What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-06-03 compared with 2026-02-18 · 148 added, 100 removed, 355 unchanged (41% of the section changed)

18 unchanged sentences

the sufficiency of our cash flow from operations with existing cash, cash equivalents, and investments to meet our cash needs for the foreseeable future;

our ability to successfully acquire and integrate companies and assets and expectations and intentions with respect to the assets, products and technologies that we acquire, including with respect to our acquisition of CyberArk Software Ltd.

and our expectations regarding the benefits and synergies of the acquisition;

our ability to successfully acquire and integrate companies and assets and expectations and intentions with respect to the assets, products and technologies that we acquire;

expectations regarding the benefits and synergies from our acquisition and integration of companies, assets and technology, including with respect to our acquisition of CyberArk Software Ltd.;

expectations regarding contingent consideration obligations;

statements regarding our competition, including the expanded scope of our competitors as a result of acquisitions;

expectations regarding the change in the fair value of our convertible senior notes and capped call transactions and its impact on us and our financial results;

statements regarding our competition, including the expanded scope of our competitors as a result of entering into new product and service categories;

the timing and amount of capital expenditures and share repurchases;

the effects of worldwide economic and geopolitical conditions, including but not limited to hostilities in Israel and the surrounding regions, inflation, interest rate levels, public or administration policies, trade regulations, trade policy, growth rates and other conditions, on our operating and financial results and performance;

the effects of worldwide economic and geopolitical conditions, including but not limited to hostilities in Israel, Iran, and the surrounding regions, inflation, interest rate levels, public or administration policies, trade regulations, trade policy, growth rates and other conditions, on our operating and financial results and performance;

the manufacture, delivery and cost of certain of our products;

the effects of litigation or regulatory developments involving us or affecting our industry;

our or our subsidiaries’ debt repayment obligations;

and other statements regarding our future operations, financial condition and prospects, and business strategies.

9 unchanged sentences

• Results of Operations.

A discussion of the nature and trends in our financial results and an analysis of our financial results comparing the three and six months ended January 31, 2026 to the three and six months ended January 31, 2025.

A discussion of the nature and trends in our financial results and an analysis of our financial results comparing the three and nine months ended April 30, 2026 to the three and nine months ended April 30, 2025.

• Liquidity and Capital Resources.

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Our mission is to be the cybersecurity partner of choice for enterprises, organizations, service providers, and government entities to protect our digital way of life.

Our cybersecurity platforms and services help secure enterprise users, networks, clouds, and endpoints by delivering comprehensive cybersecurity backed by artificial intelligence (“AI”) and automation.

Our cybersecurity platforms and services help secure enterprise users, networks, clouds, endpoints, and identities by delivering comprehensive cybersecurity backed by artificial intelligence (“AI”) and automation.

A key element of our strategy is to help our customers simplify their security architectures through consolidating disparate point products.

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• Secure Access Service Edge (“SASE”) .

Prisma ® Access, when combined with Prisma SD-WAN, provides a comprehensive SASE offering that secures users working from anywhere and pioneers the modernization of branch offices.

Prisma ® Access, when combined with Prisma SD-WAN, provides a comprehensive SASE offering that secures users working from anywhere and on any device, and pioneers the modernization of branch offices.

Prisma Browser further extends zero-trust security and data protection to the browser, where the majority of work is done today, providing users with the freedom to work securely using our secure browser from any device.

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• Prisma AIRS.

Prisma AIRS™ is a comprehensive AI security platform that has been designed to protect customers’ entire AI ecosystem by providing AI Model Security, AI Posture Management, AI Red Teaming, AI Runtime Security, and AI Agent Security.

Prisma AIRS™ is a comprehensive AI security platform designed to protect customers’ entire AI ecosystem by providing AI Model Security, AI Posture Management, AI Red Teaming, AI Runtime Security, and AI Agent Security.

• Strata Cloud Manager (“SCM”).

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Cortex XSOAR ® , for security orchestration, automation, and response (“SOAR”);

and Cortex Xpanse ® , for ASM.

Cortex Xpanse ® , for ASM;

and our recent acquisition of Koi Security Ltd.

(“Koi”) for agentic endpoint security.

Additionally, Cortex XSIAM integrates with the Chronosphere Telemetry Pipeline to ingest and optimize massive data volumes, promoting cost-effective scaling of autonomous operations.

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This helps reduce data volumes, enabling customers to cost-effectively scale their security and observability posture.

Identity Security

Idira™, our next-generation identity security platform, is designed to secure human, agentic and machine identities across the enterprise with intelligent privilege controls and continuous threat prevention.

By unifying identity access management, privilege access management and identity governance and administration, organizations can continuously discover and protect against identity risk throughout the end-to-end identity lifecycle.

The platform includes:

• Workforce Identity Security.

Our solutions apply identity assurance and modern access controls for the entire workforce, including through adaptive multi-factor authentication, single sign-on, secure browsing, web session protection, workforce password management, and automated identity lifecycle management.

Our approach enforces least privilege by elevating access only when required.

• Information Technology (“IT”) and Developer Identity Security (Modern Privilege Access Management).

