S 10-Q
SentinelOne, Inc. (S)
10-Q
2026-08-28
For: 2026-07-31
View Original
Added on
August 29, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One) | |||||
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended July 31, 2026
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from to
Commission file number 001-40531
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
(Address of Principal Executive Offices) | (Zip Code) | |||||||
(Registrant's telephone number, including area code) | ||||||||
Not Applicable | ||||||||
(Former name, former address and former fiscal year, if changed since last report) | ||||||||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
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 and posted 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.
☒ | Accelerated filer | ☐ | |||||||||
Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
Emerging growth 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 ☒
As of August 21, 2026, the registrant had 342,184,493 shares of Class A common stock and 5,864,624 shares of Class B common stock outstanding.
| TABLE OF CONTENTS | |||||
| Page | |||||
Special Note About Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), about us and our industry that involve substantial risks and uncertainties. All statements contained in this Quarterly Report on Form 10-Q, other than statements of historical fact, including statements regarding our future operating results and financial condition, our business strategy and plans, market growth, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “target,” “plan,” “expect,” or the negative of these words and similar expressions are intended to identify forward-looking statements.
Forward-looking statements include, but are not limited to, statements about:
•our future financial performance, including our expectations regarding our total revenue, cost of revenue, gross profit or gross margin, operating expenses, including changes in operating expenses and our ability to achieve and maintain future profitability;
•the global political, economic, and macroeconomic climate, whether in the cybersecurity industry in general, or among specific types of customers or within particular geographies, including but not limited to, the changes in U.S. federal spending, government shutdowns, significant political or regulatory developments including changes in trade policy, actual or perceived instability in the banking industry, supply chain disruptions, a potential recession, inflation, and interest rate volatility;
•the impact of natural or man-made global events on our business, including wars and other regional geopolitical conflicts around the world (including but not limited to the conflict in Iran);
•the impact of actions we are taking to improve operational efficiencies and operating costs, including the restructuring plans we approved in March 2025, July 2025 and May 2026;
•our business plan and our ability to effectively manage our growth;
•our total market opportunity;
•anticipated trends, growth rates, and challenges in our business and in the markets in which we operate;
•our ability to maintain the security and availability of our platform;
•market acceptance of our platform and our ability to increase adoption of our platform;
•beliefs and objectives for future operations;
•our ability to further penetrate our existing customer base and attract, retain, and expand our customer base;
•our ability to timely and effectively scale and adapt our platform;
•future acquisitions or investments in complementary companies, products, services, or technologies and our ability to integrate such acquisitions or investments, including our acquisitions of Prompt Security, Inc. (Prompt) and Observo, Inc. (Observo) in 2025 and our current and contemplated investments in Knight JV, LLC and its affiliated entities in 2026;
•cybersecurity incidents;
•our ability to develop new products and services and bring them to market in a timely manner and make enhancements to our platform;
•the ultimate success of technologies aimed at enhancing our platform, including through artificial intelligence (AI);
•our expectations concerning relationships with third parties;
•our ability to maintain, protect, and enhance our intellectual property;
•our ability to continue to expand internationally;
•the effects of increased competition in our markets and our ability to compete effectively;
•our ability to stay in compliance with laws and regulations that currently apply or become applicable to our business both in the United States (U.S.) and internationally;
•economic and industry trends, projected growth, or trend analysis;
•expenses associated with being a public company; and
•other statements regarding our future operations, financial condition, and prospects and business strategies.
We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.
These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those described in Part II, Item 1A, “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. We undertake no obligation to update publicly any of these forward-looking statements for any reason after the date of this report or to conform these statements to actual results or to changes in our expectations, except as required by law. Our forward-looking statements do not reflect the potential impact of any future acquisitions, partnerships, mergers, dispositions, joint ventures, or investments we may make.
You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed with the SEC as exhibits to this report with the understanding that our actual future results, performance, and events and circumstances may be materially different from what we expect.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
SENTINELONE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) | ||
July 31, | January 31, | ||||||||||
2026 | 2026 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Short-term investments | |||||||||||
Accounts receivable, net | |||||||||||
Deferred contract acquisition costs, current | |||||||||||
Prepaid expenses and other current assets | |||||||||||
Total current assets | |||||||||||
Property and equipment, net | |||||||||||
| Long-term investments | |||||||||||
| Deferred contract acquisition costs, non-current | |||||||||||
| Intangible assets, net | |||||||||||
| Goodwill | |||||||||||
| Other assets | |||||||||||
Total assets | $ | $ | |||||||||
| Liabilities and Stockholders’ Equity | |||||||||||
Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
Accrued payroll and benefits | |||||||||||
Deferred revenue, current | |||||||||||
| Accrued expenses and other current liabilities | |||||||||||
Total current liabilities | |||||||||||
| Deferred revenue, non-current | |||||||||||
| Other liabilities | |||||||||||
Total liabilities | |||||||||||
| Commitments and contingencies (Note 11) | |||||||||||
| Stockholders’ equity: | |||||||||||
Preferred stock, $ | |||||||||||
Class A common stock; $ | |||||||||||
Class B common stock; $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated other comprehensive income | |||||||||||
| Accumulated deficit | ( | ( | |||||||||
| Total stockholders’ equity | |||||||||||
| Total liabilities and stockholders’ equity | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
SENTINELONE, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share data) | ||
Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Revenue | $ | $ | $ | $ | |||||||||||||||||||
| Cost of revenue | |||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
Research and development | |||||||||||||||||||||||
Sales and marketing | |||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||
| Restructuring | |||||||||||||||||||||||
Total operating expenses | |||||||||||||||||||||||
| Loss from operations | ( | ( | ( | ( | |||||||||||||||||||
Interest income, net | |||||||||||||||||||||||
| Other income (expense), net | ( | ( | |||||||||||||||||||||
| Loss before income taxes | ( | ( | ( | ( | |||||||||||||||||||
| Provision for income taxes | |||||||||||||||||||||||
| Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Net loss per share attributable to Class A and Class B common stockholders, basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Weighted-average shares used in computing net loss per share attributable to Class A and Class B common stockholders, basic and diluted | |||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
SENTINELONE, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (in thousands) | ||
Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Other comprehensive loss: | |||||||||||||||||||||||
| Change in unrealized losses on investments | ( | ( | ( | ( | |||||||||||||||||||
Total comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
SENTINELONE, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands, except share data) | ||
Three Months Ended July 31, 2026 | ||||||||||||||||||||||||||||||||||||||
| Class A and Class B Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||||||||||||||||
Balance as of April 30, 2026 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
| Issuance of common stock upon exercise of stock options | — | — | — | |||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units | — | — | — | — | — | |||||||||||||||||||||||||||||||||
| Issuance of common stock under employee purchase plan | — | — | — | |||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||
Balance as of July 31, 2026 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
Three Months Ended July 31, 2025 | ||||||||||||||||||||||||||||||||||||||
| Class A and Class B Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||||||||||||||||
Balance as of April 30, 2025 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
| Issuance of common stock upon exercise of stock options | — | — | — | |||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units | — | — | — | — | — | |||||||||||||||||||||||||||||||||
| Issuance of common stock under employee purchase plan | — | — | — | |||||||||||||||||||||||||||||||||||
| Repurchase of common stock | ( | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||
Balance as of July 31, 2025 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
8
SENTINELONE, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands, except share data) | ||
| Six Months Ended July 31, 2026 | ||||||||||||||||||||||||||||||||||||||
Class A and Class B Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||||||||||||||||
Balance as of January 31, 2026 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
| Issuance of common stock upon exercise of stock options | — | — | — | |||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units and performance stock units | — | — | — | |||||||||||||||||||||||||||||||||||
| Issuance of common stock under employee purchase plan | — | — | — | |||||||||||||||||||||||||||||||||||
Cancellation of common stock in connection with acquisition | ( | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||
| Balance as of July 31, 2026 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
Six Months Ended July 31, 2025 | ||||||||||||||||||||||||||||||||||||||
| Class A and Class B Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||||||||||||||||
| Balance as of January 31, 2025 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
| Issuance of common stock upon exercise of stock options | — | — | — | |||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units and performance stock units | — | — | — | |||||||||||||||||||||||||||||||||||
| Issuance of common stock under employee purchase plan | — | — | — | |||||||||||||||||||||||||||||||||||
| Repurchase of common stock | ( | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||
| Balance as of July 31, 2025 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
9
SENTINELONE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) | ||
Six Months Ended July 31, | |||||||||||
2026 | 2025 | ||||||||||
CASH FLOW FROM OPERATING ACTIVITIES: | |||||||||||
| Net loss | $ | ( | $ | ( | |||||||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Amortization of deferred contract acquisition costs | |||||||||||
Non-cash operating lease costs | |||||||||||
Stock-based compensation expense | |||||||||||
| Change in fair value of derivative instruments and related foreign currency loss on tax liabilities, net | |||||||||||
| Net (gain) loss on strategic investments | ( | ||||||||||
Accretion of discounts, and amortization of premiums on investments, net | ( | ( | |||||||||
| Asset impairment charges | |||||||||||
Other | |||||||||||
| Changes in operating assets and liabilities, net of effects of acquisitions: | |||||||||||
| Accounts receivable | |||||||||||
Prepaid expenses and other assets | ( | ||||||||||
Deferred contract acquisition costs | ( | ( | |||||||||
| Accounts payable | ( | ||||||||||
Accrued expenses and other liabilities | ( | ||||||||||
Accrued payroll and benefits | ( | ||||||||||
| Operating lease liabilities | ( | ( | |||||||||
Deferred revenue | ( | ( | |||||||||
Net cash provided by operating activities | |||||||||||
CASH FLOW FROM INVESTING ACTIVITIES: | |||||||||||
| Purchases of property and equipment | ( | ( | |||||||||
Purchases of intangible assets | ( | ( | |||||||||
Capitalization of internal-use software | ( | ( | |||||||||
Purchases of investments | ( | ( | |||||||||
Proceeds from sales, maturities and return of capital of investments | |||||||||||
Cash paid for acquisitions, net of cash acquired | ( | ||||||||||
Net cash (used in) provided by investing activities | ( | ||||||||||
CASH FLOW FROM FINANCING ACTIVITIES: | |||||||||||
| Repurchases of common stock | ( | ||||||||||
Proceeds from exercise of stock options | |||||||||||
| Proceeds from issuance of common stock under the employee stock purchase plan | |||||||||||
Net cash provided by (used in) financing activities | ( | ||||||||||
NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | |||||||||||
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH–Beginning of period | |||||||||||
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH–End of period | $ | $ | |||||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |||||||||||
| Income taxes paid, net of refunds | $ | $ | |||||||||
| SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | |||||||||||
| Stock-based compensation capitalized as internal-use software | $ | $ | |||||||||
| Property and equipment purchased but not yet paid | $ | $ | |||||||||
| Cancellation of common stock in connection with acquisition | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
10
SENTINELONE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) | ||
1.ORGANIZATION AND DESCRIPTION OF BUSINESS
Business
SentinelOne, Inc. (SentinelOne, the Company, we, our, or us) was incorporated in January 2013 in the State of Delaware. We are a cybersecurity provider that delivers an artificial intelligence-powered platform to enable autonomous cybersecurity defense. Our headquarters is located in Mountain View, California with various other global office locations.
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), and applicable rules and regulations of the Securities and Exchange Commission (SEC), regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026 filed with the SEC on March 19, 2026 (Annual Report).
In management’s opinion, the accompanying unaudited condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, consisting of normal recurring adjustments, necessary to present fairly the results for the interim periods, but are not necessarily indicative of the results to be expected for the full year or any other future interim or annual period.
Principles of Consolidation
The condensed consolidated financial statements include the accounts of SentinelOne and our wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. These estimates are based on management’s knowledge about current events and expectations about actions we may undertake in the future. Actual results could differ from these estimates, and such differences could be material to our condensed consolidated financial statements. There have been no material changes in our use of estimates during the six months ended July 31, 2026, as compared to the use of estimates disclosed in our Annual Report.
Significant Accounting Policies
There have been no material changes to our significant accounting policies as compared to the significant accounting policies described in our Annual Report.
Recently Issued Accounting Pronouncements Not Yet Adopted
In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires additional disclosure in the notes to the financial statements of specified information about certain income statement line items. Additionally, in January 2025, the FASB further issued ASU 2025-01 to clarify the effective date of ASU 2024-03. The ASU is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either prospectively to
11
SENTINELONE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) | ||
financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the financial statements. We are currently evaluating the provisions of this ASU.
In September 2025, the FASB issued ASU No. 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This ASU is intended to simplify the capitalization guidance by removing all references to software development project stages so that the guidance is neutral to different software development methods. The ASU is effective for annual periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. We are currently evaluating the provisions of this ASU.
In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. This ASU provides targeted, narrow-scope improvements to the interim reporting guidance in Topic 270 to clarify application and improve consistency in practice. The amendments do not change the underlying principles of interim reporting. The ASU is effective for annual periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. We are currently evaluating the provisions of this ASU.
In December 2025, the FASB issued ASU No. 2025-12, Codification Improvements. This ASU addresses suggestions received from stakeholders regarding the Accounting Standards Codification and makes other incremental improvements to GAAP. The update represents changes to the Codification that clarify, correct errors in or make other improvements to a variety of topics that are intended to make it easier to understand and apply. The ASU is effective for annual periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with early adoption permitted. We are currently evaluating the provisions of this ASU.
Recently Adopted Accounting Pronouncements
In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (Subtopic 326-20): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This ASU provides a practical expedient for entities when estimating expected credit losses on current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606. We adopted this ASU effective February 1, 2026. The adoption did not have a material impact on our condensed consolidated financial statements.
Segment and Geographic Information
Cash, Cash Equivalents, and Restricted Cash
The following table provides a reconciliation of cash, cash equivalents, and restricted cash to the total of these amounts shown in the condensed consolidated statements of cash flows (in thousands):
As of July 31, | As of January 31, | ||||||||||
| 2026 | 2026 | ||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash, current | |||||||||||
| Restricted cash, non-current | |||||||||||
| $ | $ | ||||||||||
12
SENTINELONE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) | ||
3.REVENUE AND CONTRACT BALANCES
Disaggregation of Revenue
The following table summarizes revenue by geography based on the shipping address of end customers who have contracted to use our platform for the periods presented (in thousands, except percentages):
Three Months Ended July 31, 2026 | Three Months Ended July 31, 2025 | ||||||||||||||||||||||
Amount | % of Revenue | Amount | % of Revenue | ||||||||||||||||||||
United States | $ | % | $ | % | |||||||||||||||||||
International | |||||||||||||||||||||||
Total | $ | % | $ | % | |||||||||||||||||||
| Six Months Ended July 31, 2026 | Six Months Ended July 31, 2025 | ||||||||||||||||||||||
Amount | % of Revenue | Amount | % of Revenue | ||||||||||||||||||||
United States | $ | % | $ | % | |||||||||||||||||||
International | |||||||||||||||||||||||
Total | $ | % | $ | % | |||||||||||||||||||
No single country other than the United States represented 10% or more of our revenue during the three and six months ended July 31, 2026 and 2025.
Substantially all of our sales are fulfilled through our channel partners, including distributors, resellers, managed security service providers, and others.
Contract Balances
Contract assets consist of unbilled accounts receivable, which arise when a right to consideration for our performance under the customer contract occurs before invoicing the customer. The amount of unbilled accounts receivable included within accounts receivable, net on the condensed consolidated balance sheets was $10.3 million and $6.7 million as of July 31, 2026 and January 31, 2026, respectively.
Contract liabilities consist of deferred revenue, which represents invoices billed in advance of performance under a contract. Deferred revenue is recognized as revenue over the contractual period. The deferred revenue balance was $577.6 million and $633.1 million as of July 31, 2026 and January 31, 2026, respectively. We recognized revenue of $212.8 million and $181.2 million during the three months ended July 31, 2026 and 2025, respectively, and $372.6 million and $317.2 million during the six months ended July 31, 2026 and 2025, respectively, that was included in the corresponding contract liability balance at the beginning of the period.
Remaining Performance Obligations
Our contracts with customers typically range from to three years . Revenue allocated to remaining performance obligations represents non-cancelable contract revenue that has not yet been recognized, which includes deferred revenue and amounts that will be invoiced in future periods.
For consumption and usage-based contracts with non-cancelable commitments, remaining performance obligations are determined based on the ratable recognition of the remaining commitment over the remaining contract term. The amount and timing of revenue recognition are generally dependent on customers’ future consumption, which is inherently variable at the customers’ discretion.
13
SENTINELONE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) | ||
As of July 31, 2026, our remaining performance obligations were $1.7 billion, of which we expect to recognize 79 % as revenue over the next 24 months following July 31, 2026, with the remainder to be recognized thereafter.
4.ACQUISITIONS
Fiscal 2026 Acquisitions
Observo
On September 22, 2025, we completed the acquisition of Observo, Inc. (Observo), a provider of AI-ready data pipeline technology, to complement our existing product offerings and expand our data and security information and event management (SIEM) business portfolio. We acquired 100 % of the shares of Observo for total consideration of approximately $130.2 million in cash and 5,263,156 shares of our Class A common stock.
Prompt
On September 5, 2025, we completed the acquisition of Prompt Security, Inc. (Prompt), a provider of security solutions focused on the generative and agentic artificial intelligence (AI) security space, to enhance our overall product offerings. We acquired 100 % of the shares of Prompt for a total consideration of approximately $133.6 million in cash, 1,555,099 shares of our Class A common stock, and 415,109 assumed options.
Preliminary Purchase Price Allocation and Acquisition Accounting
The acquisitions completed during fiscal 2026 were accounted for as business combinations, and the purchase prices were allocated to the assets acquired and liabilities assumed based on their respective fair values as of the acquisition dates, inclusive of measurement period adjustments recorded during the period, as presented below (in thousands). The purchase price allocations are preliminary and subject to change as we complete the valuation of certain assets acquired and liabilities assumed.
Observo | Prompt | Total | ||||||||||||||||||
| Consideration: | ||||||||||||||||||||
| Cash | $ | $ | $ | |||||||||||||||||
Common stock | ||||||||||||||||||||
| Assumed options | ||||||||||||||||||||
| Holdback subject to indemnification claims | ||||||||||||||||||||
| Fair value of total consideration transferred | $ | $ | $ | |||||||||||||||||
| Goodwill | $ | $ | $ | |||||||||||||||||
| Intangible assets | ||||||||||||||||||||
Net assets (liabilities) assumed | ( | |||||||||||||||||||
| Total identifiable net assets and liabilities | $ | $ | $ | |||||||||||||||||
During the six months ended July 31, 2026, we released $1.0 million of indemnification holdback relating to the Observo acquisition. In addition, in connection with a post-closing adjustment for the Prompt acquisition, we cancelled 1,952 shares of our Class A common stock previously issued and adjusted the indemnification holdback by $0.2 million.
Goodwill is primarily attributable to the assembled workforce and anticipated synergies arising from the integration. The goodwill acquired from acquisitions in fiscal 2026 is not tax deductible in local jurisdictions.
14
SENTINELONE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) | ||
The following table presents the preliminary details of the identified intangible assets acquired (in thousands, except years):
| Fair Value | Useful Life | Amortization classification | |||||||||||||||
| (in thousands) | (in years) | ||||||||||||||||
Observo | |||||||||||||||||
| Developed technology | $ | Cost of revenue | |||||||||||||||
Customer relationships | Sales and marketing | ||||||||||||||||
Total Observo intangible assets acquired | $ | ||||||||||||||||
Prompt | |||||||||||||||||
| Developed technology | $ | Cost of revenue | |||||||||||||||
Customer relationships | Sales and marketing | ||||||||||||||||
Total Prompt intangible assets acquired | $ | ||||||||||||||||
Total intangible assets acquired | $ | ||||||||||||||||
We incurred $1.9 million and $2.7 million of transaction expenses related to the Observo and Prompt acquisitions, respectively. These costs were recorded as general and administrative expenses in our condensed consolidated statements of operations.
5.INTANGIBLE ASSETS
Intangible assets, net consisted of the following (in thousands):
| As of July 31, | As of January 31, | ||||||||||
| 2026 | 2026 | ||||||||||
| Developed technology | $ | $ | |||||||||
| Customer relationships | |||||||||||
| Backlog | |||||||||||
| Non-compete agreements | |||||||||||
| Trademarks | |||||||||||
| Patents | |||||||||||
| Total finite-lived intangible assets | |||||||||||
| Less: accumulated amortization | ( | ( | |||||||||
| Total finite-lived intangible assets, net | $ | $ | |||||||||
| Indefinite-lived intangible assets - domain names | |||||||||||
| Total intangible assets, net | $ | $ | |||||||||
Amortization expense of intangible assets was $10.9 million and $6.5 million for the three months ended July 31, 2026 and 2025, respectively, and $21.4 million and $12.8 million for the six months ended July 31, 2026 and 2025, respectively.
15
SENTINELONE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) | ||
As of July 31, 2026, estimated future amortization expense is as follows (in thousands):
Fiscal Year Ending January 31, | ||||||||
Remainder of 2027 | $ | |||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| 2031 | ||||||||
| Thereafter | ||||||||
| Total | $ | |||||||
6.CASH AND CASH EQUIVALENTS, INVESTMENTS, AND FAIR VALUE MEASUREMENTS
The following tables summarize information about our cash, cash equivalents, and investments by category as of July 31, 2026 and January 31, 2026 (in thousands):
As of July 31, 2026 | |||||||||||||||||||||||||||||
Fair Value Level | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||
| Cash and cash equivalents: | |||||||||||||||||||||||||||||
| Cash | $ | $ | $ | $ | |||||||||||||||||||||||||
| Money market funds | Level 1 | ||||||||||||||||||||||||||||
| Total cash and cash equivalents | $ | $ | $ | $ | |||||||||||||||||||||||||
| Short-term investments: | |||||||||||||||||||||||||||||
| U.S. treasury securities | Level 1 | $ | $ | $ | ( | $ | |||||||||||||||||||||||
| Commercial paper | Level 2 | ( | |||||||||||||||||||||||||||
| Corporate notes and bonds | Level 2 | ( | |||||||||||||||||||||||||||
| U.S. agency securities | Level 2 | ( | |||||||||||||||||||||||||||
| Total short-term investments | $ | $ | $ | ( | $ | ||||||||||||||||||||||||
| Long-term investments: | |||||||||||||||||||||||||||||
Strategic investments - marketable equity securities (1) | Level 1 | $ | |||||||||||||||||||||||||||
| Total assets measured at fair value | $ | ||||||||||||||||||||||||||||
(1) Unrealized losses of $0.6 million and $1.6 million on marketable equity securities held as of July 31, 2026 were recognized in other income (expense), net during the three and six months ended July 31, 2026, respectively. As of July 31, 2026, cumulative unrealized losses on marketable equity securities still held were $1.6 million.
16
SENTINELONE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) | ||
As of January 31, 2026 | |||||||||||||||||||||||||||||
Fair Value Level | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||
| Cash and cash equivalents: | |||||||||||||||||||||||||||||
| Cash | $ | $ | $ | $ | |||||||||||||||||||||||||
| Money market funds | Level 1 | ||||||||||||||||||||||||||||
| Total cash and cash equivalents | $ | $ | $ | $ | |||||||||||||||||||||||||
| Short-term investments: | |||||||||||||||||||||||||||||
| U.S. treasury securities | Level 1 | $ | $ | $ | $ | ||||||||||||||||||||||||
| Corporate notes and bonds | Level 2 | ||||||||||||||||||||||||||||
| U.S. agency securities | Level 2 | ( | |||||||||||||||||||||||||||
| Total short-term investments | $ | $ | $ | ( | $ | ||||||||||||||||||||||||
| Long-term investments: | |||||||||||||||||||||||||||||
| U.S. treasury securities | Level 1 | $ | $ | $ | $ | ||||||||||||||||||||||||
| Corporate notes and bonds | Level 2 | ||||||||||||||||||||||||||||
| Total long-term investments | $ | $ | $ | $ | |||||||||||||||||||||||||
| Total assets measured at fair value | $ | $ | $ | ( | $ | ||||||||||||||||||||||||
We invest in highly rated securities with a weighted-average maturity of 18 months or less. As of July 31, 2026, all of our investments will mature within two years .
As of July 31, 2026, we determined that the declines in the market value of our investment portfolio were not driven by credit-related factors. During the three and six months ended July 31, 2026 and 2025, we did not recognize any losses on our investments due to credit-related factors. As of July 31, 2026, there were no securities in continuous unrealized loss positions for more than twelve months.
Strategic Investments
The tables above do not include our strategic investments in non-marketable equity securities, which are recorded at cost, less any impairment, plus or minus observable price changes in orderly transactions for identical or similar investments of the same issuer. These were $155.2 million and $36.2 million as of July 31, 2026 and January 31, 2026, respectively, and are presented as long-term investments in the condensed consolidated balance sheets. The increase in our strategic investment portfolio as of July 31, 2026 was primarily due to a $100.0 million investment in Knight JV, LLC during the six months ended July 31, 2026.
During the six months ended July 31, 2026, one of our strategic investees completed an initial public offering. As a result, the investment was reclassified from a non-marketable equity security to a marketable equity security measured at fair value, with the shares held as of July 31, 2026 included in the fair value measurements table above as a Level 1 marketable equity security.
For the three months ended July 31, 2026 and July 31, 2025, the Company recognized gains of $0.5 million and $0.8 million, respectively, on its non-marketable strategic investments. For the six months ended July 31, 2026 and July 31, 2025, the Company recognized gains of $7.3 million and $0.8 million, respectively. No
17
SENTINELONE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) | ||
Derivative Financial Instruments
To mitigate our exposure to foreign currency fluctuations resulting from a recognized income tax liability denominated in the Israeli New Shekel (ILS), we began entering into foreign currency forward contracts during the fourth quarter of fiscal 2026. As of July 31, 2026, the notional value of outstanding forward contracts was $162.5 million.
