What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-19 compared with 2025-03-26 · 112 added, 87 removed, 294 unchanged (40% of the section changed)

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We had 1,667 customers with ARR of $100,000 or more as of January 31, 2026, up from 1,411 customers with ARR of $100,000 or more as of January 31, 2025.

We define ARR as the annualized revenue run rate of our subscription and consumption and usage-based agreements at the end of a reporting period, assuming contracts are renewed on their existing terms for customers that are under contracts with us.

We define ARR as the annualized revenue run rate of our subscription, consumption and usage-based agreements at the end of a reporting period, assuming contracts are renewed on their existing terms for customers that are under contracts with us.

As of January 31, 2026 and 2025, no single end

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Our overall performance depends in part on worldwide economic and geopolitical conditions and their impact on customer behavior.

Worsening economic conditions, including inflation, interest rate volatility, slower growth, potential recession, changes in tariffs and trade restrictions, fluctuations in foreign exchange rates, actual or perceived instability in the global banking industry, potential uncertainty with respect to the federal debt ceiling and budget, and other changes in economic conditions, and the impact of natural or man-made global events, including wars and other regional geopolitical armed conflict, such as the conflicts in the Middle East and Ukraine, and tensions between China and Taiwan, may result in decreased sales productivity and growth and adversely affect our results of operations and financial performance.

Worsening economic conditions, including inflation, interest rate volatility, slower growth, potential recession, significant political or regulatory developments including changes in trade policy, fluctuations in foreign exchange rates, actual or perceived instability in the global banking industry, potential uncertainty with respect to the federal debt ceiling and budget, government shutdowns, and other changes in economic conditions, and the impact of natural or man-made global events, including wars and other regional geopolitical armed conflict, such as the conflicts in the Middle East (including, but not limited to, the conflict in Iran) and Ukraine, and tensions between China and Taiwan, may result in decreased sales productivity and growth and adversely affect our results of operations and financial performance.

As a result of the current macroeconomic environment, we have recently experienced certain impacts on our business, including a decline in usage and consumption patterns from certain customers, especially larger enterprise customers, longer sales cycles, and deal downsizing by new customers and of renewals by existing customers, especially larger enterprises.

We intend to continue to monitor global macroeconomic conditions closely and may determine to take certain financial or operational actions in response to such conditions to the extent our business begins to be adversely impacted.

For example, in June 2023, we announced a restructuring plan (Plan) designed to improve operational efficiencies and operating costs and better align our workforce and operations with current business needs, priorities, and near-term growth expectations.

The actions associated with the Plan were substantially completed as of the end of fiscal 2025.

We incurred approximately $7.4 million in charges in connection with the Plan in fiscal 2024, consisting of severance payments and employee benefits, impairment charges related to excess facilities and inventory write-offs, offset partially by savings related to the reversal on stock-based compensation expense.

We are unable to predict the full impact that macroeconomic or other geopolitical factors will have on our future results of operations, liquidity and financial condition due to numerous uncertainties, including the actions that may be taken by government authorities across the U.S.

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$ 1,001,278 $ 821,461 $ 621,154

Non-GAAP operating loss

In addition to our results determined in accordance with GAAP, we use non-GAAP operating loss as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies, and to communicate with our board of directors concerning our financial performance.

We believe that non-GAAP operating loss provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as this measure excludes, among other expenses, expenses that we do not consider to be indicative of our overall operating performance.

Non-GAAP operating loss is calculated as GAAP operating loss adjusted to exclude amortization of acquired intangible assets, acquisition-related compensation, stock-based compensation expense, payroll tax on employee stock transactions, and restructuring charges.

Non-GAAP operating loss has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP, including GAAP operating loss.

Other companies, including companies in our industry, may calculate similarly titled non-GAAP measures, including non-GAAP operating loss, differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison.

As a result, our non-GAAP operating loss is presented for supplemental informational purposes only.

Non-GAAP operating income (loss)

In addition to our results determined in accordance with GAAP, we use non-GAAP operating income (loss) as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies, and to communicate with our board of directors concerning our financial performance.

We believe that non-GAAP operating income (loss) provides our management and investors consistency and comparability with our past financial performance and facilitates period-

to-period comparisons of operations, as this measure excludes, among other expenses, expenses that we do not consider to be indicative of our overall operating performance.