Our solutions secure high-risk access for IT administrators, third-party vendors, developers, and cloud operations teams across hybrid and multi-cloud environments, delivering just-in-time privileged access, session isolation, credential protection, and zero standing privileges while providing native, secure access to cloud services, workloads, and development and operations pipelines.

Organizations can eliminate excessive permissions, automate access to dynamic cloud resources, and maintain developer velocity while strengthening identity controls across infrastructure and application environments.

• Machine Identity Security.

Our solutions secure the growing volume of non-human identities—such as workloads, applications, containers, service accounts, certificates, and keys, including through centralized discovery and management of secrets, certificate lifecycle automation, workload identity issuance, public key infrastructure-as-a-service, Kubernetes certificate management, and secure code signing.

• Identity Governance and Administration (“IGA”).

IGA enables visibility into entitlements, automated joiner–mover–leaver processes, access certification, and ongoing identity compliance.

AI-supported policy automation helps organizations govern access at scale and enforce a zero-trust model across all identities.

• AI Agents Security.

Our solution discovers AI agents, assigns identity attributes, and restricts their access to task-specific resources.

It helps monitor and record agent activity for audit purposes, allows organizations to suspend or revoke access if behavior deviates from expected norms, and governs the lifecycle of the agent and the actions taken to support compliance.

Threat Intelligence and Advisory Services

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Additionally, Unit 42 offers managed detection and response (“MDR”) and managed threat hunting services.

For the second quarter of fiscal 2026 and 2025, total revenue was $2.6 billion and $2.3 billion, respectively, representing year-over-year growth of 15%.

Our growth reflects the increased adoption of our portfolio, which consists of product, subscriptions, and support.

In April 2026, we launched a new suite of Unit 42 Frontier AI Defense services to help customers proactively discover and neutralize threats introduced by next-generation AI models.

For the third quarter of fiscal 2026 and 2025, total revenue was $3.0 billion and $2.3 billion, respectively, representing year-over-year growth of 31%.

Our growth reflects the increased adoption of our portfolio, which consists of product, subscriptions, and support, and our recent acquisitions.

We believe our portfolio will enable us to benefit from recurring revenues and new revenues as we continue to grow our end-customer base.

As of January 31, 2026, we had end-customers in over 180 countries.

As of April 30, 2026, we had end-customers in over 180 countries.

Our end-customers represent a broad range of industries, including education, energy, financial services, government entities, healthcare, Internet and media, manufacturing, public sector, and telecommunications, and include almost all of the Fortune 100 companies and a majority of the Global 2000 companies.

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We primarily use a two-tiered, indirect fulfillment model whereby we sell our products, subscriptions, and support to our distributors, which, in turn, sell to our resellers, which then sell to our end-customers.

Our product revenue grew to $514 million, or 19.8% of total revenue, for the second quarter of fiscal 2026, representing year-over-year growth of 22%.

Our product revenue grew to $594 million, or 19.8% of total revenue, for the third quarter of fiscal 2026, representing year-over-year growth of 31%.

Product revenue is derived from sales of hardware products, primarily our ML-Powered Next-Generation Firewall and software licenses, including SD-WAN, VM-Series, and Panorama ® .

In connection with the acquisition of CyberArk Software Ltd.

(“CyberArk”) in February 2026, our product revenue also includes on-premise software licenses of certain identity security offerings.

Our ML-Powered Next-Generation Firewall incorporates our PAN-OS operating system, which provides a consistent set of capabilities across our entire network security product line.

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The same firewall functionality that is delivered in our hardware products is also available in our VM-Series virtual firewalls, which secure virtualized and cloud-based computing environments, and in our CN-Series container firewalls, which secure container environments and traffic.

Our subscription and support revenue grew to $2.1 billion, or 80.2% of total revenue, for the second quarter of fiscal 2026, representing year-over-year growth of 13%.

Our subscription and support revenue grew to $2.4 billion, or 80.2% of total revenue, for the third quarter of fiscal 2026, representing year-over-year growth of 31%.

Our subscriptions provide our end-customers with near real-time access to the latest intrusion prevention, web security, modern malware prevention, data loss prevention, cloud security access broker and AI security capabilities across the network, endpoints, and the cloud.

2 unchanged sentences

(“Chronosphere”) in January 2026, our subscriptions also include a next-generation observability platform for cloud-native infrastructure and applications as well as telemetry pipeline management that is designed to handle vast cloud data volumes with cost-efficiency and reliability.

With the acquisition of CyberArk, our subscriptions include a next-generation identity security platform designed to secure human, AI, and machine identity across the enterprise with intelligent privilege controls and continuous threat prevention.

Additionally, we offer MDR for Cortex subscriptions, powered by Unit 42’s elite expertise.

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In addition to the subscriptions purchased with these firewalls, customers may also purchase other subscriptions on a per-user, per-endpoint, or capacity-based basis.

We also offer professional services, including incident response, risk management, and digital forensic services.

We also offer professional services, including incident response, risk management, digital forensic services, and technical account management.

We continue to invest in innovation as we evolve and further extend the capabilities of our portfolio, as we believe that innovation and timely development of and investment in new features and products are essential to meeting the needs of our end-customers and improving our competitive position.

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

(“CyberArk”), forming our next-generation identity security platform.

