FULLTEXT DEL 1 AV 2
10-Q – 2026-06-03 – panw-20260430.htm
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NETWORKS, INC . (Exact name of registrant as specified in its charter) Delaware 20-2530195 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 3000 Tannery Way Santa Clara , California 95054 (Address of principal executive offices, including zip code) ( 408 ) 753-4000 (Registrant’s telephone number, including area code) NA (Former name, former address and former fiscal year, if changed since last report) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common stock, $0.0001 par value per share PANW The Nasdaq Stock Market LLC (Nasdaq Global Select Market) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☒ Accelerated filer ☐ Emerging growth company ☐ Non-accelerated filer ☐ Smaller reporting company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ The number of shares outstanding of the registrant’s common stock as of May 26, 2026 was 815 million. Table of Contents Table of Contents Page PART I - FINANCIAL INFORMATION Item 1. Financial Statements 2 Condensed Consolidated Balance Sheets as of April 30, 2026 and July 31, 2025 2 Condensed Consolidated Statements of Operations for the Three and Nine Months Ended April 30, 2026 and April 30, 2025 3 Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended April 30, 2026 and April 30, 2025 4 Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended April 30, 2026 and April 30, 2025 5 Condensed Consolidated Statements of Cash Flows for the Nine Months Ended April 30, 2026 and April 30, 2025 7 Notes to Condensed Consolidated Financial Statements 8 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 26 Item 3. Quantitative and Qualitative Disclosures About Market Risk 42 Item 4. Controls and Procedures 42 PART II - OTHER INFORMATION Item 1. Legal Proceedings 43 Item 1A. Risk Factors 43 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 66 Item 5. Other Information 66 Item 6. Exhibits 67 Signatures 68 - 1 - Table of Contents Part I Item 1. Financial Statements PALO ALTO NETWORKS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in millions, except per share data) April 30, 2026 July 31, 2025 (unaudited) Assets Current assets: Cash and cash equivalents $ 2,364 $ 2,269 Short-term investments 747 635 Accounts receivable, net of allowance for credit losses of $ 6 and $ 10 as of April 30, 2026 and July 31, 2025, respectively 2,852 2,965 Short-term financing receivables, net 591 715 Short-term deferred contract costs 454 419 Prepaid expenses and other current assets 705 520 Total current assets 7,713 7,523 Property and equipment, net 506 387 Operating lease right-of-use assets 678 347 Long-term investments 3,881 5,555 Long-term financing receivables, net 779 1,002 Long-term deferred contract costs 551 586 Goodwill 21,902 4,567 Intangible assets, net 7,283 763 Deferred tax assets 2,380 2,424 Other assets 593 422 Total assets $ 46,266 $ 23,576 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 293 $ 232 Accrued compensation 680 608 Accrued and other liabilities 760 846 Deferred revenue 7,113 6,302 Short-term convertible senior notes 160 — Total current liabilities 9,006 7,988 Long-term convertible senior notes 1,192 — Long-term deferred revenue 6,492 6,450 Deferred tax liabilities 259 89 Long-term operating lease liabilities 719 338 Other long-term liabilities 930 887 Total liabilities 18,598 15,752 Commitments and contingencies (Note 11) Stockholders’ equity: Preferred stock; $ 0.0001 par value; 100 shares authorized; none issued and outstanding as of April 30, 2026 and July 31, 2025 — — Common stock and additional paid-in capital; $ 0.0001 par value; 2,000 shares authorized; 813 and 668 shares issued and outstanding as of April 30, 2026 and July 31, 2025, respectively 24,608 5,292 Accumulated other comprehensive income (loss) ( 13 ) 48 Retained earnings 3,073 2,484 Total stockholders’ equity 27,668 7,824 Total liabilities and stockholders’ equity $ 46,266 $ 23,576 See notes to condensed consolidated financial statements. - 2 - Table of Contents PALO ALTO NETWORKS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, in millions, except per share data) Three Months Ended April 30, Nine Months Ended April 30, 2026 2025 2026 2025 Revenue: Product $ 594 $ 453 $ 1,542 $ 1,228 Subscription and support 2,408 1,836 6,528 5,457 Total revenue 3,002 2,289 8,070 6,685 Cost of revenue: Product 167 101 371 277 Subscription and support 807 518 1,926 1,495 Total cost of revenue 974 619 2,297 1,772 Total gross profit 2,028 1,670 5,773 4,913 Operating expenses: Research and development 734 494 1,773 1,480 Sales and marketing 1,161 793 2,804 2,271 General and administrative 316 164 673 416 Total operating expenses 2,211 1,451 5,250 4,167 Operating income (loss) ( 183 ) 219 523 746 Interest expense — ( 1 ) — ( 3 ) Other income, net 27 93 282 261 Income (loss) before income taxes ( 156 ) 311 805 1,004 Provision for income taxes 21 49 216 124 Net income (loss) $ ( 177 ) $ 262 $ 589 $ 880 Net income (loss) per share, basic $ ( 0.22 ) $ 0.39 $ 0.81 $ 1.33 Net income (loss) per share, diluted $ ( 0.22 ) $ 0.37 $ 0.79 $ 1.24 Weighted-average shares used to compute net income (loss) per share, basic 801 665 729 659 Weighted-average shares used to compute net income (loss) per share, diluted 801 707 744 708 See notes to condensed consolidated financial statements . - 3 - Table of Contents PALO ALTO NETWORKS, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited, in millions) Three Months Ended April 30, Nine Months Ended April 30, 2026 2025 2026 2025 Net income (loss) $ ( 177 ) $ 262 $ 589 $ 880 Other comprehensive income, net of tax: Change in unrealized gains (losses) on investments ( 31 ) 32 ( 32 ) 24 Cash flow hedges: Change in unrealized gains (losses) 3 30 26 21 Net realized (gains) losses reclassified into earnings ( 19 ) — ( 43 ) 5 Net change on cash flow hedges ( 16 ) 30 ( 17 ) 26 Change in fair value of convertible senior notes attributable to instrument-specific credit risk ( 12 ) — ( 12 ) — Other comprehensive income (loss) ( 59 ) 62 ( 61 ) 50 Comprehensive income (loss) $ ( 236 ) $ 324 $ 528 $ 930 See notes to condensed consolidated financial statements . - 4 - Table of Contents PALO ALTO NETWORKS, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited, in millions) Three Months Ended April 30, 2026 Common Stock and Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings Total Stockholders’ Equity Shares Amount Balance as of January 31, 2026 703 $ 6,097 $ 46 $ 3,250 $ 9,393 Net loss — — — ( 177 ) ( 177 ) Other comprehensive loss — — ( 59 ) — ( 59 ) Issuance of common stock in connection with employee equity incentive plans 5 126 — — 126 Taxes paid related to net share settlement of equity awards — ( 16 ) — — ( 16 ) Share-based compensation for equity-based awards — 648 — — 648 Repurchase and retirement of common stock ( 7 ) ( 1,000 ) — — ( 1,000 ) Issuance of common stock in connection with a business acquisition 112 18,488 — — 18,488 Replacement awards related to business acquisitions — 265 — — 265 Balance as of April 30, 2026 813 $ 24,608 $ ( 13 ) $ 3,073 $ 27,668 Three Months Ended April 30, 2025 Common Stock and Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings Total Stockholders’ Equity Shares Amount Balance as of January 31, 2025 660 $ 4,421 $ ( 14 ) $ 1,968 $ 6,375 Net income — — — 262 262 Other comprehensive income — — 62 — 62 Issuance of common stock in connection with employee equity incentive plans 6 202 — — 202 Taxes paid related to net share settlement of equity awards — ( 5 ) — — ( 5 ) Share-based compensation for equity-based awards — 334 — — 334 Settlement of convertible notes 2 — — — — Settlement of note hedges ( 2 ) — — — — Balance as of April 30, 2025 666 $ 4,952 $ 48 $ 2,230 $ 7,230 - 5 - Table of Contents Nine Months Ended April 30, 2026 Common Stock and Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings Total Stockholders’ Equity Shares Amount Balance as of July 31, 2025 668 $ 5,292 $ 48 $ 2,484 $ 7,824 Net income — — — 589 589 Other comprehensive loss — — ( 61 ) — ( 61 ) Issuance of common stock in connection with employee equity incentive plans 11 264 — — 264 Taxes paid related to net share settlement of equity awards — ( 125 ) — — ( 125 ) Share-based compensation for equity-based awards — 1,315 — — 1,315 Repurchase and retirement of common stock ( 7 ) ( 1,000 ) — — ( 1,000 ) Issuance of common stock in connection with a business acquisition 112 18,488 — — 18,488 Replacement awards related to business acquisitions 2 374 — — 374 Settlement of warrants 27 — — — — Balance as of April 30, 2026 813 $ 24,608 $ ( 13 ) $ 3,073 $ 27,668 Nine Months Ended April 30, 2025 Common Stock and Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings Total Stockholders’ Equity Shares Amount Balance as of July 31, 2024 650 $ 3,821 $ ( 2 ) $ 1,350 $ 5,169 Net income — — — 880 880 Other comprehensive income — — 50 — 50 Issuance of common stock in connection with employee equity incentive plans 16 360 — — 360 Taxes paid related to net share settlement of equity awards — ( 183 ) — — ( 183 ) Share-based compensation for equity-based awards — 954 — — 954 Settlement of convertible notes 8 — — — — Settlement of note hedges ( 8 ) — — — — Balance as of April 30, 2025 666 $ 4,952 $ 48 $ 2,230 $ 7,230 See notes to condensed consolidated financial statements. - 6 - Table of Contents PALO ALTO NETWORKS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, in millions) Nine Months Ended April 30, 2026 2025 Cash flows from operating activities Net income $ 589 $ 880 Adjustments to reconcile net income to net cash provided by operating activities: Share-based compensation for equity-based awards 1,314 941 Deferred income taxes 38 ( 442 ) Depreciation and amortization 514 259 Amortization of deferred contract costs 410 344 Amortization of debt issuance costs — 1 Change in fair value of convertible senior notes and capped calls 38 — Change in fair value of contingent consideration liability ( 120 ) 20 Reduction of operating lease right-of-use assets 54 48 Amortization of investment premiums, net of accretion of purchase discounts ( 53 ) ( 35 ) Unrealized foreign currency exchange (gains) losses, net 9 — Changes in operating assets and liabilities, net of effects of acquisitions: Accounts receivable, net 441 669 Financing receivables, net 347 102 Deferred contract costs ( 410 ) ( 328 ) Prepaid expenses and other assets ( 47 ) 68 Accounts payable 50 119 Accrued compensation ( 42 ) ( 49 ) Accrued and other liabilities 11 34 Deferred revenue 53 64 Net cash provided by operating activities 3,196 2,695 Cash flows from investing activities Purchases of investments ( 2,421 ) ( 2,821 ) Proceeds from sales of investments 3,399 830 Proceeds from maturities of investments 1,824 1,208 Business acquisitions, net of cash and restricted cash acquired ( 4,563 ) ( 499 ) Purchases of property, equipment, and other assets ( 337 ) ( 160 ) Net cash used in investing activities ( 2,098 ) ( 1,442 ) Cash flows from financing activities Repayments of convertible senior notes — ( 583 ) Proceeds from capped calls related to convertible senior notes 10 — Repurchases of common stock ( 1,000 ) — Proceeds from sales of shares through employee equity incentive plans 264 361 Payments for taxes related to net share settlement of equity awards ( 125 ) ( 183 ) Payments of contingent consideration liability ( 154 ) — 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 Cash, cash equivalents, and restricted cash—beginning of period 2,279 1,547 Cash, cash equivalents, and restricted cash—end of period $ 2,374 $ 2,395 Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets Cash and cash equivalents $ 2,364 $ 2,383 Restricted cash included in prepaid expenses and other current assets 6 12 Restricted cash included in other assets 4 — Total cash, cash equivalents, and restricted cash $ 2,374 $ 2,395 Non-cash investing and financing activities Equity consideration for business acquisitions $ ( 18,862 ) $ — Contingent consideration for a business acquisition $ — $ ( 649 ) See notes to condensed consolidated financial statements. - 7 - Table of Contents Notes to Condensed Consolidated Financial Statements (Unaudited) 1. Description of Business and Summary of Significant Accounting Policies Description of Business Palo Alto Networks, Inc. (the “Company,” “we,” “us,” or “our”), headquartered in Santa Clara, California, was incorporated in March 2005 under the laws of the State of Delaware and commenced operations in April 2005. Our cybersecurity platforms and services help enterprises, organizations, service providers, and government entities to secure their users, networks, clouds, endpoints, and identities by delivering comprehensive cybersecurity backed by artificial intelligence and automation. On February 11, 2026, we acquired CyberArk Software Ltd. (“CyberArk”), an identity security company, forming our next-generation identity security platform. The condensed consolidated financial statements include the financial results of CyberArk prospectively from the date of acquisition. Refer to Note 7. Acquisitions for more information regarding our acquisition of CyberArk. Basis of Presentation and Principles of Consolidation The accompanying condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”), consistent in all material respects with those applied in our Annual Report on Form 10-K for the fiscal year ended July 31, 2025, filed with the Securities and Exchange Commission (“SEC”) on August 29, 2025. The condensed consolidated financial statements include our accounts and our wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The condensed consolidated financial statements are unaudited but include all adjustments of a normal recurring nature necessary for a fair presentation of our quarterly results. Our condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes in our Annual Report on Form 10-K for the fiscal year ended July 31, 2025. Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the condensed consolidated financial statements and the accompanying notes. We evaluate our estimates on an ongoing basis. Management estimates include, but are not limited to, the standalone selling price for our products and services, share-based compensation, fair value of assets acquired and liabilities assumed in business combinations, fair value of contingent consideration liability, fair value of convertible senior notes and capped calls, the assessment of recoverability of our intangibles and goodwill, valuation allowance against deferred tax assets, valuation of inventory and manufacturing partner and supplier liabilities, deferred contract cost benefit period, and loss contingencies. We base our estimates on assumptions, both historical and forward looking, that we believe are reasonable. Actual results could differ materially from those estimates due to risks and uncertainties. Summary of Significant Accounting Policies There have been no material changes to our significant accounting policies as of and for the nine months ended April 30, 2026, as compared to the significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended July 31, 2025, except for the update to the disclosure of our accounting policies as described below resulting from our recent acquisition of CyberArk. Refer to Note 7. Acquisitions and Note 9. Debt for additional information. Convertible Senior Notes and Capped Calls In connection with the CyberArk acquisition, we acquired CyberArk’s convertible senior notes and assumed certain capped call transactions CyberArk had previously entered into relating to the issuance of these convertible senior notes. The capped calls are expected to reduce the potential dilution to our common stock upon conversion of the convertible senior notes and/or offset our cash payments in excess of the principal amount of converted notes, as the case may be, with such reduction and/or offset subject to a cap. For convertible senior notes acquired from CyberArk, we have elected fair value option to simplify the accounting for embedded features that would otherwise require bifurcation from the debt-host and recognition as a separate derivative liability. These convertible senior notes are measured at fair value on a recurring basis through maturity or settlement. Changes in fair value included in earnings are recorded in other income, net on our condensed consolidated statements of operations, and changes in fair value attributable to instrument-specific credit risk are included in accumulated other comprehensive income (loss) (“AOCI”) in stockholders’ equity. - 8 - Table of Contents We account for capped calls as derivative assets, measured at fair value on a recurring basis through maturity or settlement. Capped calls are recorded in other assets on our condensed consolidated balance sheets. Changes in fair value are recorded in other income, net on our condensed consolidated statements of operations. Recently Issued Accounting Pronouncements Income Tax Disclosures In December 2023, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance that requires consistent categories and greater disaggregation of information in the effective tax rate reconciliation and additional disclosures of income taxes paid by jurisdiction. The standard is effective for our annual periods beginning in fiscal 2026 and could be applied either prospectively or retrospectively. We expect the adoption of this standard will result in disclosure of additional jurisdictional level tax information in our consolidated financial statements. Expense Disaggregation Disclosures In November 2024, the FASB issued authoritative guidance that expands annual and interim disclosure of specified information about certain costs and expenses in the notes to financial statements. The standard is effective for our annual periods beginning in fiscal 2028 and interim periods beginning in the first quarter of fiscal 2029, and can be applied either prospectively or retrospectively. Early adoption is permitted. We are currently evaluating the impact of this standard on our disclosures in the consolidated financial statements. Measurement of Credit Losses for Accounts Receivable and Contract Assets In July 2025, the FASB issued authoritative guidance that provides a practical expedient for estimating expected credit losses on accounts receivable and contract assets. The standard is effective for our annual and interim periods beginning in the first quarter of fiscal 2027 and will be applied on a prospective basis. Early adoption is permitted. We do not expect the adoption of this standard will have a material impact on our consolidated financial statements. Accounting for Internal-Use Software In September 2025, the FASB issued authoritative guidance that modernizes the accounting for internal-use software by eliminating project stage-based capitalization and clarifying the requirements, including probable-to-complete threshold, to commence the capitalization of software development costs. The standard is effective for our annual and interim periods beginning in the first quarter of fiscal 2029 and could be applied either prospectively or retrospectively. Early adoption is permitted. We are currently evaluating the impact of this standard on our consolidated financial statements. Hedge Accounting Improvements In November 2025, the FASB issued authoritative guidance that clarifies and improves the existing hedge accounting guidance to better reflect the economics of an entity’s risk management activities. The standard is effective for our annual and interim periods beginning in the first quarter of fiscal 2028 and will be applied on a prospective basis. Early adoption is permitted. We are currently evaluating the impact of this standard on our consolidated financial statements. 2. Revenue Disaggregation of Revenue The following table presents revenue by geographic theater (in millions): Three Months Ended April 30, Nine Months Ended April 30, 2026 2025 2026 2025 Revenue: Americas United States $ 1,854 $ 1,425 $ 4,968 $ 4,169 Other Americas 164 105 403 305 Total Americas 2,018 1,530 5,371 4,474 Europe, the Middle East, and Africa (“EMEA”) 633 480 1,714 1,402 Asia Pacific and Japan (“APAC”) 351 279 985 809 Total revenue $ 3,002 $ 2,289 $ 8,070 $ 6,685 - 9 - Table of Contents The following table presents revenue for groups of similar products and services (in millions): Three Months Ended April 30, Nine Months Ended April 30, 2026 2025 2026 2025 Revenue: Product $ 594 $ 453 $ 1,542 $ 1,228 Subscription and support Subscription 1,632 1,234 4,400 3,659 Support 776 602 2,128 1,798 Total subscription and support 2,408 1,836 6,528 5,457 Total revenue $ 3,002 $ 2,289 $ 8,070 $ 6,685 Deferred Revenue During the nine months ended April 30, 2026 and 2025, we recognized approximately $ 4.9 billion and $ 4.4 billion of revenue pertaining to amounts that were deferred as of July 31, 2025 and 2024, respectively. Remaining Performance Obligations Remaining performance obligations were $ 18.4 billion as of April 30, 2026, of which we expect to recognize as revenue approximately $ 8.3 billion over the next 12 months and the remainder thereafter. 3. Fair Value Measurements The following table presents our financial assets and liabilities measured at fair value on a recurring basis as of April 30, 2026 and July 31, 2025 (in millions): April 30, 2026 July 31, 2025 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Cash equivalents: Money market funds $ 944 $ — $ — $ 944 $ 1,206 $ — $ — $ 1,206 Commercial paper — 535 — 535 — 169 — 169 Corporate debt securities — 2 — 2 — — — — U.S. government and agency securities — 75 — 75 — — — — Total cash equivalents 944 612 — 1,556 1,206 169 — 1,375 Short-term investments: Certificates of deposit — — — — — — — — Commercial paper — 10 — 10 — 15 — 15 Corporate debt securities — 413 — 413 — 584 — 584 U.S. government and agency securities — 27 — 27 — 6 — 6 Non-U.S. government and agency securities — — — — — 3 — 3 Asset-backed securities — 13 — 13 — 22 — 22 Total short-term investments — 463 — 463 — 630 — 630 - 10 - Table of Contents April 30, 2026 July 31, 2025 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Long-term investments: Corporate debt securities — 3,118 — 3,118 — 4,050 — 4,050 U.S. government and agency securities — 39 — 39 — 164 — 164 Non-U.S. government and agency securities — — — — — 26 — 26 Asset-backed securities — 724 — 724 — 1,315 — 1,315 Total long-term investments — 3,881 — 3,881 — 5,555 — 5,555 Prepaid expenses and other current assets: Foreign currency forward contracts — 64 — 64 — 58 — 58 Total prepaid expenses and other current assets — 64 — 64 — 58 — 58 Other assets: Foreign currency forward contracts — 1 — 1 — 3 — 3 Capped calls related to convertible senior notes — 94 — 94 — — — — Total other assets — 95 — 95 — 3 — 3 Total assets measured at fair value $ 944 $ 5,115 $ — $ 6,059 $ 1,206 $ 6,415 $ — $ 7,621 Short-term convertible senior notes $ — $ 160 $ — $ 160 $ — $ — $ — $ — Accrued and other liabilities: Foreign currency forward contracts — 5 — 5 — 4 — 4 Contingent consideration — — 124 124 — — 276 276 Total accrued and other liabilities — 5 124 129 — 4 276 280 Long-term convertible senior notes — 1,192 — 1,192 — — — — Other long-term liabilities: Foreign currency forward contracts — 1 — 1 — — — — Contingent consideration — — 116 116 — — 238 238 Total other long-term liabilities — 1 116 117 — — 238 238 Total liabilities measured at fair value $ — $ 1,358 $ 240 $ 1,598 $ — $ 4 $ 514 $ 518 As part of our acquisition of certain QRadar assets from International Business Machines Corporation (“IBM”) on August 31, 2024, we agreed to make post-closing payments to IBM contingent upon customers entering into qualified new transactions through June 30, 2028. Payments related to the contingent consideration liability commenced in the fiscal quarter ended October 2025 and are expected to continue through the fiscal quarter ending October 2028. The estimated range of undiscounted contingent consideration is between $ 0.3 billion and $ 0.5 billion. The fair value of our contingent consideration liability is estimated using a discounted cash flow valuation technique. We consider the fair value of our contingent consideration liability to be a Level 3 measurement as we use unobservable inputs in determining discounted cash flows to estimate the fair value. The significant unobservable inputs include an estimate of future cash payments related to customers entering into qualified new transactions as well as a risk-adjusted discount rate used to present value the expected cash flows. A significant change in any of these assumptions could have a material impact to the fair value of our contingent consideration liability. - 11 - Table of Contents During the three months ended April 30, 2026, we reduced our estimate of future cash payments based on our quarterly assessment of assumptions, including the magnitude and likelihood of customers entering into qualified new transactions, the competitive industry environment, and current market conditions. The following table presents a reconciliation of our contingent consideration liability (in millions): Three Months Ended April 30, Nine Months Ended April 30, 2026 2025 2026 2025 Contingent consideration liability at the beginning of the period $ 369 $ 665 $ 514 $ — Initial valuation on the acquisition date — — — 649 Change in fair value ( 110 ) 4 ( 120 ) 20 Payments ( 19 ) — ( 154 ) — Contingent consideration liability at the end of the period $ 240 $ 669 $ 240 $ 669 The total estimated fair value of our financing receivables approximates their carrying amounts as of April 30, 2026 and July 31, 2025. We consider the fair value of our financing receivables to be a Level 3 measurement as we use unobservable inputs in determining discounted cash flows to estimate the fair value. 