a result, holders have the option to convert their 2025 Notes in the fiscal quarter commencing after July 31, 2024 and 2023, respectively.

The net carrying amount of the 2025 Notes was classified as a current liability on our consolidated balance sheet as of July 31, 2024 and 2023.

The following table sets forth the net carrying amount of our 2025 Notes (in millions):

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Net carrying amount $ — $ 963.9

The total estimated fair value of the 2025 Notes was $ 3.2 billion and $ 5.0 billion as of July 31, 2024 and 2023, respectively.

The total estimated fair value of the 2025 Notes was $ 3.2 billion as of July 31, 2024.

The fair value was determined based on the closing trading price per $100 of the 2025 Notes as of the last day of trading for the period.

We consider the fair value of the 2025 Notes at July 31, 2024 and 2023 to be a Level 2 measurement.

We consider the fair value of the 2025 Notes at July 31, 2024 to be a Level 2 measurement.

The fair value of the 2025 Notes is primarily affected by the trading price of our common stock and market interest rates.

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2025 Note Hedges 40.3 $ 370.8

(1) The 2023 Note Hedges were settled as a result of the conversions of the 2023 Notes prior to or on July 1, 2023.

The Note Hedges cover shares of our common stock at a strike price per share that corresponds to the initial applicable conversion price of the applicable series of the Notes, which are also subject to adjustment, and are exercisable upon conversion of the applicable series of the Notes.

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

The Note Hedges covered shares of our common stock at a strike price per share that corresponded to the initial applicable conversion price of the applicable series of the Notes and were exercisable upon conversion of the applicable series of the Notes.

The Note Hedges expired upon maturity 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.

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

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 on our consolidated balance sheets.

As a result of the conversions of the Notes settled during the years ended July 31, 2024 and 2023, we exercised the corresponding portion of our Note Hedges and received 7.0 million and 11.4 million shares of our common stock during the respective periods.

As a result of the conversions of the Notes during the years ended July 31, 2025, 2024, and 2023, we exercised the corresponding portion of our Note Hedges and received 14.0 million, 14.0 million, and 22.9 million shares of our common stock during the respective periods.

Separately, but concurrently with the issuance of each series of our convertible senior 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 over 60 scheduled trading days beginning October 2023 and September 2025, respectively.

The 2023 Warrants were, and the 2025 Warrants are, exercisable over 60 scheduled trading days beginning October 2023 and September 2025, respectively.

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

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The Warrants are separate transactions and are not part of either series of Notes or Note Hedges and are not remeasured through earnings each reporting period.

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 on our consolidated balance sheets.

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

During the year ended July 31, 2024, we net settled all of the 2023 Warrants with 18.0 million shares of our common stock with a fair value of $ 2.4 billion.

1 unchanged sentence

Revolving Credit Facility

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

The 2018 Credit Facility expired in April 2023.

On April 13, 2023, we entered into a new credit agreement (the “2023 Credit Agreement”) with certain institutional lenders that provides for a $ 400.0 million unsecured revolving credit facility (the “2023 Credit Facility”), with an option to increase the amount by up to an additional $ 350.0 million, subject to certain conditions.

On April 13, 2023, 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 April 13, 2028.

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We are obligated to pay an ongoing commitment fee on undrawn amounts at a rate of 0.090 % to 0.150 %, depending on our leverage ratio.

The interest rates and commitment fees are also subject to upward and downward adjustments based on our progress towards the achievement of certain sustainability goals related to greenhouse gas emissions.

The interest rates and commitment fees are also subject to upward and downward adjustments based on our progress towards the achievement of certain sustainability goals.

As of July 31, 2025, there were no amounts outstanding and we were in compliance with all covenants under the Credit Agreement.

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As of July 31, 2025, we had additional non-cancelable operating leases for office space that had been signed but had not yet commenced with total future minimum lease payments of $ 36.4 million.

These leases are expected to commence on or after fiscal 2025, with lease terms ranging from four to eight years .

These leases are expected to commence on or after fiscal 2026, with lease terms ranging from four to seven years .

Commitments and Contingencies

Purchase Commitments

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

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

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

Other purchase obligations include non-cancellable subscription agreements and other commitments in the normal course of business.

The following table presents details of the aggregate future non-cancelable purchase commitments under these agreements as of July 31, 2025 (in millions):

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187.3 112.9 60.7 6.8 3.4 3.5 —

Total purchase commitments

$ 6,964.9 $ 455.5 $ 834.8 $ 1,004.6 $ 1,020.9 $ 1,151.3 $ 2,497.8

Additionally, we have a $ 141.2 million minimum purchase commitment with a cloud service provider through September 2027 with no specified annual commitments.