The following table summarizes the fair value of our derivative instruments on the condensed consolidated balance sheets (in thousands):
| As of July 31, | As of January 31, | |||||||||||||||||||||||||
| Classification | Fair Value Level | 2026 | 2026 | |||||||||||||||||||||||
| Foreign currency forward contracts not designated as hedging instruments: | ||||||||||||||||||||||||||
| Derivative liability | Accrued expenses and other current liabilities | Level 2 | $ | $ | ||||||||||||||||||||||
Changes in the fair value of these derivative instruments are recognized in other income (expense), net on the condensed consolidated statements of operations. These gains or losses are intended to economically offset the foreign currency transaction gains or losses generated by the remeasurement of the underlying ILS-denominated liability.
During the three months ended July 31, 2026, we recorded an aggregate loss of $6.3 million and realized a cumulative loss of $4.9 million through cash settlements on our foreign currency forward contracts. This loss was offset by $4.7 million of unrealized foreign currency gains on the underlying ILS-denominated tax liability.
During the six months ended July 31, 2026, we recorded an aggregate gain of $0.2 million and realized a cumulative immaterial loss through cash settlements on our foreign currency forward contracts. This gain was offset by $2.7 million of unrealized foreign currency losses on the underlying ILS-denominated tax liability. Cash flows from these contracts are classified within net cash provided by operating activities in the condensed consolidated statements of cash flows.
7.STOCKHOLDERS’ EQUITY
Stock-Based Compensation Expense
The components of stock-based compensation expense recognized in the condensed consolidated statements of operations consisted of the following (in thousands):
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Cost of revenue | $ | $ | $ | $ | |||||||||||||||||||
Research and development | |||||||||||||||||||||||
Sales and marketing | |||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||
Restructuring | ( | ||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
Stock-based compensation expense related to equity awards associated with the Prompt and Observo acquisitions totaled $1.7 million and $6.0 million for the three months ended July 31, 2026, and $3.3 million and $11.7 million for the six months ended July 31, 2026, respectively.
18
SENTINELONE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) | ||
Restricted Stock Units (RSU)
A summary of our RSU activity is as follows:
| Number of RSUs | Weighted-Average Grant Date Fair Value | ||||||||||
Outstanding as of January 31, 2026 | $ | ||||||||||
Granted | |||||||||||
| Released | ( | ||||||||||
| Forfeited | ( | ||||||||||
Outstanding as of July 31, 2026 | $ | ||||||||||
As of July 31, 2026, we had unrecognized stock-based compensation expense related to unvested RSUs of $636.5 million that is expected to be recognized on a straight-line basis over a weighted-average period of 3.0 years.
Performance Stock Units (PSU)
Executive Performance Stock Units
During the three and six months ended July 31, 2026, we granted PSUs to certain executives with terms similar to our outstanding executive PSUs issued during fiscal 2026 and fiscal 2025, which are subject to predetermined service-based and performance-based vesting conditions. These executive PSUs may vest from 0 % to 225 % of the number of target shares based on the achievement of certain financial performance metrics and vest contingently over a period of to four years , subject to continuous service with us. We recorded $9.4 million and $11.8 million of stock-based compensation expense related to our outstanding executive PSUs during the three and six months ended July 31, 2026, respectively, and $2.2 million and $3.4 million during the three and six months ended July 31, 2025, respectively.
Acquisition-related Performance Stock Units
In connection with the acquisition of Observo, during fiscal 2026, we granted PSUs subject to service-based and performance-based vesting conditions. These PSUs will fully vest upon the achievement of specified performance objectives, subject to the employees’ continued service to us from the grant date through the milestone events or target dates. During the three and six months ended July 31, 2026, we recorded $0.1 million of stock-based compensation expense and a net reversal of $0.2 million, respectively, related to these PSUs.
During fiscal 2026, in connection with the post-acquisition integration of Prompt and Observo, we granted PSUs to an executive subject to performance-based vesting conditions tied to the annualized recurring revenue (ARR) of the acquired business. These PSUs may vest from 0 % to 200 % of the target number of shares based on the achievement of specific ARR milestones, subject to the executive’s continued service through the performance period. During the three and six months ended July 31, 2026, we recorded $0.5 million and $1.0 million, respectively, of stock-based compensation expense related to these awards.
19
SENTINELONE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) | ||
A summary of our PSU activity is as follows:
| Number of PSUs | Weighted-Average Grant Date Fair Value | ||||||||||
Outstanding as of January 31, 2026 | $ | ||||||||||
| Granted | |||||||||||
| Released | ( | ||||||||||
Forfeited | ( | ||||||||||
Outstanding as of July 31, 2026 | $ | ||||||||||
As of July 31, 2026, we had unrecognized stock-based compensation expense related to unvested PSUs of $35.2 million that is expected to be recognized on a straight-line basis over a weighted-average period of 0.8 years.
Stock Options
A summary of our stock option activity is as follows:
| Number of Options | Weighted-Average Exercise Price | ||||||||||
Outstanding as of January 31, 2026 | $ | ||||||||||
| Exercised | ( | ||||||||||
| Forfeited | ( | ||||||||||
Outstanding as of July 31, 2026 | $ | ||||||||||
Vested and expected to vest as of July 31, 2026 | $ | ||||||||||
Vested and exercisable as of July 31, 2026 | $ | ||||||||||
As of July 31, 2026, we had unrecognized stock-based compensation expense related to unvested options of $4.3 million that is expected to be recognized on a straight-line basis over a weighted-average period of 0.4 years.
Employee Stock Purchase Plan
We recognized stock-based compensation expense related to the Employee Stock Purchase Plan (ESPP) of $1.5 million and $2.9 million, respectively, during the three and six months ended July 31, 2026. We recognized stock-based compensation expense of $1.9 million and $3.4 million, respectively, during the three and six months ended July 31, 2025.
Restricted Common Stock
Restricted common stock is included in issued and outstanding shares as they are legally issued and outstanding but are not deemed outstanding for accounting purposes until the shares vest. A summary of our restricted common stock activity is as follows:
| Number of Shares | Weighted-Average Grant Date Fair Value | ||||||||||
Outstanding as of January 31, 2026 | $ | ||||||||||
Vested | ( | ||||||||||
Unvested balance as of July 31, 2026 | $ | ||||||||||
As of July 31, 2026, we had unrecognized stock-based compensation expense related to unvested restricted common stock of $41.9 million that is expected to be recognized on a straight-line basis over a weighted-average period of 1.2 years.
20
SENTINELONE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) | ||
Modifications & Accelerations
In connection with the restructuring plan initiated in May 2026, certain stock-based awards were accelerated or modified, including (i) revested shares held by certain founders of previously acquired companies that vest upon termination without cause, (ii) RSUs held by certain founders of previously acquired companies for which the compensation committee of our board of directors approved acceleration, and (iii) awards held by other affected employees who received accelerated vesting. Stock-based compensation expense recognized in connection with the acceleration or modification of these awards was $10.8
During the six months ended July 31, 2025, certain members of our management team converted to non-employee consultants or to positions that no longer provide substantive service to the Company (Management Transitions). These Management Transitions have been accounted for as modifications, under which the unvested awards were accelerated, the exercise period of certain vested awards was extended, or a certain number of unvested awards will continue to vest through the end of the agreements entered into in connection with the Management Transitions. During the three and six months ended July 31, 2025, we recognized no incremental charge and $3.4 million, respectively, regarding these modifications. No
Share Repurchase Program
8.RESTRUCTURING
Fiscal 2027
In May 2026, we initiated a restructuring plan (May 2026 Plan) to further streamline the Company’s organizational structure, improve efficiencies, and concentrate investments across high-yielding growth areas, while continuing to advance the Company’s ongoing commitment to profitable growth. In connection with the May 2026 Plan, we incurred a restructuring charge of $24.4 13.6 10.8
The following table summarizes our restructuring liability that is included in accrued payroll and benefits on the condensed consolidated balance sheets related to the May 2026 Plan (in thousands):
| Severance payments and employee benefits | ||||||||
Liability as of January 31, 2026 | $ | |||||||
| Charges | ||||||||
| Payments | ( | |||||||
Liability as of July 31, 2026 | $ | |||||||
The actions associated with the May 2026 Plan are expected to be fully completed by the end of fiscal 2027.
Fiscal 2026
In March 2025, we initiated a restructuring plan (March 2025 Plan) as a result of a review of current strategic priorities, resource allocation, and cost reduction initiatives intended to reduce operating costs, improve operating margins and continue advancing our ongoing commitment to profitable growth. We incurred approximately $5.2 million in charges in connection with the March 2025 Plan during the six months ended July 31, 2025, which primarily consisted of $3.0 million in charges related to severance payments and employee benefits and $2.2 million
21
SENTINELONE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) | ||
of asset impairment charges related to facilities. The actions associated with the March 2025 Plan were completed as of July 31, 2025.
In July 2025, we initiated a restructuring plan (July 2025 Plan) and incurred approximately $3.9 million in charges related to contract terminations during the six months ended July 31, 2025. Additional restructuring charges of $3.2 million were incurred in the second half of fiscal 2026. The actions associated with the July 2025 Plan were completed as of January 31, 2026.
9.INCOME TAXES
We compute our tax provision for interim periods by applying the estimated annual effective tax rate to year-to-date income from continuing operations and adjusting for discrete items arising in that quarter.
During the three and six months ended July 31, 2026, we incurred a discrete tax expense of $2.8 million and $5.4 million, respectively, related to the interest expense recognized on the tax liability arising from an assessment agreement (the Agreement) with the Israeli Tax Authority (ITA). During the six months ended July 31, 2025, in connection with the ITA matter, we recorded a discrete tax expense of $136.0 million for an unrecognized tax benefit accrual, partially offset by $4.7 million of corresponding release of valuation allowance on Israel deferred tax assets. Without regard to the discrete items, we had an effective tax rate of (4.1 )% and (4.8 )% for the three months ended July 31, 2026 and 2025, respectively, and (4.3 )% and (3.8 )% for the six months ended July 31, 2026 and 2025, respectively.
The effective tax rate is primarily attributable to minimum taxes and profits in our foreign jurisdictions.
On January 8, 2026, we entered into the Agreement with the ITA that resolved certain transfer pricing matters related to intercompany transactions with our Israeli subsidiary, including the valuation of intellectual property. The Agreement represents a full and final resolution of these matters for the fiscal years ended January 31, 2021 through January 31, 2025.
The total tax expense associated with the Agreement of $180.0 million, exclusive of interest, was recorded during fiscal 2026. The Agreement provides for installment payments through our fiscal year 2031, with unpaid balances accruing interest at a rate of 7.0 % per annum. We have the option to extend the payment schedule for up to two additional years. In the event of a change in control, 792.7 million Israeli New Shekels, or $259.7 million, less cumulative payments made, which represents all unpaid amounts, plus interest that would have accrued through the end of the seventh year, would accelerate in accordance with the terms of the Agreement. During the six months ended July 31, 2026, we made an installment payment of $30.7 million under the Agreement.
As of July 31, 2026, the remaining liability associated with the Agreement was $162.3 million, of which $10.4 million and $151.9 million were recorded in accrued expenses and other current liabilities, and other liabilities, respectively, on our condensed consolidated balance sheets.
10.NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS
Basic and diluted net loss per share attributable to common stockholders is computed in conformity with the two-class method required for participating securities. Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by giving effect to all potentially dilutive common stock equivalents to the extent they are dilutive. For purposes of this calculation, stock options, restricted common stock, RSUs, PSUs, and shares purchased pursuant to our ESPP are considered to be common stock equivalents but have been excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect is anti-dilutive for all periods presented.
The rights, including the liquidation and dividend rights, of the holders of Class A and Class B common stock are identical, except with respect to voting, conversion, and transfer rights. As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis to each class of common stock and the
22
SENTINELONE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) | ||
resulting basic and diluted net loss per share attributable to common stockholders are, therefore, the same for both Class A and Class B common stock on both an individual and combined basis.
Basic and diluted net loss per share attributable to common stockholders was as follows (in thousands, except share and per share data):
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Numerator: | |||||||||||||||||||||||
Net loss attributable to Class A and Class B common stockholders | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Denominator: | |||||||||||||||||||||||
Weighted-average shares used in computing net loss per share attributable to Class A and Class B common stockholders, basic and diluted | |||||||||||||||||||||||
Net loss per share attributable to Class A and Class B common stockholders, basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
The following potentially dilutive securities were excluded from the computation of diluted net loss per share attributable to common stockholders because their inclusion would have been anti-dilutive:
As of July 31, | |||||||||||
2026 | 2025 | ||||||||||
| RSUs and PSUs | |||||||||||
| Stock options | |||||||||||
| Restricted common stock | |||||||||||
| ESPP | |||||||||||
| Total | |||||||||||
11.COMMITMENTS AND CONTINGENCIES
Legal Contingencies
From time to time, we may be a party to various legal proceedings and subject to claims in the ordinary course of business.
Securities Litigation
On June 6, 2023, a securities class action was filed against us, our Chief Executive Officer and our former Chief Financial Officer, in the Northern District of California, captioned Johansson v. SentinelOne, Inc., Case No. 4:23-cv-02786. The suit is brought on behalf of an alleged class of stockholders who purchased or acquired shares of the Company’s Class A common stock between June 1, 2022 and June 1, 2023. The complaint alleged that defendants made false or misleading statements about our business, operations and prospects, including our annual recurring revenues and internal controls, and purports to assert claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (Exchange Act). A substantially similar suit was filed on June 16, 2023 in the same court against the same defendants asserting the same claims, captioned Nyren v. SentinelOne, Inc., Case No. 4:23-cv-02982. On October 4, 2023, the court issued an order consolidating both cases under the caption In re SentinelOne, Inc. Securities Litigation Case No. 4:23-cv-02786 (Securities Litigation) and appointing a lead plaintiff. Defendants filed a motion to dismiss the consolidated complaint. On July 2, 2024, the District Court granted defendants’ motion, dismissing the consolidated complaint with leave for plaintiff to amend the complaint. Plaintiff filed an amended complaint on August 1, 2024. Defendants filed a motion to dismiss the amended
23
SENTINELONE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) | ||
complaint on September 16, 2024. On October 2, 2025, the District Court granted defendants’ motion, dismissing the action with prejudice and entered judgment in favor of defendants. On October 28, 2025, plaintiff filed a notice of appeal to the Ninth Circuit Court of Appeals. That appeal remains pending. We believe the case is without merit and defendants intend to defend the suit vigorously.
Warranties and Indemnification
Our services are generally warranted to deliver and operate in a manner consistent with general industry standards that are reasonably applicable and materially conform with our documentation under normal use and circumstances. Our contracts generally include certain provisions for indemnifying customers against liabilities if our products or services infringe a third party’s intellectual property rights.
We also offer a limited warranty to certain customers, subject to certain conditions, to cover certain costs incurred by the customer in case of a cybersecurity breach. We have a cybersecurity liability policy that may cover our customers’ actual damages. We have not incurred any material costs related to such obligations and had no material accruals related to such obligations in the condensed consolidated financial statements as of July 31, 2026 and January 31, 2026.
In addition, we also indemnify certain of our directors and executive officers against certain liabilities that may arise while they are serving in good faith in their company capacities. We maintain director and officer liability insurance coverage that would generally enable us to recover a portion of any future amounts paid.
Operating Lease Commitments Not Yet Commenced
In May 2026, the Company entered into a lease agreement for its new headquarters, which has not yet commenced. The lease is expected to commence during fiscal year 2028 and will have an initial term of years, with total undiscounted lease payments of approximately $10.0 million over the lease term.
Strategic Investment Commitment
On July 31, 2026, we executed an agreement to make a strategic investment for cash consideration of $150.0 million, subject to certain closing conditions.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis provides information which our management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes and the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026 filed with the U.S. Securities and Exchange Commission (SEC), on March 19, 2026 (Annual Report). This discussion, particularly information with respect to our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations, includes forward-looking statements that involve risks and uncertainties as described under the heading “Special Note About Forward-Looking Statements” in this Quarterly Report on Form 10-Q. You should review the disclosure under the heading “Risk Factors” in this Quarterly Report on Form 10-Q for a discussion of important factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements. Our fiscal year ends on January 31, and our fiscal quarters end on April 30, July 31, October 31, and January 31. Our fiscal years ended January 31, 2027 and January 31, 2026 are referred to herein as fiscal 2027 and fiscal 2026, respectively.
Unless the context otherwise requires, all references in this report to “SentinelOne,” the “Company,” “we,” “our,” “us,” or similar terms refer to SentinelOne, Inc. and its subsidiaries.
Overview
We founded SentinelOne in 2013 with a dramatically new approach to cybersecurity.
We pioneered the world’s first purpose-built AI-powered security platform to make cyber defense truly autonomous, from the endpoint and beyond. Our Singularity Platform instantly defends against cyberattacks — performing at a faster speed, greater scale, and higher accuracy than otherwise possible from a human-powered approach.
Our Singularity Platform ingests, correlates, and queries petabytes of structured and unstructured data from a myriad of ever-expanding disparate external and internal sources in real-time. We aim to build rich context and deliver greater visibility by constructing a dynamic representation of data across an organization. As a result, our AI models are able to be highly accurate, actionable, and autonomous. Our distributed AI models run both locally on every endpoint and every cloud workload, as well as on our cloud platform. Our Static and vector-agnostic Behavioral AI models, which run on the endpoints themselves, provide our customers with protection even when their devices are not connected to the cloud. In the cloud, our Streaming AI can detect anomalies that surface when multiple data feeds are correlated. By providing full visibility into the Storyline of every secured device across the organization through one console, our platform can make it very fast for analysts to easily search through petabytes of data to investigate incidents and proactively hunt threats. We have extended our control and visibility planes beyond the traditional endpoint to unmanaged Internet of Things (IoT) devices.
Singularity can be flexibly deployed on the environments that our customers choose, including public, private, or hybrid clouds. Our feature parity across Windows, macOS, Linux, and Kubernetes offers best-of-breed protection, visibility, and control across today’s heterogeneous IT environments. Together, these capabilities make our platform the logical choice for organizations of all sizes, industry verticals, and compliance requirements. Our platform offers true multi-tenancy, which allows us to serve the world’s largest organizations, managed security providers and incident response partners. Our customers are able to realize improved cybersecurity outcomes with fewer people.
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We generate most of our revenue by selling subscriptions to our Singularity Platform. We generally price our subscriptions and modules on a per agent basis, and each agent generally corresponds with an endpoint, server, virtual machine, or container.
Our subscription contracts typically range from one to three years. We recognize subscription revenue ratably over the term of a contract. Most of our contracts are for terms representing annual increments, therefore contracts generally come up for renewal in the same period in subsequent years. The timing of large multi-year enterprise contracts can create some variability in subscription order levels between periods, though the impact to our revenue in any particular period is limited as a result of ratable revenue recognition.
Our go-to-market strategy is focused on acquiring new customers and driving expanded usage of our platform by existing customers. Our sales organization is comprised of our enterprise sales, inside sales and customer solutions engineering teams. It leverages our global network of independent software vendors (ISVs), alliance partners, and channel partners for prospect access. Additionally, our sales teams work closely with our customers, channel partners, and alliance partners to drive adoption of our platform, and our software solutions are fulfilled through our channel partners. Our channel partners include some of the world’s largest resellers and distributors, managed service providers (MSPs), managed security service providers (MSSPs), managed detection and response providers (MDRs), original equipment manufacturers (OEMs), and incident response (IR) firms. Once customers experience the benefits of our platform, they often expand their subscriptions to benefit from the full range of our platform solutions. Additionally, many of our customers adopt Singularity Modules over time to extend the functionality of our platform and increase their coverage footprint. The combination of platform upgrades and extended modules drives our powerful land-and-expand motion.
Our Singularity Platform is used globally by organizations of all sizes across a broad range of industries. We had 1,715 customers with annualized recurring revenue (ARR) of $100,000 or more as of July 31, 2026, up from 1,513 as of July 31, 2025. We define ARR as the annualized revenue run rate of our subscription, consumption and usage-based agreements at the end of a reporting period, assuming contracts are renewed on their existing terms for customers that are under contracts with us. As of July 31, 2026, no single end customer accounted for more than 9% of our ARR. Our revenue outside of the U.S. represented 39% and 38% for the three months ended July 31, 2026 and 2025, respectively, and 39% and 38% for the six months ended July 31, 2026 and 2025, respectively, illustrating the global nature of our solutions.
We have grown rapidly since our inception. Our revenue was $292.0 million and $242.2 million for the three months ended July 31, 2026 and 2025, respectively, representing year-over-year growth of 21%. Our revenue was $568.6 million and $471.2 million for the six months ended July 31, 2026 and 2025, respectively, representing year-over-year growth of 21%. During this period, we continued to invest in growing our business to capitalize on our market opportunity. As a result, our net loss for the three months ended July 31, 2026 and 2025 was $93.4 million and $72.0 million, respectively, and our net loss for the six months ended July 31, 2026 and 2025 was $169.6 million and $280.2 million, respectively.
Key Business Metrics and Non-GAAP Financial Measures
We monitor the following key metrics and non-GAAP financial measures to help us evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions.
Revenue
We discuss revenue below under “Components of Our Results of Operations.”
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
Revenue | $ | 291,981 | $ | 242,183 | $ | 568,638 | $ | 471,212 | |||||||||||||||
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Non-GAAP operating income
In addition to our results determined in accordance with U.S. generally accepted accounting principles (GAAP), we use non-GAAP operating income as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies, and to communicate with our board of directors concerning our financial performance. We believe that non-GAAP operating income provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as this measure excludes, among other expenses, expenses that we do not consider to be indicative of our overall operating performance. Non-GAAP operating income is calculated as GAAP operating loss adjusted to exclude amortization of acquired intangible assets, acquisition-related compensation, stock-based compensation expense, payroll tax on employee stock transactions, and restructuring charges.
Non-GAAP operating income has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP, including GAAP operating loss. Other companies, including companies in our industry, may calculate similarly titled non-GAAP measures, including non-GAAP operating income, differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. As a result, our non-GAAP operating income is presented for supplemental informational purposes only.
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Non-GAAP operating income | $ | 30,528 | $ | 5,376 | $ | 41,073 | $ | 1,449 | |||||||||||||||
A reconciliation of non-GAAP operating income to GAAP operating loss, the most directly comparable financial measure calculated and presented in accordance with GAAP, is provided below:
| Three Months Ended July 31, | Six Months Ended July 31, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| GAAP operating loss | $ | (90,761) | $ | (80,618) | $ | (170,479) | $ | (168,101) | ||||||||||||||||||
| Stock-based compensation expense | 92,114 | 73,884 | 167,003 | 142,539 | ||||||||||||||||||||||
| Employer payroll tax on employee stock transactions | 1,442 | 1,087 | 3,033 | 3,835 | ||||||||||||||||||||||
| Amortization of acquired intangible assets | 10,780 | 6,448 | 21,208 | 12,687 | ||||||||||||||||||||||
| Acquisition-related compensation | 3,349 | 692 | 6,672 | 1,403 | ||||||||||||||||||||||
| Other restructuring charges | 13,604 | 3,883 | 13,636 | 9,086 | ||||||||||||||||||||||
| Non-GAAP operating income | $ | 30,528 | $ | 5,376 | $ | 41,073 | $ | 1,449 | ||||||||||||||||||
Annualized Recurring Revenue
We believe that ARR is a key operating metric to measure our business because it is driven by our ability to acquire new subscription, consumption, and usage-based customers, and to maintain and expand our relationship with existing customers. ARR represents the annualized revenue run rate of our subscription, consumption and usage-based agreements at the end of a reporting period, assuming contracts are renewed on their existing terms for customers that are under contracts with us. ARR is an operational metric and is not a non-GAAP metric. ARR is not a forecast of future revenue, which can be impacted by contract start and end dates, usage, renewal rates, and other contractual terms. For more information on how we recognize revenue, see Note 3, Revenue and Contract Balances to our unaudited condensed consolidated financial statements.
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As of July 31, | |||||||||||
2026 | 2025 | ||||||||||
| (in thousands) | |||||||||||
| Annualized recurring revenue | $ | 1,218,106 | $ | 1,001,360 | |||||||
ARR grew 22% year-over-year to $1,218.1 million as of July 31, 2026, primarily driven by a combination of new customer additions and adoption of adjacent platform solutions by existing customers.
Customers with ARR of $100,000 or More
We believe that our ability to increase the number of customers with ARR of $100,000 or more is an indicator of our market penetration and strategic demand for our platform. We define a customer as an entity that has an active subscription for access to our platform. We count MSPs, MSSPs, MDRs, and OEMs, who may purchase our products on behalf of multiple companies, as a single customer. We do not count our reseller or distributor channel partners as customers.
As of July 31, | |||||||||||
2026 | 2025 | ||||||||||
Customers with ARR of $100,000 or more | 1,715 | 1,513 | |||||||||
Customers with ARR of $100,000 or more grew 13% year-over-year to 1,715 as of July 31, 2026, primarily due to the growth in the ARR of existing customers from additional purchases and the growth in the average size of purchases by new customers.
Dollar-Based Net Retention Rate (NRR)
We believe that our ability to retain and expand our revenue generated from our existing customers is an indicator of the long-term value of our customer relationships and our potential future business opportunities. NRR measures the percentage change in our ARR derived from our customer base at a point in time. Our NRR remained in expansionary territory as of July 31, 2026, driven by existing customers’ adoption of additional endpoint licenses and adjacent platform solutions. We see significant long-term expansion potential based on high customer retention rates, expanding product categories, and early-stage adoption from our installed base.
