|
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
20-2530195
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
Title of each class
|
|
Trading Symbol(s)
|
|
Name of each exchange on which registered
|
Common stock, $0.0001 par value per share
|
|
PANW
|
|
New York Stock Exchange
|
Large accelerated filer
|
☒
|
Accelerated filer
|
☐
|
Emerging growth company
|
☐
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
☐
|
|
|
|
|
|
|
|
|
Page
|
|
PART I - FINANCIAL INFORMATION
|
|
Item 1.
|
||
|
||
|
||
|
||
|
||
|
||
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
|
|
|
|
PART II - OTHER INFORMATION
|
|
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 5.
|
||
Item 6.
|
||
|
ITEM 1.
|
FINANCIAL STATEMENTS
|
|
January 31, 2020
|
|
July 31, 2019
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
2,000.0
|
|
|
$
|
961.4
|
|
Short-term investments
|
1,133.9
|
|
|
1,841.7
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $1.2 and $0.8 at January 31, 2020 and July 31, 2019, respectively
|
540.3
|
|
|
582.4
|
|
||
Prepaid expenses and other current assets
|
304.0
|
|
|
279.3
|
|
||
Total current assets
|
3,978.2
|
|
|
3,664.8
|
|
||
Property and equipment, net
|
311.4
|
|
|
296.0
|
|
||
Operating lease right-of-use assets
|
270.0
|
|
|
—
|
|
||
Long-term investments
|
317.9
|
|
|
575.4
|
|
||
Goodwill
|
1,511.7
|
|
|
1,352.3
|
|
||
Intangible assets, net
|
290.0
|
|
|
280.6
|
|
||
Other assets
|
504.9
|
|
|
423.1
|
|
||
Total assets
|
$
|
7,184.1
|
|
|
$
|
6,592.2
|
|
Liabilities and stockholders’ equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
55.4
|
|
|
$
|
73.3
|
|
Accrued compensation
|
175.2
|
|
|
235.5
|
|
||
Accrued and other liabilities
|
251.2
|
|
|
162.4
|
|
||
Deferred revenue
|
1,757.7
|
|
|
1,582.1
|
|
||
Total current liabilities
|
2,239.5
|
|
|
2,053.3
|
|
||
Convertible senior notes, net
|
1,461.2
|
|
|
1,430.0
|
|
||
Long-term deferred revenue
|
1,440.8
|
|
|
1,306.6
|
|
||
Long-term operating lease liabilities
|
353.5
|
|
|
—
|
|
||
Other long-term liabilities
|
80.6
|
|
|
216.0
|
|
||
Commitments and contingencies (Note 11)
|
|
|
|
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock; $0.0001 par value; 100.0 shares authorized; none issued and outstanding at January 31, 2020 and July 31, 2019
|
—
|
|
|
—
|
|
||
Common stock and additional paid-in capital; $0.0001 par value; 1,000.0 shares authorized; 99.7 and 96.8 shares issued and outstanding at January 31, 2020 and July 31, 2019, respectively
|
2,644.5
|
|
|
2,490.9
|
|
||
Accumulated other comprehensive loss
|
(1.8
|
)
|
|
(3.7
|
)
|
||
Accumulated deficit
|
(1,034.2
|
)
|
|
(900.9
|
)
|
||
Total stockholders’ equity
|
1,608.5
|
|
|
1,586.3
|
|
||
Total liabilities and stockholders’ equity
|
$
|
7,184.1
|
|
|
$
|
6,592.2
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
January 31,
|
|
January 31,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Product
|
$
|
246.5
|
|
|
$
|
271.6
|
|
|
$
|
477.7
|
|
|
$
|
512.1
|
|
Subscription and support
|
570.2
|
|
|
439.6
|
|
|
1,110.9
|
|
|
855.1
|
|
||||
Total revenue
|
816.7
|
|
|
711.2
|
|
|
1,588.6
|
|
|
1,367.2
|
|
||||
Cost of revenue:
|
|
|
|
|
|
|
|
||||||||
Product
|
68.7
|
|
|
82.5
|
|
|
133.8
|
|
|
155.7
|
|
||||
Subscription and support
|
164.4
|
|
|
120.1
|
|
|
317.0
|
|
|
230.4
|
|
||||
Total cost of revenue
|
233.1
|
|
|
202.6
|
|
|
450.8
|
|
|
386.1
|
|
||||
Total gross profit
|
583.6
|
|
|
508.6
|
|
|
1,137.8
|
|
|
981.1
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development
|
185.4
|
|
|
128.3
|
|
|
355.9
|
|
|
241.7
|
|
||||
Sales and marketing
|
374.9
|
|
|
320.0
|
|
|
740.6
|
|
|
634.6
|
|
||||
General and administrative
|
76.2
|
|
|
53.7
|
|
|
146.0
|
|
|
130.3
|
|
||||
Total operating expenses
|
636.5
|
|
|
502.0
|
|
|
1,242.5
|
|
|
1,006.6
|
|
||||
Operating income (loss)
|
(52.9
|
)
|
|
6.6
|
|
|
(104.7
|
)
|
|
(25.5
|
)
|
||||
Interest expense
|
(19.0
|
)
|
|
(20.6
|
)
|
|
(37.9
|
)
|
|
(43.3
|
)
|
||||
Other income, net
|
10.8
|
|
|
16.0
|
|
|
27.0
|
|
|
29.0
|
|
||||
Income (loss) before income taxes
|
(61.1
|
)
|
|
2.0
|
|
|
(115.6
|
)
|
|
(39.8
|
)
|
||||
Provision for income taxes
|
12.6
|
|
|
4.6
|
|
|
17.7
|
|
|
1.1
|
|
||||
Net loss
|
$
|
(73.7
|
)
|
|
$
|
(2.6
|
)
|
|
$
|
(133.3
|
)
|
|
$
|
(40.9
|
)
|
Net loss per share, basic and diluted
|
$
|
(0.75
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(1.37
|
)
|
|
$
|
(0.44
|
)
|
Weighted-average shares used to compute net loss per share, basic and diluted
|
98.3
|
|
|
94.0
|
|
|
97.5
|
|
|
93.9
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
January 31,
|
|
January 31,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Net loss
|
$
|
(73.7
|
)
|
|
$
|
(2.6
|
)
|
|
$
|
(133.3
|
)
|
|
$
|
(40.9
|
)
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
||||||||
Change in unrealized gains (losses) on investments
|
(1.1
|
)
|
|
4.8
|
|
|
1.6
|
|
|
5.7
|
|
||||
Change in unrealized gains (losses) on cash flow hedges
|
(0.1
|
)
|
|
4.4
|
|
|
0.3
|
|
|
0.9
|
|
||||
Other comprehensive income (loss)
|
(1.2
|
)
|
|
9.2
|
|
|
1.9
|
|
|
6.6
|
|
||||
Comprehensive income (loss)
|
$
|
(74.9
|
)
|
|
$
|
6.6
|
|
|
$
|
(131.4
|
)
|
|
$
|
(34.3
|
)
|
|
Three Months Ended January 31, 2020
|
|||||||||||||||||
|
Common Stock
and
Additional Paid-In Capital
|
|
Accumulated
Other
Comprehensive Income (Loss)
|
|
Accumulated
Deficit
|
|
Total
Stockholders’
Equity
|
|||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||
Balance as of October 31, 2019
|
97.6
|
|
|
$
|
2,477.5
|
|
|
$
|
(0.6
|
)
|
|
$
|
(960.5
|
)
|
|
$
|
1,516.4
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(73.7
|
)
|
|
(73.7
|
)
|
||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
(1.2
|
)
|
|
—
|
|
|
(1.2
|
)
|
||||