Non-GAAP operating income (loss) is calculated as GAAP operating loss adjusted to exclude amortization of acquired intangible assets, acquisition-related compensation, stock-based compensation expense, payroll tax on employee stock transactions, and restructuring charges.

Non-GAAP operating income (loss) has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP, including GAAP operating loss.

Other companies, including companies in our industry, may calculate similarly titled non-GAAP measures, including non-GAAP operating income (loss), differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison.

As a result, our non-GAAP operating income (loss) is presented for supplemental informational purposes only.

Year Ended January 31,

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(in thousands)

Non-GAAP operating loss

$ (25,421) $ (118,225) $ (208,861)

A reconciliation of non-GAAP operating loss to GAAP operating loss, the most directly comparable financial measure calculated and presented in accordance with U.S.

Non-GAAP operating income (loss) $ 34,622 $ (25,421) $ (118,225)

A reconciliation of non-GAAP operating income (loss) to GAAP operating loss, the most directly comparable financial measure calculated and presented in accordance with U.S.

GAAP, is provided below:

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Other restructuring charges 12,843 — 7,766

Non-GAAP operating loss $ (25,421) $ (118,225) $ (208,861)

Non-GAAP operating income (loss) $ 34,622 $ (25,421) $ (118,225)

Annualized Recurring Revenue

We believe that ARR is a key operating metric to measure our business because it is driven by our ability to acquire new subscription and consumption and usage-based customers, and to maintain and expand our relationship with existing customers.

We believe that ARR is a key operating metric to measure our business because it is driven by our ability to acquire new subscription, consumption, and usage-based customers, and to maintain and expand our relationship with existing customers.

ARR represents the annualized revenue run rate of our subscription, consumption, and usage-based agreements at the end of a reporting period, assuming contracts are renewed on their existing terms for customers that are under contracts with us.

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ARR is not a forecast of future revenue, which can be impacted by contract start and end dates, usage, renewal rates, and other contractual terms.

For more information on how we recognize revenue, see Note 3, Revenue and Contract Balances to the consolidated financial statements included in Part II, Item 8, Financial Statements and Supplementary Data.

As of January 31,

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NRR measures the percentage change in our ARR derived from our customer base at a point in time.

To calculate NRR, we first determine Prior Period ARR, which is ARR from the population of our customers as of 12 months prior to the end of a particular reporting period.

We then calculate Net Retention ARR, which represents the total ARR at the end of a particular reporting period from the same set of customers that is used to determine Prior Period ARR.

Net Retention ARR includes any expansion, and is net of contraction and attrition associated with that set of customers.

NRR represents the quotient obtained by dividing Net Retention ARR by Prior Period ARR.

As of January 31,

2025 2024 2023

(in thousands)

Dollar-based net retention rate

110 % 114 % 132 %

Our NRR of 110% was driven by existing customers adoption of additional endpoint licenses and adjacent platform solutions.

A larger portion of our business mix was driven by new customers in fiscal 2025, which we believe will open doors for platform adoption over time.

Our NRR remained in expansionary territory as of January 31, 2026, driven by existing customers adoption of additional endpoint licenses and adjacent platform solutions.

We see significant long-term expansion potential based on high customer retention rates, expanding product categories, and early-stage adoption from our installed base.

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The nature of our promise to the customer under the subscription is to provide protection for the duration of the contractual term and as such is considered as a series of distinct services.

arrangements may include fixed consideration, variable consideration, or a combination of the two.

Our arrangements may include fixed consideration, variable consideration, or a combination of the two.

Fixed consideration is recognized over the term of the arrangement or longer if the fixed consideration relates to a material right.

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Cost of revenue consists primarily of third-party cloud infrastructure expenses incurred in connection with the hosting and maintenance of our platform.

Cost of revenue also consists of personnel-related costs associated with our customer support and services organization, including salaries, benefits, bonuses, and stock-based compensation, amortization of acquired intangible assets, amortization of capitalized internal-use software, software and subscription services used by our customer support and services team, inventory-related costs, and allocated facilities and IT overhead costs.

Cost of revenue also consists of personnel-related costs associated with

our customer support and services organization, including salaries, benefits, bonuses, and stock-based compensation, amortization of acquired intangible assets, amortization of capitalized internal-use software, software and subscription services used by our customer support and services team, inventory-related costs, and allocated facilities and IT overhead costs.