Additionally, we have a $ 119.0 million minimum purchase commitment with a cloud hosting service provider through September 2027 with no specified annual commitments.

Mutual Covenant Not to Sue and Release Agreement

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On January 31, 2024, the jury returned a verdict of non-willful infringement with a lump sum amount of $ 151.5 million, plus statutory interest.

We have filed motions to overturn the verdict and seek a new trial, which are pending before the court.

Three patents are still pending review in the PTO and are currently subject to a stay at the trial court.

In addition, Centripetal filed infringement contentions on certain of their patents in the European Patent Office in Germany, to which we filed invalidity challenges.

After post-trial motions, a judgment was issued on October 3, 2024 affirming infringement on three patents, reversing infringement on the fourth patent, and subsequently, reducing the damages amount to $ 113.6 million.

We posted a surety bond that was agreed upon by the parties and approved by the court.

This bond prevents execution of the judgment while appeals are pending.

In addition, Centripetal filed infringement contentions on certain of their patents in the European Patent Office and Unified Patent Court in Germany, to which we filed appropriate legal challenges.

Those matters are still pending.

As of July 31, 2024, we accrued $ 184.4 million for the verdict amount and estimated interest.

The accrual is recorded in other long-term liabilities on our consolidated balance sheets with the corresponding charge included in general and administrative expense on our consolidated statements of operations for the year ended July 31, 2024.

As of July 31, 2025, we accrued $ 145.6 million based on the judgment and estimated interest, which is recorded in other long-term liabilities on our consolidated balance sheets.

The corresponding amount was a charge of $ 184.4 million for the year ended July 31, 2024, and a release of $ 38.8 million for the year ended July 31, 2025, which is included in general and administrative expense on our consolidated statements of operations.

Palo Alto Networks

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The complaint requests injunctive relief, monetary damages, and attorneys’ fees.

A trial date is set for June 9, 2025.

On March 21, 2025, the judge issued an order granting summary judgment of non-infringement on all remaining patents at issue.

Plaintiff filed a Notice of Appeal on April 21, 2025.

We are unable, at this time, to reasonably estimate a possible loss or potential range of loss, if any.

Palo Alto Networks

On March 22, 2022, we filed a declaratory judgment action in the United States District Court for the Southern District of New York seeking a ruling that we are not infringing various Taasera patents.

The parties have resolved all pending matters between them as of December 2023.

The amounts paid by us to resolve these matters were not material.

Lionra Technologies v.

Eire OG Innovations.

Palo Alto Networks

On August 29, 2022, Lionra Technologies filed a patent infringement lawsuit against us in the United States District Court for the Eastern District of Texas.

The parties have resolved all pending matters between them as of July 2024.

The amounts paid by us to resolve these matters were not material.

On April 3, 2024, Eire OG Innovations filed a lawsuit against us in the United States District Court for the Eastern District of Texas asserting infringement of multiple patents, certain of which were subsequently dismissed.

The complaint requests monetary damages and attorneys’ fees.

Trial is set for February 17, 2026.

We are unable, at this time, to reasonably estimate a possible loss or potential range of loss, if any.

Indemnification

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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, August 2021, August 2022, and November 2023, our board of directors authorized additional $ 700.0 million, $ 676.1 million, $ 915.0 million and $ 316.7 million increases to this share repurchase program, respectively, bringing the total authorization under this share repurchase program to $ 3.6 billion (our “current authorization”).

Our board of directors subsequently authorized additional increases to this share repurchase program, including $ 915.0 million in August 2022, $ 316.7 million in November 2023, and $ 500.0 million in August 2024, bringing the total authorization under this share repurchase program to $ 4.1 billion (our “current authorization”).

The expiration date of our current authorization was extended to December 31, 2025, 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.

Refer to Note 19.

Subsequent Events for additional information regarding the increase to our share repurchase program in August 2024.

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

Year Ended July 31,

2024 2023 2022

Number of shares repurchased 4.0 3.6

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(1) Includes transaction costs

We did no t repurchase shares of our common stock during the year ended July 31, 2025.

During the year ended July 31, 2023, we paid $ 22.7 million related to share repurchases of our common stock that were not settled as of July 31, 2022.

As of July 31, 2024, $ 500.0 million remained available for future share repurchases under our current repurchase authorization.