Issuance of common stock in connection with employee equity incentive plans
|
0.8
|
|
|
0.8
|
|
|
—
|
|
|
—
|
|
|
0.8
|
|
||||
Taxes paid related to net share settlement of equity awards
|
—
|
|
|
(6.7
|
)
|
|
—
|
|
|
—
|
|
|
(6.7
|
)
|
||||
Share-based compensation for equity-based awards
|
—
|
|
|
172.9
|
|
|
—
|
|
|
—
|
|
|
172.9
|
|
||||
Settlement of warrants
|
1.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Balance as of January 31, 2020
|
99.7
|
|
|
$
|
2,644.5
|
|
|
$
|
(1.8
|
)
|
|
$
|
(1,034.2
|
)
|
|
$
|
1,608.5
|
|
|
Three Months Ended January 31, 2019
|
|||||||||||||||||
|
Common Stock
and
Additional Paid-In Capital
|
|
Accumulated
Other Comprehensive Income (Loss) |
|
Accumulated
Deficit
|
|
Total
Stockholders’
Equity
|
|||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||
Balance as of October 31, 2018
|
94.7
|
|
|
$
|
2,129.3
|
|
|
$
|
(19.0
|
)
|
|
$
|
(857.3
|
)
|
|
$
|
1,253.0
|
|
Cumulative-effect adjustment from adoption of new accounting pronouncement
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.6
|
)
|
|
(2.6
|
)
|
||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
9.2
|
|
|
—
|
|
|
9.2
|
|
||||
Issuance of common stock in connection with employee equity incentive plans
|
0.9
|
|
|
3.1
|
|
|
—
|
|
|
—
|
|
|
3.1
|
|
||||
Taxes paid related to net share settlement of equity awards
|
—
|
|
|
(7.1
|
)
|
|
—
|
|
|
—
|
|
|
(7.1
|
)
|
||||
Share-based compensation for equity-based awards
|
—
|
|
|
144.1
|
|
|
—
|
|
|
—
|
|
|
144.1
|
|
||||
Settlement of convertible notes
|
0.3
|
|
|
(2.0
|
)
|
|
—
|
|
|
—
|
|
|
(2.0
|
)
|
||||
Common stock received from exercise of note hedges
|
(0.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Repurchase and retirement of common stock
|
(1.9
|
)
|
|
(330.0
|
)
|
|
—
|
|
|
—
|
|
|
(330.0
|
)
|
||||
Temporary equity reclassification
|
—
|
|
|
4.1
|
|
|
—
|
|
|
—
|
|
|
4.1
|
|
||||
Balance as of January 31, 2019
|
93.7
|
|
|
$
|
1,941.5
|
|
|
$
|
(9.8
|
)
|
|
$
|
(859.9
|
)
|
|
$
|
1,071.8
|
|
|
Six Months Ended January 31, 2020
|
|||||||||||||||||
|
Common Stock
and
Additional Paid-In Capital
|
|
Accumulated
Other
Comprehensive Income (Loss)
|
|
Accumulated
Deficit
|
|
Total
Stockholders’
Equity
|
|||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||
Balance as of July 31, 2019
|
96.8
|
|
|
$
|
2,490.9
|
|
|
$
|
(3.7
|
)
|
|
$
|
(900.9
|
)
|
|
$
|
1,586.3
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(133.3
|
)
|
|
(133.3
|
)
|
||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
1.9
|
|
|
—
|
|
|
1.9
|
|
||||
Issuance of common stock in connection with employee equity incentive plans
|
1.8
|
|
|
37.1
|
|
|
—
|
|
|
—
|
|
|
37.1
|
|
||||
Taxes paid related to net share settlement of equity awards
|
—
|
|
|
(12.0
|
)
|
|
—
|
|
|
—
|
|
|
(12.0
|
)
|
||||
Share-based compensation for equity-based awards
|
—
|
|
|
326.6
|
|
|
—
|
|
|
—
|
|
|
326.6
|
|
||||
Repurchase and retirement of common stock
|
(0.9
|
)
|
|
(198.1
|
)
|
|
—
|
|
|
—
|
|
|
(198.1
|
)
|
||||
Settlement of warrants
|
2.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Balance as of January 31, 2020
|
99.7
|
|
|
$
|
2,644.5
|
|
|
$
|
(1.8
|
)
|
|
$
|
(1,034.2
|
)
|
|
$
|
1,608.5
|
|
|
Six Months Ended January 31, 2019
|
|||||||||||||||||
|
Common Stock
and
Additional Paid-In Capital
|
|
Accumulated
Other Comprehensive Income (Loss) |
|
Accumulated
Deficit
|
|
Total
Stockholders’
Equity
|
|||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||
Balance as of July 31, 2018
|
93.6
|
|
|
$
|
1,967.4
|
|
|
$
|
(16.4
|
)
|
|
$
|
(790.7
|
)
|
|
$
|
1,160.3
|
|
Cumulative-effect adjustment from adoption of new accounting pronouncement
|
—
|
|
|
—
|
|
|
—
|
|
|
(28.3
|
)
|
|
(28.3
|
)
|
||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(40.9
|
)
|
|
(40.9
|
)
|
||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
6.6
|
|
|
—
|
|
|
6.6
|
|
||||
Issuance of common stock in connection with employee equity incentive plans
|
2.0
|
|
|
33.9
|
|
|
—
|
|
|
—
|
|
|
33.9
|
|
||||
Taxes paid related to net share settlement of equity awards
|
—
|
|
|
(21.0
|
)
|
|
—
|
|
|
—
|
|
|
(21.0
|
)
|
||||
Share-based compensation for equity-based awards
|
—
|
|
|
284.3
|
|
|
—
|
|
|
—
|
|
|
284.3
|
|
||||
Settlement of convertible notes
|
1.7
|
|
|
(12.2
|
)
|
|
—
|
|
|
—
|
|
|
(12.2
|
)
|
||||
Common stock received from exercise of note hedges
|
(1.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Repurchase and retirement of common stock
|
(1.9
|
)
|
|
(330.0
|
)
|
|
—
|
|
|
—
|
|
|
(330.0
|
)
|
||||
Temporary equity reclassification
|
—
|
|
|
19.1
|
|
|
—
|
|
|
—
|
|
|
19.1
|
|
||||
Balance as of January 31, 2019
|
93.7
|
|
|
$
|
1,941.5
|
|
|
$
|
(9.8
|
)
|
|
$
|
(859.9
|
)
|
|
$
|
1,071.8
|
|
|
Six Months Ended
|
||||||
|
January 31,
|
||||||
|
2020
|
|
2019
|
||||
Cash flows from operating activities
|
|
|
|
||||
Net loss
|
$
|
(133.3
|
)
|
|
$
|
(40.9
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
||||
Share-based compensation for equity-based awards
|
318.4
|
|
|
279.3
|
|
||
Depreciation and amortization
|
92.4
|
|
|
71.3
|
|
||
Gain related to facility exit
|
(3.1
|
)
|
|
—
|
|
||
Amortization of deferred contract costs
|
110.9
|
|
|
90.4
|
|
||
Amortization of debt discount and debt issuance costs
|
31.2
|
|
|
36.5
|
|
||
Amortization of operating lease right-of-use assets
|
21.1
|
|
|
—
|
|
||
Amortization of investment premiums, net of accretion of purchase discounts
|
(4.6
|
)
|
|
(7.7
|
)
|
||
Loss on conversions of convertible senior notes
|
—
|
|
|
2.6
|
|
||
Repayments of convertible senior notes attributable to debt discount
|
—
|
|
|
(67.1
|
)
|
||
Changes in operating assets and liabilities, net of effects of acquisitions:
|
|
|
|
||||
Accounts receivable, net
|
43.1
|
|
|
53.9
|
|
||
