What changed in this filing

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Item 1. Financial Statements

2026-02-18 compared with 2025-11-20 · 214 added, 98 removed, 500 unchanged (38% of the section changed)

3 unchanged sentences

(in millions, except per share data)

October 31, 2025 July 31, 2025

January 31, 2026 July 31, 2025

Current assets:

1 unchanged sentence

Short-term investments 378 635

Accounts receivable, net of allowance for credit losses of $ 14 and $ 10 as of October 31, 2025 and July 31, 2025, respectively

Accounts receivable, net of allowance for credit losses of $ 13 and $ 10 as of January 31, 2026 and July 31, 2025, respectively

Short-term financing receivables, net 672 715

29 unchanged sentences

100 shares authorized;

none issued and outstanding as of October 31, 2025 and July 31, 2025

none issued and outstanding as of January 31, 2026 and July 31, 2025

Common stock and additional paid-in capital;

1 unchanged sentence

2,000 shares authorized;

692 and 668 shares issued and outstanding as of October 31, 2025 and July 31, 2025, respectively

703 and 668 shares issued and outstanding as of January 31, 2026 and July 31, 2025, respectively

Accumulated other comprehensive income

6 unchanged sentences

(Unaudited, in millions, except per share data)

Three Months Ended October 31,

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

2026 2025 2026 2025

Product $ 514 $ 421 $ 948 $ 775

12 unchanged sentences

Operating income

397 241 706 527

Interest expense — ( 1 ) — ( 2 )

1 unchanged sentence

Income before income taxes

549 325 961 693

Provision for income taxes 117 58 195 75

$ 432 $ 267 $ 766 $ 618

Net income per share, basic

3 unchanged sentences

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

704 659 695 657

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

711 709 713 709

See notes to condensed consolidated financial statements .

2 unchanged sentences

(Unaudited, in millions)

Three Months Ended October 31,

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

2026 2025 2026 2025

$ 432 $ 267 $ 766 $ 618

Other comprehensive income, net of tax:

3 unchanged sentences

Net realized (gains) losses reclassified into earnings

( 11 ) 4 ( 24 ) 5

Net change on cash flow hedges 5 ( 5 ) ( 1 ) ( 4 )

Other comprehensive income (loss)

Other comprehensive loss

( 21 ) ( 10 ) ( 2 ) ( 12 )

Comprehensive income $ 411 $ 257 $ 764 $ 606

3 unchanged sentences

(Unaudited, in millions)

Three Months Ended October 31, 2025

Three Months Ended January 31, 2026

Common Stock and Additional Paid-In Capital

3 unchanged sentences

Shares Amount

Balance as of July 31, 2025 668 $ 5,292 $ 48 $ 2,484 $ 7,824

Balance as of October 31, 2025 692 $ 5,780 $ 67 $ 2,818 $ 8,665

Net income — — — 432 432

Other comprehensive income

Other comprehensive loss

— — ( 21 ) — ( 21 )

Issuance of common stock in connection with employee equity incentive plans 2 9 — — 9

1 unchanged sentence

Share-based compensation for equity-based awards — 307 — — 307

Replacement awards related to a business acquisition

2 109 — — 109

Settlement of warrants 7 — — — —

Balance as of October 31, 2025 692 $ 5,780 $ 67 $ 2,818 $ 8,665

Three Months Ended October 31, 2024

Balance as of January 31, 2026 703 $ 6,097 $ 46 $ 3,250 $ 9,393

Three Months Ended January 31, 2025

Common Stock and Additional Paid-In Capital

3 unchanged sentences

Shares Amount

Balance as of October 31, 2024 655 $ 4,215 $ ( 4 ) $ 1,701 $ 5,912

— — — 267 267

Other comprehensive loss

— — ( 10 ) — ( 10 )

Issuance of common stock in connection with employee equity incentive plans 5 37 — — 37

Taxes paid related to net share settlement of equity awards — ( 156 ) — — ( 156 )