Additionally, on January 29, 2026, we completed the acquisition of Chronosphere, forming our next-generation observability platform.

For example, we launched Next-Generation Trust Security that unifies certificate lifecycle management and Prisma AIRS 3.0 that discovers, assesses, and protects agentic AI.

On February 11, 2026, we completed the acquisition of CyberArk, forming our next-generation identity security platform.

Additionally, on April 14, 2026, we completed the acquisition of Koi, to add agentic endpoint security capabilities to our security operations platform and enhance Prisma AIRS.

On May 29, 2026, we completed the acquisition of Portkey, Inc., a privately-held AI Gateway company, to enhance our Prisma AIRS capabilities.

We believe that the growth of our business and our short-term and long-term success are dependent upon many factors, including our ability to extend our technology leadership, grow our base of end-customers, expand deployment of our portfolio and support offerings within existing end-customers, focus on end-customer satisfaction, and address any product vulnerabilities.

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export/imports controls and tariffs, as well as retaliatory actions by other countries, may materially and adversely affect our business.

Further, economic conditions, including inflation, high interest rates, slow growth, fluctuations in foreign exchange rates, supply chain disruptions, such as a memory or other component shortage, impacts of trade regulations or international trade disputes, and other conditions, may adversely affect our results of operations and financial performance.

The hostilities in Israel and the surrounding region have continued to result in economic and political uncertainty.

Further, economic conditions, including inflation, high interest rates, slow growth, fluctuations in foreign exchange rates, supply chain disruptions, including increased memory, storage or other component shortages, impacts of trade regulations or international trade disputes, and other conditions, may adversely affect our results of operations and financial performance.

The hostilities in Israel, Iran and the surrounding region have continued to result in economic and political uncertainty.

While we have business operations in Israel, and intend to continue growing our presence in Israel, we currently do not expect significant business disruption.

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We monitor the key financial metrics set forth in the tables below to help us evaluate growth trends, establish budgets, measure the effectiveness of our sales and marketing efforts, and assess operational efficiencies.

We discuss revenue, gross margin, and the components of operating income and margin below under “Results of Operations.”

January 31, 2026 July 31, 2025

We discuss revenue, gross margin, and the components of operating income (loss) and margin below under “Results of Operations.”

April 30, 2026 July 31, 2025

(in billions)

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Remaining performance obligations $ 18.4 $ 15.8

$ 16.0 $ 15.8

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

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

2026 2025 2026 2025

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Gross margin 67.6 % 72.9 % 71.5 % 73.5 %

Operating income $ 397 $ 241 $ 706 $ 527

Operating income (loss) $ (183) $ 219 $ 523 $ 746

Operating margin (6.1) % 9.6 % 6.5 % 11.2 %

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GAAP, is provided below:

Six Months Ended January 31,

Nine Months Ended April 30,

(in millions)

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The period-to-period comparison of results is not necessarily indicative of results for future periods.

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

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

2026 2025 2026 2025

4 unchanged sentences

Total revenue 3,002

100.0 % 2,289 100.0 % 8,070 100.0 % 6,685 100.0 %

Cost of revenue:

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2,211 73.7 % 1,451 63.3 % 5,250 65.0 % 4,167 62.3 %

Operating income 397 15.3 % 241 10.6 % 706 13.9 % 527 12.0 %

Operating income (loss) (183) (6.1) % 219 9.6 % 523 6.5 % 746 11.2 %

Interest expense — — % (1) — % — — % (3) — %

Other income, net 27 0.9 % 93 4.0 % 282 3.5 % 261 3.8 %

Income before income taxes 549 21.2 % 325 14.4 % 961 19.0 % 693 15.8 %

Income (loss) before income taxes (156) (5.2) % 311 13.6 % 805 10.0 % 1,004 15.0 %

Provision for income taxes 21 0.7 % 49 2.1 % 216 2.7 % 124 1.8 %

Net income $ 432 16.7 % $ 267 11.8 % $ 766 15.1 % $ 618 14.1 %

Net income (loss) $ (177) (5.9) % $ 262 11.5 % $ 589 7.3 % $ 880 13.2 %

(1) Includes share-based compensation as follows:

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

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

2026 2025 2026 2025

6 unchanged sentences

Total share-based compensation $ 684 $ 326 $ 1,355 $ 941

IMPACT OF ACQUISITIONS

On February 11, 2026, we completed our acquisition of CyberArk for a total purchase consideration of $21.1 billion.

In connection with completing the acquisition, we paid approximately $2.3 billion in cash and issued 112 million shares of our common stock with a fair value of $18.5 billion.

In addition, we issued $945 million of replacement equity awards, of which $265 million attributable to services performed prior to the acquisition date was allocated to purchase consideration.

The comparability of our operating results for the three and nine months ended April 30, 2026 compared to the same periods in 2025 was impacted by our recent acquisitions, including CyberArk.

In discussions of our results of operations, we may qualitatively or quantitatively disclose the impact of our acquisitions on revenue, costs, and expenses for the one year period subsequent to the acquisition date where such discussions would be meaningful.

Our revenue consists of product revenue and subscription and support revenue.