Prepaid expenses and other assets
|
(141.5
|
)
|
|
(90.6
|
)
|
||
Accounts payable
|
(17.3
|
)
|
|
(11.2
|
)
|
||
Accrued compensation
|
(61.1
|
)
|
|
(21.0
|
)
|
||
Accrued and other liabilities
|
(31.8
|
)
|
|
(11.6
|
)
|
||
Deferred revenue
|
307.7
|
|
|
243.8
|
|
||
Net cash provided by operating activities
|
532.1
|
|
|
527.7
|
|
||
Cash flows from investing activities
|
|
|
|
||||
Purchases of investments
|
(283.3
|
)
|
|
(2,031.9
|
)
|
||
Proceeds from sales of investments
|
1.1
|
|
|
3.5
|
|
||
Proceeds from maturities of investments
|
1,255.1
|
|
|
1,004.2
|
|
||
Business acquisitions, net of cash acquired
|
(195.7
|
)
|
|
(154.9
|
)
|
||
Purchases of property, equipment, and other assets
|
(96.3
|
)
|
|
(57.8
|
)
|
||
Net cash provided by (used in) investing activities
|
680.9
|
|
|
(1,236.9
|
)
|
||
Cash flows from financing activities
|
|
|
|
||||
Repayments of convertible senior notes attributable to principal and equity component
|
—
|
|
|
(348.5
|
)
|
||
Payments for debt issuance costs
|
—
|
|
|
(3.7
|
)
|
||
Repurchases of common stock
|
(198.1
|
)
|
|
(330.0
|
)
|
||
Proceeds from sales of shares through employee equity incentive plans
|
36.9
|
|
|
33.6
|
|
||
Payments for taxes related to net settlement of equity awards
|
(12.0
|
)
|
|
(21.0
|
)
|
||
Net cash used in financing activities
|
(173.2
|
)
|
|
(669.6
|
)
|
||
Net increase (decrease) in cash, cash equivalents, and restricted cash
|
1,039.8
|
|
|
(1,378.8
|
)
|
||
Cash, cash equivalents, and restricted cash - beginning of period
|
965.0
|
|
|
2,509.2
|
|
||
Cash, cash equivalents, and restricted cash - end of period
|
$
|
2,004.8
|
|
|
$
|
1,130.4
|
|
|
|
|
|
||||
Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
2,000.0
|
|
|
$
|
1,127.8
|
|
Restricted cash included in prepaid expenses and other current assets
|
2.5
|
|
|
1.3
|
|
||
Restricted cash included in other assets
|
2.3
|
|
|
1.3
|
|
||
Total cash, cash equivalents, and restricted cash
|
$
|
2,004.8
|
|
|
$
|
1,130.4
|
|
|
Three Months Ended January 31,
|
|
Six Months Ended January 31,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Americas
|
|
|
|
|
|
|
|
||||||||
United States
|
$
|
505.6
|
|
|
$
|
434.6
|
|
|
$
|
1,000.5
|
|
|
$
|
850.5
|
|
Other Americas
|
39.1
|
|
|
40.4
|
|
|
73.8
|
|
|
74.7
|
|
||||
Total Americas
|
544.7
|
|
|
475.0
|
|
|
1,074.3
|
|
|
925.2
|
|
||||
Europe, the Middle East, and Africa (“EMEA”)
|
166.2
|
|
|
148.3
|
|
|
313.8
|
|
|
276.0
|
|
||||
Asia Pacific and Japan (“APAC”)
|
105.8
|
|
|
87.9
|
|
|
200.5
|
|
|
166.0
|
|
||||
Total revenue
|
$
|
816.7
|
|
|
$
|
711.2
|
|
|
$
|
1,588.6
|
|
|
$
|
1,367.2
|
|
|
Three Months Ended January 31,
|
|
Six Months Ended January 31,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Product
|
$
|
246.5
|
|
|
$
|
271.6
|
|
|
$
|
477.7
|
|
|
$
|
512.1
|
|
Subscription and support
|
|
|
|
|
|
|
|
||||||||
Subscription
|
342.6
|
|
|
249.7
|
|
|
661.2
|
|
|
481.0
|
|
||||
Support
|
227.6
|
|
|
189.9
|
|
|
449.7
|
|
|
374.1
|
|
||||
Total subscription and support
|
570.2
|
|
|
439.6
|
|
|
1,110.9
|
|
|
855.1
|
|
||||
Total revenue
|
$
|
816.7
|
|
|
$
|
711.2
|
|
|
$
|
1,588.6
|
|
|
$
|
1,367.2
|
|
•
|
Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.
|
•
|
Level 2—Inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments.
|
•
|
Level 3—Inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. The inputs require significant management judgment or estimation.
|
|
|
January 31, 2020
|
|
July 31, 2019
|
||||||||||||||||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Money market funds
|
|
$
|
577.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
577.1
|
|
|
$
|
369.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
369.1
|
|
Certificates of deposit
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12.0
|
|
|
|
|
12.0
|
|
|||||||||
Commercial paper
|
|
—
|
|
|
65.5
|
|
|
—
|
|
|
65.5
|
|
|
—
|
|
|
19.3
|
|
|
—
|
|
|
19.3
|
|
||||||||
U.S. government and agency securities
|
|
—
|
|
|
479.5
|
|
|
—
|
|
|
479.5
|
|
|
—
|
|
|
54.4
|
|
|
—
|
|
|
54.4
|
|
||||||||
Total cash equivalents
|
|
577.1
|
|
|
545.0
|
|
|
—
|
|
|
1,122.1
|
|
|
369.1
|
|
|
85.7
|
|
|
—
|
|
|
454.8
|
|
||||||||
Short-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Certificates of deposit
|
|
—
|
|
|
24.0
|
|
|
—
|
|
|
24.0
|
|
|
—
|
|
|
17.5
|
|
|
—
|
|
|
17.5
|
|
||||||||
Commercial paper
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8.9
|
|
|
—
|
|
|
8.9
|
|
||||||||
Corporate debt securities
|
|
—
|
|
|
318.7
|
|
|
—
|
|
|
318.7
|
|
|
—
|
|
|
375.5
|
|
|
—
|
|
|
375.5
|
|
||||||||
U.S. government and agency securities
|
|
—
|
|
|
791.2
|
|
|
—
|
|
|
791.2
|
|
|
—
|
|
|
1,439.8
|
|
|
—
|
|
|
1,439.8
|
|
||||||||
Total short-term investments
|
|
—
|
|
|
1,133.9
|
|
|
—
|
|
|
1,133.9
|
|
|
—
|
|
|
1,841.7
|
|
|
—
|
|
|
1,841.7
|
|
||||||||
Long-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Corporate debt securities
|
|
—
|
|
|
140.6
|
|
|
—
|
|
|
140.6
|
|
|
—
|
|
|
214.3
|
|
|
—
|
|
|
214.3
|
|
||||||||
U.S. government and agency securities
|
|
—
|
|
|
177.3
|
|
|
—
|
|
|
177.3
|
|
|
—
|
|
|
361.1
|
|
|
—
|
|
|
361.1
|
|
||||||||
Total long-term investments
|
|
—
|
|
|
317.9
|
|
|
—
|
|
|
317.9
|
|
|
—
|
|
|
575.4
|
|
|
—
|
|
|
575.4
|
|
||||||||
Prepaid expenses and other current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Foreign currency forward contracts
|
|
—
|
|
|
0.9
|
|
|
—
|
|
|
0.9
|
|
|
—
|
|
|
1.3
|
|
|
—
|
|
|
1.3
|
|
||||||||
Total prepaid expenses and other current assets
|
|
—
|
|
|
0.9
|
|
|
—
|
|
|
0.9
|
|
|
—
|
|
|
1.3
|
|
|
—
|
|
|
1.3
|
|
||||||||
Total assets measured at fair value
|
|
$
|
577.1
|
|
|
$
|
1,997.7
|
|
|
$
|
—
|
|
|
$
|
2,574.8
|
|
|
$
|
369.1
|
|
|
$
|
2,504.1
|
|
|
$
|
—
|
|
|
$
|