Components of Our Results of Operations
Revenue
We generate most of our revenue by selling subscriptions to our Singularity Platform. Customers can extend the functionality of their subscription to our platform by subscribing to additional Singularity Modules. Subscriptions provide access to hosted software. The nature of our promise to the customer under the subscription is to provide protection for the duration of the contractual term and as such is considered as a series of distinct services. Our arrangements may include fixed consideration, variable consideration, or a combination of the two. Fixed consideration is recognized over the term of the arrangement or longer if the fixed consideration relates to a material right. Variable consideration in these arrangements is typically a function of transaction volume or another usage-based measure. Depending upon the structure of a particular arrangement, we (i) allocate the variable amount to each distinct service period within the series and recognize revenue as each distinct service period is performed (i.e., direct allocation), (ii) estimate total variable consideration at contract inception (giving consideration to any constraints that may apply and updating the estimates as new information becomes available) and recognize the total transaction price over the period to which it relates, or (iii) apply the “right to invoice” practical expedient and recognize revenue based on the amount invoiced to the customer during the period. Premium support and maintenance and other Singularity Modules are distinct from subscriptions and are recognized ratably over the term as the performance obligations are satisfied.
We invoice our customers upfront upon signing for the entire term of the contract, periodically, or in arrears. Most of our subscription contracts have a term of one to three years.
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Cost of Revenue
Cost of revenue consists primarily of third-party cloud infrastructure expenses incurred in connection with the hosting and maintenance of our platform, as well as personnel-related costs associated with our customer support and services organization, including salaries, benefits, bonuses, and stock-based compensation. Cost of revenue also includes amortization of acquired intangible assets, amortization of capitalized internal-use software, software and subscription services used by our customer support and services team, inventory-related costs, and allocated facilities and IT overhead costs.
Our third-party cloud infrastructure costs are driven primarily by the number of customers, the number of endpoints per customer, the number of modules, and the incremental costs for storing additional data collected for such cloud modules. We plan to continue to invest in our platform infrastructure and additional resources in our customer support and services organization as we grow our business. The level and timing of investment in these areas could affect our cost of revenue from period to period. We expect our cost of revenue to increase in absolute dollars as we continue to scale our platform. Our gross margin could fluctuate depending on the interplay of these factors.
Operating Expenses
Our operating expenses consist of research and development, sales and marketing, general and administrative, and restructuring expenses. Personnel-related expenses are the most significant component of operating expenses and consist of salaries, benefits, bonuses, stock-based compensation, and sales commissions. Operating expenses also include allocated facilities and IT overhead costs.
Research and Development
Research and development expenses consist primarily of employee salaries, benefits, bonuses, and stock-based compensation. Research and development expenses also include third-party cloud infrastructure and general services expenses, such as consulting fees and software subscription services, incurred in developing our platform and modules.
We expect research and development expenses to increase in absolute dollars as we continue to increase investments in our existing products and services. However, we anticipate research and development expenses to decrease as a percentage of our total revenue over time, although our research and development expenses may fluctuate as a percentage of our total revenue from period to period depending on the timing of these expenses. In addition, research and development expenses that qualify as internal-use software are capitalized, the amount of which may fluctuate significantly from period to period.
Sales and Marketing
Sales and marketing expenses consist primarily of employee salaries, commissions, benefits, bonuses, stock-based compensation, travel and entertainment-related expenses, advertising, branding and marketing events, promotions, amortization of acquired customer relationships, and software and subscription services. Sales and marketing expenses also include sales commissions paid to our sales force and referral fees paid to independent third parties that are incremental to obtain a subscription contract. Such costs are capitalized and amortized over an estimated period of benefit of four years, and any such expenses paid for the renewal of a subscription are capitalized and amortized over the average contractual term of the renewal.
We expect sales and marketing expenses to increase in absolute dollars as we continue making significant investments in our sales and marketing organization to drive additional revenue, further penetrate the market, and expand our global customer base, but to decrease as a percentage of our revenue over time.
General and Administrative
General and administrative expenses consist primarily of salaries, benefits, bonuses, stock-based compensation, and other expenses for our executive, finance, legal, people team, IT and facilities organizations. General and
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administrative expenses also include external legal, accounting, other consulting, and professional services fees, software and subscription services, and other corporate expenses.
We expect to continue to incur additional expenses as a result of operating as a public company, including costs to comply with the rules and regulations applicable to companies listed on a national securities exchange, costs related to compliance and reporting obligations, and increased expenses for insurance, investor relations, and professional services. We expect that our general and administrative expenses will increase in absolute dollars as our business grows, but to decrease as a percentage of our revenue over time.
Restructuring
Restructuring charges related to the restructuring plans executed in May 2026 (May 2026 Plan), July 2025 (July 2025 Plan) and March 2025 (March 2025 Plan), consist primarily of charges related to severance payments, employee benefits, stock-based compensation, contract terminations, and asset impairment charges related to facilities. The March 2025 Plan and July 2025 Plan were completed as of July 31, 2025 and January 31, 2026, respectively. The actions associated with the May 2026 Plan are expected to be fully completed by the end of fiscal 2027.
Interest Income, Net, and Other Income (Expense), Net
Interest income, net consists primarily of interest earned on our cash equivalents and investments, offset by interest expense, which consists primarily of the amortization of the discount related to acquisition-related liabilities.
Other income (expense), net consists primarily of gains and losses on foreign currency remeasurements and transactions, derivative instruments, and strategic investments.
Provision for Income Taxes
Provision for income taxes consists primarily of income taxes in foreign jurisdictions in which we conduct business, and the tax effects (including the interest expense) of the fiscal 2026 Assessment Agreement (the Agreement) with the Israeli Tax Authority (ITA). The Agreement resulted in $180.0 million of tax expense, exclusive of interest, during fiscal 2026, payable over time to the ITA, with additional interest expense accruing on the tax liability over the installment period. In connection with our global consolidated losses, we maintain a full valuation allowance against our U.S. deferred tax assets, as we have concluded that it is more likely than not that the deferred tax assets will not be realized.
Exclusive of the Agreement with the ITA, we expect our provision for income taxes to increase in fiscal 2027 and beyond based upon increased foreign earnings and certain minimum taxes.
Additionally, as discussed in more detail in Part II, Item 1A, “Risk Factors” in this Quarterly Report and Note 9, Income Taxes, to our unaudited condensed consolidated financial statements, on January 8, 2026, we entered into the Agreement with the ITA covering various transfer pricing matters for intercompany transactions relating to the intergroup ownership and utilization of our intellectual property. This Agreement fully and finally resolved all related Israeli disputed income tax matters between us and the ITA for fiscal years 2021 through 2025. Pursuant to the Agreement, we are required to make installment payments through fiscal year 2031, which are subject to 7.0% interest per annum and certain acceleration clauses. The Agreement also resolved the tax impact of aligning the intellectual property of Prompt into our structure.
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Results of Operations
The following table sets forth our results of operations for the periods presented:
Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Revenue | $ | 291,981 | $ | 242,183 | $ | 568,638 | $ | 471,212 | |||||||||||||||
Cost of revenue(1) | 81,563 | 60,474 | 159,528 | 117,006 | |||||||||||||||||||
| Gross profit | 210,418 | 181,709 | 409,110 | 354,206 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
Research and development(1) | 96,882 | 79,091 | 192,652 | 151,344 | |||||||||||||||||||
Sales and marketing(1) | 123,545 | 127,879 | 255,656 | 261,760 | |||||||||||||||||||
General and administrative(1) | 56,327 | 51,474 | 106,824 | 100,153 | |||||||||||||||||||
Restructuring(1) | 24,425 | 3,883 | 24,457 | 9,050 | |||||||||||||||||||
| Total operating expenses | 301,179 | 262,327 | 579,589 | 522,307 | |||||||||||||||||||
| Loss from operations | (90,761) | (80,618) | (170,479) | (168,101) | |||||||||||||||||||
Interest income, net | 6,151 | 12,196 | 12,978 | 24,486 | |||||||||||||||||||
| Other income (expense), net | (2,414) | (327) | 76 | 165 | |||||||||||||||||||
| Loss before income taxes | (87,024) | (68,749) | (157,425) | (143,450) | |||||||||||||||||||
| Provision for income taxes | 6,376 | 3,270 | 12,139 | 136,762 | |||||||||||||||||||
| Net loss | $ | (93,400) | $ | (72,019) | $ | (169,564) | $ | (280,212) | |||||||||||||||
__________________
(1)Includes stock-based compensation expense as follows:
Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Cost of revenue | $ | 6,199 | $ | 5,399 | $ | 12,094 | $ | 10,064 | |||||||||||||||
| Research and development | 28,401 | 24,289 | 57,349 | 45,230 | |||||||||||||||||||
| Sales and marketing | 21,472 | 21,338 | 41,757 | 44,253 | |||||||||||||||||||
| General and administrative | 25,221 | 22,858 | 44,982 | 43,028 | |||||||||||||||||||
| Restructuring | 10,821 | — | 10,821 | (36) | |||||||||||||||||||
| Total stock-based compensation expense | $ | 92,114 | $ | 73,884 | $ | 167,003 | $ | 142,539 | |||||||||||||||
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The following table sets forth the components of our condensed consolidated statements of operations as a percentage of revenue for each of the periods presented:
Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (as a percentage of total revenue) | |||||||||||||||||||||||
| Revenue | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||
| Cost of revenue | 28 | 25 | 28 | 25 | |||||||||||||||||||
| Gross profit | 72 | 75 | 72 | 75 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
Research and development | 33 | 33 | 34 | 32 | |||||||||||||||||||
Sales and marketing | 42 | 53 | 45 | 56 | |||||||||||||||||||
General and administrative | 19 | 21 | 19 | 21 | |||||||||||||||||||
| Restructuring | 8 | 2 | 4 | 2 | |||||||||||||||||||
| Total operating expenses | 103 | 108 | 102 | 111 | |||||||||||||||||||
| Loss from operations | (31) | (33) | (30) | (36) | |||||||||||||||||||
Interest income, net | 2 | 5 | 2 | 5 | |||||||||||||||||||
| Other income (expense), net | (1) | — | — | — | |||||||||||||||||||
| Loss before income taxes | (30) | (28) | (28) | (30) | |||||||||||||||||||
| Provision for income taxes | 2 | 1 | 2 | 29 | |||||||||||||||||||
| Net loss | (32) | % | (30) | % | (30) | % | (59) | % | |||||||||||||||
Note: Certain figures may not sum due to rounding.
Comparison of the Three Months Ended July 31, 2026 and 2025
Revenue
Three Months Ended July 31, | Change | ||||||||||||||||||||||
2026 | 2025 | $ | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Revenue | $ | 291,981 | $ | 242,183 | $ | 49,798 | 21 | % | |||||||||||||||
Revenue increased by $49.8 million primarily due to a combination of sales to new customers and sales of additional licenses and platform solutions to existing customers.
Cost of Revenue, Gross Profit, and Gross Margin
Three Months Ended July 31, | Change | ||||||||||||||||||||||
2026 | 2025 | $ | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Cost of revenue | $ | 81,563 | $ | 60,474 | $ | 21,089 | 35 | % | |||||||||||||||
| Gross profit | $ | 210,418 | $ | 181,709 | $ | 28,709 | 16 | % | |||||||||||||||
| Gross margin | 72 | % | 75 | % | |||||||||||||||||||
Cost of revenue increased by $21.1 million primarily due to a $9.1 million increase in cloud hosting usage charges to support our expanding business, a $6.0 million increase in customer support costs, which were mostly personnel-related, a $4.0 million increase in amortization of acquired intangible assets in connection with the fiscal 2026 acquisitions, and a $1.4 million increase in amortization of capitalized internal-use software due to the
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continued investment in our platform. Gross margin was 72% compared to 75% in the prior period, primarily due to higher costs of revenue associated with scaling operations to meet increased customer demand and sales volume.
Research and Development
Three Months Ended July 31, | Change | ||||||||||||||||||||||
2026 | 2025 | $ | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Research and development expenses | $ | 96,882 | $ | 79,091 | $ | 17,791 | 22 | % | |||||||||||||||
Research and development expenses increased by $17.8 million primarily due to an increase in personnel-related expenses of $10.7 million as a result of increased headcount. This included a $4.1 million increase in stock-based compensation expense, primarily driven by the new equity awards granted, including those issued in connection with the fiscal 2026 acquisitions. The remaining increase was attributable to a $2.9 million increase in cloud hosting expenses driven by expanded research and development activities, a $2.2 million increase in general services expenses primarily driven by higher software subscription costs, and a $2.0 million increase in allocated overhead costs.
Sales and Marketing
Three Months Ended July 31, | Change | ||||||||||||||||||||||
2026 | 2025 | $ | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Sales and marketing expenses | $ | 123,545 | $ | 127,879 | $ | (4,334) | (3) | % | |||||||||||||||
Sales and marketing expenses decreased by $4.3 million primarily due to a $5.4 million decrease in marketing-related expenses, reflecting lower corporate marketing, advertising and promotion costs. The decrease was partially offset by a $0.9 million increase in allocated overhead costs.
General and Administrative
Three Months Ended July 31, | Change | ||||||||||||||||||||||
2026 | 2025 | $ | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| General and administrative expenses | $ | 56,327 | $ | 51,474 | $ | 4,853 | 9 | % | |||||||||||||||
General and administrative expenses increased by $4.9 million primarily due to an increase in personnel-related expenses of $4.7 million as a result of increased headcount. This included a $2.4 million increase in stock-based compensation expense, primarily driven by the new equity awards granted. The remaining increase was attributable to a $3.2 million increase in legal expenses, partially offset by a $1.9 million decrease in consulting expenses and a $1.2 million decrease in acquisition-related expenses.
Restructuring
Three Months Ended July 31, | Change | ||||||||||||||||||||||
2026 | 2025 | $ | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Restructuring | $ | 24,425 | $ | 3,883 | $ | 20,542 | 529 | % | |||||||||||||||
Restructuring charges increased by $20.5 million, primarily due to $24.4 million of charges related to the May 2026 Plan, consisting of $13.6 million in employee severance and related benefits and $10.8 million of stock-based compensation expense from the acceleration and modification of certain equity awards. This was partially offset by a $3.9 million decrease in restructuring charges related to the July 2025 Plan, which primarily consisted of contract termination costs.
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Interest Income, Net, and Other Income (Expense), Net
Three Months Ended July 31, | Change | ||||||||||||||||||||||
2026 | 2025 | $ | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
Interest income, net | $ | 6,151 | $ | 12,196 | $ | (6,045) | (50) | % | |||||||||||||||
| Other income (expense), net | $ | (2,414) | $ | (327) | $ | (2,087) | 638 | % | |||||||||||||||
Interest income, net decreased by $6.0 million primarily driven by lower average investment balances and a lower weighted-average book yield on our marketable securities during the three months ended July 31, 2026. The change in other income (expense), net was primarily due to net foreign currency exchange fluctuations and net losses on strategic investments.
Provision for Income Taxes
Three Months Ended July 31, | Change | ||||||||||||||||||||||
2026 | 2025 | $ | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Provision for income taxes | $ | 6,376 | $ | 3,270 | $ | 3,106 | 95 | % | |||||||||||||||
The provision for income taxes increased by $3.1 million, primarily due to $2.8 million of interest expense recognized in the current period on the ITA liability pursuant to the final settlement agreement reached in fiscal 2026.
We compute our tax provision for interim periods by applying the estimated annual effective tax rate to year-to-date income from continuing operations and adjusting for discrete items arising in those periods.
Comparison of the Six Months Ended July 31, 2026 and 2025
Revenue
| Six Months Ended July 31, | Change | ||||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Revenue | $ | 568,638 | $ | 471,212 | $ | 97,426 | 21 | % | |||||||||||||||
Revenue increased by $97.4 million primarily due to a combination of sales to new customers and sales of additional licenses and platform solutions to existing customers.
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Cost of Revenue, Gross Profit, and Gross Margin
| Six Months Ended July 31, | Change | ||||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Cost of revenue | $ | 159,528 | $ | 117,006 | $ | 42,522 | 36 | % | |||||||||||||||
| Gross profit | $ | 409,110 | $ | 354,206 | $ | 54,904 | 16 | % | |||||||||||||||
| Gross margin | 72 | % | 75 | % | |||||||||||||||||||
Cost of revenue increased by $42.5 million primarily due to an $18.3 million increase in cloud hosting usage charges to support our expanding business, a $12.3 million increase in customer support costs, which were mostly personnel-related, a $7.9 million increase in amortization of acquired intangible assets in connection with the fiscal 2026 acquisitions, and a $3.1 million increase in amortization of capitalized internal-use software due to the continued investment in our platform. Gross margin decreased to 72% compared to 75% in the prior period, primarily due to higher costs of revenue associated with scaling operations to meet increased customer demand and sales volume.
Research and Development
| Six Months Ended July 31, | Change | ||||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Research and development expenses | $ | 192,652 | $ | 151,344 | $ | 41,308 | 27 | % | |||||||||||||||
Research and development expenses increased by $41.3 million primarily due to an increase in personnel-related expenses of $30.1 million. This included a $12.1 million increase in stock-based compensation expense, primarily driven by the new equity awards granted, including those issued in connection with the fiscal 2026 acquisitions. The remaining increase was attributable to a $4.8 million increase in cloud hosting expenses driven by expanded research and development activities, a $3.8 million increase in general services expenses primarily driven by higher software subscription costs, and a $2.2 million increase in allocated overhead costs.
Sales and Marketing
| Six Months Ended July 31, | Change | ||||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Sales and marketing expenses | $ | 255,656 | $ | 261,760 | $ | (6,104) | (2) | % | |||||||||||||||
Sales and marketing expenses decreased by $6.1 million primarily due to a $9.8 million decrease in marketing-related expenses, reflecting lower corporate marketing, advertising and promotions costs. The decrease was partially offset by a $2.0 million increase in allocated overhead costs and a $1.4 million increase in software subscription costs.
General and Administrative
| Six Months Ended July 31, | Change | ||||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| General and administrative expenses | $ | 106,824 | $ | 100,153 | $ | 6,671 | 7 | % | |||||||||||||||
General and administrative expenses increased by $6.7 million, primarily due to a $5.7 million increase in personnel-related expenses, including a $1.0 million increase in stock-based compensation expense, as a result of
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increased headcount, and a $3.0 million increase in legal expenses, partially offset by a $2.8 million decrease in consulting expenses.
Restructuring
| Six Months Ended July 31, | Change | ||||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Restructuring | $ | 24,457 | $ | 9,050 | $ | 15,407 | 170 | % | |||||||||||||||
Restructuring charges increased by $15.4 million, primarily due to $24.4 million of charges related to the May 2026 Plan, consisting of $13.6 million in employee severance and related benefits and $10.8 million of stock-based compensation expense from the acceleration and modification of certain equity awards. This was partially offset by a $9.1 million decrease in restructuring charges related to the March 2025 Plan and July 2025 Plan, which included $3.9 million of contract termination charges, $3.0 million of severance and employee benefit charges, and $2.2 million of asset impairment charges related to facilities.
Interest Income, Net, and Other Income (Expense), Net
| Six Months Ended July 31, | Change | ||||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Interest income, net | $ | 12,978 | $ | 24,486 | $ | (11,508) | (47) | % | |||||||||||||||
| Other income (expense), net | $ | 76 | $ | 165 | $ | (89) | (54) | % | |||||||||||||||
Interest income, net decreased by $11.5 million primarily driven by lower average investment balances and a lower weighted-average book yield on our marketable securities during the six months ended July 31, 2026. The change in other income (expense), net was primarily due to net gains on strategic investments, partially offset by net foreign currency exchange fluctuations.
Provision for Income Taxes
| Six Months Ended July 31, | Change | ||||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Provision for income taxes | $ | 12,139 | $ | 136,762 | $ | (124,623) | (91) | % | |||||||||||||||
The provision for income taxes decreased by $124.6 million primarily due to the non-recurrence of a $136.0 million accrual for an unrecognized tax benefit recorded in the prior year in connection with our matter with the ITA. This decrease was partially offset by the non-recurrence of a $4.7 million discrete tax benefit from the release of a valuation allowance on Israeli deferred tax assets recorded in the prior year, as well as $5.4 million of interest expense recognized in the current period on the ITA liability pursuant to the final settlement agreement reached in fiscal 2026.
We compute our tax provision for interim periods by applying the estimated annual effective tax rate to year-to-date income from continuing operations and adjusting for discrete items arising in those periods.
Liquidity and Capital Resources
We have financed operations primarily through proceeds received from sales of equity securities and payments received from our customers, and we have generated operating losses, as reflected in our accumulated deficit of $2.2 billion and $2.1 billion as of July 31, 2026 and January 31, 2026, respectively. We expect these and other operating losses to continue for the foreseeable future. We also expect to incur significant research and development, sales and marketing, and general and administrative expenses over the next several years in connection with the continued
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development and expansion of our business. On January 8, 2026, we entered into the Agreement with the ITA that fully and finally resolves disputed tax matters regarding intercompany transfer pricing and intellectual property valuations for fiscal years 2021 through 2025. As more fully described in the section titled “Risk Factors—Our corporate structure and intercompany arrangements are subject to the tax laws of various jurisdictions, and we could be obligated to pay additional taxes, which would harm our operating results and financial condition,” through July 31, 2026, we recorded a total tax expense of $186.3 million, inclusive of interest, related to the Agreement with the ITA. Pursuant to the Agreement, we are required to make installment payments in Israeli New Shekels through fiscal 2031, with unpaid amounts subject to a 7.0% annual interest rate, and an option to extend the final payment through 2033. These payments will adversely affect our cash flows over the next several years. Furthermore, in the event of a change in control, all unpaid amounts plus interest that would have accrued through 2033—$259.7 million (or 792.7 million Israeli New Shekels) as of July 31, 2026, less cumulative payments made—would accelerate and become immediately due.
As of July 31, 2026 and January 31, 2026, our principal source of liquidity was cash, cash equivalents, and investments of $813.2 million and $769.6 million, respectively.
In the short term, we believe that our existing cash, cash equivalents, and investments will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months. We believe our available liquidity, together with expected cash flows from operations, will be sufficient to fund these requirements in addition to our other operating needs over the next 12 months. In the long term beyond the next 12 months, our future capital requirements will depend on many factors, including macroeconomic conditions, our revenue growth rate, the timing and the amount of cash received from customers, the expansion of sales and marketing activities, the timing and extent of spending to support research and development efforts, the price at which we are able to purchase third-party cloud infrastructure, expenses associated with our international expansion, the introduction of platform enhancements, and the continuing market adoption of our platform. We have, and in the future, we may enter into arrangements to acquire or invest in complementary businesses, products, and technologies. We may be required to seek additional equity or debt financing. In the event that we require additional financing, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued innovation, we may not be able to compete successfully, which would harm our business, operating results, and financial condition.
We hold our cash, cash equivalents, and investments with a diverse group of banking partners. However, any instability in the U.S. or global banking system or relating to the federal budget may impact liquidity both in the short term and long term and may result in adverse impacts to our or our customers’ business, including in our customers’ ability to pay for our platform.
The following table shows a summary of our cash flows for the periods presented:
Six Months Ended July 31, | ||||||||||||||
2026 | 2025 | |||||||||||||
| (in thousands) | ||||||||||||||
| Net cash provided by operating activities | $ | 31,948 | $ | 51,231 | ||||||||||
Net cash (used in) provided by investing activities | $ | (23,976) | $ | 65,642 | ||||||||||
Net cash provided by (used in) financing activities | $ | 10,660 | $ | (28,399) | ||||||||||
Operating Activities
Our largest source of operating cash is payments received from our customers. Our primary uses of cash from operating activities are for personnel-related expenses, sales and marketing expenses, third-party cloud infrastructure expenses, and overhead costs.
Our operating cash flow is influenced by seasonal billing patterns, with a concentration of annual billings in our fiscal fourth quarter due to enterprise buying and renewal cycles. This makes our fiscal first quarter our strongest
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quarter for collections and operating cash flow. Acquisitions can also impact cash flow due to transaction costs, financing expenses, and lower near-term operating cash flow contributions from acquired entities.
Cash provided by operating activities primarily consists of our net loss adjusted for certain non-cash items, including stock-based compensation expense, depreciation and amortization, amortization of deferred contract acquisition costs, and changes in operating assets and liabilities during each period.
Cash provided by operating activities during the six months ended July 31, 2026 was $31.9 million, primarily consisting of $243.2 million of adjustments for non-cash items, partially offset by our net loss of $169.6 million and $41.6 million of cash used by changes in our operating assets and liabilities. The main drivers of the changes in operating assets and liabilities were a $55.5 million decrease in deferred revenue, a $39.1 million increase in deferred contract acquisition costs, and a $16.9 million decrease in accrued expenses and other liabilities. These amounts were partially offset by a $68.8 million decrease in accounts receivable and a $6.4 million increase in accrued payroll and benefits.
Cash provided by operating activities during the six months ended July 31, 2025 was $51.2 million, primarily consisting of adjustments for non-cash items of $202.9 million, and $128.6 million provided by net changes to our operating assets and liabilities, partially offset by our net loss of $280.2 million. The main drivers of the changes in operating assets and liabilities were an increase in accrued and other liabilities of $144.0 million, of which $136.0 million is related to an accrual for an unrecognized tax benefit related to our ITA matter, a $56.4 million decrease in accounts receivable, a $3.2 million decrease in prepaid expenses and other assets, and a $1.5 million increase in accounts payable due to timing of invoices received from vendors. These amounts were partially offset by a $36.1 million increase in deferred contract acquisition costs, a $25.3 million decrease in deferred revenue, a $13.1 million decrease in accrued payroll and benefits, and a $2.1 million decrease in operating lease liabilities.
Investing Activities
Cash used in investing activities during the six months ended July 31, 2026 was $24.0 million, primarily consisting of $260.4 million of investment purchases, which included a $100.0 million strategic investment in Knight JV, LLC, $14.0 million of capitalized internal-use software costs, and $1.0 million of payments related to holdback releases in connection with our fiscal 2026 acquisitions. These amounts were partially offset by $252.0 million of proceeds from sales and maturities of investments.