Share-based compensation for equity-based awards — 325 — — 325

Settlement of convertible notes 2 — — — —

Settlement of note hedges

( 2 ) — — — —

Balance as of January 31, 2025 660 $ 4,421 $ ( 14 ) $ 1,968 $ 6,375

Six Months Ended January 31, 2026

Common Stock and Additional Paid-In Capital

Accumulated Other Comprehensive Income

Retained Earnings

Total Stockholders’ Equity

Shares Amount

Balance as of July 31, 2025 668 $ 5,292 $ 48 $ 2,484 $ 7,824

Net income — — — 766 766

Other comprehensive loss

— — ( 2 ) — ( 2 )

Issuance of common stock in connection with employee equity incentive plans 6 138 — — 138

Taxes paid related to net share settlement of equity awards — ( 109 ) — — ( 109 )

Share-based compensation for equity-based awards — 667 — — 667

Replacement awards related to a business acquisition

2 109 — — 109

Settlement of warrants 27 — — — —

Balance as of January 31, 2026 703 $ 6,097 $ 46 $ 3,250 $ 9,393

Six Months Ended January 31, 2025

Common Stock and Additional Paid-In Capital

Accumulated Other Comprehensive Loss

Retained Earnings

Total Stockholders’ Equity

Shares Amount

Balance as of July 31, 2024 650 $ 3,821 $ ( 2 ) $ 1,350 $ 5,169

Net income — — — 618 618

Other comprehensive loss

6 unchanged sentences

( 6 ) — — — —

Balance as of October 31, 2024 655 $ 4,215 $ ( 4 ) $ 1,701 $ 5,912

Balance as of January 31, 2025 660 $ 4,421 $ ( 14 ) $ 1,968 $ 6,375

See notes to condensed consolidated financial statements.

2 unchanged sentences

(Unaudited, in millions)

Three Months Ended October 31,

Six Months Ended January 31,

Cash flows from operating activities

4 unchanged sentences

Amortization of deferred contract costs 261 225

Amortization of debt issuance costs — 1

Change in fair value of contingent consideration liability

24 unchanged sentences

Payments for taxes related to net share settlement of equity awards

( 109 ) ( 178 )

Payments of contingent consideration liability

Net cash provided by (used in) financing activities

Net cash used in financing activities

( 106 ) ( 452 )

Net increase in cash, cash equivalents, and restricted cash

5 unchanged sentences

Restricted cash included in prepaid expenses and other current assets 4 11

Restricted cash included in other assets 4 —

Total cash, cash equivalents, and restricted cash $ 4,166 $ 2,237

Non-cash investing and financing activities

Equity consideration for a business acquisition

$ ( 109 ) $ —

Contingent consideration for a business acquisition

23 unchanged sentences

Summary of Significant Accounting Policies

There have been no material changes to our significant accounting policies as of and for the three months ended October 31, 2025, as compared to the significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended July 31, 2025.

There have been no material changes to our significant accounting policies as of and for the six months ended January 31, 2026, as compared to the significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended July 31, 2025.

Recently Issued Accounting Pronouncements

18 unchanged sentences

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

Hedge Accounting Improvements

In November 2025, the FASB issued authoritative guidance that clarifies and improves the existing hedge accounting guidance to better reflect the economics of an entity’s risk management activities.

The standard is effective for our annual and interim periods beginning in the first quarter of fiscal 2028 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

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

Three Months Ended October 31,

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

2026 2025 2026 2025

United States $ 1,588 $ 1,400 $ 3,114 $ 2,744

5 unchanged sentences

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

Three Months Ended October 31,

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

2026 2025 2026 2025

Product $ 514 $ 421 $ 948 $ 775

5 unchanged sentences

Deferred Revenue

During the three months ended October 31, 2025 and 2024, we recognized approximately $ 1.9 billion and $ 1.6 billion of revenue pertaining to amounts that were deferred as of July 31, 2025 and 2024, respectively.

During the six months ended January 31, 2026 and 2025, we recognized approximately $ 3.5 billion and $ 3.1 billion of revenue pertaining to amounts that were deferred as of July 31, 2025 and 2024, respectively.

Remaining Performance Obligations

Remaining performance obligations were $ 15.5 billion as of October 31, 2025, of which we expect to recognize as revenue approximately $ 6.9 billion over the next 12 months and the remainder thereafter.