2,873.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Accrued and other liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Foreign currency forward contracts
|
|
$
|
—
|
|
|
$
|
2.8
|
|
|
$
|
—
|
|
|
$
|
2.8
|
|
|
$
|
—
|
|
|
$
|
3.8
|
|
|
$
|
—
|
|
|
$
|
3.8
|
|
Total accrued and other liabilities
|
|
—
|
|
|
2.8
|
|
|
—
|
|
|
2.8
|
|
|
—
|
|
|
3.8
|
|
|
—
|
|
|
3.8
|
|
||||||||
Total liabilities measured at fair value
|
|
$
|
—
|
|
|
$
|
2.8
|
|
|
$
|
—
|
|
|
$
|
2.8
|
|
|
$
|
—
|
|
|
$
|
3.8
|
|
|
$
|
—
|
|
|
$
|
3.8
|
|
|
January 31, 2020
|
||||||||||||||
|
Amortized Cost
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
Fair Value
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Certificates of deposit
|
$
|
65.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
65.5
|
|
U.S. government and agency securities
|
479.5
|
|
|
—
|
|
|
—
|
|
|
479.5
|
|
||||
Total available-for-sale cash equivalents
|
$
|
545.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
545.0
|
|
Investments:
|
|
|
|
|
|
|
|
||||||||
Certificates of deposit
|
$
|
24.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
24.0
|
|
Corporate debt securities
|
456.5
|
|
|
2.8
|
|
|
—
|
|
|
459.3
|
|
||||
U.S. government and agency securities
|
966.1
|
|
|
2.5
|
|
|
(0.1
|
)
|
|
968.5
|
|
||||
Total available-for-sale investments
|
$
|
1,446.6
|
|
|
$
|
5.3
|
|
|
$
|
(0.1
|
)
|
|
$
|
1,451.8
|
|
|
July 31, 2019
|
||||||||||||||
|
Amortized Cost
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
Fair Value
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Certificates of deposit
|
$
|
12.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12.0
|
|
Commercial paper
|
19.3
|
|
|
—
|
|
|
—
|
|
|
19.3
|
|
||||
U.S. government and agency securities
|
54.4
|
|
|
—
|
|
|
—
|
|
|
54.4
|
|
||||
Total available-for-sale cash equivalents
|
$
|
85.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
85.7
|
|
Investments:
|
|
|
|
|
|
|
|
||||||||
Certificates of deposit
|
$
|
17.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
17.5
|
|
Commercial paper
|
8.9
|
|
|
—
|
|
|
—
|
|
|
8.9
|
|
||||
Corporate debt securities
|
587.8
|
|
|
2.3
|
|
|
(0.3
|
)
|
|
589.8
|
|
||||
U.S. government and agency securities
|
1,799.5
|
|
|
2.6
|
|
|
(1.2
|
)
|
|
1,800.9
|
|
||||
Total available-for-sale investments
|
$
|
2,413.7
|
|
|
$
|
4.9
|
|
|
$
|
(1.5
|
)
|
|
$
|
2,417.1
|
|
|
Amortized Cost
|
|
Fair Value
|
||||
Due within one year
|
$
|
1,676.7
|
|
|
$
|
1,678.9
|
|
Due between one and three years
|
314.9
|
|
|
317.9
|
|
||
Total
|
$
|
1,991.6
|
|
|
$
|
1,996.8
|
|
|
Amount
|
||
Cash
|
$
|
139.8
|
|
Fair value of replacement awards
|
4.3
|
|
|
Total
|
$
|
144.1
|
|
|
Amount
|
||
Goodwill
|
$
|
111.3
|
|
Identified intangible assets
|
23.8
|
|
|
Cash
|
10.5
|
|
|
Net liabilities assumed
|
(1.5
|
)
|
|
Total
|
$
|
144.1
|
|
|
Fair Value
|
|
Estimated Useful Life
|
||
Developed technology
|
$
|
20.5
|
|
|
7 years
|
Customer relationships
|
3.3
|
|
|
4 years
|
|
Total
|
$
|
23.8
|
|
|
|
|
Amount
|
||
Goodwill
|
$
|
48.1
|
|
Identified intangible assets
|
20.4
|
|
|
Net liabilities assumed
|
(2.1
|
)
|
|
Total
|
$
|
66.4
|
|
|
Fair Value
|
|
Estimated Useful Life
|
||
Developed technology
|
$
|
18.6
|
|
|
5 years
|
Customer relationships
|
1.8
|
|
|
8 years
|
|
Total
|
$
|
20.4
|
|
|
|
|
Amount
|
||
Balance as of July 31, 2019
|
$
|
1,352.3
|
|
Goodwill acquired
|
159.4
|
|
|
Balance as of January 31, 2020
|
$
|
1,511.7
|
|
|
January 31, 2020
|
|
July 31, 2019
|
||||||||||||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||||||||
Intangible assets subject to amortization:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Developed technology
|
$
|
358.7
|
|
|
$
|
(110.0
|
)
|
|
$
|
248.7
|
|
|
$
|
318.8
|
|
|
$
|
(78.7
|
)
|
|
$
|
240.1
|
|
Customer relationships
|
44.9
|
|
|
(7.9
|
)
|
|
37.0
|
|
|
39.8
|
|
|
(4.7
|
)
|
|
35.1
|
|
||||||
Acquired intellectual property
|
8.9
|
|
|
(5.4
|
)
|
|
3.5
|
|
|
8.9
|
|
|
(5.1
|
)
|
|
3.8
|
|
||||||
Trade name and trademarks
|
9.4
|
|
|
(9.4
|
)
|
|
—
|
|
|
9.4
|
|
|
(9.4
|
)
|
|
—
|
|
||||||
Other
|
2.2
|
|
|
(2.2
|
)
|
|
—
|
|
|
2.2
|
|
|
(2.2
|
)
|
|
—
|
|
||||||
Total intangible assets subject to amortization
|
424.1
|
|
|
(134.9
|
)
|
|
289.2
|
|
|
379.1
|
|
|
(100.1
|
)
|
|
279.0
|
|
||||||
Intangible assets not subject to amortization:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
In-process research and development
|
0.8
|
|
|
—
|
|
|
0.8
|
|
|
1.6
|
|
|
—
|
|
|
1.6
|
|
||||||
Total purchased intangible assets
|
$
|
424.9
|
|
|
$
|
(134.9
|
)
|
|
$
|
290.0
|
|
|
$
|
380.7
|
|
|
$
|
(100.1
|
)
|
|
$
|
280.6
|
|
|
Amount
|
||
Fiscal years ending July 31:
|
|
||
Remaining 2020
|
$
|
37.0
|
|
2021
|
72.0
|
|
|
2022
|
67.5
|
|
|
2023
|
41.4
|
|
|
2024
|
33.3
|
|
|
2025 and thereafter
|
38.0
|
|
|
Total future amortization expense
|
$
|
289.2
|
|
|
January 31, 2020
|
|
July 31, 2019
|
||||
Short-term deferred contract costs
|
$
|
164.6
|
|
|
$
|
151.1
|
|
Long-term deferred contract costs
|
327.2
|
|
|
324.2
|
|
||
Total deferred contract costs
|
$
|
491.8
|
|
|
$
|
475.3
|
|
•
|
during any fiscal quarter commencing after the fiscal quarter ending on October 31, 2018 (and only during such fiscal quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the applicable conversion price for the 2023 Notes on each applicable trading day (the “sale price condition”);
|
•
|
during the five business day period after any five consecutive trading day period (the “measurement period”), in which the trading price per $1,000 principal amount of the 2023 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the applicable conversion rate for the 2023 Notes on each such trading day; or
|
•
|
upon the occurrence of specified corporate events.