Revenue is recognized upon transfer of control of the corresponding promised products and subscriptions and support to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for those products and subscriptions and support.

We expect our revenue to vary from quarter to quarter based on seasonal and cyclical factors.

We expect our revenue to vary from quarter to quarter based on seasonal and cyclical factors and business acquisitions.

PRODUCT REVENUE

Product revenue is derived from sales of hardware products, primarily our ML-Powered Next-Generation Firewall, and software licenses, including SD-WAN, VM-Series, and Panorama.

Product revenue is derived from sales of hardware products, primarily our ML-Powered Next-Generation Firewall, and software licenses, including SD-WAN, VM-Series, Panorama, and certain identity security offerings.

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

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As a percentage of product revenue, we expect our revenue from software licenses to vary from quarter to quarter and increase over the long term as we improve features and capabilities of our on-premise software, renew our software license contracts, and expand our installed end-customer base.

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

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

2026 2025 Change 2026 2025 Change

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Product $ 594 $ 453 $ 141 31 % $ 1,542 $ 1,228 $ 314 26 %

Product revenue increased for the three and six months ended January 31, 2026 compared to the same periods in 2025, driven by increased revenue from software licenses and increased demand for our new generation of hardware products.

Product revenue increased for the three and nine months ended April 30, 2026 compared to the same periods in 2025, driven by increased revenue from software licenses and increased demand for our new generation of hardware products.

The increase in product revenue for the three and nine months ended April 30, 2026 was also driven by increased software licenses revenue from our CyberArk acquisition closed in February 2026.

SUBSCRIPTION AND SUPPORT REVENUE

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As a percentage of total revenue, we expect our subscription and support revenue to vary from quarter to quarter and increase over the long term as we introduce new subscriptions, renew existing subscription and support contracts, and expand our installed end-customer base.

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

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

2026 2025 Change 2026 2025 Change

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Total subscription and support $ 2,408 $ 1,836 $ 572 31 % $ 6,528 $ 5,457 $ 1,071 20 %

Subscription and support revenue increased for the three and six months ended January 31, 2026 compared to the same periods in 2025 due to increased demand for our subscription and support offerings from our end-customers.

Subscription and support revenue increased for the three and nine months ended April 30, 2026 compared to the same periods in 2025 due to increased demand for our subscription and support offerings from our end-customers and our recent acquisitions.

The mix between subscription revenue and support revenue will fluctuate over time, depending on the introduction of new subscription offerings, renewals of support services, and our ability to increase sales to new and existing end-customers.

REVENUE BY GEOGRAPHIC THEATER

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

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

2026 2025 Change 2026 2025 Change

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Asia Pacific and Japan (“APAC”) 351 279 72 26 %

985 809 176 22 %

Total revenue $ 3,002 $ 2,289 $ 713 31 % $ 8,070 $ 6,685 $ 1,385 21 %

Revenue from the Americas, EMEA, and APAC increased for the three and six months ended January 31, 2026 compared to the same periods in 2025 as we continued to increase investment in our global sales force in order to support our growth and innovation, with the Americas contributing the highest increase in revenue due to its larger scale.

Revenue from the Americas, EMEA, and APAC increased for the three and nine months ended April 30, 2026 compared to the same periods in 2025 as we continued to increase investment in our global sales force in order to support our growth and innovation, with the Americas contributing the highest increase in revenue due to its larger scale.

COST OF REVENUE

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Cost of product revenue primarily includes costs paid to our manufacturing partners for procuring components and manufacturing our products.

Our cost of product revenue also includes personnel costs, which consist of salaries, benefits, bonuses, share-based compensation, and travel associated with our operations organization, inventory excess and obsolete charges, shipping and tariff costs, amortization of intellectual property licenses, product testing costs, and shared costs.

Our cost of product revenue also includes personnel costs, which consist of salaries, benefits, bonuses, share-based compensation, and travel associated with our operations organization, inventory excess and obsolete charges, shipping and tariff costs, amortization of intangible assets, product testing costs, and shared costs.

Shared costs consist of certain facilities, depreciation, benefits, recruiting, and information technology costs that we allocate based on headcount.

We expect our cost of product revenue to fluctuate with our revenue from hardware products.

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

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

2026 2025 Change 2026 2025 Change

2 unchanged sentences

Cost of product revenue $ 167 $ 101 $ 66 65 % $ 371 $ 277 $ 94 34 %

Cost of product revenue increased for the three and six months ended January 31, 2026 compared to the same periods in 2025 primarily due to increased demand for our hardware products and higher tariff costs, partially offset by a decrease in inventory excess and obsolete charges.

Cost of product revenue increased for the three and nine months ended April 30, 2026 compared to the same periods in 2025 primarily due to higher amortization of intangible assets as a result of our CyberArk acquisition, increased demand for our hardware products and higher tariff costs, partially offset by a decrease in inventory excess and obsolete charges.

COST OF SUBSCRIPTION AND SUPPORT REVENUE

Cost of subscription and support revenue includes personnel costs for our global customer support and technical operations organizations, data center and cloud hosting service costs, third-party professional services costs, amortization of acquired intangible assets and capitalized software development costs, customer support and repair costs, and shared costs.