As of July 31, 2025, $ 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 consolidated balance sheets.

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Awards that were outstanding upon such termination remained outstanding pursuant to their original terms, and any subsequent expiration, cancellation or forfeiture of awards under our 2012 Plan are returned to our 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.

The majority of our equity awards are RSUs, which generally vest over a period of 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.

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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.

During the years ended July 31, 2024 and 2023, we granted 2.1 million and 1.6 million shares of PSUs, respectively, which contain service, performance and market conditions.

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

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

During the years ended July 31, 2025, 2024, and 2023, we granted 3.4 million, 4.2 million, and 3.2 million shares of PSUs, respectively, which contain service, performance and market conditions.

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

For PSUs granted during the year ended July 31, 2025, the performance conditions are based on an average of next-generation security annualized recurring revenue and non-GAAP net income per diluted share.

For PSUs granted during the years ended July 31, 2024 and 2023, the performance conditions are based on revenue growth or billing growth.

The market condition is measured based on our TSR relative to the TSR of the companies listed in the Standard & Poor’s 500 index.

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A total of 41.5 million shares of our common stock are available for sale under our 2012 ESPP as of July 31, 2025.

On the first day of each fiscal year, the number of shares in the reserve may be increased by the lesser of (i) 6,000,000 shares, (ii) 1 % of the outstanding shares of our common stock on the first day of the fiscal year, or (iii) such other amount as determined by our board of directors.

On the first day of each fiscal year, the number of shares in the reserve may be increased by the lesser of (i) 12.0 million shares, (ii) 1 % of the outstanding shares of our common stock on the first day of the fiscal year, or (iii) such other amount as determined by our board of directors.

Assumed Share-Based Compensation Plans

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Exercised ( 0.1 ) 9.23 ( 3.1 ) 31.70

Forfeited — — ( 0.3 ) 61.41

Balance—July 31, 2023 — $ — 0.0 $ — 12.8 $ 32.60 2.2 $ 1,184.6

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Exercised (1)

— — ( 8.2 ) 32.65

Balance—July 31, 2025 — $ — 0.0 $ — 1.4 $ 32.76 0.5 $ 197.0

Exercisable—July 31, 2025 — $ — 0.0 $ — 1.4 $ 32.76 0.5 $ 197.0

The intrinsic value of options exercised during the years ended July 31, 2024, 2023, and 2022 was $ 358.5 million, $ 237.7 million, and $ 29.2 million, respectively.

(1) Includes 1.3 million shares withheld by us to satisfy the exercise price and tax withholding requirements.

The intrinsic value of options exercised during the years ended July 31, 2025, 2024, and 2023 was $ 1.2 billion, $ 358.5 million, and $ 237.7 million, respectively.

RSU and PSU Activities

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Future grants will increase the amount of compensation expense to be recorded in these periods.

The following table presents the components of income (loss) before income taxes (in millions):

The following table presents the components of income before income taxes (in millions):

Year Ended July 31,

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Total $ 461.8 $ ( 1,589.3 ) $ 126.6

For the year ended July 31, 2024, our benefit from income taxes was $ 1.6 billion, a net change of $ 1.7 billion compared to a provision for income taxes of $ 126.6 million for the year ended July 31, 2023, primarily due to the release of our valuation allowance on U.S.

For the year ended July 31, 2025, our provision for income taxes was $ 461.8 million, which included a deferred tax provision of $ 218.5 million arising from the remeasurement of our basis difference associated with the U.S.

tax effects of foreign deferred tax assets.

Our remeasurement is a result of the One Big Beautiful Bill Act ("OBBB") enacted on July 4, 2025 which provides for significant tax law changes and modifications including changes to the U.S.

effective tax rates on certain foreign earnings.

Although these specific provisions are not effective until our fiscal 2027, our policy to account for basis differences relating to our global intangible low-taxed income requires us to account for these changes in the period of enactment.

For the year ended July 31, 2024, our benefit from income taxes was $ 1.6 billion, primarily due to the release of our valuation allowance on U.S.

federal, U.S.

states other than California, and United Kingdom (“U.K.”) deferred tax assets in fiscal 2024, partially offset by the deferred tax provision in our U.S.

states other than California, and United Kingdom (“U.K.”) deferred tax assets, partially offset by the deferred tax provision in our U.S.

federal tax provision to recognize the indirect effect on basis differences relating to our global intangible low-taxed income in connection with the release of our valuation allowance in the U.K.