Our third-party cloud infrastructure costs are driven primarily by the number of customers, the number of endpoints per customer, the number of modules, and the incremental costs for storing additional data collected for such cloud modules.

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Research and development expenses consist primarily of employee salaries, benefits, bonuses, and stock-based compensation.

Research and development expenses also include consulting fees, software and subscription services, and third-party cloud infrastructure expenses incurred in developing our platform and modules.

Research and development expenses also include third-party cloud infrastructure and general services expenses, such as consulting fees, software, and subscription services, incurred in developing our platform and modules.

We expect research and development expenses to increase in absolute dollars as we continue to increase investments in our existing products and services.

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Sales and marketing expenses consist primarily of employee salaries, commissions, benefits, bonuses, stock-based compensation, travel and entertainment related expenses, advertising, branding and marketing events, promotions, amortization of acquired customer relationships, and software and subscription services.

Sales and marketing expenses also include sales commissions paid to our sales force and referral fees paid to independent third

parties that are incremental to obtain a subscription contract.

Sales and marketing expenses also include sales commissions paid to our sales force and referral fees paid to independent third parties that are incremental to obtain a subscription contract.

Such costs are capitalized and amortized over an estimated period of benefit of four years, and any such expenses paid for the renewal of a subscription are capitalized and amortized over the average contractual term of the renewal.

We expect sales and marketing expenses to increase in absolute dollars as we continue to make significant investments in our sales and marketing organization to drive additional revenue, further penetrate the market, and expand our global customer base, but to decrease as a percentage of our revenue over time.

We expect sales and marketing expenses to increase in absolute dollars as we continue making significant investments in our sales and marketing organization to drive additional revenue, further penetrate the market, and expand our global customer base, but to decrease as a percentage of our revenue over time.

General and Administrative

General and administrative expenses consist primarily of salaries, benefits, bonuses, stock-based compensation, and other expenses for our executive, finance, legal, people team, and facilities organizations.

General and administrative expenses also include external legal, accounting, other consulting, and professional services fees, software and subscription services, and other corporate expenses.

We expect to continue to incur additional expenses as a result of operating as a public company, including costs to comply with the rules and regulations applicable to companies listed on a national securities exchange, costs related to compliance and reporting obligations, and increased expenses for insurance, investor relations, and professional services.

We expect that our general and administrative expenses will increase in absolute dollars as our business grows but will decrease as a percentage of our revenue over time.

professional services.

We expect that our general and administrative expenses will increase in absolute dollars as our business grows, but to decrease as a percentage of our revenue over time.

Restructuring

Restructuring charges, related to the Plan, consist primarily of charges related to severance payments, employee benefits, stock-based compensation, and impairment charges related to excess facilities.

The actions associated with the Plan were substantially completed as of the end of fiscal 2025.

Interest Income, Interest Expense, and Other Income (Expense), Net

Interest income consists primarily of interest earned on our cash equivalents and investments.

Interest expense consists primarily of the amortization of the discount related to the acquisition-related liabilities.

Restructuring charges related to the restructuring plans executed in June 2023 (June 2023 Plan), March 2025 (March 2025 Plan), and July 2025 (July 2025 Plan) consist primarily of charges related to contract terminations, severance payments, employee benefits, stock-based compensation, and asset impairment charges related to facilities.

The June 2023 Plan, March 2025 Plan, and July 2025 Plan were completed or substantially completed as of January 31, 2025, July 31, 2025, and January 31, 2026, respectively.

Interest Income, Net, and Other Income (Expense), Net

Interest income, net consists primarily of interest earned on our cash equivalents and investments, offset by interest expense, which consists primarily of the amortization of the discount related to acquisition-related liabilities.

Other income (expense), net consists primarily of foreign currency transaction gains and losses, and gains and losses on strategic investments.

Provision for (Benefit From) Income Taxes

Provision for (benefit from) income taxes consists primarily of income taxes in certain foreign and state jurisdictions in which we conduct business.

Provision for Income Taxes

Provision for income taxes consists primarily of income taxes in foreign jurisdictions in which we conduct business, the tax effects of the Agreement with the ITA, and deferred tax effects relating to the acquisitions of Prompt Security Inc.

(Prompt) and Observo, Inc.