Cash provided by investing activities during the six months ended July 31, 2025 was $65.6 million, primarily consisting of $286.8 million of proceeds from sales, maturities and return of capital of investments. These amounts were partially offset by $208.1 million of investment purchases, and $12.5 million of capitalized internal-use software costs.
Financing Activities
Cash provided by financing activities during the six months ended July 31, 2026 was $10.7 million, primarily consisting of $7.5 million of proceeds from the issuance of common stock under our Employee Stock Purchase Plan (ESPP), and $3.1 million of proceeds from the exercise of employee stock options.
Cash used in financing activities during the six months ended July 31, 2025 was $28.4 million, primarily consisting of $52.7 million in repurchases of common stock, partially offset by $15.2 million of proceeds from the exercise of employee stock options and $9.1 million of proceeds from the issuance of common stock under our ESPP.
Contractual Obligations and Commitments
Except as discussed in Note 11, Commitments and Contingencies, to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, there were no material changes outside of the ordinary course of business in our contractual obligations and commitments from those disclosed in our Annual Report.
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Critical Accounting Policies and Estimates
Our condensed consolidated financial statements are prepared in accordance with GAAP. The preparation of condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, and we evaluate our estimates and assumptions on an ongoing basis. Actual results could differ significantly from the estimates made by management. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, operating results, and cash flows could be affected.
There have been no material changes to our critical accounting policies and estimates as compared to those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth in our Annual Report.
Recently Issued Accounting Pronouncements
Refer to “Recently Issued Accounting Pronouncements Not Yet Adopted” in Note 2, Summary of Significant Accounting Policies in Part I, Item 1 of this Quarterly Report on Form 10-Q for a description of recent accounting pronouncements and our expectation of their impact, if any, on our results of operations and financial condition.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial condition due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of fluctuations in interest rates and foreign currency exchange rates.
Interest Rate Risk
As of July 31, 2026, we had $813.2 million of cash, cash equivalents, and investments, which consist of money market funds, U.S. treasury securities, commercial paper, corporate notes and bonds, and U.S. agency securities. We also had $13.8 million of restricted cash as of July 31, 2026, primarily consisting of indemnity escrow funds related to acquisitions and collateralized letters of credit established in connection with lease agreements for our facilities. Our cash, cash equivalents, and investments are held for working capital purposes. We do not enter into investments for trading or speculative purposes. The effect of a hypothetical 100 basis point change in interest rates would result in a $1.7 million change in the fair market value of our investment portfolio as of July 31, 2026.
Foreign Currency Exchange Risk
To date, primarily all of our sales contracts have been denominated in U.S. dollars, therefore our revenue is not subject to foreign currency risk. Operating expenses within the U.S. are primarily denominated in U.S. dollars, while operating expenses incurred outside the U.S. are primarily denominated in each country’s respective local currency. In addition, the liability to the ITA associated with the Agreement is denominated in Israeli New Shekel. As a result, our operating results and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates. Foreign currency transaction gains and losses are recorded in other income (expense), net in the condensed consolidated statements of operations.
We enter into foreign currency forward contracts to economically manage the foreign currency exchange rate risk associated with the aforementioned ITA liability denominated in the Israeli New Shekel. These forward contracts are not designated as hedging instruments for accounting purposes. The effectiveness of our risk management strategy and the availability of future contracts may be limited, and we may not be able to successfully offset our exposure, which could adversely affect our financial condition and operating results. As of July 31, 2026, we had undesignated forward contracts with notional amounts of $162.5 million.
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ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, our management recognizes that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable assurance that the objectives of the disclosure controls and procedures are met. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, believes that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. However, management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are currently a party to, and may from time to time in the future, be involved in, various litigation matters and subject to claims that arise in the ordinary course of business, including claims asserted by third parties in the form of letters and other communications. For more information regarding legal proceedings and other claims in which we are involved, see Note 11, Commitments and Contingencies, to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, and is incorporated herein by reference.
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ITEM 1A. RISK FACTORS
Investing in our Class A common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information in this Quarterly Report on Form 10-Q, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our unaudited condensed consolidated financial statements and the accompanying notes included before making a decision to invest in our Class A common stock. These disclosures reflect our beliefs and opinions as to factors that could materially and adversely affect our securities in the future. References to past events are provided by way of example only and are not intended to be a complete listing of such events or a representation as to whether or not such factors or similar events have occurred in the past or their likelihood of occurring in the future. Our business, financial condition, operating results, or prospects could also be adversely affected by risks and uncertainties that are not presently known to us or that we currently believe are not material. If any of the risks actually occur, our business, financial condition, operating results, and prospects could be adversely affected. In that event, the market price of our Class A common stock could decline, and you could lose all or part of your investment.
Summary Risk Factors
Our business is subject to numerous risks and uncertainties, including those risks more fully described below. These risks include, among others, the following, which we consider our most material risks:
Risks Related to Our Business and Industry
•We have a limited operating history at our current scale, which makes it difficult to forecast our future results of operations.
•We have a history of losses, anticipate increases in our operating expenses in the future, and may not achieve or sustain profitability. If we cannot achieve and sustain profitability, our business, operating results, and financial condition will be adversely affected.
•We face intense competition and could lose market share to our competitors, which would adversely affect our business, operating results, and financial condition.
•Our operating results may fluctuate significantly, which could make our future results difficult to predict and could cause our operating results to fall below expectations.
•Adverse global macroeconomic conditions or reduced information technology spending could adversely affect our business, operating results, and financial condition.
•We may not be successful in our artificial intelligence initiatives, which could adversely affect our business, reputation, or financial results.
•A security incident impacting us or our third-party vendors and service providers, whether actual, alleged, or perceived, could harm our reputation, create liability, and regulatory exposure, and adversely affect our business, operating results, and financial condition.
•Defects, errors, or vulnerabilities in our platform, the failure of our platform to block malware or prevent a security breach, misuse of our platform, or risks of product liability claims would harm our reputation and adversely affect our business, operating results, and financial condition.
•Existing and future acquisitions, strategic investments, partnerships, or alliances could be difficult to identify and integrate, divert the attention of key management personnel, disrupt our business, dilute stockholder value and adversely affect our business, operating results, and financial condition.
•If we are unable to retain our customers, renew and expand our relationships with them, and add new customers, or our partners are unable to execute on their purchasing commitments, we may not be able to sustain revenue growth, and we may not achieve or maintain profitability in the future.
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•If our platform does not effectively interoperate within our customers’ IT infrastructure, deployments could be delayed or canceled, which would adversely affect our business, operating results, and financial condition.
•Disruptions or other business interruptions that affect the availability of our platform could adversely affect our customer relationships and overall business.
•We may not be able to timely and cost-effectively scale and adapt our existing technology to meet our customers’ performance and other requirements.
•If we are unable to maintain successful relationships with our channel partners and alliance partners, or if our channel partners or alliance partners fail to perform, our ability to market, sell and distribute our platform will be limited, and our business, operating results, and financial condition will be harmed.
Risks Related to Our People
•We rely on our management team and other key employees and will need additional personnel to grow our business, and the loss of one or more key employees or our inability to hire, integrate, train, manage, retain, and motivate qualified personnel, including members of our board of directors, could harm our business.
Risks Related to Our Intellectual Property
•Our proprietary rights may be difficult to enforce, which could enable others to copy or use aspects of our platform without compensating us.
•Third parties have claimed and may claim in the future that our platform infringes their intellectual property rights, and this may create liability for us or otherwise adversely affect our business, operating results and financial condition.
Risks Related to Regulatory Matters
•We are subject to laws and regulations affecting our business, including those related to the privacy and data protection of the personal data or other information we collect, process or share. Our actual or perceived failure to comply with such laws or regulations could harm our business.
•Complying with laws and regulations related to privacy and data protection could result in additional costs and liabilities to us, especially as new laws or regulations are enacted, change or are subject to various interpretations.
Risks Related to Ownership of Our Class A Common Stock
•The market price of our Class A common stock may be volatile, and you could lose all or part of your investment.
•The dual class structure of our common stock has the effect of concentrating voting control with certain stockholders who held our capital stock prior to the completion of our IPO, including our directors, executive officers, and other beneficial owners who hold in the aggregate approximately 26% of the voting power of our capital stock, which will limit or preclude your ability to influence corporate matters, including the election of directors and the approval of any change of control transaction.
Risks Related to Our Business and Industry
We have a limited operating history at our current scale, which makes it difficult to forecast our future results of operations.
As a result of our limited operating history at our current scale and the introduction of new products in recent years, our ability to accurately forecast our future results of operations is limited and is subject to a number of risks and uncertainties, including those described herein. Any predictions about our future revenue and expenses may not
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be as accurate as they would be if we had a longer operating history at our current scale or operated in a more predictable or established market. If our assumptions regarding these risks and uncertainties are incorrect or change due to fluctuations in our markets or otherwise, or if we do not address these risks successfully, our operating and financial results could differ materially from our expectations and our business and operating results would be adversely affected. We cannot assure you that we will be successful in addressing these and other challenges we may face in the future. The risks associated with having a limited operating history may be exacerbated by current macroeconomic conditions.
We have a history of losses, anticipate increases in our operating expenses in the future, and may not achieve or sustain profitability. If we cannot achieve and sustain profitability, our business, operating results, and financial condition will be adversely affected.
We have incurred net losses in all periods since our inception, and we may not achieve or maintain profitability in the future. We experienced a net loss of $93.4 million and $72.0 million for the three months ended July 31, 2026 and 2025, respectively. As of July 31, 2026, we had an accumulated deficit of $2.2 billion. While we have historically experienced significant growth in revenue, we cannot predict when or whether we will reach or maintain profitability. We also expect our operating expenses to increase in the future as we continue to invest in our future growth, including expanding our research and development function to drive further development of our platform, expanding our sales and marketing activities, and expanding into adjacent markets and geographic locations, which could negatively affect our operating results if our total revenue does not increase. In addition to the anticipated costs to grow our business, we have incurred and expect to continue to incur significant legal, accounting, and other expenses as a public company. Our revenue growth is expected to slow down as we scale and our revenue may decline for a number of other reasons, including reduced demand for our platform, increased competition, a decrease in the growth or reduction in the size of our overall market, or if we cannot capitalize on growth opportunities, including acquisitions, new products, services, and feature releases. While we consistently evaluate opportunities to reduce our operating costs and optimize efficiencies, including personnel restructuring plans, we cannot guarantee that these efforts will be successful or that we will not re-accelerate operating expenditures in the future in order to capitalize on growth opportunities. If we fail to increase our revenue to offset increases in our operating expenses, or manage our costs as we invest in our business, we may not achieve or sustain profitability.
We face intense competition and could lose market share to our competitors, which would adversely affect our business, operating results, and financial condition.
The market for cybersecurity products and services is intensely competitive, fragmented and is rapidly evolving, characterized by changes in technology, customer requirements, industry standards, increasingly sophisticated attackers, and frequent introductions of new or improved products and services. We expect to continue to face intense competition from current competitors, as well as from new entrants into the market, as our competitors complete strategic acquisitions or form cooperative relationships and/or customer requirements evolve. If we are unable to anticipate or react to these challenges, our competitive position could weaken, and we would experience a decline in revenue or reduced revenue growth, and loss of market share that would adversely affect our business, operating results, and financial condition.
Our ability to compete effectively depends upon numerous factors, many of which are beyond our control, including, but not limited to:
•our ability to attract and retain new customers, expand our platform or sell additional products and services to our existing customers;
•our ability to attract, train, retain, and motivate talented employees;
•our ability to successfully incorporate new technologies into our platform, including generative and agentic AI;
•the budgeting cycles, seasonal buying patterns, and purchasing practices of our customers, including any slowdown in technology spending due to U.S. and general global macroeconomic conditions;
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•general global macroeconomic and political conditions, both domestically and in our foreign markets that could impact regions where we operate, including changes in U.S. federal spending, significant political or regulatory developments including changes in trade policy, global economic slowdowns, actual or perceived global banking and finance related issues, government shutdowns, inflation, interest rate volatility, supply chain disruptions, labor shortages, and potential global recession;
•the impact of natural or man-made global events on our business, including regional geopolitical conflicts around the world;
•changes in customer, distributor, or reseller requirements, or market needs or preferences;
•the timing and success of new product and service introductions by us or our competitors, or any other change in the competitive landscape of our industry, including consolidation among our competitors or customers, and strategic partnerships entered into by and between our competitors, and changes in pricing;
•changes in our mix of products, subscriptions and services sold, including changes in the average contract length for subscriptions and support;
•our ability to successfully and continuously expand our business domestically and internationally;
•changes in the growth rate of endpoint security, cloud security, and overall cybersecurity product platform and services sectors;
•deferral of orders from customers in anticipation of new or enhanced products and services announced by us or our competitors;
•significant security breaches of, technical difficulties with, or interruptions to the use of our platform;
•the timing and costs related to the development or acquisition of technologies, businesses, or strategic partnerships;
•our ability to execute, complete, or efficiently integrate any acquisitions that we may undertake;
•our ability to increase the size and productivity of our distribution channels;
•decisions by potential customers to purchase security solutions from larger, more established security vendors or from their primary network equipment vendors;
•timing of revenue recognition and revenue deferrals;
•insolvency or credit difficulties confronting our customers, which could increase due to U.S. and global macroeconomic issues, including actual or perceived global banking and finance related issues, inflation, interest rate volatility, government shutdowns and market downturns;
•the cost and potential outcomes of litigation or other proceedings, which could have a material adverse effect on our business;
•future accounting pronouncements or changes in our accounting policies; and
•increases or decreases in our expenses caused by fluctuations in foreign currency exchange rates.
Many of our competitors have greater financial, technical, marketing, sales, and other resources, greater name recognition, longer operating histories, and a larger base of customers than we do. Our competitors may be able to devote greater resources to the development, promotion and sale of their products and services than we can, and they may offer lower pricing than we do or bundle certain competing products and services at lower prices. Our competitors may also have greater resources for research and development of new technologies, customer support and to pursue acquisitions, or they may have other financial, technical, or other resource advantages. Our larger competitors have substantially broader and more diverse product and service offerings and more mature distribution
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and go-to-market strategies, which allow them to leverage their existing customer and distributor relationships to gain business in a manner that discourages potential customers from purchasing our platform.
Conditions in our market could change rapidly and significantly as a result of technological advancements, including but not limited to increased advancements and proliferation in the use of artificial intelligence applications, partnering or acquisitions by our competitors or continuing market consolidation. Competitive pressures in our market or our failure to compete effectively may result in price reductions, fewer orders, reduced revenue and gross margin, increased net losses, and loss of market share. Even if there is significant demand for endpoint and cloud security solutions like ours, if our competitors include functionality that is, or is perceived to be, equivalent to or better than ours in legacy products that are already generally accepted as necessary components of an organization’s IT security architecture, we will have difficulty increasing the market penetration of our platform. Furthermore, even if the functionality offered by other cybersecurity providers is different and more limited than the functionality of our platform, organizations may elect to accept such limited functionality in lieu of purchasing products and services from additional vendors like us. If we are unable to compete successfully, or if competing successfully requires us to take aggressive action with respect to pricing or other actions, our business, financial condition, and operating results would be adversely affected.
Our operating results may fluctuate significantly, which could make our future results difficult to predict and could cause our operating results to fall below expectations.
Our operating results have varied significantly from period to period in the past, and we expect that our operating results will continue to vary significantly in the future such that period-to-period comparisons of our operating results may not be meaningful. Accordingly, our financial results in any one quarter should not be relied upon as indicative of future performance. Fluctuations in quarterly results may negatively impact the trading price of our Class A common stock. Our quarterly financial results may fluctuate as a result of a number of factors, many of which are outside of our control and may be difficult to predict, including, without limitation:
•global events, general global macroeconomic and political conditions, both domestically and internationally, including geopolitical conflicts (including, but not limited to, the conflict in Iran), changes in U.S. federal spending, significant political or regulatory developments including changes in trade policy, tariffs, global economic slowdowns, actual or perceived global banking and finance related issues, government shutdowns, increased risk of inflation, interest rate volatility, supply chain disruptions, labor shortages and potential global recession;
•our ability to attract new and retain existing customers or sell additional features to existing customers;
•our ability to enter into new agreements with channel partners and expand relationships with existing channel partners;
•the budgeting cycles, seasonal buying patterns, and purchasing practices of customers; including decisions by organizations to purchase security solutions from larger, more established security vendors or from their primary IT equipment vendors and customer insolvency or credit difficulties;
•the timing and length of our sales cycles;
•changes in customer or channel partner requirements or market needs;
•changes in the growth rate of the cybersecurity market generally and market for endpoint security;
•the timing and success of new product and service introductions by us, or any other competitive developments, including consolidation among our customers or competitors and changes in our pricing policies or those of our competitors;
•the level of awareness of cybersecurity threats, particularly advanced cyberattacks, and the market adoption of our platform;
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•our ability to successfully expand our business domestically and internationally, including the impact of the amount and timing of operating costs and capital expenditures related to the expansion of our business;
•any disruption in our relationship with ISVs, alliance partners, or channel partners, including MSPs, MSSPs, MDRs, OEMs, and IR firms;
•significant security breaches of, technical difficulties with, or interruptions to, the use of our platform or other cybersecurity incidents;
•extraordinary expenses such as litigation or other dispute-related settlement payments or outcomes, taxes, regulatory fines or penalties;
•future accounting pronouncements or changes in our accounting policies or practices;
•negative media coverage or publicity; and
•increases or decreases in our expenses caused by fluctuations in foreign currency exchange rates.
In addition, we experience seasonal fluctuations in our financial results as we typically receive a higher percentage of our annual orders from new customers, as well as renewal orders from existing customers, in our fourth fiscal quarter due to the annual budget approval process of many of our customers.
Any of the above factors, individually or in the aggregate, may result in significant fluctuations in our financial and other operating results from period to period. As a result of this variability, our historical operating results should not be relied upon as an indication of future performance. Moreover, this variability and unpredictability could result in our failure to meet our operating plan or the expectations of investors or analysts for any period. If we fail to meet such expectations, our stock price could fall substantially, and we could face costly lawsuits, including securities class action lawsuits.
Adverse global macroeconomic conditions or reduced information technology spending could adversely affect our business, operating results, and financial condition.
Our business depends on the overall demand for information technology and on the economic health of our current and prospective customers. In addition, the purchase of our platform is often discretionary and may involve a significant commitment of capital and other resources. Weak global and regional economic conditions, including the changes in U.S. federal spending, significant political or regulatory developments including changes in trade policy (including actual or threatened changes in tariffs and trade restrictions), U.S. and global macroeconomic issues, actual or perceived global banking and finance related issues, labor shortages, supply chain disruptions, fluctuating interest rates and inflation, spending environments, geopolitical instability, warfare and uncertainty, weak economic conditions in certain regions or a reduction in information technology spending regardless of macroeconomic conditions, including the effects of the conflicts in the Middle East and Ukraine, and tensions between China and Taiwan, could adversely affect our business, operating results, and financial condition, including resulting in longer sales cycles, a negative impact on our ability to attract and retain new customers or expand our platform or sell additional products and services to our existing customers, lower prices for our platform, higher default rates among our channel partners, reduced sales to new or existing customers and slower or declining growth. For example, as a result of current uncertainty in macroeconomic conditions and related higher cost consciousness around IT budgets, we have continued to experience certain impacts on our business, including a decline in usage and consumption patterns from certain customers, especially larger enterprise customers, longer sales cycles, and deal downsizing by new customers and renewals by existing customers, especially larger enterprises. We expect the global macroeconomic conditions impacting demand to persist in the near term. Deterioration in economic conditions in any of the countries in which we do business could also cause slower or impaired collections on accounts receivable, which may adversely impact our liquidity and financial condition.
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We are investing in expanding our platform, including our cloud security products, and it is difficult to predict adoption and demand.
We are meaningfully investing in our platform, including growing our cloud security product. For example, in September 2025, we acquired Prompt, a private company focused on the generative and agentic AI security space, and Observo, an AI-ready data pipeline company.
It is difficult to predict customer adoption and demand for our platform, the size and growth rate of this market, the entry of competitive products and services or the success of existing competitive products and services.
Any expansion in our market depends on a number of factors, including the cost, performance and perceived value associated with, and customer adoption of, our platform. If the market for our platform does not achieve widespread adoption or there is a reduction in demand for our software or our services caused by a lack of customer acceptance, implementation challenges for deployment, technological challenges, competing technologies and services, decreases in corporate spending, weakening economic conditions, or otherwise, it could result in reduced customer orders and decreased revenue, which would adversely affect our business operations and financial condition.
Our platform interoperates with, but does not necessarily replace, other security and log analytics products. Businesses that use other cybersecurity products and services may be hesitant to purchase our platform if they believe their existing products and services provide a level of security that is sufficient to meet their needs. If we do not succeed in convincing customers that our platform should be an integral part of their overall approach to security, our sales will not grow as quickly as anticipated, or at all, which would have an adverse impact on our business, operating results, and financial condition.
We may not be successful in our artificial intelligence initiatives, which could adversely affect our business, reputation, or financial results.
We incorporate generative AI into many of our offerings, including Purple AI and Wayfinder. Purple AI streamlines threat hunting across various types of data and synthesizes threat intelligence and insights in natural language. Wayfinder uses agentic AI, which applies advanced reasoning and automation to process volumes of telemetry and security data, triaging security alerts more accurately and with context. As with many innovations, generative AI presents risks, challenges, and unintended consequences that could impact our ability to incorporate the use of generative AI in our business. For example, language models may provide flawed or inaccurate results or misinterpret prompts. Further, data practices by us or others that result in controversy could also impair the acceptance of AI solutions. This in turn could undermine confidence in the decisions, predictions, analyses or other content that our AI initiatives produce. Our generative AI solutions are reliant on third-party foundation models that may change their availability or commercial terms in a manner that negatively affects our offering. Furthermore, the integration of third-party AI models with our products and services relies on certain safeguards implemented by the third-party developers of the underlying AI models, including those related to the accuracy, bias, and other variables of the data and their safeguards may be insufficient. This may expose us to risks including supply-chain compromise, model poisoning, and vulnerabilities inherent in large-language-model-integrated application attack surfaces. If third-party AI models we rely upon are compromised or behave unexpectedly, our platform features could be degraded or exploited for malicious purposes, and we could face operational disruption, reputational harm, or regulatory liability. In addition, our competitors or other third parties may incorporate generative AI solutions into their products more successfully than us, and their solutions may achieve higher market acceptance than ours, which may result in us failing to recoup our investments in developing generative AI-powered offerings. We have made and expect to continue to make significant investments in our AI technology, including in Purple AI and Wayfinder. Our ability to employ AI, or the ability of our competitors to do so more successfully, may negatively impact our gross margins, impair our ability to compete effectively, result in reputational harm and have an adverse impact on our operating results. Further, we have, and may in the future, implement AI-based tools and solutions, including third-party software solutions, in order to, among other things, drive efficiencies in our business, IT systems and other internal processes and improve customer support. If these tools and solutions do not achieve their expected benefits or if such tools and solutions have defects, bugs, errors, or vulnerabilities, our business may be adversely impacted.
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Moreover, AI may give rise to litigation risk, including potential intellectual property, privacy, or cybersecurity liability. Because AI is an emerging technology, there is not a mature body of case law, particularly around copyright, construing the appropriateness of certain uses of data, whether through the employment of large language models or other models leveraging data found on the Internet, and the evolution of this law may limit our ability to exploit AI tools, or expose us to litigation. Intellectual property disputes regarding the use of copyrighted or proprietary data to train AI models, or the outputs generated by such models, could result in costly litigation and liability. Further, AI presents emerging ethical issues and if our use of AI algorithms draws controversy due to their perceived or actual impact on society such as concerns regarding bias, discrimination, misinformation, automation or transparency, we may experience brand or reputational harm, or competitive harm.
In addition, given the complex nature of AI technology, we face an evolving regulatory landscape. The U.S. federal government, various state legislatures and other government entities worldwide have implemented and are in the process of implementing specific laws, regulations, policies and obligations relating to the use of AI, and we will need to continue to monitor these developments to ensure our products remain compliant with such applicable regulations. For example, the E.U. AI Act, which entered into force in 2024 with phased implementation that began in 2025, imposes obligations on AI providers and deployers based on risk classification, including requirements for transparency, documentation, and risk management. In the U.S., a December 2025 executive order asserted federal preemption over the state AI regulations, creating regulatory uncertainty as the scope and enforceability of this preemption claim remains subject to debate and challenge. Compliance with evolving AI regulations will require significant investment in quality assurance, testing, documentation, and reporting systems, and failure to comply could result in fines, enforcement actions, or restrictions on our ability to offer AI-powered products and services.
Moreover, we are subject to significant competition from other companies, some of which have longer operating histories and significantly greater financial, technical, marketing, distribution, professional services, or other resources than us. Our competitors may incorporate AI into their products more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our financial results. Any of the foregoing could adversely affect our business, reputation, or financial results.
A security incident impacting us, or our third-party vendors and service providers, whether actual, alleged, or perceived, could harm our reputation, create liability and regulatory exposure, and adversely impact our business, operating results, and financial condition.
Companies are subject to an increasing number and wide variety of attacks on their networks on an ongoing basis. Traditional computer “hackers,” malicious code (such as viruses and worms), phishing attempts, ransomware, account takeover, business email compromise, employee fraud, theft or misuse, social engineering (including phishing, deepfakes, voice cloning), software supply-chain compromises, denial of service attacks, reverse-engineering of AI algorithms, and sophisticated nation-state and nation-state supported actors engage in intrusions and attacks that create risks for our internal networks, cloud deployed products and the information they store and process. Cybersecurity companies face particularly intense attack efforts, and we have faced, and will continue to face, cyber threats and attacks from a variety of sources. The research that we conduct and report may make us, or our customers, a further target for attacks of all kinds. We provide security services to many highly targeted entities, such as U.S. government agencies, defense contractors, and non-U.S. governments. Our work protecting these entities increases the likelihood that we may be targeted by nation-state actors, including those from countries with a history of conducting cyber operations against such organizations. State-supported and geopolitical-related cyberattacks may rise in connection with regional geopolitical conflicts. In addition, our cybersecurity product is likely considered a valuable target for lateral attacks because of its highly privileged access. Additionally, bad actors are utilizing AI-based tools to execute more sophisticated and scalable attacks, creating unprecedented cybersecurity challenges.