Cost of subscription and support revenue includes personnel costs for our global customer support and technical operations organizations, data center and cloud hosting service costs, third-party professional services costs, amortization of intangible assets and capitalized software development costs, customer support and repair costs, and shared costs.

We expect our cost of subscription and support revenue to increase as our installed end-customer base grows and adoption of our cloud-based subscription offerings increases.

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

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

2026 2025 Change 2026 2025 Change

2 unchanged sentences

Cost of subscription and support revenue $ 807 $ 518 $ 289 56 % $ 1,926 $ 1,495 $ 431 29 %

Cost of subscription and support revenue increased for the three and six months ended January 31, 2026 compared to the same periods in 2025 primarily due to increased costs to support the growth of our subscription and support offerings.

Cloud hosting service costs, which support our cloud-based subscription offerings, increased $48 million and $97 million for the three and six months ended January 31, 2026, respectively, compared to the same periods in 2025.

Personnel costs grew $11 million and $25 million for the three and six months ended January 31, 2026, respectively, compared to the same periods in 2025, primarily due to headcount growth.

Cost of subscription and support revenue increased for the three and nine months ended April 30, 2026 compared to the same periods in 2025 primarily due to increased costs to support the growth of our subscription and support offerings.

Cloud hosting service costs, which support our cloud-based subscription offerings, increased $75 million and $171 million for the three and nine months ended April 30, 2026, respectively, compared to the same periods in 2025.

Amortization of intangible assets increased $117 million and $109 million for the three and nine months ended April 30, 2026, respectively, compared to the same periods in 2025 as a result of our recent acquisitions.

Personnel costs grew $71 million and $97 million for the three and nine months ended April 30, 2026, respectively, compared to the same periods in 2025, primarily due to headcount growth, including headcount from our recent acquisitions.

Gross margin has been and will continue to be affected by a variety of factors, including the introduction of new products, manufacturing costs, the average sales price of our products, cloud hosting service costs, personnel costs, the mix of products sold, and the mix of revenue between product and subscription and support offerings.

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We expect our gross margins to vary over time depending on the factors described above.

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

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

2026 2025 2026 2025

4 unchanged sentences

Total gross profit $ 2,028 67.6 % $ 1,670 72.9 % $ 5,773 71.5 % $ 4,913 73.5 %

Product gross margin increased for the three and six months ended January 31, 2026 compared to the same periods in 2025 primarily due to continued shift in our product revenue mix toward software, and a decrease in inventory excess and obsolete charges, partially offset by a decrease in gross margin on our hardware products.

Subscription and support gross margin were flat for the three and six months ended January 31, 2026 compared to the same periods in 2025.

Product gross margin decreased for the three and nine months ended April 30, 2026 compared to the same periods in 2025 primarily due to a decrease in gross margin on our hardware products and higher amortization of intangible assets, partially offset by increased software licenses revenue from our CyberArk acquisition.

The decrease in product gross margin for the nine months ended April 30, 2026 was further offset by continued shift in our product revenue mix toward software and a decrease in inventory excess and obsolete charges.

Subscription and support gross margin decreased for the three and nine months ended April 30, 2026 compared to the same periods in 2025 primarily due to higher amortization of intangible assets as a result of our recent acquisitions.

OPERATING EXPENSES

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We expect operating expenses generally to increase in absolute dollars and to decrease over the long term as a percentage of revenue as we continue to scale our business.

As of January 31, 2026, we expect to recognize approximately $2.9 billion of share-based compensation expense over a weighted-average period of approximately 2.6 years, excluding additional share-based compensation expense related to any future grants of share-based awards.

As of April 30, 2026, we expect to recognize approximately $3.6 billion of share-based compensation expense over a weighted-average period of approximately 2.6 years, excluding additional share-based compensation expense related to any future grants of share-based awards.

Share-based compensation expense is generally recognized on a straight-line basis over the requisite service periods of the awards.

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We expect research and development expense to increase in absolute dollars as we continue to invest in our future products and services, although our research and development expense may fluctuate as a percentage of total revenue.

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

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

2026 2025 Change 2026 2025 Change

2 unchanged sentences

Research and development $ 734 $ 494 $ 240 49 % $ 1,773 $ 1,480 $ 293 20 %

Research and development expense was relatively flat for the three months ended January 31, 2026 compared to the same period in 2025.

Research and development expense increased for the six months ended January 31, 2026 compared to the same period in 2025 primarily due to increased personnel costs, which grew $41 million for the six months ended January 31, 2026 compared to the same period in 2025, largely due to headcount growth.

Research and development expense increased for the three and nine months ended April 30, 2026 compared to the same periods in 2025 primarily due to increased personnel costs, which grew $192 million and $233 million for the three and nine months ended April 30, 2026 compared to the same periods in 2025, largely due to headcount growth, including headcount from our recent acquisitions.

SALES AND MARKETING

Sales and marketing expense consists primarily of personnel costs, including commission expense.

Sales and marketing expense also includes costs for market development programs, promotional and other marketing costs, professional services, and shared costs.

Sales and marketing expense also includes costs for market development programs, promotional and other marketing costs, professional services, amortization of intangible assets, and shared costs.

We continue to strategically invest in headcount and have grown our sales presence.