The Agreement resulted in $180.9 million of tax expense, inclusive of interest, during fiscal 2026, payable over time to the ITA.

This expense was partially offset by a $7.1 million discrete tax benefit from the release of a valuation allowance attributable to the recognition of our Israel deferred tax assets, as well as a $5.0 million tax benefit related to the reversal of a deferred tax liability in connection with the sale of our acquired Prompt intangibles to the U.S., all related to the ITA matter.

Additionally, a $5.4 million discrete tax benefit from the release of our U.S.

valuation allowance associated with the Observo acquisition was recorded.

In connection with our global consolidated losses, we maintain a full valuation allowance against our U.S.

and Israel deferred tax assets because we have concluded that it is more likely than not that the deferred tax assets will not be realized.

We expect our provision for income taxes to increase in fiscal year 2026 and beyond based upon increased foreign earnings and federal minimum taxes.

Additionally, as discussed in more detail in Part I, Item 1A, “Risk Factors” in this Annual Report, and Note 12, Income Taxes, to the consolidated financial statements included in Part II, Item 8, Financial Statements and Supplementary Data, since 2022, we have been negotiating a bilateral Advance Pricing Agreement (APA) with the U.S.

and the Israeli governments, covering various transfer pricing matters for intercompany transactions relating to the intergroup ownership and utilization of our intellectual property.

As of January 31, 2025, the APA negotiations are ongoing with no finalized resolution.

If we agree to an APA, we may, as part of that agreement, be required to make significant payments to the Israeli government.

deferred tax assets, as we have concluded that it is more likely than not that the deferred tax assets will not be realized.

We expect our provision for income taxes to increase in fiscal 2027 and beyond based upon increased foreign earnings, interest expense under the Agreement, and certain minimum taxes.

Additionally, as discussed in more detail in Part I, Item 1A, “Risk Factors” in this Annual Report and Note 10, Income Taxes, to the consolidated financial statements included in Part II, Item 8, Financial Statements and Supplementary Data, on January 8, 2026, we entered into the Agreement with the ITA covering various transfer pricing matters for intercompany transactions relating to the intergroup ownership and utilization of our intellectual property.

This Agreement fully and finally resolves all related Israeli disputed income tax matters between us and the ITA for fiscal years 2021 through 2025.

Pursuant to the Agreement, we are required to make installment payments through 2030, which are subject to 7.0% interest per annum and certain acceleration clauses.

The Agreement also resolved the tax impact of aligning the intellectual property of Prompt into our structure.

Results of Operations

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Restructuring (1)

12,265 — 6,706

Total operating expenses 1,063,410 939,714 820,289

Loss from operations (321,309) (329,359) (378,416)

Interest income 50,100 45,880 21,408

Interest expense (171) (1,216) (1,830)

Interest income, net 42,698 49,929 44,664

Other income (expense), net

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Loss before income taxes (279,711) (281,607) (332,834)

Provision for (benefit from) income taxes

6,834 5,859 (5,613)

Provision for income taxes 171,024 6,834 5,859

Net loss $ (450,735) $ (288,441) $ (338,693)

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Restructuring

(578) — (1,060)

Total stock-based compensation expense $ 297,587 $ 267,531 $ 216,870

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Loss from operations (32) (40) (61)

Interest income 6 7 5

Interest expense — — —

Interest income, net 4 6 7

Other income (expense), net

Loss before income taxes (28) (34) (54)

Provision for (benefit from) income taxes

Provision for income taxes 17 1 1

Net loss (45) % (35) % (55) %

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Gross margin 74 % 74 %

Cost of revenue increased by $31.8 million from $179.3 million for fiscal 2024 to $211.1 million for fiscal 2025, primarily due to an increase of $17.3 million in customer support costs which were primarily personnel-related expenses, a $9.6 million increase in cloud hosting usage charges to support our expanding business, and a $5.2 million increase in amortization of capitalized internal-use software due to the continued investment in our platform.

Gross margin increased from 71% for fiscal 2024 to 74% for fiscal 2025, primarily due to revenue growth from existing and new customers outpacing growth in cost of revenue.

Cost of revenue increased by $48.1 million from $211.1 million for fiscal 2025 to $259.2 million for fiscal 2026, primarily due to an increase of $23.5 million increase in cloud hosting usage charges to support our expanding business, a $11.7 million increase in customer support costs which were mostly personnel-related expenses, a $6.9 million increase in amortization of capitalized internal-use software due to the continued investment in our platform, and a $6.2 million increase in amortization of acquired intangible assets in connection with fiscal 2026 acquisitions.