For the year ended July 31, 2023, our provision for income taxes increased compared to the year ended July 31, 2022, primarily due to our profitability in fiscal 2023 and an increase in U.S.

taxes driven by capitalization of research and development expenditure with no offsetting deferred benefit due to our valuation allowance.

The following table presents the items accounting for the difference between income taxes computed at the federal statutory income tax rate and our provision for (benefit from) income taxes:

3 unchanged sentences

State taxes, net of federal tax benefit 3.8 3.1 2.8

9.5 9.7 ( 16.5 )

Change in valuation allowance 1.1 ( 341.9 ) 15.5

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The assessment requires significant judgment and is performed for each of the applicable jurisdictions.

Based on our analysis of all positive and negative evidence during the year ended July 31, 2024, we concluded it is more likely than not that our U.S.

federal, U.S.

states other than California, and U.K.

deferred tax assets will be realizable based on our recent profitability and continued forecasted income.

In making these judgments, we considered our recent and expected ongoing profitability, which supports our conclusion of the realization of the deferred tax assets.

We continue to maintain a valuation allowance for our California deferred tax assets due to the uncertainty regarding realizability of these deferred tax assets as they have not met the “more likely than not” realization criterion.

Based on our analysis of all positive and negative evidence during the year ended July 31, 2025, we continue to maintain a valuation allowance for our California deferred tax assets due to the uncertainty regarding realizability of these deferred tax assets as they have not met the “more likely than not” realization criterion.

We expect future research and development tax credit generation in California to exceed our ability to use the existing tax credits.

As a result of the valuation allowance release, during the year ended July 31, 2024, we recognized a deferred tax benefit of $ 3.4 billion for the U.S.

federal, U.S.

states other than California, and U.K.

deferred tax assets.

federal and state deferred tax assets largely consist of capitalized research expenditures and accelerated recognition of deferred revenue for tax purposes.

1 unchanged sentence

deferred tax assets largely consist of basis differences in intangible assets and related net operating losses expected to be utilized in the future.

In addition, during the year ended July 31, 2024, we recognized a deferred tax expense of $ 1.7 billion for the U.S.

federal indirect tax effect of foreign deferred taxes consistent with our policy to record deferred taxes for basis differences relating to our global intangible low-taxed income.

Accordingly, during the year ended July 31, 2024, we recognized a net tax benefit of $ 1.7 billion relating to our valuation allowance release.

We will continue to monitor the need for a valuation allowance on our deferred tax assets.

As of July 31, 2025, we had federal, state, and foreign net operating loss carryforwards of approximately $ 129.1 million, $ 112.8 million, and $ 2.3 billion, respectively, as reported on our tax returns, available to reduce future taxable income, if any.

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The annual limitation may result in the expiration of net operating losses and credits before utilization.

As of July 31, 2024, we had $ 454.4 million of unrecognized tax benefits, $ 200.1 million of which would affect income tax expense if recognized, after consideration of our valuation allowance in the United States and other assets.

As of July 31, 2025, we had $ 572.2 million of unrecognized tax benefits, $ 274.8 million of which would affect income tax expense if recognized, after consideration of our valuation allowance in California and other assets.

6 unchanged sentences

We recognize both interest and penalties associated with uncertain tax positions as a component of income tax expense.

During the years ended July 31, 2024, 2023, and 2022, we recognized an income tax expense of $ 5.8 million, a net income tax benefit of $ 4.8 million, and an income tax expense of $ 5.2 million related to interest and penalties, respectively.

During the years ended July 31, 2025, 2024, and 2023, we recognized an income tax expense of $ 42.4 million, an income tax expense of $ 5.8 million, and a net income tax benefit of $ 4.8 million related to interest and penalties, respectively.

We had accrued interest and penalties on our consolidated balance sheets related to unrecognized tax benefits of $ 53.3 million and $ 10.9 million as of July 31, 2025 and 2024, respectively.

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Unrecognized tax benefits at the end of the period $ 572.2 $ 454.4 $ 360.0

During the year ended July 31, 2024, increases in uncertain tax positions were primarily due to positions relating to our credits and incentives and intercompany transactions.

During the year ended July 31, 2023, our reductions in uncertain tax positions primarily related to settlements with non-U.S.

tax authorities and remeasurement of certain unrecognized tax benefits.

As a result of our settlement agreements with non-U.S.

tax authorities, we paid a total of $ 39.8 million, including interest and penalties.