Remaining performance obligations were $ 16.0 billion as of January 31, 2026, of which we expect to recognize as revenue approximately $ 7.1 billion over the next 12 months and the remainder thereafter.

Fair Value Measurements

The following table presents our financial assets and liabilities measured at fair value on a recurring basis as of October 31, 2025 and July 31, 2025 (in millions):

October 31, 2025 July 31, 2025

The following table presents our financial assets and liabilities measured at fair value on a recurring basis as of January 31, 2026 and July 31, 2025 (in millions):

January 31, 2026 July 31, 2025

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

1 unchanged sentence

Money market funds $ 1,395 $ — $ — $ 1,395 $ 1,206 $ — $ — $ 1,206

Certificates of deposit — 14 — 14 — — — —

Commercial paper — 912 — 912 — 169 — 169

23 unchanged sentences

Total assets measured at fair value $ 1,395 $ 5,632 $ — $ 7,027 $ 1,206 $ 6,415 $ — $ 7,621

October 31, 2025 July 31, 2025

January 31, 2026 July 31, 2025

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

17 unchanged sentences

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

Three Months Ended October 31,

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

2026 2025 2026 2025

Contingent consideration liability at the beginning of the period

$ 380 $ 655 $ 514 $ —

Initial valuation on the acquisition date

Change in fair value

3 10 ( 10 ) 16

( 14 ) — ( 135 ) —

Contingent consideration liability at the end of the period

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

$ 369 $ 665 $ 369 $ 665

The total estimated fair value of our financing receivables approximates their carrying amounts as of January 31, 2026 and July 31, 2025.

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

1 unchanged sentence

Available-for-sale Debt Securities

The following tables summarize the amortized cost, unrealized gains and losses, and fair value of our available-for-sale debt securities as of October 31, 2025 and July 31, 2025 (in millions):

October 31, 2025

The following tables summarize the amortized cost, unrealized gains and losses, and fair value of our available-for-sale debt securities as of January 31, 2026 and July 31, 2025 (in millions):

January 31, 2026

Amortized Cost

2 unchanged sentences

Cash equivalents:

Certificates of deposit $ 14 $ — $ — $ 14

Commercial paper 912 — — 912

6 unchanged sentences

government and agency securities 30 — — 30

government and agency securities 29 — — 29

Asset-backed securities 762 9 — 771

15 unchanged sentences

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

We did not recognize any credit losses related to our available-for-sale debt securities during the three months ended October 31, 2025 and 2024.

The following table summarizes the amortized cost and fair value of our available-for-sale debt securities as of October 31, 2025, by contractual years-to-maturity (in millions):

We did not recognize any credit losses related to our available-for-sale debt securities during the three and six months ended January 31, 2026 and 2025.

The following table summarizes the amortized cost and fair value of our available-for-sale debt securities as of January 31, 2026, by contractual years-to-maturity (in millions):

Amortized Cost Fair Value

7 unchanged sentences

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

As of October 31, 2025 and July 31, 2025, the carrying values of our marketable equity securities were $ 1.1 billion and $ 1.2 billion, respectively.

There were no unrealized gains or losses recognized for these securities during the three months ended October 31, 2025 and 2024.

As of January 31, 2026 and July 31, 2025, the carrying values of our marketable equity securities were $ 1.4 billion and $ 1.2 billion, respectively.

There were no unrealized gains or losses recognized for these securities during the three and six months ended January 31, 2026 and 2025.

Financing Receivables

The following table summarizes our short-term and long-term financing receivables as of October 31, 2025 and July 31, 2025 (in millions):

October 31, 2025 July 31, 2025

The following table summarizes our short-term and long-term financing receivables as of January 31, 2026 and July 31, 2025 (in millions):

January 31, 2026 July 31, 2025

Short-term financing receivables, gross $ 754 $ 806

10 unchanged sentences

Internal Risk Rating (1)

October 31, 2025 July 31, 2025

January 31, 2026 July 31, 2025

Fiscal Year of Origination

7 unchanged sentences

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

There was no significant activity in allowance for credit losses during the three months ended October 31, 2025 and 2024.

Past due amounts on financing receivables were not material as of October 31, 2025 and July 31, 2025.

There was no significant activity in allowance for credit losses during the three and six months ended January 31, 2026 and 2025.