|
|
January 31, 2020
|
|
July 31, 2019
|
||||
Liability component:
|
|
|
|
||||
Principal
|
$
|
1,693.0
|
|
|
$
|
1,693.0
|
|
Less: debt discount and debt issuance costs, net of amortization
|
231.8
|
|
|
263.0
|
|
||
Net carrying amount
|
$
|
1,461.2
|
|
|
$
|
1,430.0
|
|
|
|
|
|
||||
Equity component
|
$
|
315.0
|
|
|
$
|
315.0
|
|
|
Three Months Ended January 31,
|
|
Six Months Ended January 31,
|
||||||||||||||||||||||||||||||||||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||||||||||||||||||||||||||||||||||
|
2019 Notes
|
|
2023 Notes
|
|
Total
|
|
2019 Notes
|
|
2023 Notes
|
|
Total
|
|
2019 Notes
|
|
2023 Notes
|
|
Total
|
|
2019 Notes
|
|
2023 Notes
|
|
Total
|
||||||||||||||||||||||||
Contractual interest expense
|
$
|
—
|
|
|
$
|
3.1
|
|
|
$
|
3.1
|
|
|
$
|
—
|
|
|
$
|
3.1
|
|
|
$
|
3.1
|
|
|
$
|
—
|
|
|
$
|
6.3
|
|
|
$
|
6.3
|
|
|
$
|
—
|
|
|
$
|
6.3
|
|
|
$
|
6.3
|
|
Amortization of debt discount
|
—
|
|
|
15.2
|
|
|
15.2
|
|
|
2.0
|
|
|
14.5
|
|
|
16.5
|
|
|
—
|
|
|
30.2
|
|
|
30.2
|
|
|
6.0
|
|
|
28.9
|
|
|
34.9
|
|
||||||||||||
Amortization of debt issuance costs
|
—
|
|
|
0.5
|
|
|
0.5
|
|
|
0.2
|
|
|
0.4
|
|
|
0.6
|
|
|
—
|
|
|
1.0
|
|
|
1.0
|
|
|
0.7
|
|
|
0.9
|
|
|
1.6
|
|
||||||||||||
Total interest expense recognized
|
$
|
—
|
|
|
$
|
18.8
|
|
|
$
|
18.8
|
|
|
$
|
2.2
|
|
|
$
|
18.0
|
|
|
$
|
20.2
|
|
|
$
|
—
|
|
|
$
|
37.5
|
|
|
$
|
37.5
|
|
|
$
|
6.7
|
|
|
$
|
36.1
|
|
|
$
|
42.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Effective interest rate of the liability component
|
—
|
%
|
|
5.2
|
%
|
|
|
|
4.8
|
%
|
|
5.2
|
%
|
|
|
|
—
|
%
|
|
5.2
|
%
|
|
|
|
4.8
|
%
|
|
5.2
|
%
|
|
|
|
Initial Number
of Shares
|
|
Strike Price
per Share
|
|
Aggregate
Proceeds
|
|||||
2019 Warrants
|
5.2
|
|
|
$
|
137.85
|
|
|
$
|
78.3
|
|
2023 Warrants
|
6.4
|
|
|
$
|
417.80
|
|
|
$
|
145.4
|
|
|
Amount
|
||
Fiscal years ending July 31:
|
|
||
Remaining 2020
|
$
|
33.5
|
|
2021
|
71.8
|
|
|
2022
|
66.0
|
|
|
2023
|
60.1
|
|
|
2024
|
49.4
|
|
|
2025 and thereafter
|
193.0
|
|
|
Total operating lease payments
|
473.8
|
|
|
Less: imputed interest
|
65.5
|
|
|
Present value of operating lease liabilities
|
$
|
408.3
|
|
Current portion of operating lease liabilities(1)
|
$
|
54.8
|
|
Long-term operating lease liabilities
|
$
|
353.5
|
|
(1)
|
Current portion of operating lease liabilities is included in accrued and other liabilities on our condensed consolidated balance sheet.
|
|
Amount
|
||
Fiscal years ending July 31:
|
|
||
Remaining 2020
|
$
|
2.3
|
|
2021
|
14.5
|
|
|
2022
|
59.3
|
|
|
2023
|
58.5
|
|
|
2024
|
67.5
|
|
|
2025 and thereafter
|
97.5
|
|
|
Total other purchase commitments
|
$
|
299.6
|
|
|
Stock Options Outstanding
|
|
PSOs Outstanding
|
||||||||||||||||||||||
|
Number of Shares
|
|
Weighted-Average Exercise Price Per Share
|
|
Weighted-Average Remaining Contractual Term
(Years) |
|
Aggregate Intrinsic Value
|
|
Number of Shares
|
|
Weighted-Average Exercise Price Per Share
|
|
Weighted-Average Remaining Contractual Term
(Years) |
|
Aggregate Intrinsic Value
|
||||||||||
Balance—July 31, 2019
|
0.3
|
|
|
$
|
14.53
|
|
|
2.2
|
|
$
|
81.4
|
|
|
3.7
|
|
|
$
|
193.99
|
|
|
6.2
|
|
$
|
120.1
|
|
Exercised
|
(0.1)
|
|
|
$
|
10.86
|
|
|
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||||
Forfeited
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
(0.8)
|
|
|
$
|
193.51
|
|
|
|
|
|
||||
Balance—January 31, 2020
|
0.2
|
|
|
$
|
17.39
|
|
|
1.9
|
|
$
|
46.9
|
|
|
2.9
|
|
|
$
|
194.11
|
|
|
5.7
|
|
$
|
119.3
|
|
Exercisable—January 31, 2020
|
0.2
|
|
|
$
|
17.39
|
|
|
1.9
|
|
$
|
46.9
|
|
|
2.9
|
|
|
$
|
194.11
|
|
|
5.7
|
|
$
|
119.3
|
|
|
RSAs Outstanding
|
|
PSAs Outstanding
|
||||||||||
|
Number of Shares
|
|
Weighted-Average Grant-Date Fair Value Per Share
|
|
Number of Shares
|
|
Weighted-Average Grant-Date Fair Value Per Share
|
||||||
Balance—July 31, 2019
|
0.0
|
|
|
$
|
148.54
|
|
|
0.1
|
|
|
$
|
148.54
|
|
Vested
|
0.0
|
|
|
$
|
148.54
|
|
|
0.0
|
|
|
$
|
148.54
|
|
Balance—January 31, 2020
|
0.0
|
|
|
$
|
148.54
|
|
|
0.1
|
|
|
$
|
148.54
|
|
|
RSUs Outstanding
|
|
PSUs Outstanding
|
|||||||||||||||||||||
|
Number of Shares
|
|
Weighted-Average Grant-Date Fair Value Per Share
|
|
Weighted-Average Remaining Contractual Term
(Years)
|
|
Aggregate Intrinsic Value
|
|
Number of Shares
|
|
Weighted-Average Grant-Date Fair Value Per Share
|
|
Weighted-Average Remaining Contractual Term
(Years)
|
|
Aggregate Intrinsic Value
|
|||||||||
Balance—July 31, 2019
|
6.9
|
|
$
|
188.16
|
|
|
1.5
|
|
$
|
1,554.0
|
|
|
0.3
|
|
|
$
|
197.86
|
|
|
1.8
|
|
$
|
67.0
|
|
Granted
|
2.0
|
|
$
|
217.39
|
|
|
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||||
Vested
|
(1.4)
|
|
$
|
175.68
|
|
|
|
|
|
|
0.0
|
|
|
$
|
169.41
|
|
|
|
|
|
||||
Forfeited
|
(0.5)
|
|
$
|
183.16
|
|
|
|
|
|
|
(0.1)
|
|
|
$
|
181.48
|
|
|
|
|
|
||||
Balance—January 31, 2020
|
7.0
|
|
$
|
199.40
|
|
|
1.5
|
|
$
|
1,641.2
|
|
|
0.2
|
|
|
$
|
201.03
|
|
|
1.5
|
|
$
|
53.0
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
January 31,
|
|
January 31,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Cost of product revenue
|
$
|
1.6
|
|
|
$
|
1.4
|
|
|
$
|
2.9
|
|
|
$
|
3.0
|
|
Cost of subscription and support revenue
|
20.0
|
|
|
18.2
|
|
|
38.9
|
|
|
35.7
|
|
||||
Research and development
|
67.0
|
|
|
44.0
|
|
|
129.4
|
|
|
84.5
|
|
||||
Sales and marketing
|
54.9
|
|
|
58.7
|
|
|
98.7
|
|
|
114.7
|
|
||||
General and administrative
|
29.4
|
|
|
20.1
|
|
|
54.2
|
|
|
55.6
|
|
||||
Total share-based compensation
|
$
|
172.9
|
|
|
$
|
142.4
|
|
|
$
|
324.1
|
|
|
$
|
293.5
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
January 31,
|
|
January 31,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Net loss
|
$
|
(73.7
|
)
|
|
$
|
(2.6
|
)
|
|
$
|
(133.3
|
)
|
|
$
|
(40.9
|
)
|
Weighted-average shares used to compute net loss per share, basic and diluted
|
98.3
|
|
|
94.0
|
|
|
97.5
|
|
|
93.9
|
|
||||
Net loss per share, basic and diluted
|
$
|
(0.75
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(1.37
|
)
|
|
$
|
(0.44
|
)
|
|
Three and Six Months Ended
|
||||
|
January 31,
|
||||
|
2020
|
|
2019
|
||
Convertible senior notes
|
6.4
|
|
|
7.8
|
|
Warrants related to the issuance of convertible senior notes
|
6.4
|
|
|
11.6
|
|
RSUs and PSUs
|
7.2
|
|
|
7.1
|
|
Options to purchase common stock, including PSOs
|
3.1
|
|
|
4.4
|
|
RSAs and PSAs
|
0.1
|
|
|
0.1
|
|
ESPP shares
|
0.2
|
|
|
0.2
|
|
Total
|
23.4
|
|
|
31.2
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
January 31,
|
|
January 31,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Interest income
|
$
|
13.9
|
|
|
$
|
18.0
|
|
|
$
|
29.7
|
|
|
$
|
33.4
|
|
Foreign currency exchange gains (losses), net
|
(2.4
|
)
|
|
(1.2
|
)
|
|
(2.0
|
)
|
|
(1.2
|
)
|
||||
Other
|
(0.7
|
)
|
|
(0.8
|
)
|
|
(0.7
|
)
|
|
(3.2
|
)
|
||||
Total other income, net
|
$
|
10.8
|
|
|
$
|
16.0
|
|
|
$
|
27.0
|
|
|
$
|
29.0
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Overview. A discussion of our business and overall analysis of financial and other highlights in order to provide context for the remainder of MD&A.