4. Cash Equivalents and Investments Available-for-sale Debt Securities The following tables summarize the amortized cost, unrealized gains and losses, and fair value of our available-for-sale debt securities as of April 30, 2026 and July 31, 2025 (in millions): April 30, 2026 Amortized Cost Unrealized Gains Unrealized Losses Fair Value Cash equivalents: Commercial paper $ 535 $ — $ — $ 535 Corporate debt securities 2 — — 2 U.S. government and agency securities 75 — — 75 Total available-for-sale cash equivalents $ 612 $ — $ — $ 612 Investments: Commercial paper $ 10 $ — $ — $ 10 Corporate debt securities 3,521 20 ( 10 ) 3,531 U.S. government and agency securities 66 — — 66 Asset-backed securities 734 4 ( 1 ) 737 Total available-for-sale investments $ 4,331 $ 24 $ ( 11 ) $ 4,344 - 12 - Table of Contents July 31, 2025 Amortized Cost Unrealized Gains Unrealized Losses Fair Value Cash equivalents: Commercial paper $ 169 $ — $ — $ 169 Total available-for-sale cash equivalents $ 169 $ — $ — $ 169 Investments: Commercial paper $ 15 $ — $ — $ 15 Corporate debt securities 4,588 47 ( 1 ) 4,634 U.S. government and agency securities 170 — — 170 Non-U.S. government and agency securities 29 — — 29 Asset-backed securities 1,328 9 — 1,337 Total available-for-sale investments $ 6,130 $ 56 $ ( 1 ) $ 6,185 Unrealized losses related to our available-for-sale debt securities are primarily due to interest rate fluctuations as opposed to credit quality. We do not intend to sell any of the securities in an unrealized loss position and it is not likely that we would be required to sell these securities before recovery of their amortized cost basis, which may be at maturity. We did not recognize any credit losses related to our available-for-sale debt securities during the three and nine months ended April 30, 2026 and 2025. The following table summarizes the amortized cost and fair value of our available-for-sale debt securities as of April 30, 2026, by contractual years-to-maturity (in millions): Amortized Cost Fair Value Due within one year $ 1,073 $ 1,075 Due between one and three years 1,559 1,570 Due between three and five years 2,064 2,064 Due between five and ten years 102 102 Due after ten years 145 145 Total $ 4,943 $ 4,956 Marketable Equity Securities Marketable equity securities consist of money market funds and are included in cash and cash equivalents on our condensed consolidated balance sheets. As of April 30, 2026 and July 31, 2025, the carrying values of our marketable equity securities were $ 944 million and $ 1.2 billion, respectively. There were no unrealized gains or losses recognized for these securities during the three and nine months ended April 30, 2026 and 2025. 5. Financing Receivables The following table summarizes our short-term and long-term financing receivables as of April 30, 2026 and July 31, 2025 (in millions): April 30, 2026 July 31, 2025 Short-term financing receivables, gross $ 661 $ 806 Unearned income ( 65 ) ( 86 ) Allowance for credit losses ( 5 ) ( 5 ) Short-term financing receivables, net $ 591 $ 715 Long-term financing receivables, gross $ 834 $ 1,079 Unearned income ( 47 ) ( 69 ) Allowance for credit losses ( 8 ) ( 8 ) Long-term financing receivables, net $ 779 $ 1,002 - 13 - Table of Contents The following table presents amortized cost basis of our financing receivables categorized by internal risk rating and year of origination (in millions): Internal Risk Rating (1) April 30, 2026 July 31, 2025 Fiscal Year of Origination Fiscal Year of Origination 2026 2025 2024 2023 2022 Total 2025 2024 2023 2022 2021 Total 1 to 4 $ 95 $ 223 $ 553 $ 126 $ 5 $ 1,002 $ 261 $ 732 $ 242 $ 9 $ 18 $ 1,262 5 to 6 109 104 120 10 — 343 174 226 50 — — 450 7 to 10 — 25 9 4 — 38 — 4 14 — — 18 Amortized cost basis of financing receivables $ 204 $ 352 $ 682 $ 140 $ 5 $ 1,383 $ 435 $ 962 $ 306 $ 9 $ 18 $ 1,730 (1) Internal risk ratings are categorized as 1 through 10, with the lowest rating representing the highest quality. There was no significant activity in allowance for credit losses during the three and nine months ended April 30, 2026 and 2025. Past due amounts on financing receivables were not material as of April 30, 2026 and July 31, 2025. We sold financing receivables of $ 49 million and $ 54 million for the three and nine months ended April 30, 2026, respectively, and $ 28 million and $ 30 million for the three and nine months ended April 30, 2025, respectively. The associated gains and losses were not material. 6. Derivative Instruments We are exposed to foreign currency exchange risk. Our sales contracts are primarily denominated in U.S. dollars. A portion of our operating expenditures are denominated in foreign currencies, making them subject to fluctuations in foreign currency exchange rates. We enter into foreign currency derivative contracts with maturities of 24 months or less, which we designate as cash flow hedges, to manage the foreign currency exchange risk associated with our revenue and operating expenditures. As of April 30, 2026 and July 31, 2025, the total notional amount of our outstanding foreign currency forward contracts designated as cash flow hedges was $ 821 million and $ 964 million, respectively. Refer to Note 3. Fair Value Measurements for the fair value of our derivative instruments as reported on our condensed consolidated balance sheets as of April 30, 2026 and July 31, 2025. As of April 30, 2026, unrealized gains and losses in AOCI related to our cash flow hedges were a net gain of $ 19 million, substantially all of which is expected to be recognized into earnings within the next 12 months. As of July 31, 2025, unrealized gains and losses in AOCI related to our cash flow hedges were a net gain of $ 40 million. As of April 30, 2026 and July 31, 2025, the notional amount of our outstanding foreign currency forward contracts not designated as hedging instruments was $ 412 million and $ 504 million, respectively. 7. Acquisitions Chronosphere, Inc. On January 29, 2026, we completed our acquisition of Chronosphere, Inc. (“Chronosphere”), a privately-held observability technology company. The acquisition resulted in forming our observability platform. The total purchase consideration for the acquisition of Chronosphere was $ 3.0 billion, which consisted of the following (in millions): Amount Cash $ 2,842 Fair value of replacement awards 109 Total $ 2,951 As part of the acquisition, we issued $ 525 million of replacement equity awards, of which the portion attributable to services performed prior to the acquisition date was allocated to purchase consideration. The remaining fair value was allocated to future services and will be expensed over the remaining service periods as share-based compensation. The replacement equity awards included 2 million shares of our restricted common stock. These restricted common stock vest over a period of two to three years from the date of issuance. - 14 - Table of Contents We have accounted for this transaction as a business combination and allocated the purchase consideration to assets acquired and liabilities assumed based on preliminary estimated fair values, as presented in the following table (in millions): Amount Goodwill $ 2,364 Identified intangible assets 565 Cash 57 Net liabilities assumed ( 35 ) Total $ 2,951 Goodwill generated from this business combination is primarily attributable to the assembled workforce and expected post-acquisition synergies from integrating the Chronosphere observability platform into our business. The goodwill is not deductible for U.S. income tax purposes. The following table presents details of the identified intangible asset acquired (in millions, except years): Fair Value Estimated Useful Life Developed technology $ 300 5 years Customer relationships 255 6 years - 10 years Trade name and trademarks 10 1 year Total $ 565 CyberArk Software Ltd. On February 11, 2026, we completed our acquisition of CyberArk, an identity security company, forming our next-generation identity security platform. CyberArk shareholders received $ 45.00 in cash and 2.2005 shares of our common stock for each CyberArk share. The total purchase consideration for the acquisition of CyberArk was $ 21.1 billion, which consisted of the following (in millions): Amount Cash $ 2,308 Common stock ( 112 million shares) 18,488 Fair value of replacement awards 265 Total $ 21,061 As part of the acquisition, we issued $ 945 million of replacement equity awards, of which the portion attributable to services performed prior to the acquisition date was allocated to purchase consideration. The remaining fair value was allocated to future services and will be expensed over the remaining service periods as share-based compensation. - 15 - Table of Contents We have accounted for this transaction as a business combination and allocated the purchase consideration to assets acquired and liabilities assumed based on preliminary estimated fair values, as presented in the following table (in millions): Amount Goodwill $ 14,802 Identified intangible assets 6,279 Cash and cash equivalents 743 Accounts receivable, net of allowance for credit losses 312 Short-term and long-term investments 1,217 Net assets acquired 61 Convertible senior notes ( 1,303 ) Deferred revenue ( 776 ) Deferred tax liabilities ( 274 ) Total $ 21,061 Goodwill generated from this business combination is primarily attributable to the assembled workforce and expected post-acquisition synergies from incorporating the CyberArk next-generation identity security platform into our business. Substantially all of goodwill is deductible for U.S. income tax purposes. The following table presents details of the identified intangible asset acquired (in millions, except years): Fair Value Estimated Useful Life Developed technology $ 2,537 5 years - 7 years Platform renewals 3,500 12 years - 14 years Customer contracts 219 2 years Trade name 23 1 year Total $ 6,279 For the three and nine months ended April 30, 2026, transaction costs related to CyberArk acquisition were $ 41 million and $ 56 million, respectively, which were primarily included in general and administrative expense on our condensed consolidated statements of operations. In connection with our acquisition integration strategy, we initiated a plan to optimize the combined entity’s workforce for a total estimated cost of $ 59 million. The activities associated with this plan are expected to be substantially completed by the end of fiscal 2027. Employee severance costs are recognized upon notification. If service beyond the minimum retention period is required, expense is recognized ratably over the future service period. During the three and nine months ended April 30, 2026, we made cash payments of $ 12 million under the plan. As of April 30, 2026, a liability of $ 12 million related to the employee severance was included in accrued compensation on our condensed consolidated balance sheets. The following table summarizes employee severance charges related to the CyberArk acquisition (in millions): Three and Nine Months Ended April 30, 2026 Cash Compensation Share-based Compensation Total Cost of subscription and support revenue $ 2 $ — $ 2 Research and development 1 — 1 Sales and marketing 13 16 29 General and administrative 8 1 9 Total $ 24 $ 17 $ 41 - 16 - Table of Contents Koi Security Ltd. On April 14, 2026, we completed our acquisition of Koi Security Ltd. (“Koi”), a privately-held endpoint posture management company. We