We expect sales and marketing expense to continue to increase in absolute dollars as we increase the size of our sales and marketing organizations to grow our customer base, increase touch points with end-customers, and expand our global presence, although our sales and marketing expense may fluctuate as a percentage of total revenue.

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

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

2026 2025 Change 2026 2025 Change

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Sales and marketing $ 1,161 $ 793 $ 368 46 % $ 2,804 $ 2,271 $ 533 23 %

Sales and marketing expense increased for the three and six months ended January 31, 2026 compared to the same periods in 2025 primarily due to increased personnel costs, which grew $69 million and $154 million for the three and six months ended January 31, 2026, respectively, compared to the same periods in 2025, largely due to headcount growth.

Sales and marketing expense increased for the three and nine months ended April 30, 2026 compared to the same periods in 2025 primarily due to increased personnel costs, which grew $254 million and $408 million for the three and nine months ended April 30, 2026, respectively, compared to the same periods in 2025, largely due to headcount growth, including headcount from our recent acquisitions.

The increase in sales and marketing expense in both periods were further driven by higher amortization of intangible assets as a result of our recent acquisitions.

GENERAL AND ADMINISTRATIVE

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General and administrative expense also includes change in fair value of contingent consideration liability.

We expect general and administrative expense to increase in absolute dollars over time as we increase the size of our general and administrative organizations and incur additional costs to support our business growth, although our general and administrative expense may fluctuate as a percentage of total revenue.

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

Excluding the near-term impact of our recent acquisitions, we expect general and administrative expense to increase in absolute dollars over time as we increase the size of our general and administrative organizations and incur additional costs to support our business growth, although our general and administrative expense may fluctuate as a percentage of total revenue.

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

2026 2025 Change 2026 2025 Change

2 unchanged sentences

General and administrative $ 316 $ 164 $ 152 93 % $ 673 $ 416 $ 257 62 %

General and administrative expense increased for the three months ended January 31, 2026 compared to the same period in 2025 primarily due to an increase in acquisition-related costs.

General and administrative expense increased for the six months ended January 31, 2026 compared to the same period in 2025 primarily due to the partial release of litigation-related accrual of $42 million during the six months ended January 31, 2025.

The increase in general and administrative expense for the six months ended January 31, 2026 was further driven by increased personnel costs, which grew $43 million, largely due to increased share-based compensation and headcount growth.

General and administrative expense increased for the three and nine months ended April 30, 2026 compared to the same periods in 2025 primarily due to increased personnel costs, which grew $195 million and $237 million for the three and nine months ended April 30, 2026, respectively.

The increase in personnel costs in both periods was primarily due to the accelerated vesting of certain equity awards in connection with our recent acquisitions, employee severance charges in connection with our CyberArk acquisition, and headcount growth, including headcount from our recent acquisitions.

The increase in general and administrative expense in both periods were further driven by an increase in acquisition-related costs, partially offset by a gain of $110 million for the change in fair value of contingent consideration liability during the three months ended April 30, 2026.

The increase in general and administrative expense for the nine months ended April 30, 2026 was also driven by a partial release of litigation-related accrual of $40 million during the nine months ended April 30, 2025.

INTEREST EXPENSE

Interest expense consists of interest expense related to our 0.375% Convertible Senior Notes due 2025 (the “2025 Notes”).

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

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

2026 2025 Change 2026 2025 Change

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Interest expense $ — $ 1 $ (1) (100) % $ — $ 3 $ (3) (100) %

Interest expense decreased for the three and six months ended January 31, 2026 compared to the same periods in 2025 due to the maturity of our 2025 Notes in June 2025.

Interest expense decreased for the three and nine months ended April 30, 2026 compared to the same periods in 2025 due to the maturity of our 2025 Notes in June 2025.

Refer to Note 9.

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OTHER INCOME, NET

Other income, net includes interest income earned on our cash, cash equivalents, and investments, and gains and losses from foreign currency remeasurement and foreign currency transactions.

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

Other income, net includes interest income earned on our cash, cash equivalents, and investments, gains and losses from foreign currency remeasurement and foreign currency transactions, and change in fair value of convertible senior notes and capped calls.

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

2026 2025 Change 2026 2025 Change

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Other income, net $ 27 $ 93 $ (66) (71) % $ 282 $ 261 $ 21 8 %

Other income, net increased for the three and six months ended January 31, 2026 compared to the same periods in 2025 primarily due to higher interest income as a result of higher average cash, cash equivalents, and investment balances for the three and six months ended January 31, 2026 compared to the same periods in 2025.

The increase was further driven by increased gains on sales of our investments to fund recent acquisitions.

Other income, net decreased for the three months ended April 30, 2026 compared to the same period in 2025 primarily due to a loss from change in fair value of our convertible senior notes and lower interest income as a result of lower average cash, cash equivalent and investment balances for the three months ended April 30, 2026 compared to the same period in 2025.

Other income, net increased for the nine months ended April 30, 2026 compared to the same period in 2025 primarily due to increased gains on sales of our investments to fund acquisitions and higher interest income as a result of higher average cash, cash equivalent and investment balances for the nine months ended April 30, 2026 compared to the same period in 2025, partially offset by a loss from change in fair value of our convertible senior notes.