Although we have implemented security measures designed to prevent such attacks, our networks and systems, and those of our third-party vendors and service providers have in the past, and may in the future be, breached due to the actions of outside parties, human error, insufficient cybersecurity controls, malfeasance, a combination of these, or otherwise, and as a result, an unauthorized party may obtain access to our and/or our customers’ systems, networks, or data. We and our third-party vendors and service providers may face difficulties or delays in identifying or otherwise responding to any attacks or actual or potential security breaches or threats. More capable general-purpose AI models released by major providers that are or may soon become widely accessible to developers and end
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users have amplified, and will continue to amplify, the capabilities of threat actors, enabling more targeted and convincing phishing and social engineering campaigns, automated identification and exploitation of software vulnerabilities, the generation of novel malware and attack vectors, prompt injection attacks, automated reconnaissance, and the ability to conduct attacks at greater speed and scale than previously possible. These AI-enhanced threats may be more difficult to detect using traditional security measures and may require us to research and invest in additional defensive capabilities. These risks are exacerbated by developments in generative AI. A breach in our or in our third-party vendors and service providers’ data security or an attack against our platform or our third-party vendors’ or service providers’ platform could impact our networks or the networks and data of our customers that are secured by our platform, creating system disruptions or slowdowns and providing access to malicious parties to information stored on our networks or the networks of our customers, resulting in data being publicly disclosed, misused, altered, lost, or stolen, which could subject us to liability and adversely affect our financial condition. If compromised, our own systems or the systems of our third-party vendors and service providers could be used to facilitate or magnify an attack. Further, the trend towards remote and hybrid work by companies and individuals has generally increased the attack surface available to bad actors for exploitation, and as such, the risk of a cybersecurity incident potentially occurring has increased. We have accordingly increased our investments in protective measures and risk mitigation strategies, but we cannot guarantee that our efforts, or the efforts of our third-party vendors and service providers or efforts of others upon whom we rely and partner with, will be successful in preventing any such information security incidents. Protecting our own assets has become more expensive from a dollar investment and time perspective and these costs may increase as the threat landscape evolves, including as a result of the use of AI by bad actors.
Any actual, alleged, or perceived security breach in our systems or networks or those of our third-party vendors and service providers, or any other actual, alleged or perceived data security incident we suffer, could result in damage to our reputation, negative publicity, loss of customers and sales, loss of competitive advantages over our competitors, increased costs to remedy any problems and otherwise respond to any incident, regulatory investigations and enforcement actions, fines and penalties, costly litigation, and other liability. We may also be required to publicly disclose material security breaches, which could exacerbate the adverse impact of such incidents. We would also be exposed to a risk of loss or litigation and potential liability under applicable laws, regulations, and contracts that protect the privacy and security of personal data. For additional information regarding these laws and regulations, see the Risk Factor titled “We are subject to laws and regulations affecting our business, including those related to the privacy and data protection of the personal data or other information we collect, process or share. Our actual or perceived failure to comply with such laws or regulations could harm our business.”
In addition, our customer agreements may require us to promptly report security breaches to our customers involving their data on our systems or those of third-party vendors or subcontractors processing such data on our behalf. This mandatory disclosure could be costly, result in litigation, harm our reputation, erode customer trust, and require significant resources to mitigate issues stemming from actual or perceived security breaches. Some of our customers may be subject to sector specific regulations, such as the E.U. Digital Operational Resilience Act (DORA) for financial services entities, which may require them to comply with enhanced third-party risk management and contractual obligations. In addition, if a high-profile cybersecurity incident occurs with respect to another SaaS provider or cybersecurity vendor, customers may lose trust in the security of the SaaS business model generally or in cybersecurity companies generally, which could adversely affect our ability to retain existing customers or attract new ones.
We may also incur significant financial and operational costs to investigate, remediate, eliminate and put in place additional tools and devices designed to prevent actual or perceived security breaches and other security incidents, as well as costs to comply with any notification obligations resulting from any security incidents. Any of these negative outcomes could adversely affect the market perception of our platform and customer and investor confidence in our company, and would adversely affect our business, operating results, and financial condition.
Defects, errors, or vulnerabilities in our platform, misuse of our platform, or risks of product liability claims would harm our reputation and adversely impact our business, operating results, and financial condition.
Our platform and product features are multi-faceted, rely on third-party software and infrastructure, and may be deployed with material defects, vulnerabilities, software “bugs” or errors that are not detected until after their
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commercial release and deployment to our customers. Vulnerabilities may be exploited by malicious actors and material defects may prevent our software from operating correctly or detecting malicious software. From time to time, certain of our customers and external researchers have reported defects in our platform related to performance, scalability, and compatibility. In addition, customers may request a software bill of materials where we disclose an inventory of software used by the customer along with potential defects and vulnerabilities. Our platform and product features also provide our customers with the ability to customize a multitude of settings, and administer devices on the applicable computing environment, and it is possible that a customer, partner or internal services team member could misconfigure or misuse our platform or otherwise fail to configure our products in an optimal manner. Such defects and misconfigurations of our platform could cause our platform to operate at suboptimal efficacy, cause it to fail to secure customers’ computing environments and detect and block threats, or temporarily interrupt our customers’ computing environments. We also make frequent updates to our platform, which may fail or be deployed incorrectly resulting in temporary vulnerability, or a material defect or downtime in our customer environments.
In addition, because the techniques used by computer hackers to access or sabotage target computing environments change frequently and generally are not recognized until launched against a target, there is a risk that an advanced attack could emerge that our platform is unable to detect or prevent. Furthermore, as a well-known provider of security solutions and because security solutions are highly privileged in customers’ environments, our networks, platform, products, including cloud-based technology, and customers could be targeted by attacks specifically designed to disrupt our business, harm our reputation or use our technology to gain unauthorized access. In addition, defects or errors in our platform could result in a failure to effectively update customers’ cloud-based products. Our data centers and networks may experience technical failures and downtime, may fail to distribute appropriate updates, or may fail to meet the increased requirements of a growing customer base, any of which could temporarily or permanently expose our customers’ computing environments, leaving their computing environments unprotected against cyber threats. Any of these situations could result in negative publicity to us, damage our reputation, and increase expenses and customer relations issues, which would adversely affect our business, financial condition, and operating results.
Advances in computer capabilities, discoveries of new weaknesses and other developments with software generally used online may increase the risk we will suffer a security breach. Our platform may fail to interoperate or conflict with customer environments causing customer downtime. We or our service providers may also suffer security breaches or unauthorized access to personal data, financial account information, and other confidential information due to employee error, rogue employee activity, unauthorized access by third parties acting with malicious intent or who commit an inadvertent mistake or social engineering. If we experience, or our service providers experience, any breaches of security measures or sabotage or otherwise suffer unauthorized use or disclosure of, or access to, personal data, financial account information or other confidential information, we might be required to expend significant capital and resources to address these problems. To the extent potential customers, industry analysts or testing firms believe that the failure to detect or prevent any particular threat is a flaw or indicates that our platform does not provide significant value, our reputation and business would be harmed. Any real or perceived defects, errors or vulnerabilities in our platform, or any other failure of our platform to detect an advanced threat, could result in:
•a loss of existing or potential customers;
•delayed or lost revenue and adverse impacts to our business, operating results, and financial condition;
•a delay in attaining, or the failure to attain, market acceptance;
•the expenditure of significant financial and research and development resources in efforts to analyze, correct, eliminate, or work around errors or defects, and address and eliminate vulnerabilities;
•an increase in resources devoted to customer service and support, which could adversely affect our gross margin;
•negative impact on our customers’ operations;
•harm to our reputation or brand; and
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•claims and litigation, regulatory inquiries, or investigations, enforcement actions, and other claims and liabilities, all of which may be costly and burdensome and further harm our reputation.
Because techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until after they are launched against a target, we and our service providers may be unable to anticipate these techniques or to implement adequate preventative measures. Moreover, if a high-profile cybersecurity incident occurs with respect to another SaaS provider, customers may lose trust in the security of the SaaS business model generally, which could adversely affect our ability to retain existing customers or attract new ones. Further, if another cybersecurity vendor were to experience a defect, error, or vulnerability, fail to detect a cybersecurity incident, or to cause interruptions in the networks of their customers, customers may lose trust in cybersecurity companies generally, including our platform, which could adversely affect our business, including our ability to retain existing customers or attract new ones.
In the last few years there have been many successful advanced cybersecurity incidents that have damaged several prominent companies despite strong information security measures. We expect that the risks associated with cybersecurity incidents and the costs of preventing such attacks will continue to increase in the future.
Limitation of liability provisions in our contracts may not fully protect us from security-related claims, particularly under applicable data protection laws. We maintain insurance to protect against certain claims associated with the use of our platform, but our insurance coverage may not adequately cover any claim asserted against us. Furthermore, our insurance coverage may not extend to all risks we face, including all AI-related risks, and may not cover us for all losses for errors or omissions caused by AI. In addition, even claims that ultimately are unsuccessful could result in our expenditure of funds in litigation, divert management’s time and other resources, and harm our reputation. We cannot be certain that our insurance coverage will be adequate for data handling or data security liabilities actually incurred, that insurance will continue to be available to us on economically reasonable terms, or at all, or that any future claim will not be excluded or otherwise be denied coverage by any insurer. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could adversely affect our business, operating results, and financial condition.
Existing and future acquisitions, strategic investments, partnerships or alliances could be difficult to identify and integrate, divert the attention of key management personnel, disrupt our business, dilute stockholder value and adversely affect our business, operating results, and financial condition.
As part of our business strategy, we have in the past and expect to continue to make investments in and/or acquire complementary companies, services, products, technologies, or talent. Our ability as an organization to acquire and integrate other companies, services or technologies in a successful manner is not guaranteed.
We may not be able to find suitable acquisition candidates, or complete acquisitions on favorable terms, if at all. Our due diligence efforts may fail to identify all of the material risks, liabilities or other challenges involved in an acquisition or strategic investment. Even if completed, acquisitions or investments may not strengthen our competitive position, may not achieve expected benefits, and may be viewed negatively by our customers or investors.
In addition, if we are unsuccessful at integrating acquired business, technologies or personnel, the revenue and operating results of the combined company could be adversely affected. Any integration process may require significant time and resources, and we may not be able to manage the process successfully. We may not successfully evaluate or utilize the acquired technology or personnel, or accurately forecast the financial impact of an acquisition transaction, causing unanticipated write-offs or accounting charges.
We have in the past and may in the future finance acquisitions through cash, debt, or equity securities, each of which could adversely affect our financial condition and the market price of our Class A common stock. The issuance of equity or debt to finance any such acquisitions could result in dilution to our stockholders, which may be significant. The incurrence of indebtedness would result in increased fixed obligations and could also include covenants or other restrictions that would impede our ability to manage our operations.
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Additional risks we may face in connection with acquisitions include:
•diversion of management’s attention and resources;
•the inability to integrate products, service offerings, technologies, operations, systems, controls or personnel;
•failure to retain key employees, customers or partners;
•cultural challenges associated with integrating employees from the acquired company into our organization;
•the need to implement or improve controls, procedures and policies at a business that prior to the acquisition may have lacked sufficiently effective controls, procedures and policies;
•unexpected security risks or higher than expected costs to improve the security posture of the acquired company;
•higher than expected costs to bring the acquired company’s IT infrastructure up to our standards;
•additional legal, regulatory, or compliance requirements;
•financial reporting, revenue recognition or other financial or control deficiencies of the acquired company that we don’t adequately address and that cause our reported results to be incorrect; and
•liability for activities of the acquired company before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities, and other known and unknown liabilities.
Our failure to address these risks or other problems encountered in connection with acquisitions and investments could cause us to fail to realize the anticipated benefits of these acquisitions or investments, cause us to incur unanticipated liabilities, and harm our business generally.
If we are unable to retain our customers, renew and expand our relationships with them, and add new customers, or our partners are unable to execute on their purchasing commitments, we may not be able to sustain revenue growth, and we may not achieve or maintain profitability in the future.
Historically, we have experienced rapid growth in the adoption of our platform, customer base, and revenue. However, we may not return to our prior growth rates or grow at the same rate in the future. Any success that we may experience in the future will depend, in large part, on our ability to, among other things:
•maintain, renew and expand our existing customer base;
•continue to attract new customers and drive broader and deeper adoption of our platform and services;
•our ability to enter into new agreements with channel partners and expand relationships with existing channel partners;
•improve the capabilities of our platform through research and development;
•successfully execute on partner purchasing commitments;
•continue to successfully expand our business domestically and internationally; and
•successfully compete in the cybersecurity industry.
Our customers have no obligation to renew their subscription for our platform after the expiration of their contractual subscription period, which is generally one to three years. In the normal course of business, some customers have elected not to renew or have reduced the scope or duration of their subscriptions. Our customer retention and expansion may decline or fluctuate as a result of a number of factors, including our customers’ satisfaction with our services, our pricing, customer security and networking issues and requirements, our customers’
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spending levels, our channel partner strategy and pricing, decreases in the number of endpoints to which our customers deploy our solution, mergers and acquisitions involving our customers, industry developments, competition, general economic conditions, or the perceived decline in the incidence of cyberattacks. If our efforts to maintain and expand our relationships with our existing customers are not successful, our business, operating results, and financial condition will materially suffer.
If our platform does not effectively interoperate within our customers’ IT infrastructure, deployments could be delayed or canceled, which would adversely impact our business, operating results, and financial condition.
Our platform must effectively interoperate with our customers’ existing IT infrastructure, which often has different specifications, utilizes multiple protocol standards, deploys products and services from multiple vendors, and contains multiple generations of products and services that have been added over time. As a result, our solutions can sometimes encounter interoperability issues on deployment or over time, which require additional support and problem solving with customers, in some cases, at a substantial cost to us. We may modify our software or introduce new capabilities so that our platform interoperates with a customer’s infrastructure. These issues could cause longer deployment and integration times for our platform, leading to customer churn, which would adversely affect our business, operating results, and financial condition. Government and other customers may require our platform to comply with certain security certifications and standards; failure to maintain such compliance could disqualify us from selling to these customers or create a competitive disadvantage.
Disruptions or other business interruptions that affect the availability of our platform could adversely impact our customer relationships and overall business.
Our platform is hosted by third-party cloud hosting providers including AWS. Our software and systems are designed to use computing, storage capabilities, bandwidth, and other services provided by such cloud hosting providers, and currently our cloud service infrastructure is primarily run on AWS. We have experienced, and expect in the future that we may experience from time to time, interruptions, delays or outages in service and availability due to a variety of factors, including as we continue to innovate, modernize and transition to new cloud infrastructure. Product, platform and service disruptions including capacity constraints could arise from a number of causes such as technical failures, natural disasters, fraud, or security attacks. Such risks may become more pronounced as we continue to scale our business. The level of service provided by our cloud hosting providers, or regular or prolonged interruptions in that service, could also impact the use of, and our customers’ satisfaction with, our platform and could harm our business and reputation. In addition, hosting costs are expected to increase as our customer base grows, and we may also experience component shortages and pricing increases from our cloud hosting providers as a result of increased demand for computing and storage resources. Any of these factors could adversely affect our business, operating results, and financial condition.
Furthermore, AWS has discretion to change and interpret its terms of service and other policies with respect to us, including on contract renewal, and those actions may be unfavorable to our business operations. AWS, and other cloud hosting providers, may also take actions beyond our control that could seriously harm our business, including discontinuing or limiting our access to one or more services, increasing pricing terms, competing with us, terminating or seeking to terminate our contractual relationship altogether, or altering how we are able to process data on their system in a way that is unfavorable or costly to us. Although we obtain services from other cloud hosting providers, if our current arrangement with AWS were to be terminated, we could experience interruptions on our platform and in our ability to make our content available to customers, as well as delays and additional expenses in arranging for expansion and transition to alternative cloud hosting and infrastructure services. Such a transition could require further technical changes to our platform, including, but not limited to, our cloud service infrastructure which was initially designed to run on AWS. Making such changes could be costly in terms of time and financial resources.
Any of these platform defects, interoperability issues, or service disruptions could reduce our revenue, subject us to liability, and cause our customers to decline to renew their subscriptions, any of which would harm our business and operating results.
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We may not timely and cost-effectively scale and adapt our existing technology to meet our customers’ performance and other requirements.
Our future growth is dependent upon our ability to continue to meet the needs of new customers and the expanding needs of our existing customers as their use of our solutions grows. As our customers gain more experience with our platform, the number of endpoints and events, the amount of data transferred, processed and stored by us, and the number of locations where our platform is being accessed, have in the past, and may in the future, expand rapidly. In order to meet the performance and other requirements of our customers, we intend to continue to make significant investments to increase capacity and to develop and implement new technologies in our service and cloud infrastructure operations. These technologies, which include databases, applications, and server optimizations, network and hosting strategies, and automation, are often advanced, complex, new and untested. We may not be successful in developing or implementing these technologies. In addition, it takes a significant amount of time to plan, develop and test improvements to our technologies and infrastructure, and we may not be able to accurately forecast demand or predict the results we will realize from such improvements. In some circumstances, we may also determine to scale our technology through the acquisition of complementary businesses and technologies rather than through internal development, which may divert management’s time and resources. To the extent that we do not effectively scale our operations to meet the needs of our growing customer base and to maintain performance as our customers expand their use of our solution, we will not be able to grow as quickly as we anticipate, our customers may reduce or cancel use of our solutions and we will be unable to compete as effectively and our business and operating results will be adversely affected.
If we do not accurately anticipate and promptly respond to changes in our customers’ technologies, business plans or security needs, our competitive position and prospects will be adversely impacted.
The cybersecurity market has grown quickly and is expected to continue to evolve rapidly. Moreover, many of our customers operate in markets characterized by rapidly changing technologies and business plans, which require them to add numerous network-connected endpoints and adapt to increasingly complex IT environments, incorporating a variety of hardware, software applications, operating systems, and networking protocols. As their technologies and business plans grow more complex, we expect these customers to face new and increasingly sophisticated methods of attack. We face significant challenges in ensuring that our platform effectively identifies and responds to these advanced and evolving attacks, including as a result of the evolving AI landscape. As a result of the continued rapid innovations in the technology industry, including the rapid growth of smartphones, tablets and other devices, enterprise employees using personal devices for work, the rapidly evolving IoT and AI, we expect the networks of our customers to continue to change rapidly and become more complex. There can be no assurance that we will be successful in developing and marketing, on a timely basis, enhancements to our platform that adequately address the changing needs of our customers. In addition, any enhancements to our platform could involve research and development processes that are more complex, expensive and time-consuming than we anticipate. We may experience unanticipated delays in the availability of enhancements to our platform and may fail to meet customer expectations with respect to the timing of such availability. If we do not quickly respond to the rapidly changing and rigorous needs of our customers by developing and releasing updates to our platform on a timely basis that can adequately respond to advanced threats and our customers’ evolving needs, our business, operating results, and financial condition will be adversely affected.
If we are not able to maintain and enhance our brand and reputation, our business and operating results may be adversely affected.
We believe that maintaining and enhancing our brand and our reputation as a leading platform provider of endpoint, cloud, identity, AI, and data security solutions is critical to our relationship with our existing customers, channel partners, and alliance partners and our ability to attract new customers and partners. The successful promotion of our brand will depend on a number of factors, including our ability to continue to develop additional features for our platform, our ability to successfully differentiate our platform from competitive AI-powered or legacy security solutions, our marketing efforts, and, ultimately, our ability to detect and stop breaches. Although we believe it is important for our growth, our brand promotion activities may not be successful or yield increased revenue.
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Under certain circumstances, our employees may have access to our customers’ platforms and misuse of such access, whether actual or perceived, could result in negative press coverage and negatively affect our reputation, which could result in harm to our business, reputation, and operating results.
In addition, independent industry and research firms often evaluate our solutions and provide reviews of our platform, as well as those of our competitors, and perception of our platform in the marketplace may be significantly influenced by these reviews. If these reviews are negative, or less favorable than those of our competitors, our brand may be adversely affected. Our solutions may fail to detect or prevent threats in any particular test for a number of reasons that may or may not be related to the efficacy of our solutions in real world environments. To the extent potential customers, industry analysts or research firms believe that the occurrence of a failure to detect or prevent any particular threat is a flaw or indicates that our solutions or services do not provide significant value, we may lose customers, and our reputation, financial condition and business would be harmed.
Moreover, the performance of our channel partners and alliance partners may affect our brand and reputation, as it could negatively impact our reputation if customers do not have a positive experience with these partners. Negative publicity about us, including about our management, the efficacy and reliability of our platform, our product offerings, our professional services, and the customers we work with, even if inaccurate, could adversely affect our reputation and brand.
If we are unable to maintain successful relationships with our channel partners and alliance partners, or if our channel partners or alliance partners fail to perform, our ability to market, sell and distribute our platform will be limited, and our business, operating results, and financial condition will be harmed.
Substantially all of our sales are fulfilled through our channel partners, including resellers, distributors, MSPs, MSSPs, MDRs, OEMs, and IR firms, and we expect that we will continue to generate a significant portion of our revenue from channel partners for the foreseeable future. Our agreements with our channel partners generally are non-exclusive, do not last for set terms, and may be terminated by either party at any time. Further, the majority of channel partners fulfill our sales on a purchase order basis and do not impose minimum purchase requirements or related terms on sales. However, in recent periods, we have with increasing frequency entered into, or expanded, relationships with several large MSSP, OEM and reseller partnerships that have multi-year purchasing commitments. Additionally, we have entered, and intend to continue to enter, into alliance partnerships with third parties to support our future growth plans. The loss of a substantial number of our channel partners or alliance partners, the failure to recruit additional partners, or failure of partners to meet their purchasing commitments would adversely affect our business, operating results, key financial metrics and financial condition.
If our partners are unsuccessful in selling our platform, or if we are unable to establish and maintain a sufficient number of high-quality partnerships, or if our partners shift focus to other vendors and/or our competitors, our ability to sell our platform and operating results will be harmed. To the extent our partners fail to meet their purchasing commitments, they may fail to pay us or attempt to renegotiate our agreements and we risk churn in forecast metrics. The termination of our relationship with any significant partner may adversely affect our sales and operating results. Our ability to achieve revenue growth in the future will depend in part on our ability to maintain successful relationships with our channel partners and in training our channel partners to independently sell and deploy our platform.
We are also exposed to credit and liquidity risks and our operating results will be harmed if our partners were to become unable or unwilling to pay us at all or in a timely manner, terminate their relationships with us or go out of business. Although we have programs in place that are designed to monitor and mitigate such risks, we cannot guarantee these programs will be effective. If we are unable to adequately control these risks, our business, operating results, and financial condition would be harmed. If partners fail to pay us under the terms of our agreements or we are otherwise unable to collect on our accounts receivable from these partners, we may be adversely affected both from the inability to collect amounts due and the cost of enforcing the terms of our contracts, including litigation. Our partners may seek bankruptcy protection or other similar relief and fail to pay amounts due to us, or pay those amounts more slowly, either of which would adversely affect our business, operating results, and financial condition. We may be further impacted by consolidation of our existing channel partners. In such instances, we may experience changes to our overall business and operational relationships due to dealing with a larger combined entity, and our
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ability to maintain such relationships on favorable contractual terms may be more limited. We may also become increasingly dependent on a more limited number of channel partners, as consolidation increases the relative proportion of our business for which each channel partner is responsible, which may magnify the risks described in the preceding paragraphs.
Our business depends, in part, on sales to government organizations, and significant changes in the contracting or fiscal policies of such government organizations could adversely affect our business and operating results.
Our future growth depends, in part, on increasing sales to government organizations. Demand from government organizations is often unpredictable and subject to budgetary uncertainty. We have made significant investments to address the government sector, but we cannot assure you that these investments will be successful, or that we will be able to maintain or grow our revenue from the government sector. Although we anticipate that they may increase in the future, sales to government organizations have not accounted for, and may never account for, a significant portion of our revenue. Sales to government organizations are subject to a number of challenges and risks that may adversely affect our business and operating results, including the following risks:
•selling to government agencies can be highly competitive, expensive, and time consuming, often requiring significant upfront time and expense without any assurance that such efforts will generate a sale;
•government certification, software supply chain or source code transparency requirements applicable to us or our platform may change and, in doing so, restrict our ability to sell into the government sector until we have attained the revised certification or meet other new requirements. For example, although we are currently FedRAMP authorized, such authorization is costly to maintain and subject to rigorous compliance requirements, and if we lose our authorization, it will restrict our ability to sell to government customers;
•government demand and payment for our platform may be impacted by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our platform, including as a result of sudden, unforeseen and disruptive events such as government shutdowns, agency closures, agency or executive actions, or extensive agency layoffs or restructuring, government defaults on indebtedness, war, regional geopolitical conflicts around the world, incidents of terrorism, natural disasters, and public health concerns or epidemics;
•governments routinely investigate and audit government contractors’ administrative processes, and any unfavorable audit could result in the government refusing to continue buying our platform, which would adversely impact our revenue and operating results, or institute fines or civil or criminal liability if an investigation, audit, or other review, were to uncover improper or illegal activities;
•governments may require certain products to be manufactured, produced, hosted or accessed solely in their country or in other relatively high-cost locations, and we may not produce or host all products in locations that meet these requirements, affecting our ability to sell these products to government agencies; and
•refusal to grant, suspension or revocation of certain certifications or clearances, including corporate or individual security clearances, by a government agency, executive order or other government action, or decision by one government agency that our products do not meet certain standards, may cause reputational harm, loss of sales and business opportunities and cause concern with other government agencies.