expect the acquisition to add agentic endpoint security capabilities to our security operations platform and enhance Prisma ® AIRS™. The total purchase consideration for the acquisition of Koi was $ 231 million, substantially all of which is comprised of cash. As part of the acquisition, we issued $ 61 million of replacement equity awards, which was allocated to future services and will be expensed over the remaining service periods as share-based compensation. The replacement equity awards included 0.3 million shares of our restricted common stock. These restricted common stock vest over a period of three years from the date of issuance. We have accounted for this transaction as a business combination and allocated the purchase consideration to assets acquired and liabilities assumed based on preliminary estimated fair values, as presented in the following table (in millions): Amount Goodwill $ 169 Identified intangible assets 35 Cash and restricted cash 20 Net assets acquired 7 Total $ 231 Goodwill generated from this business combination is primarily attributable to the assembled workforce and expected post-acquisition synergies from integrating Koi’s technology into our platforms. The goodwill is deductible for U.S. income tax purposes. The following table presents details of the identified intangible asset acquired (in millions, except years): Fair Value Estimated Useful Life Developed technology $ 35 5 years Portkey, Inc. On April 30, 2026, we entered into a definitive agreement to acquire Portkey, Inc., a privately-held AI Gateway company (“Portkey”), in exchange for total consideration of $ 140 million in cash and replacement awards, subject to adjustments. We expect the acquisition will enhance the capabilities of Prisma AIRS. Refer to Note 17. Subsequent Events for additional information. Additional Acquisition-Related Information Since the date of acquisitions, the combined net impact of the Chronosphere and CyberArk acquisitions on our condensed consolidated statements of operations was revenue of $ 388 million and $ 391 million and operating loss of $ 523 million and $ 524 million for the three and nine months ended April 30, 2026, respectively. The following unaudited pro forma financial information summarizes the combined results of operations for Palo Alto Networks, Chronosphere, and CyberArk, as though the companies were combined as of the beginning of our fiscal 2025 (in millions): Three Months Ended April 30, Nine Months Ended April 30, 2026 2025 2026 2025 Total revenue $ 3,043 $ 2,621 $ 8,917 $ 7,598 Net income (loss) $ 8 $ ( 2 ) $ 134 $ ( 178 ) The unaudited pro forma financial information for the three and nine months ended April 30, 2026 and 2025 combines the historical results of Palo Alto Networks and Chronosphere for these periods with the historical results of CyberArk for the three and nine months ended March 31, 2026 and 2025, respectively. The unaudited pro forma financial information include adjustments attributable to our acquisition of Chronosphere and CyberArk, including amortization of acquired intangible assets, stock-based compensation expense from assumed replacement equity awards, acquisition-related transaction costs, employee severance costs under the workforce optimization plan, and income tax impact. The unaudited pro forma financial information is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisitions had taken place at the beginning of our fiscal 2025 or of the results of our future operations of the combined business. - 17 - Table of Contents Additional information related to our acquisitions, such as that related to income tax and other contingencies, existing as of the acquisition date may become known during the remainder of the measurement period, not to exceed 12 months from the acquisition date, which may result in changes to the amounts and allocations recorded. 8. Goodwill, Intangible Assets and Other Long-Lived Assets Goodwill The following table presents details of our goodwill during the nine months ended April 30, 2026 (in millions): Amount Balance as of July 31, 2025 $ 4,567 Goodwill acquired 17,335 Balance as of April 30, 2026 $ 21,902 Purchased Intangible Assets The following table presents details of our purchased intangible assets as of April 30, 2026 and July 31, 2025 (in millions): April 30, 2026 July 31, 2025 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Intangible assets subject to amortization: Developed technology $ 3,387 $ ( 458 ) $ 2,929 $ 536 $ ( 274 ) $ 262 Customer relationships and platform renewals 4,364 ( 240 ) 4,124 609 ( 123 ) 486 Customer contracts 219 ( 27 ) 192 — — — Acquired intellectual property 24 ( 11 ) 13 24 ( 9 ) 15 Trade name and trademarks 33 ( 8 ) 25 — — — Other — — — 1 ( 1 ) — Total purchased intangible assets $ 8,027 $ ( 744 ) $ 7,283 $ 1,170 $ ( 407 ) $ 763 The following table summarizes amortization expense of our intangible assets included in costs and expenses (in millions): Three Months Ended April 30, Nine Months Ended April 30, 2026 2025 2026 2025 Cost of product revenue $ 37 $ — $ 37 $ — Cost of subscription and support revenue 146 29 197 88 Sales and marketing 97 14 125 41 Total intangible assets amortization $ 280 $ 43 $ 359 $ 129 The following table summarizes estimated future amortization expense of our intangible assets subject to amortization as of April 30, 2026 (in millions): Fiscal years ending July 31, Total Remaining 2026 2027 2028 2029 2030 2031 and Thereafter Future amortization expense $ 7,283 $ 281 $ 1,078 $ 986 $ 906 $ 889 $ 3,143 Other Long-lived assets During the nine months ended April 30, 2026, we purchased 14.5 acres of land adjacent to our headquarters in Santa Clara, California, for $ 91 million to accommodate future expansion of our headquarters. This amount was recorded in property and equipment, net on our condensed consolidated balance sheet as of April 30, 2026. - 18 - Table of Contents 9. Debt Convertible Senior Notes, Note Hedges, and Warrants In June 2020, we issued $ 2.0 billion aggregate principal amount of 0.375 % Convertible Senior Notes due 2025 (the “2025 Notes”). The 2025 Notes were converted prior to or settled on the maturity date of June 1, 2025 in accordance with their terms. Concurrent with the issuance of the 2025 Notes, we entered into separate convertible note hedge transactions (the “2025 Note Hedges”) with respect to our common stock for an aggregate payment of $ 371 million. The 2025 Note Hedges expired upon maturity of the 2025 Notes. Any shares of our common stock that were receivable by us under the 2025 Note Hedges are excluded from the calculation of diluted earnings per share as they are antidilutive. Separately, but concurrently with the issuance of our 2025 Notes, we entered into transactions whereby we sold warrants (the “2025 Warrants”) to acquire 40 million shares of our common stock with a strike price of $ 68.08 per share, subject to anti-dilution adjustments, for aggregate proceeds of $ 203 million. The 2025 Warrants were exercisable over 60 scheduled trading days beginning September 2025. The shares that were issuable under the 2025 Warrants are included in the calculation of diluted earnings per share when the average market value per share of our common stock for the reporting period exceeds the strike price of the 2025 Warrants. During the nine months ended April 30, 2026, we net settled all of the 2025 Warrants with the issuance of 27 million shares of our common stock with a fair value of $ 5.6 billion. The number of net shares issued was determined based on the number of 2025 Warrants exercised multiplied by the difference between the strike price of the 2025 Warrants and their daily volume-weighted-average stock price. 2030 Convertible Senior Notes and Capped Calls 2030 Convertible Senior Notes 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 no longer convertible into ordinary shares of CyberArk. The conversion feature has been modified such that each $1,000 principal amount of the 2030 Notes are exchangeable for a combination of (i) approximately 4.3161 shares of our common stock, which is the effective initial conversion rate, and (ii) cash of $ 88.2630 , subject to adjustment under the Indenture. These modifications result in the 2030 Notes being exchangeable initially for 5.4 million shares of our common stock with an effective initial conversion price of approximately $ 211.24 per share of common stock, subject to adjustments, and an initial cash amount of $ 110 million. The 2030 Notes are unsecured, unsubordinated obligations and the Indenture does not contain any financial covenants or restrictions on the payments of dividends, the incurrence of indebtedness, or the issuance or repurchase of securities by us or any of our subsidiaries. The 2030 Notes mature on June 15, 2030. We may redeem for cash all or, subject to certain limitations, any portion of the 2030 Notes, at our option, on or after June 20, 2028 and on or prior to the 31st scheduled trading day immediately preceding the maturity date if the last reported sale price of our common stock has been at least $ 280.75 per share for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on and including the trading day preceding the date on which we provide notice of redemption. Any redemption of the 2030 Notes will be at a price equal to 100 % of the principal amount of the 2030 Notes, plus accrued and unpaid special interest, if any, up to, but excluding, the redemption date. If we call any or all of the 2030 Notes for redemption, holders may convert such 2030 Notes called for redemption at an increased conversion rate at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date. Holders of the 2030 Notes may surrender their 2030 Notes for conversion at their option at any time prior to the close of business on the business day immediately preceding February 15, 2030 under the following circumstances: • during any calendar quarter commencing after the calendar quarter ended on September 30, 2025 (and only during such calendar quarter), if the last reported sale price of our common stock is greater than or equal to $ 280.75 per share of our common stock on each applicable trading day for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter (the “sale price condition”); • during the five business day period immediately after any ten consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of the 2030 Notes for each trading day of the measurement period was less than 98 % of the aggregate of (i) the product of the last reported sale price of our common stock on each such trading day and the conversion rate for the 2030 Notes on each such trading day and (ii) $ 88.2630 ; or • upon the occurrence of specified corporate events as described in the Indenture. - 19 - Table of Contents On or after February 15, 2030, holders may surrender all or, subject to certain limitations, any portion of their 2030 Notes for conversion at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date, and such conversions will be settled upon the maturity date. Upon any conversion of the 2030 Notes, holders of the 2030 Notes will receive cash equal to the aggregate principal amount of the 2030 Notes to be converted, and, at our election, cash or a combination of cash and shares of our common stock for any amounts in excess of the aggregate principal amount of the 2030 Notes converted. The conversion rate will be subject to adjustment in connection with certain events. Holders of the 2030 Notes who convert their 2030 Notes in connection with certain corporate events that constitute a “make-whole fundamental change” under the Indenture are, under certain circumstances, entitled to an increase in the conversion rate for a certain period of time. Additionally, following the occurrence of a corporate event that constitutes a “fundamental change” under the Indenture, holders of the 2030 Notes may require us to repurchase for cash all or a portion of the 2030 Notes at a repurchase price equal to 100 % of the principal amount of the 2030 Notes plus accrued and unpaid special interest, if any, up to, but excluding, the fundamental change repurchase date. Our acquisition of CyberArk constituted both a “make-whole fundamental change” and a “fundamental change” under the Indenture. In connection with the make-whole fundamental change, holders had the option to convert all or a portion of their 2030 Notes at an increased conversion rate equal to a combination of