Past due amounts on financing receivables were not material as of January 31, 2026 and July 31, 2025.

Derivative Instruments

3 unchanged sentences

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 revenue and operating expenditures.

As of October 31, 2025 and July 31, 2025, the total notional amount of our outstanding foreign currency forward contracts designated as cash flow hedges was $ 760 million and $ 964 million, respectively.

As of January 31, 2026 and July 31, 2025, the total notional amount of our outstanding foreign currency forward contracts designated as cash flow hedges was $ 523 million and $ 964 million, respectively.

Refer to Note 3.

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

As of October 31, 2025, unrealized gains and losses in accumulated other comprehensive income (“AOCI”) related to our cash flow hedges were a $ 32 million net gain, of which $ 34 million in gains are expected to be recognized into earnings within the next 12 months.

Fair Value Measurements for the fair value of our derivative instruments as reported on our condensed consolidated balance sheets as of January 31, 2026 and July 31, 2025.

As of January 31, 2026, unrealized gains and losses in accumulated other comprehensive income (“AOCI”) related to our cash flow hedges were a $ 39 million net gain, of which $ 40 million in gains are expected to be recognized into earnings within the next 12 months.

As of July 31, 2025, unrealized gains and losses in AOCI related to our cash flow hedges were a $ 40 million net gain.

As of October 31, 2025 and July 31, 2025, the notional amount of our outstanding foreign currency forward contracts not designated as hedging instruments was $ 586 million and $ 504 million, respectively.

As of January 31, 2026 and July 31, 2025, the notional amount of our outstanding foreign currency forward contracts not designated as hedging instruments was $ 557 million and $ 504 million, respectively.

Chronosphere, Inc.

On January 29, 2026, we completed our acquisition of Chronosphere, Inc.

(“Chronosphere”), a privately-held observability technology company.

The acquisition resulted in forming our observability platform.

The total purchase consideration for the acquisition of Chronosphere was $ 3.0 billion, which consisted of the following (in millions):

Fair value of replacement awards 109

Total $ 2,951

As part of the acquisition, we issued $ 525 million of replacement equity 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.

The replacement equity awards included 2 million shares of our restricted common stock.

These restricted common stock vest over a period of two to three years from the date of issuance.

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 $ 2,951

Goodwill generated from this business combination is primarily attributable to the assembled workforce and expected post-acquisition synergies from integrating Chronosphere 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 $ 300 5 years

Customer relationships

255 6 years - 10 years

Trade name and trademarks 10 1 year

We have included the financial results of Chronosphere in our consolidated financial statements from the date of acquisition.

Post-acquisition revenue and earnings of Chronosphere were not material to our condensed consolidated statements of operations for the three and six months ended January 31, 2026.

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 third quarter of our fiscal 2026, subject to the satisfaction of customary closing conditions, including the receipt of certain 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 million may be payable by CyberArk to us, upon termination of the definitive acquisition agreement under specified circumstances.

Intangible Assets

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

On February 11, 2026, we completed the acquisition of CyberArk.

Subsequent Events for additional information.

This acquisition will be accounted for as a business combination in the third quarter of fiscal 2026.

Additional Acquisition-Related Information

The following unaudited pro forma financial information summarizes the combined results of operations for Palo Alto Networks and Chronosphere, as though the companies were combined as of the beginning of our fiscal 2025 (in millions):

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

2026 2025 2026 2025

Total revenue

$ 2,643 $ 2,271 $ 5,158 $ 4,423

$ 286 $ 173 $ 535 $ 422

The unaudited pro forma financial information include adjustments attributable to our acquisition of Chronosphere, including amortization for intangible assets acquired and stock-based compensation expense from assumed replacement equity awards.

The unaudited pro forma financial information is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of our fiscal 2025 or of the results of our future operations of the combined business.