The occurrence of any of the foregoing could cause government organizations to delay or refrain from purchasing our solutions in the future or otherwise adversely affect our business and operating results. Furthermore, the U.S. Department of Government Efficiency was established in an effort to maximize government efficiency and productivity. Pressures on and uncertainty surrounding the U.S. federal government’s budget and potential changes in budgetary priorities, as well as those of U.S. states and localities, could adversely affect the funding for and purchases of our platform by government organizations.
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Our long-term success depends, in part, on our ability to expand the sale of our platform to customers located outside of the U.S. and our current, and any further, expansion of our international operations exposes us to risks that could have a material adverse effect on our business, operating results, and financial condition.
We are generating a growing portion of our revenue outside of the U.S., and conduct our business activities in various foreign countries, including some emerging markets where we have limited experience, where the challenges of conducting our business can be significantly different from those we have faced in more developed markets and where business practices may create internal control risks including:
•fluctuations in foreign currency exchange rates, which could add volatility to our operating results;
•new, or changes in, regulatory requirements, including tariffs, export and import restrictions, restrictions on foreign investments, sanctions, and other measures;
•exposure to numerous, increasing, stringent (particularly in the E.U.), and potentially inconsistent laws and regulations relating to privacy, data protection, information security and AI;
•costs of localizing products and services (including, but not limited to data localization requirements);
•lack of acceptance of localized products and services;
•the need to make significant upfront investments in people, solutions and infrastructure;
•challenges in managing an increased number of geographically dispersed employees, including the need to implement appropriate systems, policies, benefits, and compliance programs and maintaining corporate culture;
•treatment of revenue from international sources, evolving domestic and international tax environments, and other potential tax issues, including with respect to our corporate operating structure and intercompany arrangements;
•different or weaker protection of our intellectual property, including increased risk of theft of our proprietary technology and other intellectual property;
•economic weakness or currency-related crises;
•compliance with multiple, conflicting, ambiguous or evolving government laws and regulations, including employment, tax, data privacy, anti-corruption, antitrust, data transfer, storage and protection, and industry-specific laws and regulations, and our ability to identify and respond timely to compliance issues;
•vetting and monitoring our third-party channel partners in new and evolving markets to confirm they maintain standards consistent with our brand and reputation;
•generally longer payment cycles and greater difficulty in collecting accounts receivable;
•our ability to adapt to sales practices and customer requirements in different cultures;
•the lack of reference customers and other marketing assets in regional markets that are new or developing for us, as well as other adaptations in our market generation efforts that we may be slow to identify and implement;
•dependence on certain third parties, including channel partners with whom we do not have extensive experience;
•natural disasters, acts of war, terrorism, or pandemics, including regional geopolitical conflicts around the world and political instability;
•actual or perceived instability in the global banking system; and
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•cybersecurity incidents.
We have undertaken, and will continue to undertake, additional corporate operating restructurings from time to time that involve our group of foreign country subsidiaries through which we do business abroad. We consider various factors in evaluating these restructurings, including the alignment of our corporate legal entity structure with our organizational structure and its objectives, the operational and tax efficiency of our group structure, and the long-term cash flows and cash needs of our business. Such restructurings increase our operating costs, and if ineffectual, could increase our income tax liabilities and our global effective tax rate.
We have experienced rapid growth, and if we do not effectively manage our future growth, our business, operating results, and financial condition may be adversely affected.
We have experienced rapid growth in recent periods, and we expect to continue to invest broadly across our organization to support our growth. For example, our headcount grew from over 2,700 employees as of July 31, 2025, to over 2,800 employees as of July 31, 2026. Although we have experienced rapid growth historically, we may not sustain our growth rates, nor can we assure you that our investments to support our growth will be successful. The growth and expansion of our business will require us to invest significant financial and operational resources and the continuous dedication of our management team.
In addition, as we have grown, our number of customers has also increased significantly, and we have increasingly managed more complex deployments of our platform in more complex computing environments. The rapid growth and expansion of our business places a significant strain on our management, operational, and financial resources. 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. As a result of macroeconomic conditions, in March 2025, July 2025 and May 2026, we approved restructuring plans designed to improve operational efficiencies and operating costs, and better align our workforce and operations with current business needs, priorities, and near term growth expectations.
If we continue to experience rapid growth, we may not be able to successfully implement or scale improvements to our systems, processes, and controls in an efficient or timely manner. For example, as we grow, we may experience difficulties in managing improvements to our systems, processes, and controls or in connection with third-party software licensed to help us with such improvements. As we grow, our existing systems, processes, and controls may not prevent or detect all errors, omissions, or fraud. Any future growth will continue to add complexity to our organization and require effective coordination throughout our organization. Failure to manage any future growth effectively could result in increased costs, cause difficulty or delays in deploying new customers, reduce demand for our platform, cause difficulties in introducing new features or other operational difficulties, and any of these difficulties would adversely affect our business, operating results, and financial condition.
Our sales cycles can be long and unpredictable, and our sales efforts require considerable time and expense.
Our revenue recognition is difficult to predict because of the length and unpredictability of the sales cycle for our platform, particularly with respect to large organizations and government entities. For example, in light of current macroeconomic conditions, we have observed a lengthening of the sales cycle for some prospective customers that we attribute to higher cost-consciousness around IT budgets, which has become more pronounced recently. Customers often view the subscription to our platform as a significant strategic decision and, as a result, frequently require considerable time to evaluate, test and qualify our platform prior to entering into or expanding a relationship with us. Large enterprises and government entities in particular often undertake a significant evaluation process that further lengthens our sales cycle.
Our direct sales team develops relationships with our customers, and works with our channel partners on account penetration, account coordination, sales and overall market development. We spend substantial time and resources on our sales efforts without any assurance that our efforts will produce a sale. Security solution purchases are frequently subject to budget constraints, multiple approvals and unanticipated administrative, processing and other delays. As a result, it is difficult to predict whether and when a sale will be completed. The failure of our efforts to secure sales
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after investing resources in a lengthy sales process would adversely affect our business, operating results and financial condition.
The sales prices of our platform may decrease, or the mix of our sales may change, which may reduce our gross profits and adversely affect our business, operating results, and financial condition.
We have limited experience with respect to determining the optimal prices for our platform. As the market for endpoint security matures, or as new competitors introduce new products or services that are similar to or compete with ours, we may be unable to effectively optimize our prices through increases or decreases, attract new customers at our offered prices or based on the same pricing model as we have used historically. Further, competition continues to increase in the market segments in which we participate, and we expect competition to further increase in the future, thereby leading to increased pricing pressures. Larger competitors with more diverse products and service offerings may reduce the price of products or services that compete with ours or may bundle them with other products and services. This could lead customers to demand greater price concessions or additional functionality at the same price levels. As a result, in the future we may be required to reduce our prices or provide more features without corresponding increases in price, which would adversely affect our business, operating results, and financial condition.
Because we recognize revenue from subscriptions to our platform over the term of the subscription, downturns or upturns in new business will not be immediately reflected in our operating results.
We generally recognize revenue from customers ratably over the term of their subscription, which is generally one to three years. As a result, a substantial portion of the revenue we report in each period is attributable to the recognition of deferred revenue relating to agreements that we entered into during previous periods. Consequently, any increase or decrease in new sales or renewals in any one period will not be immediately reflected in our revenue for that period. Any such change, however, would affect our revenue in future periods. Accordingly, the effect of downturns or upturns in new sales and potential changes in our rate of renewals will not be fully reflected in our operating results until future periods. We may also be unable to timely reduce our cost structure in line with a significant deterioration in sales or renewals that would adversely affect our business, operating results, and financial condition.
We provide service level commitments under some of our customer contracts. If we fail to meet these contractual commitments, we could be obligated to provide partial refunds or our customers could be entitled to terminate their contracts and our business would suffer.
Certain of our customer agreements contain service level commitments, which contain specifications regarding the availability of our platform and our support services. Failure of or disruption to our infrastructure or third-party hosting service providers could impact the performance of our platform and the availability of services to customers. If we are unable to meet our stated service level commitments or if we suffer extended periods of poor performance or unavailability of our platform, we may be contractually obligated to provide affected customers with credit, partial refunds or termination rights. To date, there has not been a material failure to meet our service level commitments, and we do not currently have any material liabilities accrued on our condensed consolidated balance sheets for such commitments. Our business, operating results, and financial condition would be adversely affected if we suffer performance issues or downtime that exceeds the service level commitments under our agreements with our customers.
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Our business is subject to the risks of liability, indemnity and warranty claims, from real or perceived defects in our solutions or their misuse by our customers or third parties and indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement and other losses.
We may be subject to liability claims for damages related to errors or defects in our solutions. A material liability claim or other occurrence that harms our reputation or decreases market acceptance of our platform will harm our business and operating results. Although we generally have limitation of liability provisions in our terms and conditions of sale, they may not fully or effectively protect us from claims as a result of federal, state or local laws or ordinances, or unfavorable judicial decisions in the U.S. or other countries. The sales and support of our platform also entails the risk of liability claims. We employ measures in the form of policy and technical controls to limit unauthorized access to our platform by our employees, customers and third-parties, however, these measures may not fully or effectively protect our platform from unauthorized access.
Additionally, we typically provide indemnification to customers and partners we do business with for certain losses suffered or expenses incurred as a result of third-party claims arising from our infringement of a third party’s intellectual property. We also provide unlimited liability for certain breaches of confidentiality, as defined in our master subscription agreement. We also provide limited liability in the event of certain breaches of our master subscription agreement. Certain of these contractual provisions survive the termination or expiration of the applicable agreement. However, as we continue to grow, indemnification claims against us for the obligations listed may increase.
When our customers or other third parties with whom we do business make intellectual property rights or other indemnification claims against us, we incur significant legal expenses and may have to pay damages, license fees and/or stop using technology found to be in violation of the third party’s rights. We may also have to seek a license for the technology. Such licenses may not be available on reasonable terms, if at all, and may significantly increase our operating expenses or may require us to restrict our business activities and limit our ability to deliver certain solutions or features. We may also be required to develop alternative non-infringing technology, which could require significant effort and expense and/or cause us to alter our platform, which could harm our business. Large indemnity obligations, whether for intellectual property or in certain limited circumstances, other claims, would harm our business, operating results and financial condition.
Additionally, our platform may be used by our customers and other third parties who obtain access to our solutions for purposes other than for which our platform was intended.
We maintain insurance to protect against certain claims associated with the use of our platform, but our insurance coverage may not adequately cover the claims asserted against us. In addition, even claims that ultimately are unsuccessful could result in our expenditure of funds in litigation, divert management’s time and other resources, and harm our business and reputation. We have offered some of our customers a limited warranty, subject to certain conditions. Any failure or refusal of our insurance providers to provide the expected insurance benefits to us after we have remediated warranty claims would cause us to incur significant expense or cause us to cease offering warranties which could damage our reputation, cause us to lose customers, expose us to liability claims by our customers, negatively impact our sales and marketing efforts, and have an adverse effect on our business, operating results, and financial condition. Further, although the terms of the warranty do not allow those customers to use warranty claim payments to fund payments to persons on the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), list of Specially Designated Nationals and Blocked Persons or who are otherwise subject to U.S. sanctions, we cannot assure you that all of our customers will comply with our warranty terms or refrain from taking actions, in violation of our warranty and applicable law.
Key business metrics and other estimates are subject to inherent challenges in measurement and to change as our business evolves, and our business, operating results, and financial condition could be adversely affected by real or perceived inaccuracies in those metrics or any changes in metrics we disclose.
We regularly review key business metrics, including our ARR, number of customers with ARR of $100,000 or more, and other measures to evaluate growth trends, measure our performance, and make strategic decisions. These metrics are calculated using internal company data and have not been validated by an independent third party. While
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these numbers are based on what we believe to be reasonable estimates for the applicable period of measurement at the time of reporting, there are inherent challenges in such measurements. If we fail to maintain effective processes and systems, our metrics calculations may be inaccurate, and we may not be able to identify those inaccuracies. We regularly review our processes for calculating these metrics, and from time to time we make adjustments to improve their accuracy. Moreover, we may periodically change the definition or methodology underlying our metrics. If our key metrics are inaccurate or if investors perceive any changes to our key business metrics or the methodologies for calculating these metrics negatively, our business could be adversely affected.
Risks Related to Our People
We rely on our management team and other key employees and will need additional personnel to grow our business, and the loss of one or more key employees or our inability to hire, integrate, train, manage, retain, and motivate qualified personnel, including members of our board of directors, could harm our business.
Our future success is dependent, in part, on our ability to hire, integrate, train, manage, retain, and motivate the members of our management team and other key employees throughout our organization. The loss of key personnel, including key members of our management team or members of our board of directors, as well as certain of our key marketing, sales, finance, support, product development, people team, or technology personnel, could disrupt our operations and have an adverse effect on our ability to grow our business. In particular, we are highly dependent on the services of Tomer Weingarten, our co-founder, Chairman of our board of directors, President, and Chief Executive Officer, who is critical to the development of our technology, platform, future vision, and strategic direction. From time to time, there have been and may in the future be changes in our management team. While we seek to manage any such transitions carefully, such changes may result in a loss of institutional knowledge, cause disruptions to our business and negatively affect our business.
Competition for highly skilled personnel is intense, especially in the San Francisco Bay Area, where we have a substantial presence and need for such talent, and we may not be successful in hiring or retaining qualified personnel to fulfill our current or future needs. In particular, the scarcity of individuals with the specialized skills required to develop and enhance AI-driven technologies has led to increased competition and may lengthen our hiring cycles or inflate compensation expectations. As we continue to integrate artificial intelligence across our platform, any failure to recruit such individuals could delay our product roadmap and harm our competitive position. More generally, the technology industry, and the cybersecurity industry more specifically, is also subject to substantial and continuous competition for engineers with high levels of experience in designing, developing and managing software and related services, and experiences high employee attrition. We have, from time to time, experienced, and we expect to continue to experience, difficulty in hiring and retaining highly skilled employees with appropriate qualifications. We may be required to provide more training to our personnel than we currently anticipate. Further, labor is subject to external factors that are beyond our control, including cost inflation, overall macroeconomic conditions and workforce participation rates. Should our competitors recruit our employees, our level of expertise and ability to execute our business plan would be negatively impacted.
Additionally, restrictive immigration policies or legal or regulatory developments relating to immigration may also negatively affect our efforts to attract and hire new personnel as well as retain our existing personnel. Changes in U.S. immigration and work authorization laws and regulations can be significantly affected by political forces and levels of economic activity. Our business may be adversely affected if legislative or administrative changes to immigration or visa laws and regulations impair our hiring processes.
Moreover, many of the companies with which we compete for experienced personnel have greater resources than we have. Our competitors also may be successful in recruiting and hiring members of our management team, sales team or other key employees, and it may be difficult for us to find suitable replacements on a timely basis, on competitive terms, or at all. We have in the past, and may in the future, be subject to allegations that employees we hire have been improperly solicited, or that they have divulged proprietary or other confidential information or that their former employers own such employees’ inventions or other work product, or that they have been hired in violation of non-compete or non-solicitation provisions.
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In addition, job candidates and existing employees often consider the value of the equity awards and other compensation they receive in connection with their employment. If the perceived value of our compensatory package declines, it may adversely affect our ability to attract and retain highly skilled employees. In recent years, the increased availability of hybrid or remote working arrangements has expanded the pool of companies that can compete for our employees and employment candidates. Although we have entered into employment agreements with our key employees, these agreements are on an “at-will” basis, meaning they are able to terminate their employment with us at any time. If we fail to attract new personnel or fail to retain and motivate our current personnel, our business and future growth prospects would be severely harmed.
If we do not effectively integrate, train, manage, and retain sales personnel, and expand our sales and marketing capabilities, we may be unable to increase our customer base and increase sales to our existing customers.
Our ability to increase our customer base and achieve broader market adoption of our platform will depend to a significant extent on our ability to continue to expand our sales and marketing operations. We have and plan to continue to dedicate significant resources to sales and marketing programs and to expand our sales and marketing capabilities to target additional potential customers, but there is no guarantee that we will be successful in attracting and maintaining additional customers. If we are unable to find efficient ways to deploy our sales and marketing investments or if our sales and marketing programs are not effective, our business and operating results would be adversely affected.
Furthermore, we plan to continue expanding our sales force and there is significant competition for sales personnel with the skills and technical knowledge that we require. Our ability to achieve revenue growth will depend, in part, on our success in hiring, integrating, training, managing, and retaining sufficient numbers of sales personnel to support our growth, particularly in international markets. New hires require significant training and may take extended time before they are productive. Our recent hires and planned hires may not become productive as quickly as we expect, or at all, and we may be unable to hire or retain sufficient numbers of qualified individuals in the markets where we do business or plan to do business. Moreover, our international expansion may be slow or unsuccessful if we are unable to retain qualified personnel with international experience, language skills and cultural competencies in the geographic markets which we target.
If we are unable to hire, integrate, train, manage, and retain a sufficient number of effective sales personnel, or the sales personnel we hire are not successful in obtaining new customers or increasing sales to our existing customer base, our business, operating results and financial condition will be adversely affected.
Any inability to maintain a high-quality customer support organization could lead to a lack of customer satisfaction, which could hurt our customer relationships and adversely affect our business, operating results, and financial condition.
Once our platform is deployed within our customers’ computing environments, our customers rely on our technical support services to assist with service customization and optimization and to resolve certain issues relating to the implementation and maintenance of our platform and advanced services. If we do not effectively assist our customers in deploying our platform, succeed in helping our customers quickly resolve technical issues, or provide effective ongoing support, our ability to sell additional products and services as part of our platform to existing customers would be adversely affected and our reputation with potential customers could be damaged.
In addition, our sales process is highly dependent on our product and business reputation and on positive recommendations, referrals, and peer promotions from our existing customers. Any failure to maintain high-quality technical support, or a market perception that we do not maintain high-quality support, could adversely affect our reputation, our ability to sell our services to existing and prospective customers, and our business, operating results and financial condition.
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We believe that our corporate culture has contributed to our success, and if we cannot maintain this culture as we grow, we could lose the innovation, creativity, and teamwork fostered by our culture, and our business may be harmed.
We believe that our corporate culture has been, and will continue to be a key contributor to our success. If we do not continue to develop our corporate culture as we grow and evolve, it could harm our ability to foster the innovation, inclusion, creativity, and teamwork that we believe is important to support our growth. As we implement more complex organizational structures, we may find it increasingly difficult to maintain the beneficial aspects of our corporate culture, which could negatively impact our future success. We are also taking steps to develop a more inclusive workforce, however, there is no guarantee that we will be able to do so.
Risks Related to Our Intellectual Property
Our proprietary rights may be difficult to enforce, which could enable others to copy or use aspects of our platform without compensating us.
We rely primarily on patent, trademark, copyright and trade secrets laws, as well as confidentiality agreements and contractual provisions to protect our technology. Valid patents may not issue from our pending applications, and the claims eventually allowed on any patents may not be sufficiently broad to protect our technology or platform. Any issued patents may be challenged, invalidated or circumvented, and any rights granted under these patents may not actually provide adequate defensive protection or competitive advantages to us. Patent applications in the U.S. are typically not published until at least 18 months after filing, or, in some cases, not at all, and publications of discoveries in industry-related literature lag behind actual discoveries. We cannot be certain that we were the first to make the inventions claimed in our pending patent applications or that we were the first to file for patent protection. Additionally, the process of obtaining patent protection is expensive and time-consuming, and we may not be able to prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. In addition, recent changes to the patent laws in the U.S. may bring into question the validity of certain software patents and may make it more difficult and costly to prosecute patent applications. Such changes may lead to uncertainties or increased costs and risks surrounding the prosecution, validity, ownership, enforcement, and defense of our issued patents and patent applications and other intellectual property, the outcome of third-party claims of infringement, misappropriation, or other violation of intellectual property brought against us and the actual or enhanced damages (including treble damages) that may be awarded in connection with any such current or future claims, and could have a material adverse effect on our business, operating results, and financial condition.
Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our platform or obtain and use information that we regard as proprietary. We generally enter into confidentiality or license agreements with our employees, consultants, vendors, channel partners, and customers, and generally limit access to and distribution of our proprietary information. However, such agreements may not be enforceable in full or in part in all jurisdictions and any breach could negatively affect our business and our remedy for such breach may be limited. The contractual provisions that we enter into may not prevent unauthorized use or disclosure of our proprietary technology or intellectual property rights and may not provide an adequate remedy in the event of unauthorized use or disclosure of our proprietary technology or intellectual property rights. Lastly, the measures we employ to limit the access and distribution of our proprietary information may not prevent unauthorized use or disclosure of our proprietary technology or intellectual property. As such, we cannot guarantee that the steps taken by us will prevent misappropriation of our technology. Policing unauthorized use of our technology or platform is difficult. In addition, the laws of some foreign countries do not protect our proprietary rights to the same extent as the laws of the U.S., and many foreign countries do not enforce these laws as diligently as government agencies and private parties in the U.S. For example, many foreign countries limit the enforceability of patents against certain third parties, including government agencies or government contractors. In these countries, patents may provide limited or no benefit. Effective trade secret protection may also not be available in every country in which our products are available or where we have employees or independent contractors. The loss of trade secret protection could make it easier for third parties to compete with our products by copying functionality. In addition, any changes in, or unexpected interpretations of, the trade secret and employment laws in any country in which we operate may compromise our ability to enforce our trade secret and intellectual property rights. From time to time, legal action by us may be necessary to enforce our patents and other intellectual property rights, to protect our trade secrets, to
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determine the validity and scope of the proprietary rights of others or to defend against claims of infringement or invalidity. Moreover, the availability of copyright protection and other legal protections for intellectual property generated by certain technologies, such as generative AI, is uncertain. The use of generative AI and other forms of AI may expose us to risks because the intellectual property ownership and license rights, including copyright, of generative and other AI output, have not been fully interpreted by U.S. courts or been fully addressed by U.S. federal or state regulation, as well as in foreign jurisdictions.
Such litigation could result in substantial costs and diversion of resources and could negatively affect our business, operating results and financial condition. If we are unable to protect our proprietary rights (including aspects of our software and platform protected other than by patent rights), we will find ourselves at a competitive disadvantage to others who need not incur the additional expense, time and effort required to create our platform and other innovative products that have enabled us to be successful to date. Moreover, we may need to expend additional resources to defend our intellectual property rights in foreign countries, and our inability to do so could impair our business or adversely affect our international expansion.
Third parties have claimed and may claim that our platform infringes their intellectual property rights and this may create liability for us or otherwise adversely affect our business, operating results, and financial condition.
Third parties have claimed, and may claim in the future, that our current or future products and services infringe their intellectual property rights, and such claims may result in legal claims against our channel partners, our alliance partners, our customers and us. These claims may damage our brand and reputation, harm our customer relationships, and create liability for us. Contractually, we are expected to indemnify our partners and customers for these types of claims. We expect the number of such claims to increase as the number of products and services and the level of competition in our market grows, as the functionality of our platform overlaps with that of other products and services, and as the volume of issued software patents and patent applications continues to increase. We generally agree in our customer and partner contracts to indemnify customers for certain expenses or liabilities they incur as a result of third-party intellectual property infringement claims associated with our platform. To the extent that any claim arises as a result of third-party technology we have licensed for use in our platform, we may be unable to recover from the appropriate third party any expenses or other liabilities that we incur.
Companies in the software and technology industries, including some of our current and potential competitors, own large numbers of patents, copyrights, trademarks, and trade secrets and frequently enter into litigation based on allegations of infringement or other violations of intellectual property rights. In addition, many of these companies have the capability to dedicate substantially greater resources to enforce their intellectual property rights and to defend claims that may be brought against them. Furthermore, patent holding companies, non-practicing entities, and other adverse patent owners that are not deterred by our existing intellectual property protections may seek to assert patent claims against us. From time to time, third parties have invited us to license their patents and may, in the future, assert patent, copyright, trademark, or other intellectual property rights against us, our channel partners, our alliance partners, or our customers. We have received, and may in the future receive, notices that claim we have misappropriated, misused, or infringed other parties’ intellectual property rights, and, to the extent we gain greater market visibility, we face a higher risk of being the subject of intellectual property infringement claims.
There may be third-party intellectual property rights, including issued or pending patents and trademarks, that cover significant aspects of our technologies or business methods and assets. We may also face exposure to third-party intellectual property infringement, misappropriation, or violation actions if we engage software engineers or other personnel who were previously engaged by competitors or other third parties and those personnel inadvertently or deliberately incorporate proprietary technology of third parties into our products. In addition, we may lose valuable intellectual property rights or personnel. A loss of key personnel or their work product could hamper or prevent our ability to develop, market, and support potential products or enhancements, which could severely harm our business. Any intellectual property claims, with or without merit, could be very time-consuming, could be expensive to settle or litigate, and could divert our management’s attention and other resources. These claims could also subject us to significant liability for damages, potentially including treble damages if we are found to have willfully infringed patents or copyrights, and may require us to indemnify our customers for liabilities they incur as a result of such claims. These claims could also result in our having to stop using technology found to be in violation of a third party’s rights. We might be required to seek a license for the intellectual property, which may not be available on
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reasonable terms or at all. Even if a license were available, we could be required to pay significant royalties, which would increase our operating expenses. Alternatively, we could be required to develop alternative non-infringing technology, which could require significant time, effort, and expense, and may affect the performance or features of our platform. If we cannot license or develop alternative non-infringing substitutes for any infringing technology used in any aspect of our business, we would be forced to limit or stop sales of our platform and may be unable to compete effectively. Any of these results would adversely affect our business, operating results, and financial condition.
We license technology from third parties, and our inability to maintain those licenses could harm our business.