approximately 5.5690 shares of our common stock and $ 113.8860 in cash per $1,000 principal amount (the “make-whole conversion right”). We elected cash settlement as the settlement method for any 2030 Notes surrendered during the make-whole fundamental change period, and certain holders of the 2030 Notes surrendered $ 153 million in aggregate principal amount of the 2030 Notes during the make-whole fundamental change period for conversion. In connection with the fundamental change, holders had the right to tender all or a portion of their 2030 Notes for cash (the “repurchase right”) pursuant to our offer to purchase in accordance with the obligations under the 2030 Notes. No holders exercised the repurchase right to tender their 2030 Notes. The make-whole conversion right and repurchase right resulting from our acquisition of CyberArk expired on March 20, 2026. As of April 30, 2026, the 2030 Notes surrendered by the holders during the make-whole conversion period were classified as a current liability on our condensed consolidated balance sheets. The related fair value of $ 160 million was estimated based on the sum of the daily conversion values computed from our stock price during the 30 consecutive trading days between March 24, 2026 and May 5, 2026. The 2030 Notes surrendered for conversion during the make-whole conversion period were settled in cash for $ 160 million on May 7, 2026. As of April 30, 2026, the remaining 2030 Notes with an aggregate principal amount of $ 1.1 billion were classified as a long-term liability on our condensed consolidated balance sheets since the sale price condition was not met during the calendar quarter ended March 31, 2026. The related fair value of $ 1.2 billion was determined based on the closing trading price per $100 of the 2030 Notes as of the last day of trading for the period. The fair value of the 2030 Notes is primarily affected by the trading price of our common stock and market interest rates. For the three and nine months ended April 30, 2026, changes in fair value of 2030 Notes included in earnings were a loss of $ 37 million, and changes in fair value attributable to instrument-specific credit risk included in AOCI were a loss of $ 12 million. Capped Calls In connection with our acquisition of CyberArk, on February 11, 2026, we entered into amendments to the capped call transactions that CyberArk purchased from certain financial institutions in connection with the issuance of the 2030 Notes. Under the amendments, we assumed the rights and obligations of CyberArk with respect to the capped call transactions, and modified the capped calls to require the delivery of shares of our common stock in lieu of ordinary shares of CyberArk. The capped calls have a strike price of approximately $ 211.24 per share, subject to certain adjustments, which corresponds to the effective initial conversion price of our 2030 Notes. The capped calls have cap prices ranging from approximately $ 287.21 to $ 291.44 per share, subject to certain adjustments. In connection with exercising the capped calls, we may elect that the capped calls be settled either entirely in cash or a combination of our common stock and cash. The capped calls are separate transactions from the 2030 Notes, and holders of the 2030 Notes do not have any rights with respect to the capped calls. The capped calls cover shares of our common stock underlying the 2030 Notes, subject to anti-dilution adjustments substantially similar to those applicable to the 2030 Notes. In April 2026, we elected to terminate portions of the capped calls in exchange for $ 10 million in cash in connection with the $ 153 million in aggregate principal amount of the 2030 Notes surrendered by certain holders during the make-whole conversion period. As of April 30, 2026, the fair value of the outstanding capped calls was $ 94 million, determined using the Black-Scholes option pricing model and observable inputs including price of our common stock, volatility, remaining contractual term, and risk-free interest rate. For the three and nine months ended April 30, 2026, change in fair value of capped calls was a loss of $ 1 million. - 20 - Table of Contents Revolving Credit Facility On April 13, 2023, we entered into a credit agreement (the “Credit Agreement”) with certain institutional lenders 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 Credit Facility matures on April 13, 2028. The borrowings under the Credit Facility bear interest, at our option, at a base rate plus a spread of 0.000 % to 0.375 %, or an adjusted term Secured Overnight Financing Rate plus a spread of 1.000 % to 1.375 %, in each case with such spread being determined based on our leverage ratio. We are obligated to pay an ongoing commitment fee on undrawn amounts at a rate of 0.090 % to 0.150 %, depending on our leverage ratio. The interest rates and commitment fees are also subject to upward and downward adjustments based on our progress towards the achievement of certain sustainability goals. As of April 30, 2026, there were no amounts outstanding and we were in compliance with all covenants under the Credit Agreement. 10. Leases In April 2026, we entered into three lease amendments to extend the lease terms of our current corporate headquarters in Santa Clara, California for a period of twelve years through July 2040. The leases contain rent holiday periods, scheduled rent increases, lease incentives, and renewal options which allow the lease terms to be extended through July 2052. Lease payments under the three lease amendments, net of lease incentives such as rent holidays and tenant improvement allowances, are approximately $ 469 million over the extended lease term through July 2040. The amendments resulted in an increase of $ 262 million in our right-of-use assets in exchange for new operating lease liabilities. 11. Commitments and Contingencies Purchase Commitments We have entered into various non-cancelable agreements with cloud hosting service providers, under which we are committed to minimum or fixed purchases of certain cloud hosting services. In addition, in order to reduce manufacturing lead times and plan for adequate supply, we have entered into agreements with manufacturing partners and component suppliers to procure inventory based on our demand forecasts. Other purchase obligations include non-cancellable subscription agreements and other commitments in the normal course of business. The following table presents details of the aggregate future non-cancelable purchase commitments under these agreements as of April 30, 2026 (in millions): Fiscal years ending July 31, Total Remaining 2026 2027 2028 2029 2030 2031 and Thereafter Cloud $ 8,092 $ — $ 449 $ 1,295 $ 1,352 $ 1,398 $ 3,598 Manufacturing 246 94 152 — — — — Other 191 42 109 21 10 9 — Total $ 8,529 $ 136 $ 710 $ 1,316 $ 1,362 $ 1,407 $ 3,598 Additionally, we have a $ 92 million minimum purchase commitment with a cloud hosting service provider through September 2027 with no specified annual commitments. Litigation We are subject to legal proceedings, claims, tax matters, and litigation arising in the ordinary course of business, including, for instance, intellectual property and patent litigation. We accrue for contingencies when we believe that a loss is probable and that we can reasonably estimate the amount of any such loss. Legal matters could include speculative, substantial, or indeterminate monetary amounts. Significant judgment is required to determine both the likelihood of there being a loss and the estimated amount of a loss related to such matters, and we may be unable to estimate the reasonably possible loss or range of loss. The outcomes of outstanding legal matters are inherently unpredictable, and could, either individually or in aggregate, have a material adverse effect on us and our results of operations. To the extent there is a reasonable possibility that a loss exceeding any amounts already recognized may be incurred, we will either disclose the estimated additional loss or state that such an estimate cannot be made. - 21 - Table of Contents The following matters arose in the ordinary course of business. Centripetal Networks, Inc. v. Palo Alto Networks On March 12, 2021, Centripetal Networks, Inc., filed a lawsuit against us in the United States District Court for the Eastern District of Virginia. The lawsuit alleges that our products infringe multiple Centripetal patents. We successfully challenged certain of these patents, which were found unpatentable by the U.S. Patent and Trademark Office (“PTO”). The case went to jury trial on January 22, 2024, on four patents. On January 31, 2024, the jury returned a verdict of non-willful infringement with a lump sum amount of $ 152 million, plus statutory interest. After post-trial motions, a judgment was issued on October 3, 2024 affirming infringement on three patents, reversing infringement on the fourth patent, and subsequently, reducing the damages amount to $ 114 million. We posted a surety bond that was agreed upon by the parties and approved by the court. This bond prevents execution of the judgment while appeals are pending. In addition, Centripetal filed infringement contentions on certain of their patents in the European Patent Office and Unified Patent Court in Germany, to which we filed appropriate legal challenges. Those matters are still pending. As of April 30, 2026 and July 31, 2025, we accrued $ 150 million and $ 146 million based on the judgment and estimated interest, which is recorded in other long-term liabilities on our condensed consolidated balance sheets. The corresponding interest charge was $ 1 million and $ 4 million for the three and nine months ended April 30, 2026, respectively. We recorded a charge of $ 2 million and a release of $ 40 million for the three and nine months ended April 30, 2025, respectively. These amounts are included in general and administrative expense on our condensed consolidated statements of operations. Finjan, Inc. v. Palo Alto Networks On November 4, 2014, Finjan, Inc., filed a lawsuit against us in the United States District Court for the Northern District of California. The lawsuit alleges that our products infringe multiple Finjan patents. The complaint requests injunctive relief, monetary damages, and attorneys’ fees. On March 21, 2025, the judge issued an order granting summary judgment of non-infringement on all remaining patents at issue. Plaintiff filed a Notice of Appeal on April 21, 2025. We are unable, at this time, to reasonably estimate a possible loss or potential range of loss, if any. Eire OG Innovations. v. Palo Alto Networks On April 3, 2024, Eire OG Innovations filed a lawsuit against us in the United States District Court for the Eastern District of Texas asserting infringement of multiple patents, certain of which were subsequently dismissed. The parties have resolved all pending matters between them as of December 2025. The amount paid by us to resolve these matters was not material. 