PROVISION FOR INCOME TAXES

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and foreign income taxes.

Our effective tax rate during the three and six months ended January 31, 2026 was lower than our statutory tax rate primarily due to excess tax benefits from share-based compensation.

Our effective tax rate during the three and nine months ended April 30, 2026 differed from our statutory tax rate primarily due to our CyberArk acquisition and excess tax benefits from share-based compensation.

We may continue to see fluctuations in our effective tax rate as we further integrate CyberArk into our corporate structure and intercompany relationships.

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.

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

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

2026 2025 Change 2026 2025 Change

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Effective tax rate (13.5) % 15.6 % 26.8 % 12.3 %

Our provision for income taxes for the three and six months ended January 31, 2026 was primarily due to U.S.

and foreign income taxes.

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

Our effective tax rate varied for the three and nine months ended April 30, 2026 compared to the same periods in 2025 primarily due to our CyberArk acquisition and decreased excess tax benefits from share-based compensation.

Refer to Note 14.

Income Taxes in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information.

In March 2026, the Knesset Finance Committee approved the Law for the Encouragement and Incentivization of Research and Development (the “R&D Law”) that provides incentives for qualifying research and development expenditures incurred after January 1, 2026.

The R&D Law introduces a tax credit, at varying rates based on specified thresholds, for qualifying research and development expenditures incurred in Israel, subject to meeting defined eligibility criteria.

It provides that all or a portion of the unutilized R&D tax credit will be paid in cash upon the lapse of a period stipulated by the R&D Law.

The Israeli Knesset has indicated plans to issue additional regulations regarding the implementation of the R&D Law.

For the three and nine months ended April 30, 2026, the impact of the R&D Law was not material to our condensed consolidated financial statements.

Liquidity and Capital Resources

January 31, 2026 July 31, 2025

April 30, 2026 July 31, 2025

(in millions)

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Total cash, cash equivalents, and investments $ 6,992 $ 8,459

As of January 31, 2026, our total cash, cash equivalents, and investments of $7.9 billion were held for general corporate purposes.

As of January 31, 2026, we had no unremitted earnings when evaluating our outside basis difference relating to our U.S.

investment in foreign subsidiaries.

However, there could be local withholding taxes due to various foreign countries if certain lower tier earnings are distributed.

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

As of April 30, 2026, our total cash, cash equivalents, and investments of $7.0 billion were held for general corporate purposes.

As part of the acquisition of CyberArk, we executed an intercompany transaction to repatriate $3.5 billion of foreign earnings, resulting in immaterial income tax expense related to state and other taxes.

Our remaining unremitted earnings are indefinitely reinvested.

In February 2026, in connection with the acquisition of CyberArk, we entered into a supplemental indenture (the “Supplemental Indenture”) to the Indenture, dated as of June 10, 2025 (together with the Supplemental Indenture, the “Indenture”), between CyberArk, as issuer, and U.S.

Bank Trust Company, National Association, as trustee, governing CyberArk’s $1.25 billion aggregate principal amount of 0.0% Convertible Senior Notes due 2030 (the “2030 Notes”).

As a result of our acquisition of CyberArk and pursuant to the Supplemental Indenture, the 2030 Notes are now exchangeable into shares of our common stock and cash.

The 2030 Notes mature on June 15, 2030;

however, under certain circumstances, holders may surrender their 2030 Notes for conversion prior to the maturity date.

Upon conversion of the 2030 Notes, we will pay cash equal to the aggregate principal amount of the 2030 Notes to be converted, and, at our election, we will pay or deliver cash and/or a combination of cash and shares of our common stock for the amount of our conversion obligation in excess of the aggregate principal amount of the 2030 Notes converted.

During the three and nine months ended April 30, 2026, holders surrendered $153 million in aggregate principal amount of the 2030 Notes for conversion, which were settled for $160 million in cash on May 7, 2026.

After giving effect to these conversions, the remaining outstanding principal balance of the 2030 Notes was $1.1 billion.

The sale price condition for the 2030 Notes was not met during the calendar quarter ended March 31, 2026, and as a result, our 2030 Notes are not convertible pursuant to that condition during the calendar quarter ending June 30, 2026.

If the sale price condition for the 2030 Notes is met during the calendar quarter ending June 30, 2026 and all of the holders elect to convert their 2030 Notes during the calendar quarter ending September 30, 2026, we would be obligated to settle the $1.1 billion principal amount of the 2030 Notes and a portion of our conversion obligation in excess of the aggregate principal amount of the 2030 Notes, if any, in cash.

We believe that our cash provided by operating activities, our existing cash, cash equivalents, and investments, and existing sources of and access to financing, including any proceeds that may be received from the settlement or termination of the outstanding capped call transactions we assumed in connection with our acquisition of CyberArk, will be sufficient to meet our anticipated cash needs should the holders choose to convert their 2030 Notes during the fiscal quarter ending July 31, 2026 or hold the 2030 Notes until maturity on June 15, 2030.

Refer to Note 9.

Debt in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information on the 2030 Notes.

In April 2023, we entered into a credit agreement (the “Credit Agreement”) that provides for a $400 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 million, subject to certain conditions.