Gross margin was 74% for fiscal 2025 flat compared to fiscal 2026.

Research and Development

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Research and development expenses $ 323,853 $ 267,002 $ 56,851 21 %

Research and development expenses increased from $218.2 million in fiscal 2024 to $267.0 million in fiscal 2025, primarily due to an increase in personnel-related expenses of $36.7 million, including an increase of $22.9 million related to stock-based compensation expense as a result of increased headcount, a $9.2 million increase in allocated overhead costs, and an increase of $3.6 million in cloud hosting expenses driven by expanded research and development activities.

Research and development expenses increased from $267.0 million in fiscal 2025 to $323.9 million in fiscal 2026, primarily due to an increase in personnel-related expenses of $37.7 million, including an increase of $10.6 million related to stock-based compensation expense as a result of increased headcount, an increase of $7.8 million in cloud hosting expenses driven by expanded research and development activities, a $5.4 million increase in general services expenses, and a $5.1 million increase in allocated overhead costs.

Sales and Marketing

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Sales and marketing expenses $ 525,151 $ 487,225 $ 37,926 8 %

Sales and marketing expenses increased from $397.2 million in fiscal 2024 to $487.2 million in fiscal 2025, primarily due to an increase in personnel-related expenses of $62.6 million, including an increase of $24.7 million in stock-based compensation expense as a result of increased headcount and accelerated stock-based compensation expenses.

In addition, there was an increase in marketing-related expenses of $17.9 million, and a $5.9 million increase in sales-related expenses due to overall business growth and further investment in marketing activities.

Sales and marketing expenses increased from $487.2 million in fiscal 2025 to $525.2 million in fiscal 2026, primarily due to an increase in personnel-related expenses of $42.3 million, including an increase of $13.1 million in stock-based compensation expense, primarily due to restricted shares awards granted in connection with acquisitions, as well as an increase in sales-related expenses of $2.0 million, primarily attributable to external commissions.

The increase was partially offset by a decrease in $7.0 million in marketing-related expenses, largely due to lower branding and marketing costs.

General and Administrative

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General and administrative expenses $ 202,141 $ 185,487 $ 16,654 9 %

General and administrative expenses decreased from $198.2 million in fiscal 2024 to $185.5 million in fiscal 2025, primarily due to a $6.4 million decrease in overhead expenses due to higher overhead cost being allocated out, a decrease of $4.2 million in legal expenses and a decrease in $2.7 million in litigation expenses due to lower legal consulting fees and lower settlement charges during fiscal 2025.

General and administrative expenses increased from $185.5 million in fiscal 2025 to $202.1 million in fiscal 2026, primarily due to an increase in personnel-related expenses of $13.3 million, including an increase of $7.6 million in stock-based compensation expense as a result of increased headcount, and an increase of $5.0 million in consulting and professional services expense.

Restructuring

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$ 12,265 $ — $ 12,265 100 %

Restructuring charges decreased by $6.7 million due to activities undertaken pursuant to the Plan announced in June 2023.

The decrease included severance and employee benefit charges of $5.4 million and impairment charges related to excess facilities of $2.4 million incurred during fiscal 2024, partially offset by stock-based compensation savings of $1.1 million due to decreased headcount.

Interest Income, Interest Expense, and Other Income (Expense), Net

Restructuring charges increased by $12.3 million due to activities undertaken pursuant to the March 2025 Plan and July 2025 Plan for fiscal 2026.

This primarily included severance and employee benefit charges of $6.7 million, $3.9 million in contract termination charges, and asset impairment charges related to facilities of $2.2 million.

Interest Income, Net, and Other Income (Expense), Net

Year Ended January 31, Change

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(dollars in thousands)

Interest income $ 50,100 $ 45,880 $ 4,220 9 %

Interest expense $ (171) $ (1,216) $ 1,045 (86) %

Interest income, net $ 42,698 $ 49,929 $ (7,231) (14) %

Other income (expense), net $ (1,100) $ (2,177) $ 1,077 (49) %

Interest income increased $4.2 million as a result of higher income earned from investments in marketable securities in fiscal 2025 primarily due to a higher investment balance and increased yield.

Interest expense decreased primarily due to a reduction in the amortization of the discount related to acquisition-related liabilities.

The change in other income (expense), net is primarily due to a decrease in net gains on strategic investments.

Interest income decreased $7.2 million primarily driven by lower income earned from investments in marketable securities in fiscal 2026.

The change in other income (expense), net is primarily due to net foreign currency exchange fluctuations.

Provision for Income Taxes

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$ 171,024 $ 6,834 $ 164,190 2403 %

The provision for income taxes increased in fiscal 2025, compared to fiscal 2024, primarily as a result of the increase in foreign taxes related to operations in international subsidiaries.

The provision for income taxes increased by $164.2 million primarily due to the Agreement with the ITA.

The Agreement resulted in $180.9 million of tax expense, inclusive of interest, partially offset by a $7.1 million tax benefit from the release of valuation allowance attributable to the recognition of our Israel deferred tax assets, and a $5.0 million tax benefit from the reversal of a deferred tax liability in connection with the sale of our acquired Prompt intangibles to the U.S.

Additionally, there was a tax benefit of $5.4 million from the release of our U.S.

valuation allowance related to the Observo acquisition.

We compute our annual tax provision based on actual income from operations for the full year, adjusted for discrete items arising during the periods.

Liquidity and Capital Resources

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We also expect to incur significant research and development, sales and marketing, and general and administrative expenses over the next several years in connection with the continued development and expansion of our business.

Additionally, if we agree to an APA, we may, as part of that agreement, be required to make significant payments to the Israeli government which may adversely affect our cash flows over the next several years.

As of January 31, 2025 and 2024, our principal source of liquidity was cash, cash equivalents, and investments of $1.1 billion and $1.1 billion, respectively.

On January 8, 2026, we entered into an Assessment Agreement with the ITA that fully and finally resolves disputed tax matters regarding intercompany transfer pricing and intellectual property valuations for fiscal years 2021 through 2025.

As more fully described in the section titled “Risk Factors—Our corporate structure and intercompany arrangements are subject to the tax laws of various jurisdictions, and we could be obligated to pay additional taxes, which would harm our operating results and financial condition,” we recorded a total tax expense of $180.9 million, inclusive of interest, in fiscal 2026 related to the Assessment Agreement with the ITA, which includes the sale of our acquired Prompt intangibles to the U.S.

Pursuant to the Agreement, we are required to make installment payments in Israeli New Shekels through fiscal 2031, with unpaid amounts subject to a 7.0% annual interest rate, and an option to extend the final payment through 2033.

These payments will adversely affect our cash flows over the next several years.

Furthermore, in the event of a change in control, all unpaid amounts plus interest that would have accrued through 2033—$255.1 million (or 792.7 million Israeli New Shekels) as of January 31, 2026, less cumulative payments made—would accelerate and become immediately due.

As of January 31, 2026 and 2025, our principal source of liquidity was cash, cash equivalents, and investments of $769.6 million and $1.1 billion, respectively.

In May 2025, our board of directors authorized the 2025 Share Repurchase Program, under which we may purchase up to $200.0 million of our outstanding shares of Class A common stock.

During fiscal 2026, we repurchased 12.2 million shares of our Class A common stock under the 2025 Share Repurchase Program for an aggregate purchase price of $200.0 million, including transaction costs, at an average price of $16.39 per share.

As of January 31, 2026, the 2025 Share Repurchase Program was fully utilized, with no further amounts available for future share repurchases.

Refer to Note 8.

Stockholders’ Equity to our consolidated financial statements included in Part II, Item 8, Financial Statements and Supplementary Data.

In the short term, we believe that our existing cash, cash equivalents, and investments will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months.

We believe our available liquidity, together with expected cash flows from operations, will be sufficient to fund these requirements in addition to our other operating needs over the next 12 months.

In the long term beyond the next 12 months, our future capital requirements will depend on many factors, including macroeconomic conditions, our revenue growth rate, the timing and the amount of cash received from customers, the expansion of sales and marketing activities, the timing and extent of spending to support research and development efforts, the price at which we are able to purchase third-party cloud infrastructure, expenses associated with our international expansion, the introduction of platform enhancements, and the continuing market adoption of our platform.

14 unchanged sentences

$ 86,993 $ (218,397) $ 140,590

Net cash provided by financing activities $ 55,885 $ 47,464 $ 36,308

Net cash (used in) provided by financing activities $ (160,753) $ 55,885 $ 47,464

Operating Activities

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Our primary uses of cash from operating activities are for personnel-related expenses, sales and marketing expenses, third-party cloud infrastructure expenses, and overhead expenses.

Historically, we have generated negative operating cash flow, but in fiscal 2025, we achieved positive operating cash flow, primarily due to higher customer collections, partially offset by increased cash payments for cost of revenue and operating expenses.

Historically, we have generated negative operating cash flow, but since fiscal 2025, we have achieved positive operating cash flow, primarily due to higher customer collections, partially offset by increased cash payments for cost of revenue and operating expenses.

Our operating cash flow is influenced by seasonal billing patterns, with a concentration of annual billings in our fiscal fourth quarter due to enterprise buying and renewal cycles.

This makes our fiscal first quarter our strongest for collections and operating cash flow.

Acquisitions can also impact cash flow due to transaction costs, financing expenses, and lower initial contributions from acquired entities.

Acquisitions can also impact cash flow due to transaction costs, financing expenses, and lower near-term operating cash flow contributions from acquired entities.

Cash provided by (used in) operating activities primarily consists of our net loss adjusted for certain non-cash items, including stock-based compensation expense, depreciation and amortization, amortization of deferred contract acquisition costs, and changes in operating assets and liabilities during each period.

Cash provided by operating activities during fiscal 2026 was $76.6 million, primarily consisting of adjustments for non-cash items of $430.4 million, and $96.9 million provided by net changes to our operating assets and liabilities, partially offset by our net loss of $450.7 million.

The main drivers of the changes in operating assets and liabilities were a $188.7 million increase in accrued liabilities and other liabilities, which primarily related to ITA liability pursuant to the Agreement, a $59.6 million increase in deferred revenue resulting primarily from increased subscription contracts.

These amounts were partially offset by a $88.7 million increase in deferred contract acquisition costs, a $52.1 million increase in accounts receivable due to timing of cash received from customers, a $6.6 million increase in prepaid expenses and other assets, and a $4.3 million decrease in operating lease liabilities.

Cash provided by operating activities during fiscal 2025 was $33.7 million, primarily consisting of our net loss of $288.4 million, and $46.6 million used in net changes to our operating assets and liabilities, offset by adjustments for non-cash items of $368.8 million.

1 unchanged sentence

These amounts were partially offset by a $56.9 million increase in deferred revenue resulting primarily from increased subscription contracts, a $5.3 million increase in accrued payroll and benefits and a $5.1 million increase in accrued liabilities and other liabilities.

Cash used in operating activities during fiscal 2024 was $68.4 million, primarily consisting of our net loss of $338.7 million, and $20.2 million used in net changes to our operating assets and liabilities, partially offset by non-cash items of $290.5 million.

The main drivers of the changes in operating assets and liabilities were a $81.0 million increase in deferred contract acquisition costs, a $61.9 million increase in accounts receivable due to timing of cash received from customers, and a $4.5 million decrease in accounts payable.

These amounts were partially offset by a $108.2 million increase in deferred revenue resulting primarily from increased subscription contracts and a $19.1 million increase in accrued payroll and benefits.

Investing Activities

related to the release of escrow liabilities from the Attivo acquisition, and $25.1 million of capitalized internal-use software costs.

Cash provided by investing activities during fiscal 2026 was $87.0 million, primarily consisting of $610.2 million of proceeds from sales, maturities and return of capital of investments.

These amounts were partially offset by $249.3 million of investment purchases, $249.0 million of net cash paid for the acquisitions, primarily related to the Prompt and Observo acquisitions, and $24.0 million of capitalized internal-use software costs.

Cash used in investing activities during fiscal 2025 was $218.4 million, consisting of $804.5 million of investment purchases, $123.8 million of net cash paid for the acquisitions of PingSafe, Stride, as well as payments related to the release of escrow liabilities from the Attivo acquisition, and $25.1 million of capitalized internal-use software costs.

These amounts were partially offset by $737.1 million of investment sales and maturities.