12. Stockholders’ Equity Share Repurchase Program In February 2019, our board of directors authorized a $ 1.0 billion share repurchase program, which is funded from available working capital. Our board of directors subsequently authorized additional increases to this share repurchase program, bringing the total authorization to $ 4.1 billion. On March 10, 2026, our board of directors authorized an additional $ 1.0 billion increase to our share repurchase program, bringing the total authorization under this share repurchase program to $ 5.1 billion (our “current authorization”). The expiration date of our current authorization was extended to December 31, 2026, and our repurchase program may be suspended or discontinued at any time. Repurchases may be made at management’s discretion from time to time on the open market, through privately negotiated transactions, transactions structured through investment banking institutions, block purchase techniques, 10b5-1 trading plans, or a combination of the foregoing. During the three and nine months ended April 30, 2026, we repurchased and retired 7 million shares of our common stock under our current repurchase authorization for an aggregate purchase price of $ 1.0 billion, including transaction costs, at an average price of $ 147.70 per share. The total price of the shares repurchased and related transaction costs are reflected as a reduction to common stock and additional paid-in capital on our condensed consolidated balance sheets. We did not repurchase shares of our common stock during the three and nine months ended April 30, 2025. As of April 30, 2026, $ 1.0 billion remained available for future share repurchases under our current repurchase authorization. - 22 - Table of Contents 13. Equity Award Plans Restricted Stock Unit (“RSU”) and Performance-Based Stock Unit (“PSU”) Activities The following table summarizes the RSU and PSU activity under our stock plans during the nine months ended April 30, 2026 (in millions, except per share amounts): Unvested RSUs Unvested PSUs Number of Shares Weighted-Average Grant-Date Fair Value Per Share Aggregate Intrinsic Value Number of Shares Weighted-Average Grant-Date Fair Value Per Share Aggregate Intrinsic Value Balance—July 31, 2025 13 $ 143.33 $ 2,285 9 $ 140.92 $ 1,635 Granted (1)(2) 14 $ 178.55 4 $ 186.49 Vested (3) ( 6 ) $ 140.04 ( 3 ) $ 150.47 Forfeited ( 2 ) $ 153.49 ( 2 ) $ 142.73 Balance—April 30, 2026 19 $ 169.21 $ 3,450 8 $ 156.51 $ 1,461 (1) For PSUs, shares granted represent the aggregate maximum number of shares that may be earned and issued with respect to these awards over their full terms. (2) Includes 7 million RSUs assumed in connection with the acquisitions of Chronosphere, CyberArk, and Koi, with weighted-average grant-date fair value of $ 176.20 , $ 165.30 , and $ 161.59 per share, respectively, for the nine months ended April 30, 2026. (3) Includes time-based vesting for PSUs. Our RSUs generally vest over a period of four years from the date of grant. Until vested, RSUs do not have the voting and dividend participation rights of common stock and the shares underlying the awards are not considered issued and outstanding. Our PSUs generally vest over a period of one to four years from the date of grant. The number of PSUs eligible to vest is determined based on the level of achievement against certain performance conditions, market conditions, and a combination thereof. During the nine months ended April 30, 2026, we granted 3 million shares of PSUs that contain service, performance, and market conditions. The service conditions are satisfied after a period of one to three years . The performance conditions are based on an average of next-generation security annualized recurring revenue and non-GAAP net income per diluted share, subject to certain adjustments. The market condition is measured based on our total shareholder return (“TSR”) relative to the TSR of the companies listed in the Standard & Poor’s 500 index. As of April 30, 2026, we have approved 3 million shares of PSUs, which will be granted upon the performance condition being established during the next two fiscal years. The fair value of the PSUs subject to market conditions is estimated on the grant date using a Monte Carlo simulation model. The following table summarizes the assumptions used and the resulting grant-date fair value of our PSUs subject to market conditions granted during the nine months ended April 30, 2026 and 2025: Nine Months Ended April 30, 2026 2025 Volatility 36.6 % - 42.6 % 43.5 % - 47.6 % Expected term (in years) 1.0 - 3.0 1.0 - 2.9 Dividend yield 0.0 % 0.0 % Risk-free interest rate 3.6 % - 3.9 % 3.7 % - 4.5 % Grant-date fair value per share $ 226.06 - $ 261.62 $ 264.51 - $ 305.83 Performance Stock Option (“PSO”) Activities We have granted PSOs with both service and market conditions. The market conditions were achieved when certain stock price targets were met. As of April 30, 2026 and July 31, 2025, all of our outstanding PSOs have been fully vested. The maximum contractual term of our outstanding PSOs is seven and a half years from the date of grant in fiscal year 2018 and 2019. - 23 - Table of Contents The following table summarizes the PSO activity under our stock plans during the nine months ended April 30, 2026 (in millions, except per share amounts): Number of Shares Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Balance—July 31, 2025 1 $ 32.76 0.5 $ 197 Exercised ( 1 ) $ 32.76 Balance—April 30, 2026 — $ — 0.0 $ — Exercisable—April 30, 2026 — $ — 0.0 $ — Share-Based Compensation The following table summarizes share-based compensation included in costs and expenses (in millions): Three Months Ended April 30, Nine Months Ended April 30, 2026 2025 2026 2025 Cost of product revenue $ 2 $ 1 $ 4 $ 4 Cost of subscription and support revenue 50 32 114 95 Research and development 206 134 477 411 Sales and marketing 188 92 388 258 General and administrative 238 67 372 173 Total share-based compensation $ 684 $ 326 $ 1,355 $ 941 During the three and nine months ended April 30, 2026, the vesting of certain equity awards was accelerated in connection with our acquisitions of CyberArk and Koi; as a result, we recorded share-based compensation of $ 177 million, including $ 1 million in cost of subscription and support revenue, $ 36 million in sales and marketing expense, and $ 140 million in general and administrative expense on our condensed consolidated statements of operations. As of April 30, 2026, total compensation cost related to unvested share-based awards not yet recognized was $ 3.6 billion. This cost is expected to be amortized over a weighted-average period of approximately 2.6 years. 14. Income Taxes Our income taxes primarily consist of U.S. and foreign income taxes and our effective tax rates differ from the U.S. statutory tax rate primarily due to our CyberArk acquisition and excess tax benefits from share-based compensation. For the three months ended April 30, 2026, our provision for income taxes reflected an effective tax rate of negative 13.5 % and for the nine months ended April 30, 2026, our provision for income taxes reflected an effective tax rate of 26.8 %. For the three and nine months ended April 30, 2025, our provision for income taxes reflected effective tax rates of 15.6 % and 12.3 %, respectively. Our effective tax rates for the three and nine months ended April 30, 2026 were impacted by our CyberArk acquisition and decreased excess tax benefits from share-based compensation as compared to the same periods in 2025. 15. Net Income (Loss) Per Share Basic net income (loss) per share is computed by dividing net income (loss) by basic weighted-average shares outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) by diluted weighted-average shares outstanding during the period giving effect to all potentially dilutive securities to the extent they are dilutive. We compute the dilutive effect of shares issuable upon conversion of our convertible senior notes using the if-converted method, and the dilutive effect of warrants related to the issuance of convertible senior notes and equity awards under our employee equity incentive plans using the treasury stock method. - 24 - Table of Contents The following table presents the computation of basic and diluted net income (loss) per share of common stock (in millions, except per share data): Three Months Ended April 30, Nine Months Ended April 30, 2026 2025 2026 2025 Net income (loss) $ ( 177 ) $ 262 $ 589 $ 880 Weighted-average shares used to compute net income (loss) per share, basic 801 665 729 659 Weighted-average effect of potentially dilutive securities: Convertible senior notes — 6 — 9 Warrants related to the issuance of convertible senior notes — 25 8 25 Employee equity incentive plans — 11 7 15 Weighted-average shares used to compute net income (loss) per share, diluted 801 707 744 708 Net income (loss) per share, basic $ ( 0.22 ) $ 0.39 $ 0.81 $ 1.33 Net income (loss) per share, diluted $ ( 0.22 ) $ 0.37 $ 0.79 $ 1.24 The following securities were excluded from the computation of diluted net income (loss) per share of common stock as their effect would have been antidilutive or issuance of such shares is contingent upon the satisfaction of certain conditions which were not satisfied by the end of the applicable period (in millions): Three Months Ended April 30, Nine Months Ended April 30, 2026 2025 2026 2025 Employee equity incentive plans 30 4 6 5 Our 2030 Notes and capped calls were also excluded from the calculation of diluted net income (loss) per share as the effect would have been antidilutive. 16. Other Income, Net The following table sets forth the components of other income, net (in millions): Three Months Ended April 30, Nine Months Ended April 30, 2026 2025 2026 2025 Interest income $ 71 $ 93 $ 285 $ 266 Foreign currency exchange gains (losses), net ( 14 ) ( 8 ) ( 41 ) ( 14 ) Change in fair value of convertible senior notes ( 37 ) — ( 37 ) — Change in fair value of capped calls ( 1 ) — ( 1 ) — Other, net 8 8 76 9 Total other income, net $ 27 $ 93 $ 282 $ 261 17. Subsequent Events Portkey, Inc. On May 29, 2026, we completed the acquisition of Portkey. This acquisition will be accounted for as a business combination in the fourth quarter of fiscal 2026. - 25 - Table of Contents Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. This Quarterly Report on Form 10-Q, including, without limitation, the following discussion and analysis, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements generally can be identified by words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potentially,” “projects,” “will,” “will be,” “will continue,” “will likely result,” “would” and similar expressions that convey uncertainty of future events or outcomes. These forward-looking statements include, but are not limited to, statements concerning the following: expectations regarding the cybersecurity landscape; expectations regarding our platformization strategy and related progress and opportunities; expectations regarding annual recurring revenue, remaining performance obligations, and product development strategy; expectations regarding artificial intelligence; expectations regarding our strategic partnerships; expectations regarding drivers of and factors affecting growth in our business; statements regarding expected profitability, trends in annual recurring revenue, trends in remaining performance obligations, our mix of product and subscription and support revenue, cost of revenue, gross margin, cash flows, operating expenses, including future share-based compensation expense, income taxes, investment plans, and liquidity; expected recurring revenues resulting from growth in our end-customers and increased adoption of our products and cloud-delivered security solutions; the performance advantages of our products and subscription and support offerings and the potential benefits to our customers; expectations regarding future investments in research and development and product development, customer support, in our employees and in our sales force, including expectations regarding growth in our sales headcount; expectations that we will continue to expand our global presence; expectations regarding our revenues, including the seasonality and cyclicality from quarter to quarter; expectations relating to our customer financing activities; 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; 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; 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, 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. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially from those anticipated or implied by any forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this Quarterly Report on Form 10-Q and, in particular, the risks discussed under the caption “Risk Factors” in Part II, Item 1A of this report and those discussed in other documents we file with the Securities and Exchange Commission (“SEC”) from time to time. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is organized as follows: • Overview. A discussion of our business and overall analysis of financial and other highlights in order to provide context for the remainder of MD&A. • Key Financial Metrics. A summary of our U.S. GAAP and non-GAAP key financial metrics, which management monitors to evaluate our performance. • 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 nine months ended April 30, 2026 to the three and nine months ended April 30, 2025. • Liquidity and Capital Resources. An analysis of changes on our balance sheets and cash flows, and a discussion of our financial condition and our ability to meet cash needs. • Critical Accounting Estimates. A discussion of our accounting policies that require critical estimates, assumptions, and judgments. • Recent Accounting Pronouncements. A discussion of expected impacts of impending accounting changes on financial information to be reported in the future. - 26 - Table of Contents Overview 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, 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. We execute on this strategy by developing our capabilities and packaging our offerings into platforms which are able to cover many of our customers’ needs in the markets in which we operate. Our platformization strategy combines various products and services into a tightly integrated architecture for more secure, faster and cost-effective outcomes. Network Security Our network security platform is designed to deliver complete zero trust solutions to our customers. The platform includes: • 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 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. • Next-Generation Firewalls. Our hardware ML-Powered Next-Generation Firewalls (“NGFWs”) secure on-premises environments including campus locations and data centers. Our software NGFWs secure cloud networks. • Cloud-Delivered Security Services (“CDSS”). Our network security platform integrates a suite of CDSS that complements our SASE and Firewall solutions. These include Advanced Threat Prevention, Advanced WildFire ® , Advanced URL Filtering, Advanced DNS Security, Device Security, GlobalProtect ® , Prisma Access Agent, Enterprise Data Loss Prevention (“Enterprise DLP”), AI for IT Operations (“AIOps”), Software as a Service (“SaaS”) Security, and AI Access Security. Through these add-on services, our customers are able to secure their content, applications, users, and devices across their entire organization. • Prisma AIRS. 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”). SCM, our network security management solution, centrally manages network security across all remote workers, branches, headquarters, campuses, and cloud. This comprehensive solution includes Strata Copilot, which offers a natural language interface for enhanced insights and guided remediation, and integrates Autonomous Digital Experience Monitoring (“ADEM”) to proactively maintain infrastructure health, facilitate AI-driven one-click troubleshooting, and ensure seamless end-user performance across the enterprise. Security Operations Our AI-powered Cortex platform transforms end-to-end security operations with unified data, AI, and automation for more secure, faster, and cost effective outcomes. We have consolidated our industry-leading Security Operations and Cloud Security capabilities on a single comprehensive platform to provide centralized visibility, proactive protection, real-time prevention, AI-driven insights, and automated remediation across enterprise and cloud. • Security Operations. We deliver the next generation of security operations capabilities that unifies standalone Security Information and Event Management (“SIEM”) tools, endpoint security, security automation, cloud detection and response (“CDR”), as well as attack surface management (“ASM”) capabilities on our Cortex ® platform. These include Cortex XSIAM ® , for AI-powered security operations replacing traditional SIEM tools; Cortex XDR ® , for the prevention, detection, and response to complex cybersecurity attacks; Cortex XSOAR ® , for security orchestration, automation, and response (“SOAR”); 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. • Cloud Security. We deliver comprehensive security across the cloud application development lifecycle through Cortex Cloud, delivered as a scalable SaaS offering. As a comprehensive Cloud Native Application Protection Platform (“CNAPP”) combined with CDR, Cortex Cloud secures multi- and hybrid-cloud environments for applications, data, generative AI (“GenAI”) ecosystem, and the cloud native technology stack across the full development lifecycle, from code to cloud to security operations. As part of the Cortex Cloud platform, customers can expand from Cortex Cloud to our security operations offerings available on a single user experience and unified agent. We also offer our VM-Series and CN-Series virtual firewalls for inline network security on multi- and hybrid-cloud environments. - 27 - Table of Contents Observability Chronosphere, our next-generation observability platform, delivers real-time visibility and monitoring across cloud-native infrastructure, applications, and AI workloads. Purpose-built to handle the massive data volumes of the AI era, Chronosphere enables organizations to maintain system resilience and uptime with high cost-efficiency and reliability. • Chronosphere Platform. Our observability platform provides comprehensive visibility into complex digital environments and automated troubleshooting of issues. It allows customers to transition from passive monitoring to proactive management of their entire digital estate. • Chronosphere Telemetry Pipeline. Our telemetry pipeline acts as an intelligent control layer that filters, transforms, and routes data. 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 • Unit 42 brings together world-renowned expertise across threat research, incident response, and security consulting to deliver intelligence-driven, response-ready outcomes that help customers reduce cyber risk. Our elite consultants serve as trusted advisors to our customers by assessing and testing their security controls against sophisticated threats, transforming their security strategy with a threat-informed approach, and responding to security incidents on behalf of our clients. Additionally, Unit 42 offers managed detection and response (“MDR”) and managed threat hunting services. 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 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. We maintain a field sales force that works closely with our channel partners in developing sales opportunities. 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. - 28 - Table of Contents 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. Our hardware products and software licenses include a broad set of built-in networking and security features and functionalities. Our products are designed for different performance requirements throughout an organization, ranging from our PA-400, which is designed for small organizations and remote or branch offices, to our top-of-the-line PA-7500, which is designed for large-scale data centers and service provider use. 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 $2.4 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. Our subscriptions also include security operations, which enable customers to leverage the AI-powered Cortex platform for advanced capabilities such as security information and event management, next-generation antivirus, endpoint detection and response, extended detection and response, identity threat detection and response, cloud detection and response, SOAR, ASM, and CNAPP for comprehensive cloud security. In connection with our acquisition of Chronosphere, Inc. (“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. When customers purchase our physical, virtual, or container firewalls, or certain cloud offerings, they typically purchase support in order to receive ongoing security updates, upgrades, bug fixes, and repairs. 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, 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. 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. To manage any future growth effectively, we must continue to improve and expand our information technology and financial infrastructure, our operating and administrative systems and controls, and our ability to manage headcount, capital, and processes in an efficient manner. While these areas present significant opportunities for us, they also pose challenges and risks that we must successfully address in order to sustain the growth of our business and improve our operating results. For additional information regarding the challenges and risks we face, see the “Risk Factors” section in Part II, Item 1A of this Quarterly Report on Form 10-Q. IMPACT OF MACROECONOMIC DEVELOPMENTS AND OTHER FACTORS ON OUR BUSINESS Our overall performance depends in part on worldwide economic and geopolitical conditions and their impact on customer behavior. Changes in legislation or regulations and actions by regulators, including changes in enforcement and administration policies, may have an impact on our results of operations and financial condition. Significant changes in U.S. or global trade policy, including further expansion of U.S. 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, 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. We are actively monitoring, evaluating, and responding to the situation. We are also monitoring the impact of inflationary pressures and the tensions between China and Taiwan, and between the U.S. and China, which could have an adverse impact on our business or results of operations in future periods. - 29 - Table of Contents Key Financial Metrics 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 (loss) and margin below under “Results of Operations.” April 30, 2026 July 31, 2025 (in billions) Next-Generation Security Annualized Recurring Revenue $ 8.1 $ 5.6 Remaining performance obligations $ 18.4 $ 15.8 Three Months Ended April 30, Nine Months Ended April 30, 2026 2025 2026 2025 (dollars in millions) Total revenue $ 3,002 $ 2,289 $ 8,070 $ 6,685 Total revenue year-over-year percentage increase 31 % 15 % 21 % 15 % Gross margin 67.6 % 72.9 % 71.5 % 73.5 % Operating income (loss) $ (183) $ 219 $ 523 $ 746 Operating margin (6.1) % 9.6 % 6.5 % 11.2 % Cash flow provided by operating activities $ 3,196 $ 2,695 Free cash flow (non-GAAP) $ 2,859 $ 2,535 • Next-Generation Security Annualized Recurring Revenue (“NGS ARR”). Our NGS ARR represents the annualized allocated revenue of all active contracts as of the final day of the reporting period related to all product, subscription and support offerings, excluding revenue from hardware products, and legacy attached subscriptions, support offerings and professional services. NGS ARR is an operating metric that we use to assess the strength and trajectory of our business. NGS ARR should be viewed independently of revenue, deferred revenue and remaining performance obligations and does not represent our revenue under U.S. GAAP on an annualized basis, as it is an operating metric that can be impacted by contract start and end dates and renewal rates. NGS ARR is not intended to be a replacement for forecasts of revenue. The scope of products, subscriptions, and support offerings that contribute to NGS ARR will generally increase over time as we introduce or acquire new next-generation products, subscriptions, and support offerings. • Cash Flow Provided by Operating Activities. We monitor cash flow provided by operating activities as a measure of our overall business performance. Our cash flow provided by operating activities is driven in large part by sales of our products and from up-front payments for subscription and support offerings. Monitoring cash flow provided by operating activities enables us to analyze our financial performance without the non-cash effects of certain items such as share-based compensation costs, depreciation, and amortization, thereby allowing us to better understand and manage the cash needs of our business. - 30 - Table of Contents • Free Cash Flow (non-GAAP). We define free cash flow, a non-GAAP financial measure, as cash provided by operating activities less purchases of property, equipment, and other assets. We consider free cash flow to be an operating metric as well as a profitability and liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after necessary capital expenditures. A limitation of the utility of free cash flow as a measure of our financial performance and liquidity is that it does not represent the total increase or decrease in our cash balance for the period. In addition, it is important to note that other companies, including companies in our industry, may not use free cash flow, may calculate free cash flow in a different manner than we do, or may use other financial measures to evaluate their performance, all of which could reduce the usefulness of free cash flow as a comparative measure. A reconciliation of free cash flow to cash flow provided by operating activities, the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP, is provided below: Nine Months Ended