Additional information related to our acquisitions, 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, Intangible Assets and Other Long-Lived Assets

The following table presents details of our goodwill during the six months ended January 31, 2026 (in millions):

Balance as of July 31, 2025 $ 4,567

Goodwill acquired 2,364

Balance as of January 31, 2026 $ 6,931

Purchased Intangible Assets

The following table presents details of our purchased intangible assets as of October 31, 2025 and July 31, 2025 (in millions):

October 31, 2025 July 31, 2025

The following table presents details of our purchased intangible assets as of January 31, 2026 and July 31, 2025 (in millions):

January 31, 2026 July 31, 2025

Gross Carrying Amount

8 unchanged sentences

Acquired intellectual property 24 ( 10 ) 14 24 ( 9 ) 15

Trade name and trademarks 10 — 10 — — —

Other — — — 1 ( 1 ) —

Total purchased intangible assets $ 1,713 $ ( 464 ) $ 1,249 $ 1,170 $ ( 407 ) $ 763

We recognized amortization expense of $ 40 million and $ 41 million for the three months ended October 31, 2025 and 2024 respectively.

The following table summarizes estimated future amortization expense of our intangible assets subject to amortization as of October 31, 2025 (in millions):

We recognized amortization expense of $ 39 million and $ 79 million for the three and six months ended January 31, 2026, respectively, and $ 45 million and $ 86 million for the three and six months ended January 31, 2025, respectively.

The following table summarizes estimated future amortization expense of our intangible assets subject to amortization as of January 31, 2026 (in millions):

Fiscal years ending July 31,

1 unchanged sentence

Future amortization expense $ 1,249 $ 130 $ 224 $ 199 $ 173 $ 156 $ 367

Other Long-lived assets

During the six months ended January 31, 2026, we purchased 14.5 acres of land adjacent to our headquarters in Santa Clara, California, for $ 91 million to accommodate future expansion of our headquarters.

This amount was recorded in property and equipment, net on our condensed consolidated balance sheet as of January 31, 2026.

Convertible Senior Notes, Note Hedges, and Warrants

7 unchanged sentences

The shares issuable under the 2025 Warrants are included in the calculation of diluted earnings per share when the average market value per share of our common stock for the reporting period exceeds the strike price of the 2025 Warrants.

During the three months ended October 31, 2025, we net settled a portion of the 2025 Warrants with 20 million shares of our common stock with a fair value of $ 4.1 billion.

During the six months ended January 31, 2026, we net settled all of the 2025 Warrants with the issuance of 27 million shares of our common stock with a fair value of $ 5.6 billion, of which 7 million shares of our common stock with a fair value of $ 1.5 billion were issued during the three months ended January 31, 2026.

The number of net shares issued was determined based on the number of 2025 Warrants exercised multiplied by the difference between the strike price of the 2025 Warrants and their daily volume-weighted-average stock price.

As of October 31, 2025, up to 11 million shares of our common stock were issuable for gross settlement under the remaining outstanding 2025 Warrants, which will be net settled when exercised through the end of November 2025.

Revolving Credit Facility

4 unchanged sentences

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

As of January 31, 2026, there were no amounts outstanding and we were in compliance with all covenants under the Credit Agreement.

Commitments and Contingencies

3 unchanged sentences

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 October 31, 2025 (in millions):

The following table presents details of the aggregate future non-cancelable purchase commitments under these agreements as of January 31, 2026 (in millions):

Fiscal years ending July 31,

26 unchanged sentences

Those matters are still pending.

As of October 31, 2025 and July 31, 2025, we accrued $ 147 million and $ 146 million based on the judgment and estimated interest, which is recorded in other long-term liabilities on our condensed consolidated balance sheets.

The corresponding charge was $ 1 million for the three months ended October 31, 2025.

We recorded a release of $ 43 million for the three months ended October 31, 2024.

As of January 31, 2026 and July 31, 2025, we accrued $ 149 million and $ 146 million based on the judgment and estimated interest, which is recorded in other long-term liabilities on our condensed consolidated balance sheets.

The corresponding interest charge was $ 2 million and $ 3 million for the three and six months ended January 31, 2026, respectively.

We recorded a charge of $ 1 million and a release of $ 42 million for the three and six months ended January 31, 2025, respectively.

These amounts are included in general and administrative expense on our condensed consolidated statements of operations.

9 unchanged sentences

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.

As of October 31, 2025, we accrued for an immaterial amount related to this matter.

The parties have resolved all pending matters between them as of December 2025.

The amount paid by us to resolve these matters was not material.