|
•
|
Key Financial Metrics. A summary of our generally accepted accounting principles (“GAAP”) and non-GAAP key financial metrics, which management monitors to evaluate our performance.
|
•
|
Results of Operations. A discussion of the nature and trends in our financial results and an analysis of our financial results comparing the three and six months ended January 31, 2020 to the three and six months ended January 31, 2019.
|
•
|
Liquidity and Capital Resources. An analysis of changes in our balance sheets and cash flows, and a discussion of our financial condition and our ability to meet cash needs.
|
•
|
Critical Accounting Estimates. A discussion of our accounting policies that require critical estimates, assumptions, and judgments.
|
•
|
Recent Accounting Pronouncements. A discussion of expected impacts of impending accounting changes on financial information to be reported in the future.
|
•
|
Secure the network through our Next-Generation Firewalls, available as physical appliances, virtual appliances called VM-Series, or a cloud-delivered service called Prisma Access (formerly GlobalProtect cloud service), and Panorama
|
•
|
Secure the cloud through our Prisma security offerings, such as Prisma Cloud (formerly RedLock, Twistlock and PureSec) with comprehensive security and compliance coverage for cloud native applications throughout the full development lifecycle and across multi- and hybrid- cloud environments, Prisma Access (formerly GlobalProtect cloud service) for securing user access, Prisma SaaS (formerly Aperture) for protecting SaaS applications and VM-Series for in-line network security in multi- and hybrid- cloud environments.
|
•
|
Secure the future of security operations through Cortex, which includes Cortex XDR for prevention, detection and response (one unified product that was formerly Cortex XDR and Traps), Cortex SOAR (formerly Demisto) for security orchestration, automation and response (“SOAR”), AutoFocus for threat intelligence, Zingbox IoT Guardian for Internet of Things (“IoT”) security and Cortex Data Lake to collect and integrate security data for analytics. These products are delivered as software or SaaS subscriptions.
|
|
January 31, 2020
|
|
July 31, 2019
|
||||
|
|
|
|
||||
|
(in millions)
|
||||||
Total deferred revenue
|
$
|
3,198.5
|
|
|
$
|
2,888.7
|
|
Cash, cash equivalents, and investments
|
$
|
3,451.8
|
|
|
$
|
3,378.5
|
|
|
Three Months Ended January 31,
|
|
Six Months Ended January 31,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(dollars in millions)
|
||||||||||||||
Total revenue
|
$
|
816.7
|
|
|
$
|
711.2
|
|
|
$
|
1,588.6
|
|
|
$
|
1,367.2
|
|
Total revenue year-over-year percentage increase
|
14.8
|
%
|
|
30.4
|
%
|
|
16.2
|
%
|
|
30.5
|
%
|
||||
Gross margin
|
71.5
|
%
|
|
71.5
|
%
|
|
71.6
|
%
|
|
71.8
|
%
|
||||
Operating loss
|
$
|
(52.9
|
)
|
|
$
|
6.6
|
|
|
$
|
(104.7
|
)
|
|
$
|
(25.5
|
)
|
Operating margin
|
(6.5
|
)%
|
|
0.9
|
%
|
|
(6.6
|
)%
|
|
(1.9
|
)%
|
||||
Billings
|
$
|
998.9
|
|
|
$
|
852.5
|
|
|
$
|
1,896.3
|
|
|
$
|
1,611.0
|
|
Billings year-over-year percentage increase
|
17.2
|
%
|
|
26.6
|
%
|
|
17.7
|
%
|
|
27.0
|
%
|
||||
Cash flow provided by operating activities
|
|
|
|
|
$
|
532.1
|
|
|
$
|
527.7
|
|
||||
Free cash flow (non-GAAP)
|
|
|
|
|
$
|
435.8
|
|
|
$
|
469.9
|
|
•
|
Deferred Revenue. Our deferred revenue primarily consists of amounts that have been invoiced but have not been recognized as revenue as of the period end. The majority of our deferred revenue balance consists of subscription and support revenue that is recognized ratably over the contractual service period. We monitor our deferred revenue balance because it represents a significant portion of revenue to be recognized in future periods.
|
•
|
Billings. We define billings as total revenue plus the change in total deferred revenue, net of acquired deferred revenue, during the period. We consider billings to be a key metric used by management to manage our business given our hybrid SaaS revenue model, and believe billings provides investors with an important indicator of the health and visibility of our business because it includes subscription and support revenue, which is recognized ratably over the contractual service period, and product revenue, which is recognized at the time of shipment, provided that all other conditions for revenue recognition have been met. We consider billings to be a useful metric for management and investors, particularly if we continue to experience increased sales of subscriptions and strong renewal rates for subscription and support offerings, and as we monitor our near-term cash flows. While we believe that billings provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management, it is important to note that other companies, including companies in our industry, may not use billings, may calculate billings differently, may have different billing frequencies, or may use other financial measures to evaluate their performance, all of which could reduce the usefulness of billings as a comparative measure. We calculate billings in the following manner:
|
|
Three Months Ended January 31,
|
|
Six Months Ended January 31,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in millions)
|
|
(in millions)
|
||||||||||||
Billings:
|
|
|
|
|
|
|
|
||||||||
Total revenue
|
$
|
816.7
|
|
|
$
|
711.2
|
|
|
$
|
1,588.6
|
|
|
$
|
1,367.2
|
|
Add: change in total deferred revenue, net of acquired deferred revenue
|
182.2
|
|
|
141.3
|
|
|
307.7
|
|
|
243.8
|
|
||||
Billings
|
$
|
998.9
|
|
|
$
|
852.5
|
|
|
$
|
1,896.3
|
|
|
$
|
1,611.0
|
|
•
|
Cash Flow Provided by Operating Activities. We monitor cash flow provided by operating activities as a measure of our overall business performance. Our cash flow provided by operating activities is driven in large part by sales of our products and from up-front payments for subscription and support offerings. Monitoring cash flow provided by operating activities enables us to analyze our financial performance without the non-cash effects of certain items such as depreciation, amortization, and share-based compensation costs, thereby allowing us to better understand and manage the cash needs of our business.