April 30, 2026 2025 (in millions) Free cash flow (non-GAAP): Net cash provided by operating activities $ 3,196 $ 2,695 Less: purchases of property, equipment, and other assets 337 160 Free cash flow (non-GAAP) $ 2,859 $ 2,535 Net cash used in investing activities $ (2,098) $ (1,442) Net cash used in financing activities $ (1,005) $ (405) - 31 - Table of Contents Results of Operations The following table summarizes our results of operations for the periods presented and as a percentage of our total revenue for those periods based on our condensed consolidated statements of operations data. The period-to-period comparison of results is not necessarily indicative of results for future periods. Three Months Ended April 30, Nine Months Ended April 30, 2026 2025 2026 2025 Amount % of Revenue Amount % of Revenue Amount % of Revenue Amount % of Revenue (dollars in millions) Revenue: Product $ 594 19.8 % $ 453 19.8 % $ 1,542 19.1 % $ 1,228 18.4 % Subscription and support 2,408 80.2 % 1,836 80.2 % 6,528 80.9 % 5,457 81.6 % Total revenue 3,002 100.0 % 2,289 100.0 % 8,070 100.0 % 6,685 100.0 % Cost of revenue: Product 167 5.6 % 101 4.4 % 371 4.6 % 277 4.1 % Subscription and support 807 26.8 % 518 22.7 % 1,926 23.9 % 1,495 22.4 % Total cost of revenue (1) 974 32.4 % 619 27.1 % 2,297 28.5 % 1,772 26.5 % Total gross profit 2,028 67.6 % 1,670 72.9 % 5,773 71.5 % 4,913 73.5 % Operating expenses: Research and development 734 24.5 % 494 21.6 % 1,773 22.0 % 1,480 22.1 % Sales and marketing 1,161 38.7 % 793 34.5 % 2,804 34.7 % 2,271 34.0 % General and administrative 316 10.5 % 164 7.2 % 673 8.3 % 416 6.2 % Total operating expenses (1) 2,211 73.7 % 1,451 63.3 % 5,250 65.0 % 4,167 62.3 % 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 (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 (loss) $ (177) (5.9) % $ 262 11.5 % $ 589 7.3 % $ 880 13.2 % (1) Includes share-based compensation as follows: Three Months Ended April 30, Nine Months Ended April 30, 2026 2025 2026 2025 (in millions) Cost of product revenue $ 2 $ 1 $ 4 $ 4 Cost of subscription and support revenue 50 32 114 95 Research and development 206 134 477 411 Sales and marketing 188 92 388 258 General and administrative 238 67 372 173 Total share-based compensation $ 684 $ 326 $ 1,355 $ 941 - 32 - Table of Contents 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. REVENUE 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 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, 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. We recognize product revenue at the time of hardware shipment or delivery of software license. 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 April 30, Nine Months Ended April 30, 2026 2025 Change 2026 2025 Change Amount Amount Amount % Amount Amount Amount % (dollars in millions) Product $ 594 $ 453 $ 141 31 % $ 1,542 $ 1,228 $ 314 26 % 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 Subscription and support revenue is derived primarily from sales of our subscription and support offerings. Our subscription and support contracts are typically one to five years. We recognize revenue from subscriptions and support over time as the services are performed. 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 April 30, Nine Months Ended April 30, 2026 2025 Change 2026 2025 Change Amount Amount Amount % Amount Amount Amount % (dollars in millions) Subscription $ 1,632 $ 1,234 $ 398 32 % $ 4,400 $ 3,659 $ 741 20 % Support 776 602 174 29 % 2,128 1,798 330 18 % Total subscription and support $ 2,408 $ 1,836 $ 572 31 % $ 6,528 $ 5,457 $ 1,071 20 % - 33 - Table of Contents 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 April 30, Nine Months Ended April 30, 2026 2025 Change 2026 2025 Change Amount Amount Amount % Amount Amount Amount % (dollars in millions) Americas $ 2,018 $ 1,530 $ 488 32 % $ 5,371 $ 4,474 $ 897 20 % Europe, the Middle East, and Africa (“EMEA”) 633 480 153 32 % 1,714 1,402 312 22 % 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 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 Our cost of revenue consists of cost of product revenue and cost of subscription and support revenue. COST OF PRODUCT REVENUE 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 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 April 30, Nine Months Ended April 30, 2026 2025 Change 2026 2025 Change Amount Amount Amount % Amount Amount Amount % (dollars in millions) Cost of product revenue $ 167 $ 101 $ 66 65 % $ 371 $ 277 $ 94 34 % 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. - 34 - Table of Contents 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 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 April 30, Nine Months Ended April 30, 2026 2025 Change 2026 2025 Change Amount Amount Amount % Amount Amount Amount % (dollars in millions) 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 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 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. Our higher-end firewall products generally have higher gross margins than our lower-end firewall products within each product series. We expect our gross margins to vary over time depending on the factors described above. Three Months Ended April 30, Nine Months Ended April 30, 2026 2025 2026 2025 Amount Gross Margin Amount Gross Margin Amount Gross Margin Amount Gross Margin (dollars in millions) Product $ 427 71.9 % $ 352 77.8 % $ 1,171 75.9 % $ 951 77.4 % Subscription and support 1,601 66.5 % 1,318 71.8 % 4,602 70.5 % 3,962 72.6 % Total gross profit $ 2,028 67.6 % $ 1,670 72.9 % $ 5,773 71.5 % $ 4,913 73.5 % 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. - 35 - Table of Contents OPERATING EXPENSES Our operating expenses consist of research and development, sales and marketing, and general and administrative expenses. Personnel costs are the most significant component of operating expenses and consist of salaries, benefits, bonuses, share-based compensation, travel and entertainment, and with regard to sales and marketing expense, sales commissions. Our operating expenses also include shared costs, which consist of certain facilities, depreciation, benefits, recruiting, and information technology costs that we allocate based on headcount to each department. 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 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. RESEARCH AND DEVELOPMENT Research and development expense consists primarily of personnel costs. Research and development expense also includes prototype-related expenses and shared costs. 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 April 30, Nine Months Ended April 30, 2026 2025 Change 2026 2025 Change Amount Amount Amount % Amount Amount Amount % (dollars in millions) Research and development $ 734 $ 494 $ 240 49 % $ 1,773 $ 1,480 $ 293 20 % 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, 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 April 30, Nine Months Ended April 30, 2026 2025 Change 2026 2025 Change Amount Amount Amount % Amount Amount Amount % (dollars in millions) Sales and marketing $ 1,161 $ 793 $ 368 46 % $ 2,804 $ 2,271 $ 533 23 % 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. - 36 - Table of Contents GENERAL AND ADMINISTRATIVE General and administrative expense consists primarily of personnel costs and shared costs for our executive, finance, human resources, information technology, and legal organizations, and professional services costs, which consist primarily of legal, auditing, accounting, and other consulting costs. General and administrative expense also includes change in fair value of contingent consideration liability. 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 Amount Amount Amount % Amount Amount Amount % (dollars in millions) General and administrative $ 316 $ 164 $ 152 93 % $ 673 $ 416 $ 257 62 % 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 April 30, Nine Months Ended April 30, 2026 2025 Change 2026 2025 Change Amount Amount Amount % Amount Amount Amount % (dollars in millions) Interest expense $ — $ 1 $ (1) (100) % $ — $ 3 $ (3) (100) % 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. Debt in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information on the Notes. - 37 - Table of Contents OTHER INCOME, NET 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 Amount Amount Amount % Amount Amount Amount % (dollars in millions) Other income, net $ 27 $ 93 $ (66) (71) % $ 282 $ 261 $ 21 8 % 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 Provision for income taxes consists primarily of U.S. and foreign income taxes. 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 April 30, Nine Months Ended April 30, 2026 2025 Change 2026 2025 Change Amount Amount Amount % Amount Amount Amount % (dollars in millions) Provision for income taxes $ 21 $ 49 $ (28) (57) % $ 216 $ 124 $ 92 74 % Effective tax rate (13.5) % 15.6 % 26.8 % 12.3 % 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. - 38 - Table of Contents Liquidity and Capital Resources April 30, 2026 July 31, 2025 (in millions) Working capital (deficit) $ (1,293) $ (465) Cash, cash equivalents, and investments: Cash and cash equivalents $ 2,364 $ 2,269 Investments 4,628 6,190 Total cash, cash equivalents, and investments $ 6,992 $ 8,459 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. DEBT 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 April 30, 2026, there were no amounts outstanding, and we were in compliance with all covenants under the Credit Agreement. Refer to Note 9. Debt in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information on the Credit Agreement. CAPITAL RETURN In February 2019, our board of directors authorized a $1.0 billion share repurchase program. Our board of directors subsequently authorized additional increases to this share repurchase program, bringing the total authorization to $5.1 billion. Repurchases will be funded from available working capital and may be made at management’s discretion from time to time. 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. Refer to Note 12. Stockholders’ Equity in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information on this repurchase program. - 39 - Table of Contents 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 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. Commitments and Contingencies in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information on these commitments. 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 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. CASH FLOWS The following table summarizes our cash flows for the nine months ended April 30, 2026 and 2025: Nine Months Ended April 30, 2026 2025 (in millions) Net cash provided by operating activities $ 3,196 $ 2,695 Net cash used in investing activities (2,098) (1,442) 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 Cash from operations could be affected by various risks and uncertainties detailed in Part II, Item 1A “Risk Factors” in this Quarterly Report on Form 10-Q. We believe that our cash flow from operations with existing cash and cash equivalents will be sufficient to meet our anticipated cash needs for at least the next 12 months and thereafter for the foreseeable future. Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of spending to support development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced products and subscription and support offerings, the costs to acquire or invest in complementary businesses and technologies, the costs to ensure access to adequate manufacturing capacity, the investments in our infrastructure to support the adoption of our cloud-based subscription offerings, the continuing market acceptance of our products and subscription and support offerings and macroeconomic events. In addition, from time to time, we may incur additional tax liability in connection with certain corporate structuring decisions. We may also choose to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, operating results, and financial condition may be adversely affected. OPERATING ACTIVITIES Our operating activities have consisted of net income adjusted for certain non-cash items and changes in assets and liabilities. Our largest source of cash provided by our operations is receipts from our customers. 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 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. - 40 - Table of Contents