Stockholders’ Equity

2 unchanged sentences

Our board of directors subsequently authorized additional increases to this share repurchase program, bringing the total authorization under this share repurchase program to $ 4.1 billion (our “current authorization”).

As of October 31, 2025, the expiration date of our current authorization was December 31, 2025.

The expiration date of the authorization was subsequently extended to December 31, 2026.

Refer to Note 16.

Subsequent Events for additional information.

Our repurchase program may be suspended or discontinued at any time.

The expiration date of our current authorization was extended to December 31, 2026, and our repurchase program may be suspended or discontinued at any time.

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

We did not repurchase shares of our common stock during the three months ended October 31, 2025 and 2024.

As of October 31, 2025, $ 1.0 billion remained available for future share repurchases under our current repurchase authorization.

We did not repurchase shares of our common stock during the three and six months ended January 31, 2026 and 2025.

As of January 31, 2026, $ 1.0 billion remained available for future share repurchases under our current repurchase authorization.

Equity Award Plans

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

The following table summarizes the RSU and PSU activity under our stock plans during the three months ended October 31, 2025 (in millions, except per share amounts):

The following table summarizes the RSU and PSU activity under our stock plans during the six months ended January 31, 2026 (in millions, except per share amounts):

Unvested RSUs

7 unchanged sentences

Balance—July 31, 2025 13 $ 143.33 $ 2,285 9 $ 140.92 $ 1,635

Granted (1)(2)

5 $ 200.15 4 $ 186.49

1 unchanged sentence

Forfeited ( 1 ) $ 146.80 ( 2 ) $ 143.61

Balance—October 31, 2025 12 $ 150.94 $ 2,623 12 $ 153.01 $ 2,677

Balance—January 31, 2026 14 $ 168.38 $ 2,533 8 $ 155.96 $ 1,464

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

(2) Includes 1 million RSUs assumed in connection with the acquisition of Chronosphere, with a weighted-average grant-date fair value of $ 176.20 per share for the six months ended January 31, 2026.

(3) Includes time-based vesting for PSUs.

3 unchanged sentences

The number of PSUs eligible to vest is determined based on the level of achievement against certain performance conditions, market conditions, and a combination thereof.

During the three months ended October 31, 2025, we granted 3 million shares of PSUs that contain service, performance, and market conditions.

During the six months ended January 31, 2026, we granted 3 million shares of PSUs that contain service, performance, and market conditions.

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

1 unchanged sentence

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

As of October 31, 2025, we have approved 3 million shares of PSUs, which will be granted upon the performance condition being established during the next two fiscal years.

As of January 31, 2026, we have approved 3 million shares of PSUs, which will be granted upon the performance condition being established during the next two fiscal years.

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

The following table summarizes the assumptions used and the resulting grant-date fair value of our PSUs subject to market conditions granted during the three months ended October 31, 2025 and 2024:

Three Months Ended October 31,

The following table summarizes the assumptions used and the resulting grant-date fair value of our PSUs subject to market conditions granted during the three and six months ended January 31, 2026 and 2025:

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

2025 2026 2025

Volatility 43.5 % - 43.9 %

36.6 % - 42.6 %

43.5 % - 47.6 %

Expected term (in years) 1.7 - 2.7

2 unchanged sentences

3.6 % - 3.9 %

3.7 % - 4.5 %

Grant-date fair value per share $ 287.98 - $ 291.91

$ 226.06 - $ 261.62

$ 264.51 - $ 305.83

Performance Stock Option (“PSO”) Activities

1 unchanged sentence

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

As of October 31, 2025 and July 31, 2025, all of our outstanding PSOs have been fully vested.

As of January 31, 2026 and July 31, 2025, all of our outstanding PSOs have been fully vested.

The maximum contractual term of our outstanding PSOs is seven and a half years from the date of grant in fiscal year 2018 and 2019.