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

As of April 30, 2026, there were no amounts outstanding, and we were in compliance with all covenants under the Credit Agreement.

Refer to Note 9.

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Repurchases will be funded from available working capital and may be made at management’s discretion from time to time.

As of January 31, 2026, $1.0 billion remained available for future share repurchases under this repurchase program.

As of April 30, 2026, $1.0 billion remained available for future share repurchases under this repurchase program.

The repurchase authorization will expire on December 31, 2026, and may be suspended or discontinued at any time without prior notice.

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CONTRACTUAL OBLIGATIONS AND OTHER MATERIAL CASH REQUIREMENTS

We have entered into various non-cancelable operating leases, primarily for our offices and data centers, with lease terms expiring through fiscal 2036.

As of January 31, 2026, we have total operating lease obligations of $459 million recorded on our condensed consolidated balance sheet.

As of January 31, 2026, our commitments to purchase products, components, cloud hosting and other services totaled $6.9 billion.

We have entered into various non-cancelable operating leases, primarily for our offices and data centers, with lease terms expiring through fiscal 2040, with the most significant leases relating to our corporate headquarters in Santa Clara, California.

As of April 30, 2026, we have total operating lease obligations of $778 million recorded on our condensed consolidated balance sheet.

As of April 30, 2026, our commitments to purchase products, components, cloud hosting and other services totaled $8.6 billion.

Refer to Note 11.

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Our acquisition of certain QRadar assets from International Business Machines Corporation (“IBM”) on August 31, 2024 included contingent consideration that requires potential future payments through the fiscal quarter ending October 2028.

As of January 31, 2026, we have total contingent consideration obligation of $369 million recorded on our condensed consolidated balance sheet.

As of April 30, 2026, we have total contingent consideration obligation of $240 million recorded on our condensed consolidated balance sheet.

Refer to Note 3.

Fair Value Measurements in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information on our contingent consideration obligation.

On July 30, 2025, we entered into a definitive agreement to acquire CyberArk.

Under the terms of the definitive 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 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.

Refer to Part II, Item 1A “Risk Factors” and Note 7.

Acquisitions in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information on the acquisition.

The following table summarizes our cash flows for the six months ended January 31, 2026 and 2025:

Six Months Ended January 31,

The following table summarizes our cash flows for the nine months ended April 30, 2026 and 2025:

Nine Months Ended April 30,

(in millions)

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Net cash used in financing activities (1,005) (405)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash 2

Net increase in cash, cash equivalents, and restricted cash $ 95 $ 848

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Net cash provided by operating activities can be impacted by factors such as timing of payments and collections, vendor payment terms, and timing and amount of tax payments.

Cash provided by operating activities during the six months ended January 31, 2026 was $2.3 billion, an increase of $258 million compared to the same period in 2025.

The increase was primarily due to growth of our business as reflected by increases in collections during the six months ended January 31, 2026, partially offset by higher cash expenditure to support our business growth.

Cash provided by operating activities during the nine months ended April 30, 2026 was $3.2 billion, an increase of $501 million compared to the same period in 2025.

The increase was primarily due to growth of our business as reflected by increases in collections during the nine months ended April 30, 2026, partially offset by higher cash expenditure to support our business growth.

INVESTING ACTIVITIES

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We expect to continue such activities as our business grows.

Cash used in investing activities during the six months ended January 31, 2026 was $332 million, a decrease of $593 million compared to the same period in 2025.

The decrease was primarily due to higher proceeds from sales and maturities of investments, partially offset by an increase in net cash payments for business acquisitions during the six months ended January 31, 2026.

Cash used in investing activities during the nine months ended April 30, 2026 was $2.1 billion, an increase of $656 million compared to the same period in 2025.

The increase was primarily due to an increase in net cash payments for business acquisitions during the nine months ended April 30, 2026, partially offset by higher proceeds from sales and maturities of investments and lower purchases of investments.

FINANCING ACTIVITIES

Our financing activities have consisted of repayments of our convertible senior notes, proceeds from sales of shares through employee equity incentive plans, payments for tax withholding obligations of certain employees related to the net share settlement of equity awards, and payments of contingent consideration liability.

Cash used in financing activities during the six months ended January 31, 2026 was $106 million, a decrease of $346 million compared to the same period in 2025.

The decrease was primarily due to a decrease in cash used for repayments of our 2025 Notes which did not recur during the six months ended January 31, 2026 as a result of its maturity, partially offset by payments of our contingent consideration liability during the six months ended January 31, 2026.

Our financing activities have consisted of repayments of our convertible senior notes, cash used to repurchase shares of our common stock, proceeds from sales of shares through employee equity incentive plans, payments for tax withholding obligations of certain employees related to the net share settlement of equity awards, and payments of contingent consideration liability.

Cash used in financing activities during the nine months ended April 30, 2026 was $1.0 billion, an increase of $600 million compared to the same period in 2025.

The increase was primarily due to repurchase of our common stock and payments of our contingent consideration liability during the nine months ended April 30, 2026, partially offset by a decrease in cash used for repayments of our 2025 Notes which did not recur during the nine months ended April 30, 2026 as a result of its maturity.

Critical Accounting Estimates

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis