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Item 2. Management’s Discussion and Analysis

2026-08-27 compared with 2026-05-22 · 111 added, 87 removed, 233 unchanged (46% of the section changed)

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As we continue to grow, we are focused on driving sustainable, long-term subscription revenue growth by adding new customers and expanding our relationships with existing customers through increased adoption of our suite of solutions.

Central to this effort is investing in strategic growth areas including developing innovative AI solutions, expanding internationally, growing our partner ecosystem, deepening our presence in industry verticals and the emerging and medium enterprise market, and exploring strategic acquisitions to complement our organic innovation.

Central to this effort is investing in strategic growth areas including developing innovative AI solutions, expanding internationally, growing our partner ecosystem, deepening our presence in industry verticals and the medium enterprise market, and exploring strategic acquisitions to complement our organic innovation.

Our investments across these targeted growth areas may require additional costs, but we remain committed to optimizing resource allocation and realizing a return on our investments.

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As a result of our focus on expanding operating margin, we expect our product development, sales and marketing, and general and administrative expenses as a percentage of total revenues will decrease over the longer term as we grow our revenues and invest in a disciplined manner to support our long-term growth objectives.

Table of Cont ents

Financial Results Overview

The following table provides an overview of our key metrics (in millions, except percentages, basis points, and headcount data):

Three Months Ended April 30,

2026 2025 Change

Three Months Ended July 31, Six Months Ended July 31,

2026 2025 Change 2026 2025 Change

Total revenues $ 2,649 $ 2,348 13 % $ 5,191 $ 4,588 13 %

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$ 824 $ 680 21 % $ 1,633 $ 1,358 20 %

GAAP operating margin 13.3 % 1.8 % 1,154 bps

GAAP operating margin 11.8 % 10.6 % 124 bps 12.5 % 6.3 % 627 bps

Non-GAAP operating margin (1)

31.8 % 30.2 % 159 bps

31.1 % 29.0 % 212 bps 31.5 % 29.6 % 186 bps

Operating cash flows $ 1,215 $ 1,073 13 %

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$ 1,076 $ 1,009 7 %

As of April 30,

As of July 31,

2026 2025 Change

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12-month subscription revenue backlog $ 9,034 $ 7,910 14 %

Cash, cash equivalents, and marketable securities $ 4,353 $ 7,970 (45) %

Headcount 20,896 19,517 7 %

July 31, 2026 January 31, 2026 Change

Cash, cash equivalents, and marketable securities $ 3,403 $ 5,443 (37) %

(1) See “Non-GAAP Financial Measures” below for further information.

Impact of Current Economic Conditions

Recent macroeconomic events including increased tariffs, elevated inflation and energy prices, and fluctuating interest rates and foreign currency exchange rates, as well as geopolitical instability and conflicts, continue to impact the global economy and create uncertainty, volatility, and disruption of financial markets.

Impact of Current Economic and Market Conditions

Recent macroeconomic events and evolving market conditions are impacting aspects of our business including customer behavior and the way we market, price, and sell our solutions.

External factors such as increased tariffs, elevated inflation and energy prices, the evolving legislative and regulatory environment, and fluctuating interest rates and foreign currency exchange rates, as well as geopolitical instability and conflicts, continue to impact the global economy and create uncertainty, volatility, and disruption of financial markets.

As a result, we have experienced, and may continue to experience, a moderation of revenue growth rates due to deal scrutiny and the lengthening of certain sales cycles, particularly within net new opportunities, as well as reduced growth in headcount-level commitments upon renewals of existing customers.

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Further, we have provided, and may continue to provide, certain customers with more flexible payment terms.

For further discussion of the potential impacts of recent macroeconomic events on our business, financial condition, and operating results, see “Risk Factors” included in Part II, Item 1A of this report.

Additionally, to address the rapidly changing technology market and AI landscape, we are addressing shifts in customer buying behavior and demand through actions such as new pricing models and sales and marketing strategies, all of which are dependent on our ability to optimally price our solutions, customer adoption and usage, and our costs to deliver our solutions.

For further discussion of the potential impacts of recent macroeconomic events and market conditions on our business, financial condition, and operating results, see “Risk Factors” included in Part II, Item 1A of this report.

Components of Results of Operations

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Professional services revenues include fees for deployment services, optimization services, and training.

Subscription services revenues accounted for approximately 93% of our total revenues for the three months ended April 30, 2026, and represented 97% of our total unearned revenue as of April 30, 2026.

Subscription services revenues accounted for approximately 93% of our total revenues for the three and six months ended July 31, 2026, and represented 97% of our total unearned revenue as of July 31, 2026.

Subscription services revenues are driven primarily by the number of customers, the number of workers at each customer, the specific applications subscribed to by each customer, and the price of our applications.

Table of Cont ents

The mix of applications to which each customer subscribes can affect our financial performance due to price differentials in our applications.

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Our subscription revenue backlog, which is also referred to as remaining performance obligations for subscription contracts, represents contracted subscription services revenues that have not yet been recognized and includes billed and unbilled amounts.

Subscription revenue backlog may fluctuate from period-to-period due to a number of factors, including the timing of renewals and overall renewal rates, new business growth, average contract duration, business combinations, and seasonality.

Costs and Expenses

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Restructuring expenses are associated with a formal restructuring program and consist of charges related to workforce reductions, including employee transition, severance payments, and share-based compensation, as well as charges associated with the closure of facilities and other exit and disposal activities.

Table of Cont ents

Results of Operations

Our total revenues were as follows (in millions, except percentages):

Three Months Ended April 30,

2026 2025 % Change

Three Months Ended July 31, Six Months Ended July 31,

2026 2025 % Change 2026 2025 % Change

Subscription services $ 2,471 $ 2,169 14 % $ 4,826 $ 4,228 14 %

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Total revenues $ 2,649 $ 2,348 13 % $ 5,191 $ 4,588 13 %

Total revenues were $2.5 billion for the three months ended April 30, 2026, compared to $2.2 billion for the prior year period, an increase of $302 million, or 13% .

Subscription services revenues were $2.4 billion for the three months ended April 30, 2026, compared to $2.1 billion for the prior year period, an increase of $295 million, or 14%.

Total revenues were $2.6 billion for the three months ended July 31, 2026, compared to $2.3 billion for the prior year period, an increase of $301 million, or 13%.

Subscription services revenues were $2.5 billion for the three months ended July 31, 2026, compared to $2.2 billion for the prior year period, an increase of $302 million, or 14%.

Approximately 60% of the increase in subscription services revenues was attributable to expansion within our customers that existed as of the beginning of the comparable prior year period, and the remaining 40% was attributable to customers added after the beginning of the comparable prior year period.

Professional services revenues were $188 million for the three months ended April 30, 2026, compared to $181 million for the prior year period, an increase of $7 million, or 4%.

Professional services revenues were $178 million for the three months ended July 31, 2026, compared to $179 million for the prior year period, a decrease of $1 million, or 1%.

Professional services revenues remained relatively flat as we continued to expand and leverage our service providers.

Total revenues were $5.2 billion for the six months ended July 31, 2026, compared to $4.6 billion for the prior year period, an increase of $603 million, or 13%.

Subscription services revenues were $4.8 billion for the six months ended July 31, 2026, compared to $4.2 billion for the prior year period, an increase of $597 million, or 14%.

Approximately 60% of the increase in subscription services revenues was attributable to expansion within our customers that existed as of the beginning of the prior fiscal year, and the remaining 40% was attributable to customers added after the beginning of the prior fiscal year.

Professional services revenues were $365 million for the six months ended July 31, 2026, compared to $360 million for the prior year period, an increase of $6 million, or 2%.

Professional services revenues remained relatively flat as we continued to expand and leverage our service providers.

Gross Revenue Retention Rate

Our growth in subscription services revenues attributable to existing customers is further reflected by our gross revenue retention rate of approximately 97% as of April 30, 2026.

Our growth in subscription services revenues attributable to existing customers is further reflected by our gross revenue retention rate of approximately 97% as of July 31, 2026.

Our gross revenue retention rate measures the percentage of recurring revenue retained from existing customers and is calculated by taking total annual recurring revenue (“ARR”) of our customers as of the corresponding prior period-end and comparing that to ARR from that same set of customers as of the current period-end.

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Subscription Revenue Backlog

As of April 30, 2026, our total subscription revenue backlog was $27.3 billion, with $8.8 billion expected to be recognized in revenues over the next 12 months.

As of April 30, 2025, our total subscription revenue backlog was $24.6 billion, with $7.6 billion expected to be recognized in revenues over the next 12 months.

As of July 31, 2026, our total subscription revenue backlog was $27.4 billion, and 12-month subscription revenue backlog was $9.0 billion.

As of July 31, 2025, our total subscription revenue backlog was $25.4 billion, and 12-month subscription revenue backlog was $7.9 billion.

The increase in subscription revenue backlog was primarily driven by expansion within our existing customer base, sales to new customers, and timing of renewals for existing customers.

Table of Cont ents

Costs and Expenses

Our costs and expenses were as follows (in millions):

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

2026 2025 2026 2025

Costs of subscription services $ 436 $ 370 $ 848 $ 720

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Total costs and expenses $ 2,336 $ 2,100 $ 4,540 $ 4,301

Total costs and expenses were $2.2 billion for the three months ended April 30, 2026, compared to $2.2 billion for the prior year period, an increase of $4 million, or 0.2%.

Total costs and expenses were $2.3 billion for the three months ended July 31, 2026, compared to $2.1 billion for the prior year period, an increase of $236 million, or 11%.

The increase in total costs and expenses included increases of $126 million in employee-related expenses, $43 million in facilities and IT-related expenses, $32 million in third-party hosted infrastructure expenses, $14 million in amortization of acquisition-related intangible assets, and $11 million in amortization of deferred sales commissions.

Total costs and expenses were $4.5 billion for the six months ended July 31, 2026, compared to $4.3 billion for the prior year period, an increase of $240 million, or 6%.

The increase in total costs and expenses included increases of $185 million in employee-related expenses, $82 million in third-party hosted infrastructure expenses, $80 million in facilities and IT-related expenses, $29 million in amortization of acquisition-related intangible assets, and $22 million in amortization of deferred sales commissions, offset by a reduction of $167 million in restructuring expenses.

Costs of Subscription Services

Costs of subscription services were $412 million for the three months ended April 30, 2026, compared to $350 million for the prior year period, an increase of $62 million, or 18%.

The increase in costs of subscription services included increases of $47 million in third-party hosted infrastructure expenses and $11 million in amortization of acquisition-related intangible assets.

Costs of subscription services were $436 million for the three months ended July 31, 2026, compared to $370 million for the prior year period, an increase of $66 million, or 18%.

The increase in costs of subscription services included increases of $33 million in third-party hosted infrastructure expenses, $14 million in employee-related expenses, $9 million in amortization of acquisition-related intangible assets, and $9 million in facilities and IT-related expenses.

Costs of subscription services were $848 million for the six months ended July 31, 2026, compared to $720 million for the prior year period, an increase of $128 million, or 18%.

The increase in costs of subscription services included increases of $80 million in third-party hosted infrastructure expenses, $20 million in amortization of acquisition-related intangible assets, $17 million in employee-related expenses, and $11 million in facilities and IT-related expenses.

We expect costs of subscription services will continue to increase in absolute dollars as we improve and expand our technical operations infrastructure, including third-party hosted infrastructure, and as we grow our enhanced customer support services.

Costs of Professional Services

Costs of professional services were $192 million for the three months ended April 30, 2026, compared to $187 million for the prior year period, an increase of $5 million, or 3%.

Costs of professional services were $216 million for the three months ended July 31, 2026, compared to $212 million for the prior year period, an increase of $4 million, or 2%.

Costs of professional services remained relatively flat.

Costs of professional services were $408 million for the six months ended July 31, 2026, compared to $399 million for the prior year period, an increase of $9 million, or 2%.

Costs of professional services remained relatively flat.

We expect costs of professional services as a percentage of total revenues to continue to decline as we expand and leverage our service partners to deploy our applications and focus on growing our subscription revenues.

Product Development

Product development expenses were $705 million for the three months ended April 30, 2026, compared to $663 million for the prior year period, an increase of $42 million, or 6%.

Product development expenses were $747 million for the three months ended July 31, 2026, compared to $660 million for the prior year period, an increase of $88 million, or 13%.

The increase in product development expenses included increases of $71 million in employee-related expenses and $22 million in facilities and IT-related expenses.

Product development expenses were $1.5 billion for the six months ended July 31, 2026, compared to $1.3 billion for the prior year period, an increase of $130 million, or 10%.

The increase in product development expenses included increases of $102 million in employee-related expenses and $38 million in facilities and IT-related expenses.

We expect product development expenses will continue to increase in absolute dollars as we improve and extend our applications and develop new technologies.

Sales and Marketing

Sales and marketing expenses were $679 million for the three months ended April 30, 2026, compared to $623 million for the prior year period, an increase of $56 million, or 9%.

The increase in sales and marketing expenses included increases of $22 million in employee-related expenses, $11 million in amortization of deferred sales commissions, and $11 million in facilities and IT-related expenses.

Sales and marketing expenses were $706 million for the three months ended July 31, 2026, compared to $641 million for the prior year period, an increase of $65 million, or 10%.

The increase in sales and marketing expenses included increases of $28 million in employee-related expenses, $11 million in amortization of deferred sales commissions, and $8 million related to marketing programs.

Sales and marketing expenses were $1.4 billion for the six months ended July 31, 2026, compared to $1.3 billion for the prior year period, an increase of $122 million, or 10%.

The increase in sales and marketing expenses included increases of $51 million in employee-related expenses, $22 million in amortization of deferred sales commissions, $17 million in facilities and IT-related expenses, and $9 million related to marketing programs.

We expect sales and marketing expenses to increase in absolute dollars as we continue to invest domestically and internationally to expand awareness of our brand and product offerings to attract new and existing customers.

General and Administrative

General and administrative expenses were $216 million for the three months ended April 30, 2026, compared to $212 million for the prior year period, an increase of $4 million, or 2%.

General and administrative expenses remained relatively flat.

Table of Cont ents

General and administrative expenses were $231 million for the three months ended July 31, 2026, compared to $216 million for the prior year period, an increase of $15 million, or 7%.

The increase in general and administrative expenses included an increase of $8 million in employee-related expenses.

General and administrative expenses were $447 million for the six months ended July 31, 2026, compared to $429 million for the prior year period, an increase of $19 million, or 4%.

The increase in general and administrative expenses included increases of $11 million in facilities and IT-related expenses and $7 million in employee-related expenses.

We expect general and administrative expenses will continue to increase in absolute dollars as we continue to grow our business and invest in our people, processes, and systems to support our global operations.

Restructuring

There were no restructuring expenses recognized during the three months ended April 30, 2026.

Restructuring expenses were $166 million for the three months ended April 30, 2025, of which $132 million related to employee transition, severance payments, employee benefits, and share-based compensation, and $34 million related to an impairment of office space.

There were no material restructuring expenses recognized during the three and six months ended July 31, 2026.

Restructuring expenses were $1 million and $167 million for the three and six months ended July 31, 2025, respectively.

These expenses included $133 million related to employee transition, severance payments, employee benefits, and share-based compensation, and $34 million related to an impairment of office space.

Share-based Compensation

Costs and expenses include share-based compensation expense as follows (in millions):

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

2026 2025 2026 2025

Costs of subscription services $ 44 $ 39 $ 80 $ 81

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17.4 % 16.7 % 16.8 % 18.5 %

Share-based compensation expense decreased by $50 million for the three months ended April 30, 2026, compared to the prior year period, primarily due to a reduction in restructuring expenses.

Share-based compensation expense increased by $71 million for the three months ended July 31, 2026, compared to the prior year period, primarily due to additional grants to new and existing employees.

Share-based compensation expense increased by $20 million for the six months ended July 31, 2026, compared to the prior year period, primarily due to additional grants to new and existing employees, offset by a reduction in restructuring expenses.

Equity compensation is an important element of our compensation philosophy.

While we expect share-based compensation expense to grow in absolute dollars as we expand our global workforce, we expect it to decline as a percentage of total revenues.

We expect share-based compensation expense to grow in absolute dollars as we continue to issue share-based awards to our employees but decline as a percentage of total revenues.

Operating Income and Operating Margin

GAAP operating income was $338 million, or 13.3% of revenues, for the three months ended April 30, 2026, compared to the prior year GAAP operating income of $39 million, or 1.8% of revenues.

The increase is primarily due to our revenue growth outpacing headcount growth, a reduction in restructuring expenses, and moderation of operating expenses, including share-based compensation.

Non-GAAP operating income wa s $809 million, or 31.8% of revenues, for the three months ended April 30, 2026, compared to the prior year non-GAAP operating income of $677 million, or 30.2% of revenues.