Our additions for tax positions taken in the years ended July 31, 2024, 2023 and 2022 were primarily attributable to uncertain tax positions related to tax credits.

Our additions for tax positions taken in the year ended July 31, 2024 were further driven by intercompany transactions.

During the years ended July 31, 2025 and 2024, increases in uncertain tax positions were primarily due to our credits and incentives and intercompany transactions.

As of July 31, 2025, we had no unremitted earnings when evaluating our outside basis difference relating to our U.S.

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Withholding taxes that would be payable upon remittance of these lower tier earnings are not material.

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.

Net Income Per Share

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

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

We compute the dilutive effect of shares issuable upon conversion of our convertible senior notes using the if-converted method, and the dilutive effect of 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):

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

Year Ended July 31,

2025 2024 2023

Net income (loss) $ 2,577.6 $ 439.7 $ ( 267.0 )

Weighted-average shares used to compute net income (loss) per share, basic 319.2 303.2 295.6

$ 1,133.9 $ 2,577.6 $ 439.7

Weighted-average shares used to compute net income per share, basic

662.5 638.5 606.4

Weighted-average effect of potentially dilutive securities:

2 unchanged sentences

Employee equity incentive plans 14.1 23.1 23.8

Weighted-average shares used to compute net income (loss) per share, diluted 354.0 342.3 295.6

Net income (loss) per share, basic $ 8.07 $ 1.45 $ ( 0.90 )

Net income (loss) per share, diluted $ 7.28 $ 1.28 $ ( 0.90 )

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):

Weighted-average shares used to compute net income per share, diluted

709.3 707.9 684.5

Net income per share, basic

$ 1.71 $ 4.04 $ 0.73

Net income per share, diluted

$ 1.60 $ 3.64 $ 0.64

The following securities were excluded from the computation of diluted net income 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):

Year Ended July 31,

2025 2024 2023

Convertible senior notes — — 39.2

Warrants related to the issuance of convertible senior notes — — 39.2

Employee equity incentive plans 3.4 4.7 7.7

Total 2.4 3.9 105.2

Other Income, Net

7 unchanged sentences

Segment Information

We have one operating and reportable segment.

We conduct business globally and sales are primarily managed on a geographic theater basis.

Our chief operating decision maker reviews financial information presented on a consolidated basis accompanied by information about revenue by geographic region for purposes of allocating resources and evaluating financial performance.

We have one business activity and there are no segment managers who are held accountable for operations, operating results, and plans for levels, components, or types of products or services below the consolidated unit level.

Accordingly, we are considered to be in a single reportable segment and operating unit structure.

Our chief operating decision maker (“CODM”) is our Chairman and Chief Executive Officer who reviews financial information presented on a consolidated basis accompanied by revenue information for purposes of allocating resources and evaluating financial performance.

Our CODM uses consolidated net income as our measure of segment profit or loss.

The consolidated financial information by function as reflected on our consolidated statements of operations is used in our annual budget and forecasting process to establish goals and monitor budget versus actual results.

The measure of segment assets is reported on the consolidated balance sheets as total consolidated assets.

The following table presents our long-lived assets, which consist of property and equipment, net and operating lease right-of-use assets, by geographic area (in millions):

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Revenue for revenue by geographic theater and revenue for groups of similar products and services for the years ended July 31, 2025, 2024, and 2023.

Subsequent Events

On May 15, 2024, we entered into a definitive agreement with International Business Machines Corporation to acquire certain QRadar assets, including intellectual property, customer relationships, and customer contracts.

We agreed to pay $ 500.0 million in cash upon closing, and to make additional post-closing payments contingent upon the migration of QRadar on-premise customers to Cortex XSIAM through December 31, 2027.

We expect the acquisition will help accelerate the growth of our Cortex XSIAM business.

On August 31, 2024, we completed this acquisition, which will be accounted for as a business combination in the first quarter of fiscal 2025.

We are currently in the process of determining the initial purchase accounting for this transaction.

2025 Notes Conversion

Subsequent to July 31, 2024, $ 285.8 million in aggregate principal amount of the 2025 Notes was converted or had been submitted by the holders for conversion and will settle during the fiscal quarter ending October 31, 2024.

Share Repurchase

On August 15, 2024, our board of directors authorized a $ 500.0 million increase to our share repurchase program, bringing the total remaining authorization for future share repurchases to $ 1.0 billion.

The expiration date of the repurchase authorization was extended to December 31, 2025, and our repurchase program may be suspended or discontinued at any time without prior notice.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

1 unchanged sentence

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data