We currently incorporate, and will in the future incorporate, technology that we license from third parties, including software, into our solutions. Licensing technologies from third parties exposes us to increased risk of being the subject of intellectual property infringement and vulnerabilities due to, among other things, our lower level of visibility into the development process with respect to such technology and the care taken to safeguard against risks. We cannot be certain that our licensors do not or will not infringe on the intellectual property rights of third parties or that our licensors have or will have sufficient rights to the licensed intellectual property in all jurisdictions in which we may sell our platform. Some of our agreements with our licensors may be terminated by them for convenience, or otherwise provide for a limited term. If we are unable to continue to license technology because of intellectual property infringement claims brought by third parties against our licensors or against us, or if we are unable to continue our license agreements or enter into new licenses on commercially reasonable terms, our ability to develop and sell solutions and services containing or dependent on that technology would be limited, and our business, including our financial conditions, cash flows and results of operations could be harmed. Additionally, if we are unable to license technology from third parties, we may be forced to acquire or develop alternative technology, which we may be unable to do in a commercially feasible manner, or at all, and may require us to use alternative technology of lower quality or performance standards. This could limit or delay our ability to offer new or competitive solutions and increase our costs. Third-party software we rely on may be updated infrequently, unsupported or subject to vulnerabilities that may not be resolved in a timely manner, any of which may expose our solutions to vulnerabilities. As a result, our business, operating results, and financial condition would be adversely affected.
Some of our technology incorporates “open source” software, which could negatively affect our ability to sell our platform and subject us to possible litigation.
Our platform contains third-party open source software components, and failure to comply with the terms of the underlying open source software licenses could restrict our ability to sell our products and subscriptions. The use and distribution of open source software may entail greater risks than the use of third-party commercial software, as open source licensors generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the code, which they are not typically required to maintain and update, and they can change the license terms on which they offer the open source software. Although we monitor our use of open source software in an effort both to comply with the terms of the applicable open source licenses and to avoid subjecting our products to conditions we do not intend, many of the risks associated with use of open source software cannot be eliminated and could negatively affect our business. In addition, the wide availability of source code used in our solutions could expose us to security vulnerabilities.
Some open source licenses contain requirements that we make available as source code for modifications or derivative works we create based upon our use and distribution of the open source software. If we combine and distribute our proprietary software with open source software in a certain manner, we could, under certain open source licenses, be required to release the source code of our proprietary software to the public, including authorizing further modification and redistribution, or otherwise be limited in the licensing of our services, each of which could provide an advantage to our competitors or other entrants to the market, create security vulnerabilities in our solution, require us to re-engineer all or a portion of our platform, and reduce or eliminate the value of our services. This would allow our competitors to create similar products with lower development effort and time and ultimately could result in a loss of sales for us.
The terms of many open source licenses have not been interpreted by U.S. courts, and there is a risk that these licenses could be construed in ways that could impose unanticipated conditions or restrictions on our ability to commercialize products and subscriptions incorporating such software. Moreover, we cannot assure you that our
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processes for controlling our use of open source software in our products and subscriptions will be effective. From time to time, we may face claims from third parties asserting ownership of, or demanding release of, the open source software or derivative works that we developed using such software (which could include our proprietary source code), or otherwise seeking to enforce the terms of the applicable open source license. These claims, regardless of validity, could result in time consuming and costly litigation, divert management’s time and attention away from developing the business, expose us to customer indemnity claims, or force us to disclose source code. Litigation could be costly for us to defend, result in paying damages, entering into unfavorable licenses, have a negative effect on our operating results and financial condition, or cause delays by requiring us to devote additional research and development resources to change our solution.
Risks Related to Legal and Regulatory Matters
We are subject to laws and regulations, including government export and import controls, sanctions controls and anti-corruption laws, that could impair our ability to compete in our markets and subject us to liability if we are not in full compliance with applicable laws.
We are subject to laws and regulations, including government export and import controls, that could subject us to liability or impair our ability to compete in our markets. Our platform and related technology are subject to the U.S. Department of Commerce’s Export Administration Regulations (EAR). We are also subject to the economic and trade sanctions regulations administered by OFAC. U.S. export control laws and economic sanctions prohibit the export, re-export and transfer (in-country) of certain hardware and software and the provision of certain cloud-based solutions to certain countries, governments and parties and for certain end-uses. Various countries regulate the import of certain encryption technology, including through import permit and license requirements, and have enacted laws that could limit our ability to distribute our platform or could limit our customers’ ability to implement our platform in those countries. Changes in our platform, and changes in or promulgation of new export and import regulations may create delays in the introduction of our platform into certain international markets, prevent our customers with international operations from deploying our platform globally or, in some cases, prevent the export or import of our platform to certain countries, governments or parties altogether. Any decreased use of our platform or limitation on our ability to export or sell our platform would adversely affect our business, operating results, and financial condition. Further, regulators in the U.S. and elsewhere have signaled an increased emphasis on sanctions and export control enforcement. While we have implemented certain procedures to facilitate compliance with applicable laws and regulations, we cannot assure you that these procedures have been fully effective or that we, or third parties who we do not control, have complied with all laws or regulations in this regard. Failure by our employees, representatives, contractors, channel partners, agents, intermediaries, or other third parties to comply with applicable laws and regulations also could have negative consequences to us, including reputational harm, government investigations, loss of export privileges, monetary fines, and other penalties.
We also collect information about cyber threats from public sources, intermediaries and third parties that we make available to our customers in our threat intelligence industry publications. Although we take precautions to prevent our information collection practices and services from being provided in violation of such laws, our information collection practices and services may have been in the past, and could in the future be, provided in violation of such laws. If we or our employees, representatives, contractors, channel partners, agents, intermediaries, or other third parties fail to comply with these laws and regulations, we could be subject to civil or criminal penalties, including the possible loss of export privileges and fines. We may also be adversely affected through reputational harm, loss of access to certain markets or otherwise. Obtaining the necessary authorizations, including any required license, for a particular transaction may be time-consuming, is not guaranteed and may result in the delay or loss of sales opportunities.
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Various countries regulate the import of certain encryption technology, including through import permit and license requirements, and have enacted laws that could limit our ability to distribute our platform or could limit our customers’ ability to implement our platform in those countries. Additionally, export restrictions imposed on Russia and Belarus specifically limit the export of encryption hardware, software and related source code and technology to these locations which could limit our ability to provide our software and services to these countries. Changes in our platform, and changes in or promulgation of new export and import regulations may create delays in the introduction of our platform into certain international markets, prevent our customers with international operations from deploying our platform globally or, in some cases, prevent the export or import of our platform to certain countries, governments or persons altogether. Any change in export or import regulations, economic sanctions or related legislation, shift in the enforcement or scope of existing regulations, or change in the countries, governments, persons or technologies targeted by such regulations, could result in decreased use of our platform by, or in our decreased ability to export or sell our platform to, existing or potential customers with international operations. Any decreased use of our platform or limitation on our ability to export or sell our platform would adversely affect our business, operating results, and financial condition.
We are also subject to the United States Foreign Corrupt Practices Act of 1977 (FCPA), as amended, the United Kingdom Bribery Act 2010 (the Bribery Act), and other applicable anti-corruption and anti-bribery laws in the U.S. and non-U.S. jurisdictions where we operate. Such laws, which are interpreted broadly, prohibit companies and their employees, agents, intermediaries and other third parties from offering, promising, authorizing or providing anything of value, directly or indirectly, to government officials and others in the public, and in certain cases, private sector for the purpose of obtaining or retaining business or securing an improper advantage. We engage third parties, including intermediaries, agents and channel partners, to conduct our business in the U.S. and abroad, to sell subscriptions to our platform and to collect information about cyber threats. We and these third parties may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities and we can be held liable for unlawful conduct of these third parties, even if we did not authorize or have actual knowledge of the misconduct. Although we maintain anti-corruption compliance policies, procedures, training and controls designed to reduce the risk of violations, they may not be effective in preventing all improper conduct. As our international sales and business, and our business with government agencies or state-owned or affiliated entities expands, our risks under these laws will increase. Noncompliance with these laws could result in investigations, significant civil or criminal penalties, disgorgement, injunctions, suspension or debarment from government contracts, private litigation, reputational harm, diversion of management time and resources, and other legal and business consequences, any of which could harm our reputation, business, operating results, and financial condition.
We are subject to laws and regulations affecting our business, including those related to the privacy and data protection of the personal data or other information we collect, process or share. Our actual or perceived failure to comply with such laws or regulations could harm our business.
We collect, receive, store, and process personal data from our employees, customers, the employees of our customers, and our end users. This personal data is hosted by our third-party vendors and service providers. A wide variety of state, national, and international laws, as well as regulations and industry standards apply to the collection, use, retention, protection, disclosure, transfer and other processing of personal data and other confidential or sensitive information, the scope of which are changing, subject to differing interpretations, and may be inconsistent across countries or conflict with other rules. Data protection and privacy-related laws and regulations are evolving and may result in increasing regulatory and public scrutiny and escalating levels of enforcement and sanctions. Complying with these various laws and regulations could cause us to incur substantial costs or require us to change our business practices, systems, and compliance procedures in a manner adverse to our business.
In the U.S., there are numerous federal and state consumer, privacy, and data security laws and regulations governing the collection, use, disclosure, and protection of personal data, including security breach notification laws and consumer protection laws. Each of these laws is subject to varying interpretations and constantly evolving. For example, in California, the California Consumer Privacy Act of 2018 (as amended, CCPA) imposes significant obligations on covered businesses, including providing privacy rights to California residents such as the right to opt out of certain disclosures of their personal information and receive detailed information about how their personal information is collected, used and shared. Regulations effective January 1, 2026 expanded these obligations to require covered businesses to conduct privacy risk assessments before initiating certain categories of processing that present
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significant risk to consumer privacy, including the use of automated decision-making technology for significant decisions and the processing of sensitive personal information. Those same regulations also established mandatory independent cybersecurity audits for businesses meeting specified revenue and data-volume thresholds. Following California’s lead, approximately 20 other U.S. states have enacted privacy laws with Indiana, Kentucky, and Rhode Island among those taking effect in 2026. These state laws impose varying requirements regarding consumer rights, data minimization, automated decision-making, and security obligations, and several existing laws were further amended in 2026 to expand their scope and strengthen enforcement. In addition, various comprehensive federal privacy bills have been proposed in Congress from time to time. Compliance with this expanding and increasingly complex patchwork of state and federal requirements is costly and creates operational complexity.
As a result of our presence in the E.U. and the U.K., we are also subject to the GDPR, which governs the collection, use, disclosure, transfer or other processing of personal data of natural persons in the EEA and U.K., and it applies extra-territorially and imposes strict requirements on controllers and processors of personal data. A breach of the GDPR could result in fines of up to €20 million (£17.5 million in the U.K.) or 4% of a company’s global turnover, whichever is greater. In addition to financial penalties, a breach could result in penalties, regulatory investigations, reputational damage, orders to cease or change our processing of personal data, enforcement notices, and/or assessment notices for a compulsory audit.
We may also face civil claims including representative actions and other class action type litigation (where individuals have suffered harm), potentially amounting to significant compensation or damages liabilities, as well as associated costs, diversion of internal resources, and reputational harm.
The GDPR prohibits personal data from being transferred outside of the EEA or the U.K. to any jurisdictions that have not been deemed adequate by regulators in the E.U. or U.K. (including the U.S.), unless steps are taken to legitimize those data transfers. Switzerland follows similar legal practices. We currently rely on the use of Standard Contractual Clauses (SCCs) and our certification under the E.U.-U.S. Data Privacy Framework (DPF), the Swiss-U.S. DPF, and the U.K. Extension to the E.U.-U.S. DPF for such transfers of personal data. However, these transfer mechanisms could be subject to further legal challenges. Some countries have enacted or are considering legislation requiring local storage and processing of data, or similar requirements, which could increase the cost and complexity of delivering our products and services if we were to operate in those countries. If we are required to implement additional measures for cross-border data transfers or are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our services, add expenses, create distractions from our other business pursuits, and could adversely affect our business, financial condition and results of operations.
We are also subject to evolving laws, including in the E.U. and U.K., on the use of cookies and electronic marketing technologies. Regulation of cookies and similar technologies, and any decline of cookies or similar online tracking technologies as a means to identify and potentially target users, may lead to broader restrictions and impairments on our marketing and personalization activities and may negatively impact our efforts to understand and acquire new users.
In recent years, some regulators have proposed or introduced cybersecurity licensing requirements or certification regimes for specific sectors, such as critical infrastructure and financial services. These may impose new requirements on us or our current or prospective customers such as data processing locations, breach notification, and security standards. For instance, under DORA, which came into force in January 2025, our E.U. financial entity clients for whom we are a third-party provider of critical information and communication technology (ICT) services will require us to contract with and manage our relationships with them (and, where applicable, our relationships with critical third-party technology vendors in our own supply chain) in accordance with DORA’s requirements for ICT risk management, reporting, resilience and oversight. In addition to DORA, the E.U.’s Data Act (Data Act) became applicable on September 12, 2025. Among other things, the Data Act imposes data and cloud service interoperability and switching obligations to enable users to switch between cloud service providers. If we are subject to the Data Act, we may be required to revise our customer contracts and pricing models, and implement new switching procedures. Such requirements may cause us to incur significant organizational costs and increase barriers of entry into new markets.
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We depend on a number of third parties in relation to the operation of our business, many of which process personal data on our behalf or as our sub-processor. To the extent required by applicable law, we attempt to mitigate the associated risks of using third parties by performing security assessments and detailed due diligence, entering into contractual arrangements to ensure that providers only process personal data according to our instructions or comparable instructions to the instructions of our customer (as applicable), and that they have sufficient technical and organizational security measures in place. There is no assurance that these contractual measures and our own privacy and security-related safeguards will protect us from the risks associated with the third-party processing, disclosure, storage and transmission of such information. Any violation of privacy, data protection, data or cybersecurity laws by our third-party processors could have a material adverse effect on our business and result in fines and penalties under the GDPR or other applicable laws.
Any failure or perceived failure by us, even if unfounded, to comply with applicable privacy and data security laws and regulations, our privacy policies, or our privacy-related obligations to customers, users or other third parties, or any compromise of security that results in the unauthorized release or transfer of personal data or other customer data, may result in government enforcement actions, fines, penalties, litigation, or public statements against us by consumer advocacy groups or others and could cause our users to lose trust in us, which would have an adverse effect on our reputation and business. For example, in 2017, we reached a consent agreement with the Federal Trade Commission (FTC), to resolve an investigation relating to certain disclosures in our privacy policy. The consent agreement requires us, among other things, to provide information to the FTC about our compliance with the FTC order and about representations made in our marketing materials. We may be subject to future investigations and legal proceedings by the FTC or other regulators. As such, it is possible that a regulatory inquiry might result in changes to our policies or business practices. Violation of existing or future regulatory orders or consent decrees could subject us to substantial monetary fines and other penalties that could negatively affect our operating results and financial condition. In addition, it is possible that future orders issued by, or enforcement actions initiated by, regulatory authorities could cause us to incur substantial costs or require us to change our business practices in a manner materially adverse to our business.
While we strive to publish and prominently display privacy policies that are accurate, comprehensive, and compliant with applicable laws, rules, regulations and industry standards, we cannot ensure that our privacy policies and other statements regarding our practices will be sufficient. If such public statements are alleged to be deceptive, unfair or misrepresentative of our actual practices, we may be subject to potential government or legal investigation or action, including by the FTC or applicable state attorneys general.
Our compliance efforts are further complicated by the fact that data privacy and security laws, rules, regulations and standards around the world are rapidly evolving, may be subject to uncertain or inconsistent interpretations and enforcement, and may conflict among various jurisdictions. Any failure or perceived failure by us to comply with our privacy policies, or applicable data privacy and security laws, rules, regulations, standards, certifications or contractual obligations, or any compromise of security that results in unauthorized access to, or unauthorized loss, destruction, use, modification, acquisition, disclosure, release or transfer of personal data, may result in requirements to modify or cease certain operations or practices, the expenditure of substantial costs, time and other resources, proceedings or actions against us, legal liability, government investigations, enforcement actions, claims, fines, judgments, awards, penalties, sanctions, and costly litigation (including class actions). Any of the foregoing could result in significant operational and compliance costs, harm our reputation, distract our management and technical personnel, adversely affect the demand for our products and services, and ultimately result in the imposition of liability, any of which could have a material adverse effect on our business, operating results, and financial condition.
We are currently in, and may in the future, become involved in litigation that may adversely affect us.
From time to time, we are subject to claims, suits and other proceedings. For example, we are currently the subject of securities litigation and commercial litigation. For additional information regarding these litigation matters, see the section titled “Legal Proceedings.” Regardless of the outcome, legal proceedings can have an adverse impact on us because of legal costs and diversion of management’s attention and resources, and could cause us to incur significant expenses or liability, adversely affect our brand recognition or require us to change our business practices. The expense of litigation and the timing of this expense from period to period are difficult to estimate, subject to change and could adversely affect our business, operating results, and financial condition. It is possible that a
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resolution of one or more such proceedings could result in substantial damages, settlement costs, fines and penalties that would adversely affect our business, consolidated financial condition, operating results or cash flows in a particular period. These proceedings could also result in reputational harm, sanctions, consent decrees or orders requiring a change in our business practices. Because of the potential risks, expenses and uncertainties of litigation, we may, from time to time, settle disputes, even where we have meritorious claims or defenses, by agreeing to settlement agreements. Because litigation is inherently unpredictable, we cannot assure you that the results of any of these actions will not have a material adverse effect on our business, operating results, financial condition, and prospects. Any of these consequences could adversely affect our business, operating results, and financial condition.
Risks Related to Financial and Accounting Matters
The requirements of being a public company, including maintaining adequate internal control over our financial and management systems, result in significant costs and may strain our resources, divert management’s attention, and affect our ability to attract and retain executive management and qualified board members.
As a public company we incur and expect to continue to incur significant legal, accounting, and other expenses. We are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the rules and regulations of the applicable listing standards of the New York Stock Exchange (NYSE). We expect that the requirements of these rules and regulations will continue to increase our legal, accounting, and financial compliance costs, make some activities more difficult, time-consuming, and costly, and place significant strain on our personnel, systems, and resources.
The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. We are continuing to develop and refine our disclosure controls, internal control over financial reporting and other procedures that are designed to ensure information required to be disclosed by us in our condensed consolidated financial statements and in the reports that we will file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers.
Our current controls and any new controls we develop may become inadequate due to changes in conditions in our business. Additionally, to the extent we acquire other businesses, the acquired companies may not have sufficiently robust systems of internal controls and we may uncover new deficiencies. Further, weaknesses in our internal controls may be discovered in the future. Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could harm our operating results, may result in a restatement of our condensed consolidated financial statements for prior periods, cause us to fail to meet our reporting obligations, and could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting. Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the market price of our Class A common stock. Our management is also required, pursuant to Section 404 of the Sarbanes-Oxley Act, to certify financial and other information in our quarterly and annual reports and provide an annual report on the effectiveness of our internal control over financial reporting.
We have incurred significant costs with respect to our directors’ and officers’ insurance coverage. In the future, it may be more expensive or more difficult for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors would also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.
Being a public company requires significant resources and management oversight. As a result, management’s attention may be diverted from other business concerns, which could harm our business, operating results, and financial condition.
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We could be subject to additional tax liabilities and United States federal and global income tax reform could adversely affect us.
We are subject to U.S. federal, state, and sales taxes in the U.S. and foreign income taxes, withholding taxes and transaction taxes in numerous foreign jurisdictions. Significant judgment is required in evaluating our tax positions and our worldwide provision for income taxes. During the ordinary course of business, there are many activities and transactions for which the determination of our ultimate tax liabilities is uncertain. In addition, our future income tax obligations could be adversely affected by changes in, or interpretations of, tax laws in the U.S. or in other jurisdictions in which we operate.
For example, the United States tax law legislation, commonly referred to as the Tax Cuts and Jobs Act of 2017 significantly reformed the Internal Revenue Code of 1986, as amended (the Internal Revenue Code), reducing U.S. federal tax rates, making sweeping changes to rules governing international business operations, and imposing significant additional limitations on tax benefits, including the deductibility of interest and the use of net operating loss carryforwards. On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (IRA) into law. The IRA contains certain tax measures, including a corporate alternative minimum tax of 15% on some large corporations and an excise tax of 1% on certain corporate stock buy-backs taking place after December 31, 2022.
Further, for our 2022 to 2024 tax years, the Tax Cuts and Jobs Act of 2017 required research and experimental (R&E) expenditures to be capitalized and amortized ratably over a five-year period for domestic expenditures. Any such expenditures attributable to research conducted outside the United States were required to be capitalized and amortized over a 15-year period. On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (the OBBBA), restoring immediate deductibility of domestic R&E expenditures beginning with our 2025 tax year, while foreign R&E expenditures will continue to be capitalized and amortized over a 15-year period. The OBBBA introduced other provisions, such as the permanent extension and modification of certain provisions of the Tax Cuts and Jobs Act of 2017, changes to bonus depreciation rules, and adjustments to interest expense limitations. The OBBBA has not had a material effect on our condensed consolidated financial statements through July 31, 2026.
In addition, the Organization for Economic Cooperation and Development (OECD) Inclusive Framework of over 140 jurisdictions have joined a two-pillar plan to reform international taxation rules. The first pillar is focused on the allocation of taxing rights between countries for in-scope multinational enterprises that sell goods and services into countries with little or no local physical presence and is intended to apply to multinational enterprises with global turnover above €20 billion. The second pillar (Pillar Two) is focused on developing a global minimum tax rate of at least 15% applicable to in-scope multinational enterprises and is intended to apply to multinational enterprises with annual consolidated group revenue in excess of €750 million. The rules were effective for us beginning in fiscal 2025 but have not had a material impact on our condensed consolidated financial statements. Numerous countries have enacted or substantially enacted legislation to implement these rules. In January 2026, the OECD issued additional guidance regarding a side-by-side agreement, which is intended to provide relief for U.S.-parented multinational corporations from certain provisions of Pillar Two, but will require adoption by OECD member countries to implement. While Pillar Two did not have an impact on our tax provision or effective tax rate in the first half of fiscal 2027, we continue to monitor Pillar Two and other evolving tax legislation in the jurisdictions in which we operate.
Due to the large and expanding scale of our international business activities, these types of changes to the taxation of our activities could impact the tax treatment of our foreign earnings, increase our worldwide effective tax rate, increase the amount of taxes imposed on our business, and harm our financial position. Such changes may also apply retroactively to our historical operations and result in taxes greater than the amounts estimated and recorded in our financial statements.
Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
As of January 31, 2026, we had aggregate U.S. federal and state net operating loss carryforwards of $978.0 million and $477.9 million, respectively, which may be available to offset future taxable income for U.S. income tax purposes. If not utilized, a portion of the federal net operating loss carryforwards will begin to expire in 2031, and the state net operating loss carryforwards will begin to expire in 2027. In addition, as of January 31, 2026, we had federal research and development credit carryforwards of $13.1 million, which will begin to expire in 2037,
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and state research and development credit carryforwards of $5.4 million, which do not expire. We had no foreign net operating loss carryforwards as of January 31, 2026. Realization of these net operating loss and research and development credit carryforwards depends on future income, and there is a risk that certain of our existing carryforwards could expire unused and be unavailable to offset future income tax liabilities, which could adversely affect our operating results and financial condition.
In addition, under Sections 382 and 383 of the Internal Revenue Code, if a corporation undergoes an “ownership change,” generally defined as a greater than 50% change (by value) in ownership by “5% shareholders” over a rolling three-year period, the corporation’s ability to use its pre-change net operating loss carryovers and other pre-change tax attributes, such as research and development credits, to offset its post-change income or taxes may be limited. Similar rules apply under U.S. state tax laws. We have, and may in the future, experience ownership changes as a result of shifts in our stock ownership. As a result, if we earn net taxable income, our ability to use our pre-change U.S. net operating loss carryforwards to offset U.S. federal taxable income may be subject to limitations, which could potentially result in increased future tax liability to us.
We could be required to collect additional sales, use, value added, digital services, or other similar taxes or be subject to other liabilities with respect to past or future sales, that may increase the costs our customers would have to pay for our solutions and adversely affect our business, operating results, and financial condition.
We do not collect sales and use, value added, or similar taxes in all jurisdictions in which we have sales because we have been advised that such taxes are not applicable to our services in certain jurisdictions. Sales and use, value added, and similar tax laws and rates vary greatly by jurisdiction. Certain jurisdictions in which we do not collect such taxes may seek to impose incremental or new sales, use, value added, digital services, or assert other tax collection obligations on us that such taxes are applicable, which could result in tax assessments, penalties and interest, to us or our customers for the past amounts. We may be required to collect such taxes in the future. If we are unsuccessful in collecting such taxes from our customers, we could be held liable for such costs, which may adversely affect our results of operations.
Further, an increasing number of U.S. states have considered or adopted laws that attempt to impose tax collection obligations on out-of-state companies. A successful assertion by one or more U.S. states requiring us to collect taxes where we presently do not do so, or to collect more taxes in a jurisdiction in which we currently do collect some taxes, could result in substantial liabilities, including taxes on past sales, as well as interest and penalties. Furthermore, certain jurisdictions, such as the U.K., France and Canada, have enacted a digital services tax, which is generally a tax on gross revenue generated from users or customers located in those jurisdictions, and other jurisdictions are considering enacting similar laws. A successful assertion by a U.S. state or local government, or other country or jurisdiction that we should have been or should be collecting additional sales, use, value added, digital services or other similar taxes could, among other things, result in substantial tax payments, create significant administrative burdens for us, discourage potential customers from subscribing to our platform due to the incremental cost of any such sales or other related taxes, or otherwise harm our business.
Our corporate structure and intercompany arrangements are subject to the tax laws of various jurisdictions, and we could be obligated to pay additional taxes, which would harm our operating results and financial condition.