Cash provided by investing activities during fiscal 2024 was $140.6 million, consisting of $639.2 million of investment sales and maturities, partially offset by $466.3 million of investment purchases, $14.0 million of capitalized internal-use software costs, $13.6 million of net cash paid for the KSG acquisition, $3.5 million for purchases of intangible assets, and $1.3 million of purchases of property and equipment to support additional office facilities.

Financing Activities

Cash provided by financing activities during fiscal 2025 was $55.9 million, consisting of $33.4 million of proceeds from the exercise of employee stock options and $22.5 million of proceeds from the issuance of common stock under our 2021 Employee Stock Purchase Plan.

Cash provided by financing activities during fiscal 2024 was $47.5 million, consisting of $28.3 million of proceeds from the exercise of employee stock options and $19.1 million of proceeds from the issuance of common stock under our 2021 Employee Stock Purchase Plan.

Cash used in financing activities during fiscal 2026 was $160.8 million, consisting of $200.0 million in repurchases of common stock, partially offset by $21.2 million of proceeds from the issuance of common stock under our Employee Stock Purchase Plan (ESPP), and $18.0 million of proceeds from the exercise of employee stock options.

Contractual Obligations and Commitments

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Our purchase obligations as of January 31, 2026 were approximately $732.0 million, with $182.9 million expected to be paid within 12 months and the remainder thereafter.

In January 2026, we entered into an Assessment Agreement with the ITA, which includes the sale of our acquired Prompt intangibles to the U.S., and requires installment payments through 2030.

As of January 31, 2026,

the total obligation under the Agreement was approximately $184.8 million, inclusive of interest and foreign currency effects, with approximately $40.9 million expected to be paid within 12 months and the remainder thereafter.

The Agreement contains certain change in control provisions that, if triggered, would require an accelerated payment in excess of the currently accrued liability.

See Note 10, Income Taxes, for further information.

Off-Balance Sheet Arrangements

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We consider the terms and conditions of contracts with customers and our customary business practices in identifying contracts.

the contract has commercial substance, and we have determined that the customer has the ability and intent to pay.

We determine we have a contract with a customer when the contract is approved, the payment terms for the services can be identified, each party’s rights regarding the services to be transferred can be identified, the contract has commercial substance, and we have determined that the customer has the ability and intent to pay.

We apply judgment in determining the customer’s ability and intent to pay, which is based on a variety of factors, including the customer’s historical payment experience or, in the case of a new customer, credit and financial information pertaining to such customer.

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Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

We evaluate uncertain tax positions in accordance with ASC 740.

We recognize a tax benefit when it is more likely than not that our tax position will be sustained upon examination based on the technical merits.

The amount recognized is based on the largest benefit that is cumulatively greater than 50% likely to be realized upon settlement.

The evaluation of uncertain tax positions involves significant judgment, including interpretation of tax law, legal precedent, expected outcomes of negotiations with taxing authorities and changes in facts and circumstances.

When new information becomes available, such as discussions in settlement negotiations, this could constitute a change in facts and circumstances that may require remeasurement of the associated liability.

In connection with this final resolution, which includes the sale of our acquired Prompt intangibles to the U.S., we recorded a total tax expense of $180.9 million during fiscal 2026.

We will continue to reassess our uncertain tax positions at each reporting date, incorporating the most current information, including any settlement developments, audit activity, or legal interpretations.

See Note 10, Income Taxes to the consolidated financial statements included in Part II, Item 8, Financial Statements and Supplementary Data.

We utilize the asset and liability method of accounting for income taxes, whereby deferred tax assets and liabilities are determined based on temporary differences between financial reporting and tax bases of assets and liabilities, as well as net operating loss and other attribute carryforwards.

We establish a valuation allowance against deferred tax assets if it is more likely than not that all or a portion of the deferred tax asset will not be realized.

We consider both positive and negative evidence under ASC 740, including historical levels of income, expectations, and risks associated with estimates of future taxable income in assessing the need for a valuation allowance.

We released valuation allowance of $7.1 million against Israeli deferred tax assets, in connection with the Agreement with the ITA, during fiscal 2026.

We continue to maintain a full valuation allowance against our U.S.

deferred tax assets.

We will continue to assess the need for a valuation allowance against our deferred tax assets at each reporting date.

See Note 10, Income Taxes to the consolidated financial statements included in Part II, Item 8, Financial Statements and Supplementary Data.

Recently Issued Accounting Pronouncements

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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-K

Item 7. Management’s Discussion and Analysis