|
•
|
Free Cash Flow (non-GAAP). We define free cash flow, a non-GAAP financial measure, as cash provided by operating activities less purchases of property, equipment, and other assets. We consider free cash flow to be a profitability and liquidity measure that provides useful information to management and investors about the amount of cash generated by
|
|
Six Months Ended January 31,
|
||||||
|
2020
|
|
2019
|
||||
|
|
|
|
||||
|
(in millions)
|
||||||
Free cash flow (non-GAAP):
|
|
|
|
||||
Net cash provided by operating activities
|
$
|
532.1
|
|
|
$
|
527.7
|
|
Less: purchases of property, equipment, and other assets
|
96.3
|
|
|
57.8
|
|
||
Free cash flow (non-GAAP)
|
$
|
435.8
|
|
|
$
|
469.9
|
|
Net cash provided by (used in) investing activities
|
$
|
680.9
|
|
|
$
|
(1,236.9
|
)
|
Net cash used in financing activities
|
$
|
(173.2
|
)
|
|
$
|
(669.6
|
)
|
|
Three Months Ended January 31,
|
|
Six Months Ended January 31,
|
||||||||||||||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||||||||||||||
|
Amount
|
|
% of Revenue
|
|
Amount
|
|
% of Revenue
|
|
Amount
|
|
% of Revenue
|
|
Amount
|
|
% of Revenue
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
(dollars in millions)
|
||||||||||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Product
|
$
|
246.5
|
|
|
30.2
|
%
|
|
$
|
271.6
|
|
|
38.2
|
%
|
|
$
|
477.7
|
|
|
30.1
|
%
|
|
$
|
512.1
|
|
|
37.5
|
%
|
Subscription and support
|
570.2
|
|
|
69.8
|
%
|
|
439.6
|
|
|
61.8
|
%
|
|
1,110.9
|
|
|
69.9
|
%
|
|
855.1
|
|
|
62.5
|
%
|
||||
Total revenue
|
816.7
|
|
|
100.0
|
%
|
|
711.2
|
|
|
100.0
|
%
|
|
1,588.6
|
|
|
100.0
|
%
|
|
1,367.2
|
|
|
100.0
|
%
|
||||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Product
|
68.7
|
|
|
8.4
|
%
|
|
82.5
|
|
|
11.6
|
%
|
|
133.8
|
|
|
8.4
|
%
|
|
155.7
|
|
|
11.4
|
%
|
||||
Subscription and support
|
164.4
|
|
|
20.1
|
%
|
|
120.1
|
|
|
16.9
|
%
|
|
317.0
|
|
|
20.0
|
%
|
|
230.4
|
|
|
16.8
|
%
|
||||
Total cost of revenue(1)
|
233.1
|
|
|
28.5
|
%
|
|
202.6
|
|
|
28.5
|
%
|
|
450.8
|
|
|
28.4
|
%
|
|
386.1
|
|
|
28.2
|
%
|
||||
Total gross profit
|
583.6
|
|
|
71.5
|
%
|
|
508.6
|
|
|
71.5
|
%
|
|
1,137.8
|
|
|
71.6
|
%
|
|
981.1
|
|
|
71.8
|
%
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Research and development
|
185.4
|
|
|
22.7
|
%
|
|
128.3
|
|
|
18.0
|
%
|
|
355.9
|
|
|
22.4
|
%
|
|
241.7
|
|
|
17.7
|
%
|
||||
Sales and marketing
|
374.9
|
|
|
46.0
|
%
|
|
320.0
|
|
|
45.0
|
%
|
|
740.6
|
|
|
46.6
|
%
|
|
634.6
|
|
|
46.5
|
%
|
||||
General and administrative
|
76.2
|
|
|
9.3
|
%
|
|
53.7
|
|
|
7.6
|
%
|
|
146.0
|
|
|
9.2
|
%
|
|
130.3
|
|
|
9.5
|
%
|
||||
Total operating expenses(1)
|
636.5
|
|
|
78.0
|
%
|
|
502.0
|
|
|
70.6
|
%
|
|
1,242.5
|
|
|
78.2
|
%
|
|
1,006.6
|
|
|
73.7
|
%
|
||||
Operating loss
|
(52.9
|
)
|
|
(6.5
|
)%
|
|
6.6
|
|
|
0.9
|
%
|
|
(104.7
|
)
|
|
(6.6
|
)%
|
|
(25.5
|
)
|
|
(1.9
|
)%
|
||||
Interest expense
|
(19.0
|
)
|
|
(2.3
|
)%
|
|
(20.6
|
)
|
|
(2.9
|
)%
|
|
(37.9
|
)
|
|
(2.4
|
)%
|
|
(43.3
|
)
|
|
(3.2
|
)%
|
||||
Other income, net
|
10.8
|
|
|
1.3
|
%
|
|
16.0
|
|
|
2.3
|
%
|
|
27.0
|
|
|
1.7
|
%
|
|
29.0
|
|
|
2.2
|
%
|
||||
Loss before income taxes
|
(61.1
|
)
|
|
(7.5
|
)%
|
|
2.0
|
|
|
0.3
|
%
|
|
(115.6
|
)
|
|
(7.3
|
)%
|
|
(39.8
|
)
|
|
(2.9
|
)%
|
||||
Provision for income taxes
|
12.6
|
|
|
1.5
|
%
|
|
4.6
|
|
|
0.7
|
%
|
|
17.7
|
|
|
1.1
|
%
|
|
1.1
|
|
|
0.1
|
%
|
||||
Net loss
|
$
|
(73.7
|
)
|
|
(9.0
|
)%
|
|
$
|
(2.6
|
)
|
|
(0.4
|
)%
|
|
$
|
(133.3
|
)
|
|
(8.4
|
)%
|
|
$
|
(40.9
|
)
|
|
(3.0
|
)%
|
(1)
|
Includes share-based compensation as follows:
|
|
Three Months Ended January 31,
|
|
Six Months Ended January 31,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in millions)
|
||||||||||||||
Cost of product revenue
|
$
|
1.6
|
|
|
$
|
1.4
|
|
|
$
|
2.9
|
|
|
$
|
3.0
|
|
Cost of subscription and support revenue
|
20.0
|
|
|
18.2
|
|
|
38.9
|
|
|
35.7
|
|
||||
Research and development
|
67.0
|
|
|
44.0
|
|
|
129.4
|
|
|
84.5
|
|
||||
Sales and marketing
|
54.9
|
|
|
58.7
|
|
|
98.7
|
|
|
114.7
|
|
||||
General and administrative
|
29.4
|
|
|
20.1
|
|
|
54.2
|
|
|
55.6
|
|
||||
Total share-based compensation
|
$
|
172.9
|
|
|
$
|
142.4
|
|
|
$
|
324.1
|
|
|
$
|
293.5
|
|
|
Three Months Ended January 31,
|
|
|
|
|
|
Six Months Ended January 31,
|
|
|
|
|
||||||||||||||||||
|
2020
|
|
2019
|
|
Change
|
|
2020
|
|
2019
|
|
Change
|
||||||||||||||||||
|
Amount
|
|
Amount
|
|
Amount
|
|
%
|
|
Amount
|
|
Amount
|
|
Amount
|
|
%
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
(dollars in millions)
|
||||||||||||||||||||||||||||
Subscription
|
$
|
342.6
|
|
|
$
|
249.7
|
|
|
$
|
92.9
|
|
|
37.2
|
%
|
|
$
|
661.2
|
|
|
$
|
481.0
|
|
|
$
|
180.2
|
|
|
37.5
|
%
|
Support
|
227.6
|
|
|
189.9
|
|
|
37.7
|
|
|
19.9
|
%
|
|
449.7
|
|
|
374.1
|
|
|
75.6
|
|
|
20.2
|
%
|
||||||
Total subscription and support
|
$
|
570.2
|
|
|
$
|
439.6
|
|
|
$
|
130.6
|
|
|
29.7
|
%
|
|
$
|
1,110.9
|
|
|
$
|
855.1
|
|
|
$
|
255.8
|
|
|
29.9
|
%
|
|
Three Months Ended January 31,
|
|
|
|
|
|
Six Months Ended January 31,
|
|
|
|
|
||||||||||||||||||
|
2020
|
|
2019
|
|
Change
|
|
2020
|
|