GAAP operating income was $313 million, or 11.8% of revenues, for the three months ended July 31, 2026, compared to the prior year GAAP operating income of $248 million, or 10.6% of revenues.

The increase is primarily due to our revenue growth outpacing headcount growth and moderation of operating expenses.

Table of Cont ents

GAAP operating income was $651 million, or 12.5% of revenues, for the six months ended July 31, 2026, compared to the prior year GAAP operating income of $287 million, or 6.3% of revenues.

The increase is primarily due to our revenue growth outpacing headcount growth, a reduction in restructuring expenses, and moderation of operating expenses.

Non-GAAP operating income was $824 million, or 31.1% of revenues, for the three months ended July 31, 2026, compared to the prior year non-GAAP operating income of $680 million, or 29.0% of revenues.

The increase is primarily due to our revenue growth outpacing headcount growth and moderation of operating expenses.

Non-GAAP operating income was $1.6 billion, or 31.5% of revenues, for the six months ended July 31, 2026, compared to the prior year non-GAAP operating income of $1.4 billion, or 29.6% of revenues.

The increase is primarily due to our revenue growth outpacing headcount growth and moderation of operating expenses.

Reconciliations of our GAAP to non-GAAP operating income and operating margin were as follows (in millions, except percentages).

See “Non-GAAP Financial Measures” below for further information.

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

2026 2025 2026 2025

Operating income $ 313 $ 248 $ 651 $ 287

Share-based compensation expense (1)

462 391 871 809

Employer payroll tax-related items on employee stock transactions 13 12 32 39

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Acquisition-related costs

0.1 % 0.3 % 0.2 % 0.3 %

Restructuring costs

0.0 % 0.0 % 0.0 % 3.7 %

Non-GAAP operating margin 31.1 % 29.0 % 31.5 % 29.6 %

(1) Share-based compensation expense in the GAAP to non-GAAP reconciliation tables above excludes share-based compensation associated with restructuring activities of $42 million for the three months ended April 30, 2025.

These expenses are included in Restructuring costs.

This expense is included in Restructuring costs.

There was no comparable activity for the six months ended July 31, 2026.

Other Income, Net

Other income, net was as follows (in millions):

Three Months Ended April 30,

Total other income, net

Other income, net decreased by $47 million for the three months ended April 30, 2026, primarily due to lower interest income following the liquidation of marketable debt securities in the prior fiscal year to fund acquisition activities and share repurchases.

Provision For Income Taxes

The provision for income taxes was as follows (in millions):

Three Months Ended April 30,

Provision for income taxes

The income tax provision for the three months ended April 30, 2026, was primarily attributable to earnings in the U.S.

and profitable foreign jurisdictions, and incremental tax expense from share-based compensation awards where the tax deduction realized was lower than the compensation expense recognized.

The income tax provision for the three months ended April 30, 2025, was primarily attributable to earnings in the U.S.

Three Months Ended July 31, Six Months Ended July 31,

2026 2025 2026 2025

Other income, net $ 14 $ 56 $ 31 $ 120

Other income, net decreased by $42 million and $89 million for the three and six months ended July 31, 2026, respectively, compared to the prior year periods.

The decreases were primarily due to lower interest income resulting from the liquidation of marketable debt securities to fund acquisition activities and share repurchases.

Provision For (Benefit From) Income Taxes

The provision for (benefit from) income taxes was as follows (in millions):

Three Months Ended July 31, Six Months Ended July 31,

2026 2025 2026 2025

Provision for (benefit from) income taxes $ (305) $ 76 $ (172) $ 111

The income tax benefit for the three and six months ended July 31, 2026, was primarily attributable to an intra-entity transfer of certain intellectual property rights as part of an internal legal entity restructuring.

In connection with the transaction, we recognized $374 million of deferred tax assets related to deductible temporary differences associated with certain tax attributes transferred at carryover basis.

This benefit was partially offset by income tax expense primarily attributable to earnings in the U.S.

and profitable foreign jurisdictions.

The income tax provision for the three and six months ended July 31, 2025, was primarily attributable to earnings in the U.S.

and profitable foreign jurisdictions.

For further information, see Note 16, Income Taxes , of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this report.

Table of Cont ents

Liquidity and Capital Resources

As of April 30, 2026, our principal sources of liquidity were cash, cash equivalents, and marketable securities totaling $4.4 billion, which were primarily held for working capital and general corporate purposes.

As of July 31, 2026, our principal sources of liquidity were cash, cash equivalents, and marketable securities totaling $3.4 billion, which were primarily held for working capital and general corporate purposes.

Our cash equivalents and marketable securities are primarily composed of, in order from largest to smallest, corporate bonds, U.S.

treasury securities, U.S.

agency obligations, money market funds, asset-backed securities, and supranational securities.

treasury securities, money market funds, asset-backed securities, U.S.

agency obligations, and supranational securities.

We believe our existing cash, cash equivalents, marketable securities, cash provided by operating activities, unbilled amounts related to the remaining term of contracted noncancelable subscription agreements, which are not reflected on the Condensed Consolidated Balance Sheets, and, if necessary, our borrowing capacity under our 2022 Credit Agreement that provides for $1.0 billion of unsecured financing, are sufficient to meet our working capital, capital expenditure, share repurchase, and debt repayment needs over the next 12 months and beyond.

Our long-term future capital requirements depend on many factors, including the effects of macroeconomic trends, customer growth rates, subscription renewal activity, headcount growth, the timing and extent of development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced services offerings, infrastructure development, and our investment and acquisition activities.

Our future capital requirements depend on many factors, including the effects of macroeconomic trends, customer growth rates, subscription renewal activity, headcount levels, the timing and extent of development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced services offerings, infrastructure development, and our investment and acquisition activities.

As part of our strategy, we may choose to seek additional debt or equity financing, which may not be available on terms favorable to us or at all.

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Our cash flows were as follows (in millions):

Three Months Ended April 30,

Six Months Ended July 31,

Net cash provided by (used in):

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Operating Activities

Cash provided by operating activities was $696 million and $457 million for the three months ended April 30, 2026, and 2025, respectively.

The improvement in cash provided by operating activities was primarily driven by higher cash collections of $463 million mainly due to increased sales, partially offset by increased employee-related payments of $90 million, increased supplier payments of $66 million to support our continued growth, and decreased interest income of $30 million.

Cash provided by operating activities was $1.2 billion and $1.1 billion for the six months ended July 31, 2026, and 2025, respectively.

The improvement in cash provided by operating activities was primarily driven by higher cash collections of $723 million mainly due to increased sales, partially offset by increased supplier payments of $196 million to support our continued growth, increased employee-related payments of $191 million, higher income tax payments of $73 million, and decreased interest income of $58 million.

Investing Activities

Cash provided by investing activities was $97 million for the three months ended April 30, 2026, which primarily resulted from net inflows of $127 million related to marketable debt securities activity and inflows of $41 million from the exit of non-marketable equity investments, offset by capital expenditures of $80 million mainly for office space projects.

Cash used in investing activities was $523 million for the three months ended April 30, 2025, which primarily resulted from a net outflow of $483 million related to marketable debt securities activity and capital expenditures of $36 million mainly for office space projects.

Cash provided by investing activities was $1.0 billion for the six months ended July 31, 2026, which primarily resulted from net cash inflows of $1.1 billion related to marketable debt securities activity and net cash inflows of $29 million related to non-marketable equity investments activity, offset by capital expenditures of $139 million mainly for office space projects.

Cash used in investing activities was $510 million for the six months ended July 31, 2025, which primarily resulted from net cash outflows of $431 million related to marketable debt securities activity, capital expenditures of $64 million mainly for office space projects, and purchases of $15 million for non-marketable equity investments.

We expect capital expenditures will be approximately $270 million in fiscal 2027, primarily related to investments in our office facilities to support our continued growth.

Financing Activities

Cash used in financing activities was $1.7 billion for the three months ended April 30, 2026, which primarily resulted from repurchases of common stock of $1.6 billion under our share repurchase programs and taxes paid of $146 million related to net share settlement of equity awards.

Cash used in financing activities was $501 million for the three months ended April 30, 2025, which primarily resulted from repurchases of common stock of $290 million under our share repurchase programs and taxes paid of $211 million related to net share settlement of equity awards.

Table of Cont ents

Cash used in financing activities was $3.1 billion for the six months ended July 31, 2026, which primarily resulted from repurchases of common stock of $2.9 billion under our share repurchase programs and taxes paid of $273 million related to net share settlement of equity awards, offset by proceeds of $98 million from the issuance of common stock from employee equity plans.

Cash used in financing activities was $850 million for the six months ended July 31, 2025, which primarily resulted from repurchases of common stock of $589 million under our share repurchase programs and taxes paid of $372 million related to net share settlement of equity awards, offset by proceeds of $111 million from the issuance of common stock from employee equity plans.

Free Cash Flows

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See “Non-GAAP Financial Measures” below for further information.

Free cash flows were $616 million for the three months ended April 30, 2026, compared to $421 million for the prior year period.

The improvement was primarily driven by higher cash collections of $463 million mainly due to increased sales, partially offset by increased employee-related payments of $90 million, increased supplier payments of $66 million to support our continued growth, increased capital expenditures of $44 million, and decreased interest income of $30 million.

Free cash flows were $1.1 billion for the six months ended July 31, 2026, compared to $1.0 billion for the prior year period.

The improvement was primarily driven by higher cash collections of $723 million mainly due to increased sales, partially offset by increased supplier payments of $196 million to support our continued growth, increased employee-related payments of $191 million, increased capital expenditures of $75 million, higher income tax payments of $73 million, and decreased interest income of $58 million.

Reconciliation of our GAAP net cash provided by operating activities to non-GAAP free cash flows is as follows (in millions):

Three Months Ended April 30,

Six Months Ended July 31,

Net cash provided by operating activities $ 1,215 $ 1,073

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The share repurchase programs have no expiration date, may be suspended or discontinued at any time, and do not obligate us to acquire any amount of Class A common stock.

Share repurchase programs authorized by our Board of Directors that were active during the periods presented were as follows (in millions):

Share repurchase programs authorized by our Board of Directors that were in effect during the three and six months ended July 31, 2026, and 2025, were as follows (in millions):

Authorization Date

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Authorization Completion Date

November 2022

1,000 Q3 fiscal 2026

February 2024

1,000 Q4 fiscal 2026

1,000 Q3 fiscal 2026

1,000 Q4 fiscal 2026

September 2025 4,000

As of April 30, 2026, we were authorized to repurchase a remaining $1.3 billion of our outstanding shares of Class A common stock under our share repurchase programs.

For further information, see Note 13, Stockholders’ Equity , of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this report.

September 2025 4,000 Q2 fiscal 2027

As of July 31, 2026, our share repurchase programs were fully completed with no authorization remaining.

In August 2026, our Board of Directors authorized the repurchase of up to an additional $4.0 billion of our outstanding shares of Class A common stock.

For further information, see Note 13, Stockholders’ Equity , and Note 20, Subsequent Event , of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this report.

Contractual Obligations

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Our measures of non-GAAP operating income, non-GAAP operating margin, and free cash flows meet the definition of non-GAAP financial measures.

Table of Cont ents

Non-GAAP Operating Income and Non-GAAP Operating Margin

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In the case of share-based compensation, if we did not pay out a portion of compensation in the form of share-based compensation, the cash salary expense included in operating expenses would be higher, which would affect our cash position.

Table of Cont ents

We compensate for these limitations by reconciling the non-GAAP financial measures to the most comparable GAAP financial measures.

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We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure, and to view our non-GAAP financial measures in conjunction with the most comparable GAAP financial measures.

See “Results of Operations—Operating Income and Operating Margin” for reconciliations from the most directly comparable GAAP financial measures of GAAP operating income and GAAP operating margin, to the non-GAAP financial measures of non-GAAP operating income and non-GAAP operating margin, for the three months ended April 30, 2026, and 2025.

See “Liquidity and Capital Resources—Free Cash Flows” for a reconciliation from the most comparable GAAP financial measure, net cash provided by operating activities, to the non-GAAP financial measure, free cash flows, for the three months ended April 30, 2026, and 2025.

Critical Accounting Estimates

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For a further discussion of our critical accounting estimates, refer to our Annual Report on Form 10-K for the fiscal year ended January 31, 2026.

During the three months ended April 30, 2026, there were no significant changes to our critical accounting estimates.

Table of Cont ents

During the six months ended July 31, 2026, there were no significant changes to our critical accounting estimates.

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