We are expanding our international operations and staff to support our business and growth in international markets. We generally conduct our international operations through wholly-owned subsidiaries and are or may be required to report our taxable income in various jurisdictions worldwide based upon our business operations in those jurisdictions. Our corporate structure and associated transfer pricing policies contemplate future growth in international markets, and consider the functions, risks, and assets of the various entities involved in intercompany transactions. Furthermore, increases in tax rates, new or revised tax laws, and new interpretations of existing tax laws and policies by taxing authorities and courts in various jurisdictions, could result in an increase in our overall tax obligations which could adversely affect our business. Our intercompany relationships and intercompany transactions are subject to complex transfer pricing rules administered by taxing authorities in various jurisdictions in which we operate with potentially divergent tax laws. The amount of taxes we pay in different jurisdictions will depend on the application of the tax laws of the various jurisdictions, including the U.S., to our intercompany transactions, international business activities, changes in tax rates, new or revised tax laws or interpretations of existing tax laws
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and policies by taxing authorities and courts in various jurisdictions, and our ability to operate our business in a manner consistent with our corporate structure and intercompany arrangements.
It is not uncommon for tax authorities in different countries to have conflicting views, for instance, with respect to, among other things, the manner in which the arm’s length standard is applied for transfer pricing purposes, the transfer pricing and charges for intercompany services and other intercompany transactions, or with respect to the valuation of our intellectual property for tax purposes and the manner in which our intellectual property is owned and utilized within our group. On January 8, 2026, we entered into the Agreement with the ITA covering various transfer pricing matters for intercompany transactions between us and our Israeli subsidiary, including the valuation and taxation of intellectual property. The Agreement fully and finally resolves all related Israeli disputed income tax matters between us, our affiliates, and the ITA for the fiscal years ended January 31, 2021 through January 31, 2025. This settlement with the ITA includes certain principles established in the bilateral Advanced Pricing Agreement (APA) process between us, the Internal Revenue Service, and the ITA, which we have been negotiating since fiscal year 2022, and provides a final tax determination on this matter for Israeli tax purposes. As a result of this final resolution and the related reassessment of our uncertain tax positions, through July 31, 2026, we recorded a total tax expense of $186.3 million, inclusive of interest, related to this matter. Under the terms of the Agreement, we are required to make installment payments through fiscal 2031 and the unpaid balance is subject to a 7.0% annual interest rate. Additionally, in the event of a change in control, all unpaid amounts plus interest—$259.7 million (792.7 million Israeli New Shekels), less cumulative payments made—would accelerate and become immediately due. For more information, see Note 9, Income Taxes, to our condensed consolidated financial statements.
While this matter is resolved in Israel, there can be no assurance that other tax authorities, including the IRS, will not successfully challenge our transfer pricing positions elsewhere, which could result in increased tax liabilities or double taxation. In addition, if taxing authorities in any of the jurisdictions in which we conduct our international operations were to successfully challenge our transfer pricing, we could be required to reallocate part or all of our income to reflect transfer pricing adjustments, which could result in an increased tax liability to us. In such circumstances, if the country from where the income was reallocated did not agree to the reallocation, we could become subject to tax on the same income in both countries, resulting in double taxation. Furthermore, the relevant taxing authorities may disagree with our determinations as to the income and expenses attributable to specific jurisdictions. We believe that our tax and financial accounting positions are reasonable and our tax reserves are adequate to cover any potential liability. We believe that our assumptions, judgments, and estimates are reasonable and that our transfer pricing for these intercompany transactions are on arm’s-length terms. However, the relevant tax authorities may disagree with our tax positions, including any assumptions, judgments, valuations or estimates used for these transfer pricing matters and intercompany transactions. If any of these tax authorities determine that our transfer pricing for these intercompany transactions do not meet arm’s-length criteria, and were successful in challenging our positions, we could be required to pay additional taxes, interest, indexation charges and/or penalties related thereto, which could be in excess of any reserves established therefore, and which could result in higher effective tax rates, reduced cash flows and lower overall profitability of our operations. Our financial statements could fail to reflect adequate reserves to cover such a contingency.
We may be audited in various jurisdictions, including in jurisdictions in which we are not currently filing, and such jurisdictions may assess new or additional taxes, sales taxes and value added taxes against us. Although we believe our tax estimates are reasonable, the final determination of any tax audits or litigation could be materially different from our historical tax provisions and accruals, which could have an adverse effect on our operating results or cash flows in the period or periods for which a determination is made.
If our estimates or judgments relating to our critical accounting policies prove to be incorrect or financial reporting standards or interpretations change, our operating results could be adversely affected.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our condensed consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as discussed in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities and equity, and the amount of revenue and expenses that are not readily
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apparent from other sources. Significant assumptions and estimates used in preparing our condensed consolidated financial statements include but are not limited to those related to stock-based compensation, the period of benefit for deferred contract acquisition costs, useful lives of long-lived assets and intangibles, the valuation of intangibles acquired as part of a business combination, and accounting for income taxes. Our operating results may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our operating results to fall below the expectations of industry or financial analysts and investors, resulting in a potential decline in the market price of our Class A common stock.
Additionally, we regularly monitor our compliance with applicable financial reporting standards and review new pronouncements and drafts thereof that are relevant to us. As a result of new standards, changes to existing standards and changes in their interpretation, we might be required to change our accounting policies, alter our operational policies and implement new or enhance existing systems so that they reflect new or amended financial reporting standards, or we may be required to restate our published financial statements. Such changes to existing standards or changes in their interpretation may have an adverse effect on our reputation, business, financial condition and profit, or cause an adverse deviation from our revenue and operating profit target, which may adversely affect our financial results.
We are exposed to fluctuations in currency exchange rates, which could negatively affect our business, operating results, and financial condition.
Our sales contracts are denominated in U.S. dollars, and therefore our revenue is not subject to foreign currency risk. However, the strengthening of the U.S. dollar increases the real cost of our platform to our customers outside of the U.S., which could lead to delays in the purchase of our platform and the lengthening of our sales cycle. If the U.S. dollar strengthens, this could adversely affect our operating results and financial condition. In addition, increased international sales in the future, including through continued international expansion, our channel partners and other partnerships, could result in foreign currency denominated sales, which would increase our foreign currency risk. Conversely, if the U.S. dollar weakens relative to the foreign currencies in the jurisdictions in which we have operations, our cost of revenue and operating expenses will increase, which would have an adverse impact on our operating results.
Our operating expenses incurred outside the U.S. and denominated in foreign currencies are increasing and are subject to fluctuations due to changes in foreign currency exchange rates. Other than entering into foreign currency forward contracts to economically manage the foreign currency exchange rate risk associated with the ITA liability denominated in the Israeli New Shekel, we do not currently hedge against the risks associated with currency fluctuations, but may do so, or use other derivative instruments, in the future.
We may require additional capital to fund our business and support our growth, and any inability to generate or obtain such capital may adversely affect our operating results and financial condition.
In order to support our growth and respond to business challenges, such as developing new features or enhancements to our platform to stay competitive, acquiring new technologies, and improving our infrastructure, we have made significant financial investments in our business and we intend to continue to make such investments. As a result, we may need to engage in additional equity or debt financings to provide the funds required for these investments and other business endeavors. If we raise additional funds through equity or convertible debt issuances, our existing stockholders may suffer significant dilution and these securities could have rights, preferences, and privileges that are superior to those of holders of our Class A common stock. We expect that our existing cash, cash equivalents and investments will be sufficient to meet our anticipated cash needs for working capital and capital expenditures for at least the next 12 months. If we obtain additional funds through debt financing, we may not be able to obtain such financing on terms favorable to us. Further, the current global macroeconomic environment may make it more difficult to raise additional capital on favorable terms, if at all. Such terms may involve restrictive covenants making it difficult to engage in capital raising activities and pursue business opportunities, including potential acquisitions. The trading prices of technology companies have been highly volatile due to factors such as regional geopolitical conflicts, inflation, interest rate fluctuations, changes in U.S. federal spending, significant political or regulatory developments, including changes in trade policy, actual or perceived instability in the banking system, and broader market downturns. This volatility may reduce our ability to access capital on favorable terms or at all. In
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addition, a recession, depression, or other sustained adverse market event could negatively affect our business and the value of our Class A common stock. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly impaired and our business may be adversely affected, requiring us to delay, reduce, or eliminate some or all of our operations.
Risks Related to Ownership of Our Class A Common Stock
The market price of our Class A common stock may be volatile, and you could lose all or part of your investment.
Our Class A common stock price could be subject to wide fluctuations. The market price of our Class A common stock depends on a number of factors, including those described in this “Risk Factors” section, many of which are beyond our control and may not be related to our operating performance. These fluctuations could cause you to lose all or part of your investment in our Class A common stock. Factors that could cause fluctuations in the market price of our Class A common stock include the following:
•actual or anticipated changes or fluctuations in our operating results;
•the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;
•announcements by us or our competitors of new products or new or terminated significant contracts, commercial relationships, acquisitions or capital commitments;
•rumors and market speculation involving us or other companies in our industry;
•the overall performance of the stock market or technology companies;
•the number of shares of our Class A common stock publicly owned and available for trading;
•repurchases by us of any of our outstanding shares of Class A common stock on unfavorable terms or at all;
•failure of industry or financial analysts to maintain coverage of us, changes in financial estimates by any analysts who follow our company, or our failure to meet these estimates or the expectations of investors;
•litigation or other proceedings involving us, our industry or both, or investigations by regulators into our operations or those of our competitors;
•developments or disputes concerning our intellectual property rights or our solutions, or third-party proprietary rights;
•new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
•any major changes in our management or our board of directors;
•the global political, economic and macroeconomic climate, including but not limited to, the changes in U.S. federal spending, significant political or regulatory developments including changes in trade policy, actual or perceived instability in the banking industry, labor shortages, supply chain disruptions, potential recession, inflation, government shutdowns, and fluctuating interest rates;
•other events or factors, including those resulting from war, armed conflict, regional geopolitical conflicts around the world, incidents of terrorism or responses to these events; and
•cybersecurity incidents.
In addition, the stock market in general, and the market for technology companies in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies, particularly during the current period of global macroeconomic uncertainty,
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including inflation, fluctuating interest rates, significant political or regulatory developments including changes in trade policy, labor shortages and fluctuations in international currency rates, as well as the impacts of regional geopolitical conflicts around the world. These economic, political, regulatory and market conditions have and may continue to negatively impact the market price of our Class A common stock, regardless of our actual operating performance. In addition, in the past, following periods of volatility in the overall market and the market prices of a particular company’s securities, securities class action litigation has often been instituted against that company. Securities litigation, if instituted against us, could result in substantial costs and divert our management’s attention and resources from our business. This could have an adverse effect on our business, operating results, and financial condition.
Sales of substantial amounts of our Class A common stock in the public markets, or the perception that they might occur, could cause the market price of our Class A common stock to decline.
Sales of a substantial number of shares of our Class A common stock into the public market, including shares of Class A common stock held by our existing stockholders that have been converted from shares of Class B common stock, and particularly sales by our directors, executive officers, and principal stockholders, or the perception that these sales might occur, could cause the market price of our Class A common stock to decline.
We may also issue shares of our capital stock or securities convertible into shares of our capital stock from time to time in connection with a financing, an acquisition, an investment, or otherwise. Any such issuance could result in substantial dilution to our existing stockholders and cause the market price of our Class A common stock to decline.
The dual class structure of our common stock has had the effect of concentrating voting control with the holders of our Class B common stock who held, in the aggregate, approximately 26% of the voting power of our capital stock as of July 31, 2026, which makes it more difficult for you to influence corporate matters, including the election of directors and the approval of any change of control transaction.
Our Class B common stock has 20 votes per share, and our Class A common stock has one vote per share. As of July 31, 2026, the holders of our outstanding Class B common stock held approximately 26% of the voting power of our outstanding capital stock. The outstanding Class B common stock automatically converts to Class A common stock on the earlier of (i) the date specified by a vote of the holders of 66 2/3% of the then outstanding shares of Class B common stock, (ii) seven years from the date of our prospectus filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act (the Final Prospectus), or June 29, 2028, (iii) the first date following the completion of our IPO on which the number of shares of outstanding Class B common stock (including shares of Class B common stock subject to outstanding stock options) held by Tomer Weingarten, including certain permitted entities that Mr. Weingarten controls, is less than 25% of the number of shares of outstanding Class B common stock (including shares of Class B common stock subject to outstanding stock options) that Mr. Weingarten originally held as of the date of our Final Prospectus, (iv) the date fixed by our board of directors, following the first date following the completion of our IPO when Mr. Weingarten is no longer providing services to us as an officer, employee, consultant or member of our board of directors, (v) the date fixed by our board of directors following the date on which, if applicable, Mr. Weingarten is terminated for cause, as defined in our restated certificate of incorporation, and (vi) the date that is 12 months after the death or disability, as defined in our restated certificate of incorporation, of Mr. Weingarten. The dual class structure of our common stock will make it difficult for you to influence corporate matters, including the election of directors, amendments of our organizational documents, and any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction requiring stockholder approval. In addition, this may prevent or discourage unsolicited acquisition proposals or offers for our capital stock that you may feel are in your best interest as one of our stockholders.
Future transfers by holders of our Class B common stock will generally result in those shares converting to Class A common stock, subject to limited exceptions, such as certain transfers effected for estate planning purposes. The
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conversion of Class B common stock to Class A common stock has had the effect, over time, of increasing the relative voting power of those holders of our Class B common stock who retain their shares in the long term.
The dual class structure of our common stock may adversely affect the trading market for our Class A common stock.
We cannot predict whether our dual class structure will, over time, result in a lower or more volatile market price of our Class A common stock, adverse publicity, or other adverse consequences. Certain stock index providers exclude or limit the ability of multi-class share structures from being added to certain indices. In addition, several stockholder advisory firms and large institutional investors oppose the use of multiple class structures. As a result, the dual class structure of our common stock may make us ineligible for inclusion in certain indices and may discourage such indices from selecting us for inclusion, notwithstanding our automatic termination provision, may cause stockholder advisory firms to publish negative commentary about our corporate governance practices or otherwise seek to cause us to change our capital structure, and may result in large institutional investors not purchasing shares of our Class A common stock. Any exclusion from certain stock indices could result in less demand for our Class A common stock. Any actions or publications by stockholder advisory firms or institutional investors critical of our corporate governance practices or capital structure could also adversely affect the value of our Class A common stock.
General Risk Factors
We may be adversely affected by natural disasters, pandemics, and other catastrophic events, and by man-made problems such as war and regional geopolitical conflicts around the world, that could disrupt our business operations, and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster.
Natural disasters or other catastrophic events may cause damage or disruption to our operations, international commerce, and the global economy, and thus could have an adverse effect on us. Our business operations are also subject to interruption by fire, power shortages, flooding, and other events beyond our control. In addition, our global operations expose us to risks associated with public health crises, such as pandemics and epidemics, which could harm our business and cause our operating results to suffer. Further, acts of war, armed conflict, terrorism and other geopolitical unrest, such as the conflicts in the Middle East and Ukraine, and tensions between China and Taiwan, could cause disruptions in our business or the businesses of our partners or the economy as a whole. We maintain an office in Tel Aviv, Israel and had approximately 11% of our personnel in Israel as of July 31, 2026. We are closely monitoring the continued armed conflict in Israel. While this conflict is still evolving, to date, the conflict has not had an adverse impact on our business, results of operations and we have implemented continuity measures to address the safety of our employees and continue our operations in the event of reduced employee availability in the conflict region. However, if our continuity measures fail or the conflict continues to worsen or intensify, any business interruptions or spillover effects could adversely affect our business and operations.
In the event of a natural disaster, including a major earthquake, blizzard, or hurricane, or a catastrophic event such as a fire, power loss, cyberattack, or telecommunications failure, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in development of our platform, lengthy interruptions in service, breaches of data security, and loss of critical data, all of which could have an adverse effect on our future operating results. Climate change could result in an increase in the frequency or severity of such natural disasters. Moreover, any of our office locations may be vulnerable to the adverse effects of climate change. For example, our corporate office is located in California, a state that frequently experiences earthquakes, wildfires and resultant air quality impacts and power shutoffs associated with wildfire prevention, heatwaves, and droughts. These events can, in turn, have impacts on inflation risk, food security, water security and on our employees’ health and well-being. Additionally, all the aforementioned risks will be further increased if we do not implement an effective disaster recovery plan or if our partners’ disaster recovery plans prove to be inadequate.
Investors’ expectations of our performance relating to corporate sustainability may impose additional costs and expose us to new risks.
There is an increasing focus from certain regulators, investors, employees, users and other stakeholders concerning corporate sustainability both in the U.S. and internationally. Some investors may use these non-financial
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performance factors to guide their investment strategies and, in some cases, may choose not to invest in us if they believe our policies and actions relating to corporate responsibility are inadequate. We may face reputational damage in the event that we do not meet the sustainability standards set by various constituencies.
Further, corporate sustainability initiatives, goals or commitments could be difficult to achieve or costly to implement. If our competitors’ corporate social responsibility performance is perceived to be better than ours, potential or current investors may elect to invest in our competitors instead. Moreover, California has adopted two new climate-related bills, which require companies doing business in California that meet certain revenue thresholds to publicly disclose certain greenhouse gas emissions data and climate-related financial risk reports, and compliance with such requirements could require significant effort and resources. Our business may face increased scrutiny related to these activities and our related disclosures, including from the investment community, and our failure to achieve progress or manage the dynamic public sentiment and legal landscape in these areas on a timely basis, or at all, could adversely affect our reputation, business, and financial performance.
If industry or financial analysts do not publish research or reports about our business, or if they issue inaccurate or unfavorable research regarding our Class A common stock, our stock price could decline.
The trading market for our Class A common stock may be influenced by the research and reports that industry or financial analysts publish about us, our business, our market and our competitors. We do not control these analysts or the content and opinions included in their reports. If any of the analysts who cover us issues an inaccurate or unfavorable opinion regarding our stock price, our stock price could potentially decline. If our financial results fail to meet, or exceed, our announced guidance or the expectations of analysts or public investors, analysts could downgrade our Class A common stock or publish unfavorable research about us.
We are currently subject to and can in the future be subject to securities class action litigation.
Securities class action litigation can be instituted against companies following periods of volatility in the market price of a company’s securities. We are currently subject to securities litigation as further described in the section titled “Legal Proceedings.” This type of litigation can result in substantial costs and a diversion of management’s attention and resources, which could adversely affect our business, operating results, or financial condition. Additionally, the dramatic increase in the cost of directors’ and officers’ liability insurance may make it more expensive for us to obtain directors’ and officers’ liability insurance in the future and may require us to opt for lower overall policy limits and coverage or to forgo insurance that we may otherwise rely on to cover significant defense costs, settlements, and damages awarded to plaintiffs, or incur substantially higher costs to maintain the same or similar coverage. These factors could make it more difficult for us to attract and retain qualified executive officers and members of our board of directors.
We do not intend to pay dividends in the foreseeable future. As a result, your ability to achieve a return on your investment will depend on appreciation in the price of our Class A common stock.
We have never declared or paid any cash dividends on our capital stock. We currently intend to retain all available funds and any future earnings for use in the operation of our business and other corporate purposes, which may include share repurchases, and do not anticipate paying any dividends in the foreseeable future. Any determination to pay dividends in the future will be at the discretion of our board of directors. Accordingly, investors must rely on sales of their Class A common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments.
Provisions in our charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may limit attempts by our stockholders to replace or remove our current management.
Provisions in our restated certificate of incorporation and amended and restated bylaws may have the effect of delaying or preventing a merger, acquisition or other change of control of the company that the stockholders may consider favorable. In addition, because our board of directors is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors.
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Among other things, our restated certificate of incorporation and amended and restated bylaws include provisions that:
•provide that our board of directors is classified into three classes of directors with staggered three-year terms;
•permit our board of directors to establish the number of directors and fill any vacancies and newly created directorships;
•require super-majority voting to amend some provisions in our restated certificate of incorporation and amended and restated bylaws;
•authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan;
•provide that only our chief executive officer or a majority of our board of directors will be authorized to call a special meeting of stockholders;
•eliminate the ability of our stockholders to call special meetings of stockholders;
•do not provide for cumulative voting;
•provide that directors may only be removed “for cause” and only with the approval of two-thirds of our stockholders;
•provide for a dual class common stock structure in which holders of our Class B common stock may have the ability to control the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the outstanding shares of our common stock, including the election of directors and other significant corporate transactions, such as a merger or other sale of our company or its assets;
•prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders;
•provide that our board of directors is expressly authorized to make, alter, or repeal our amended and restated bylaws; and
•establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.
Moreover, Section 203 of the Delaware General Corporation Law (DGCL), may discourage, delay, or prevent a change in control of our company. Section 203 imposes certain restrictions on mergers, business combinations, and other transactions between us and holders of 15% or more of our common stock.
Our restated certificate of incorporation contains exclusive forum provisions for certain claims, which may limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.
Our restated certificate of incorporation provides that the Court of Chancery of the State of Delaware, to the fullest extent permitted by law, will be the exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty, any action asserting a claim against us arising pursuant to the DGCL, our restated certificate of incorporation, or our amended and restated bylaws, or any action asserting a claim against us that is governed by the internal affairs doctrine.
Moreover, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all claims brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Our restated certificate of incorporation provides that the federal district courts of the U.S. will, to the fullest extent permitted by law, be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act (Federal Forum Provision). Our decision to adopt a Federal Forum Provision followed a decision by
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the Supreme Court of the State of Delaware holding that such provisions are facially valid under Delaware law. While there can be no assurance that federal or state courts will follow the holding of the Delaware Supreme Court or determine that the Federal Forum Provision should be enforced in a particular case, application of the Federal Forum Provision means that suits brought by our stockholders to enforce any duty or liability created by the Securities Act must be brought in federal court and cannot be brought in state court.
Section 27 of the Exchange Act creates exclusive federal jurisdiction over all claims brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. In addition, the Federal Forum Provision applies to suits brought to enforce any duty or liability created by the Exchange Act. Accordingly, actions by our stockholders to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder must be brought in federal court.
Our stockholders will not be deemed to have waived our compliance with the federal securities laws and the regulations promulgated thereunder.
Any person or entity purchasing or otherwise acquiring or holding any interest in any of our securities shall be deemed to have notice of and consented to our exclusive forum provisions, including the Federal Forum Provision. These provisions may limit stockholders’ ability to bring a claim in a judicial forum of their choosing for disputes with us or our directors, officers, or employees, which may discourage lawsuits against us and our directors, officers, and employees. Alternatively, if a court were to find the choice of forum provision contained in our restated certificate of incorporation or amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, financial condition, and operating results.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Unregistered Sales of Equity Securities
None.
Use of Proceeds
None.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
Our directors and officers (as defined in Rule 16a-1(f) under the Exchange Act) are only permitted to trade in our securities pursuant to a prearranged trading plan
On June 9, 2026 , Sonalee Parekh , our Chief Financial Officer , adopted a Rule 10b5-1 Plan (the Parekh Plan) providing for the potential sale of certain shares of our Class A common stock which may be received by Ms. Parekh upon vesting and settlement of certain outstanding restricted stock units and performance stock units, net of any shares withheld by the Company to satisfy applicable tax obligations, with such sales occurring between an estimated start date of August 27, 2026 and an estimated end date of September 30, 2027 . The number of shares to be withheld, and therefore the exact number of shares to be sold pursuant to the Parekh Plan, can only be determined upon the occurrence of the future vesting events. The Parekh Plan is scheduled to expire on September 30, 2027.
On June 9, 2026 , Robin Tomasello , our Chief Accounting Officer , adopted a Rule 10b5-1 Plan (the Tomasello Plan) providing for the potential sale of certain shares of our Class A common stock which may be received by Ms. Tomasello upon vesting and settlement of certain outstanding options, restricted stock units, and performance stock units, net of any shares withheld by the Company to satisfy applicable tax obligations, with such sales occurring between an estimated start date of August 27, 2026 and an estimated end date of September 30, 2027 . The number of shares to be withheld, and therefore the exact number of shares to be sold pursuant to the Tomasello Plan, can only be determined upon the occurrence of the future vesting events. The Tomasello Plan is scheduled to expire on September 30, 2027.
On July 2, 2026 , Tomer Weingarten , our President and Chief Executive Officer , adopted a Rule 10b5-1 Plan (the Weingarten Plan) providing for the potential sale of: (i) 500,000 shares of our Class A common stock and (ii) certain shares of our Class A common stock which may be received by Mr. Weingarten upon vesting and settlement of certain outstanding restricted stock units, net of any shares withheld by the Company to satisfy applicable tax obligations, with such sales occurring between an estimated start date of October 5, 2026 and an estimated end date of October 5, 2027 . The number of shares to be withheld, and therefore the exact number of shares to be sold pursuant to the Weingarten Plan, can only be determined upon the occurrence of the future vesting events. The Weingarten Plan is scheduled to expire on October 5, 2027.
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ITEM 6. EXHIBITS
The exhibits listed below are filed as part of this Quarterly Report on Form 10-Q or are incorporated herein by reference, in each case as indicated below.
Exhibit Number | Description of Document | Form | File No. | Exhibit | Filing Date | ||||||||||||||||||||||||||||||
| 101.INS | Inline XBRL Instance Document--the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. | ||||||||||||||||||||||||||||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | ||||||||||||||||||||||||||||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | ||||||||||||||||||||||||||||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | ||||||||||||||||||||||||||||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | ||||||||||||||||||||||||||||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | ||||||||||||||||||||||||||||||||||
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). | ||||||||||||||||||||||||||||||||||
*The certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall they be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| SENTINELONE, INC. | |||||||||||
Date: August 27, 2026 | By: | /s/ Sonalee Parekh | |||||||||
| Sonalee Parekh | |||||||||||
| Chief Financial Officer | |||||||||||
(Principal Financial Officer) | |||||||||||