The following table summarizes the PSO activity under our stock plans during the three months ended October 31, 2025 (in millions, except per share amounts):

The following table summarizes the PSO activity under our stock plans during the six months ended January 31, 2026 (in millions, except per share amounts):

Number of Shares

4 unchanged sentences

Exercised ( 1 ) $ 32.76

Balance—October 31, 2025 — $ 32.25 0.5 $ 52

Exercisable—October 31, 2025 — $ 32.25 0.5 $ 52

Balance—January 31, 2026 — $ — 0.0 $ —

Exercisable—January 31, 2026 — $ — 0.0 $ —

Share-Based Compensation

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

Three Months Ended October 31,

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

2026 2025 2026 2025

Cost of product revenue $ 1 $ 2 $ 2 $ 3

4 unchanged sentences

Total share-based compensation $ 301 $ 320 $ 671 $ 615

As of October 31, 2025, total compensation cost related to unvested share-based awards not yet recognized was $ 2.2 billion.

As of January 31, 2026, total compensation cost related to unvested share-based awards not yet recognized was $ 2.9 billion.

This cost is expected to be amortized over a weighted-average period of approximately 2.6 years.

For the three months ended October 31, 2025 and 2024, our provision for income taxes reflected effective tax rates of 18.9 % and 4.9 %, respectively.

Our income taxes for the three months ended October 31, 2025 and 2024 were primarily due to U.S.

and foreign income taxes.

Our effective tax rates for the three months ended October 31, 2025 and 2024 differed from the U.S.

statutory tax rate primarily due to excess tax benefits from share-based compensation.

Our income taxes primarily consist of U.S.

and foreign income taxes and our effective tax rates differ from the U.S.

statutory tax rate primarily due to the excess tax benefits from share-based compensation.

For the three and six months ended January 31, 2026, our provision for income taxes reflected effective tax rates of 21.3 % and 20.3 %, respectively.

For the three and six months ended January 31, 2025, our provision for income taxes reflected effective tax rates of 17.7 % and 10.9 %, respectively.

Our effective tax rates for the three and six months ended January 31, 2026 increased as compared to the same periods in 2025 primarily due to decreased excess tax benefits from share-based compensation relative to our increased business profits.

Net Income Per Share

3 unchanged sentences

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

Three Months Ended October 31,

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

2026 2025 2026 2025

$ 432 $ 267 $ 766 $ 618

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

704 659 695 657

Weighted-average effect of potentially dilutive securities:

3 unchanged sentences

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

711 709 713 709

Net income per share, basic

3 unchanged sentences

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):

Three Months Ended October 31,

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

2026 2025 2026 2025

Employee equity incentive plans 6 6 4 5

1 unchanged sentence

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

Three Months Ended October 31,

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

2026 2025 2026 2025

Interest income $ 109 $ 87 $ 214 $ 173

Foreign currency exchange gains (losses), net ( 16 ) 2 ( 27 ) ( 6 )

59 ( 4 ) 68 1

Total other income, net $ 152 $ 85 $ 255 $ 168

Subsequent Events

Share Repurchase

On November 18, 2025, our board of directors authorized the extension of the expiration date of our current share repurchase authorization to December 31, 2026.

Our repurchase program may be suspended or discontinued at any time without prior notice.

Chronosphere, Inc.

On November 19, 2025, we entered into a definitive agreement to acquire Chronosphere, Inc., a privately-held observability technology company (“Chronosphere”), in exchange for total consideration of $ 3.35 billion in cash and replacement awards, subject to adjustments.

We expect the acquisition to be our entry into the observability space.

The acquisition of Chronosphere is expected to close during the second half of our fiscal 2026, subject to the satisfaction of closing conditions, including regulatory clearance.

CyberArk Software Ltd.

On February 11, 2026, we completed the acquisition of CyberArk for $ 2.3 billion in cash and 112 million shares of our common stock.

The cash portion of the consideration was funded with our cash on hand.

We also assumed certain unvested outstanding equity awards held by CyberArk employees under certain of CyberArk’s share incentive plans.

Koi Security Ltd.

On February 16, 2026, we entered into a definitive agreement to acquire Koi Security Ltd., a privately-held endpoint posture management company (“Koi Security”), in exchange for total consideration of $ 300 million in cash and replacement awards, subject to adjustments.

We expect the acquisition to expand the capabilities of our security operations platform.

The acquisition of Koi Security is expected to close during the second half of our fiscal 2026, subject to the satisfaction of closing conditions, including regulatory clearance.

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

What changed 10-Q

Item 1. Financial Statements