2019
|
|
Change
|
||||||||||||||||||
|
Amount
|
|
Amount
|
|
Amount
|
|
%
|
|
Amount
|
|
Amount
|
|
Amount
|
|
%
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
(dollars in millions)
|
||||||||||||||||||||||||||||
Americas
|
$
|
544.7
|
|
|
$
|
475.0
|
|
|
$
|
69.7
|
|
|
14.7
|
%
|
|
$
|
1,074.3
|
|
|
$
|
925.2
|
|
|
$
|
149.1
|
|
|
16.1
|
%
|
EMEA
|
166.2
|
|
|
148.3
|
|
|
$
|
17.9
|
|
|
12.1
|
%
|
|
313.8
|
|
|
276.0
|
|
|
37.8
|
|
|
13.7
|
%
|
|||||
APAC
|
105.8
|
|
|
87.9
|
|
|
17.9
|
|
|
20.4
|
%
|
|
200.5
|
|
|
166.0
|
|
|
34.5
|
|
|
20.8
|
%
|
||||||
Total revenue
|
$
|
816.7
|
|
|
$
|
711.2
|
|
|
$
|
105.5
|
|
|
14.8
|
%
|
|
$
|
1,588.6
|
|
|
$
|
1,367.2
|
|
|
$
|
221.4
|
|
|
16.2
|
%
|
|
Three Months Ended January 31,
|
|
|
|
|
|
Six Months Ended January 31,
|
|
|
|
|
||||||||||||||||||
|
2020
|
|
2019
|
|
Change
|
|
2020
|
|
2019
|
|
Change
|
||||||||||||||||||
|
Amount
|
|
Amount
|
|
Amount
|
|
%
|
|
Amount
|
|
Amount
|
|
Amount
|
|
%
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
(dollars in millions)
|
||||||||||||||||||||||||||||
Cost of product revenue
|
$
|
68.7
|
|
|
$
|
82.5
|
|
|
$
|
(13.8
|
)
|
|
(16.7
|
)%
|
|
$
|
133.8
|
|
|
$
|
155.7
|
|
|
$
|
(21.9
|
)
|
|
(14.1
|
)%
|
Number of employees at period end
|
111
|
|
|
98
|
|
|
13
|
|
|
13.3
|
%
|
|
111
|
|
|
98
|
|
|
13
|
|
|
13.3
|
%
|
|
Three Months Ended January 31,
|
|
|
|
|
|
Six Months Ended January 31,
|
|
|
|
|
||||||||||||||||||
|
2020
|
|
2019
|
|
Change
|
|
2020
|
|
2019
|
|
Change
|
||||||||||||||||||
|
Amount
|
|
Amount
|
|
Amount
|
|
%
|
|
Amount
|
|
Amount
|
|
Amount
|
|
%
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
(dollars in millions)
|
||||||||||||||||||||||||||||
Cost of subscription and support revenue
|
$
|
164.4
|
|
|
$
|
120.1
|
|
|
$
|
44.3
|
|
|
36.9
|
%
|
|
$
|
317.0
|
|
|
$
|
230.4
|
|
|
$
|
86.6
|
|
|
37.6
|
%
|
Number of employees at period end
|
1,331
|
|
|
1030
|
|
|
301
|
|
|
29.2
|
%
|
|
1,331
|
|
|
1,030
|
|
|
301
|
|
|
29.2
|
%
|
|
Three Months Ended January 31,
|
|
Six Months Ended January 31,
|
||||||||||||||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||||||||||||||
|
Amount
|
|
Gross Margin
|
|
Amount
|
|
Gross Margin
|
|
Amount
|
|
Gross Margin
|
|
Amount
|
|
Gross Margin
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
(dollars in millions)
|
||||||||||||||||||||||||||
Product
|
$
|
177.8
|
|
|
72.1
|
%
|
|
$
|
189.1
|
|
|
69.6
|
%
|
|
$
|
343.9
|
|
|
72.0
|
%
|
|
$
|
356.4
|
|
|
69.6
|
%
|
Subscription and support
|
405.8
|
|
|
71.2
|
%
|
|
319.5
|
|
|
72.7
|
%
|
|
793.9
|
|
|
71.5
|
%
|
|
624.7
|
|
|
73.1
|
%
|
||||
Total gross profit
|
$
|
583.6
|
|
|
71.5
|
%
|
|
$
|
508.6
|
|
|
71.5
|
%
|
|
$
|
1,137.8
|
|
|
71.6
|
%
|
|
$
|
981.1
|
|
|
71.8
|
%
|
|
Three Months Ended January 31,
|
|
|
|
|
|
Six Months Ended January 31,
|
|
|
|
|
||||||||||||||||||
|
2020
|
|
2019
|
|
Change
|
|
2020
|
|
2019
|
|
Change
|
||||||||||||||||||
|
Amount
|
|
Amount
|
|
Amount
|
|
%
|
|
Amount
|
|
Amount
|
|
Amount
|
|
%
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
(dollars in millions)
|
||||||||||||||||||||||||||||
Research and development
|
$
|
185.4
|
|
|
$
|
128.3
|
|
|
$
|
57.1
|
|
|
44.5
|
%
|
|
$
|
355.9
|
|
|
$
|
241.7
|
|
|
$
|
114.2
|
|
|
47.2
|
%
|
Number of employees at period end
|
1,646
|
|
|
1,098
|
|
|
548
|
|
|
49.9
|
%
|
|
1,646
|
|
|
1,098
|
|
|
548
|
|
|
49.9
|
%
|
|
Three Months Ended January 31,
|
|
|
|
|
|
Six Months Ended January 31,
|
|
|
|
|
||||||||||||||||||
|
2020
|
|
2019
|
|
Change
|
|
2020
|
|
2019
|
|
Change
|
||||||||||||||||||
|
Amount
|
|
Amount
|
|
Amount
|
|
%
|
|
Amount
|
|
Amount
|
|
Amount
|
|
%
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
(dollars in millions)
|
||||||||||||||||||||||||||||
Sales and marketing
|
$
|
374.9
|
|
|
$
|
320.0
|
|
|
$
|
54.9
|
|
|
17.2
|
%
|
|
$
|
740.6
|
|
|
$
|
634.6
|
|
|
$
|
106.0
|
|
|
16.7
|
%
|
Number of employees at period end
|
3,699
|
|
|
2,919
|
|
780
|
|
|
26.7
|
%
|
|
3,699
|
|
|
2,919
|
|
|
780
|
|
|
26.7
|
%
|
|
Three Months Ended January 31,
|
|
|
|
|
|
Six Months Ended January 31,
|
|
|
|
|
||||||||||||||||||
|
2020
|
|
2019
|
|
Change
|
|
2020
|
|
2019
|
|
Change
|
||||||||||||||||||
|
Amount
|
|
Amount
|
|
Amount
|
|
%
|
|
Amount
|
|
Amount
|
|
Amount
|
|
%
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
(dollars in millions)
|
||||||||||||||||||||||||||||
General and administrative
|
$
|
76.2
|
|
|
$
|
53.7
|
|
|
$
|
22.5
|
|
|
41.9
|
%
|
|
$
|
146.0
|
|
|
$
|
130.3
|
|
|
$
|
15.7
|
|
|
12.0
|
%
|
Number of employees at period end
|
856
|
|
|
711
|
|
|
145
|
|
|
20.4
|
%
|
|
856
|
|
|
711
|
|
|
145
|
|
|
20.4
|
%
|
|
Three Months Ended January 31,
|
|
Change
|
|
Six Months Ended January 31,
|
|
Change
|
||||||||||||||||||||||
|
2020
|
|
2019
|
|
Amount
|
|
%
|
|
2020
|
|
2019
|
|
Amount
|
|
%
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
(dollars in millions)
|
||||||||||||||||||||||||||||
Provision for income taxes
|
$
|
12.6
|
|
|
$
|
4.6
|
|
|
$
|
8.0
|
|
|
173.9
|
%
|
|
$
|
17.7
|
|
|
$
|
1.1
|
|
|
$
|
16.6
|
|
|
1,509.1
|
%
|
Effective tax rate
|
(20.6
|
)%
|
|
230.0
|
%
|
|
|
|
|
|
(15.3
|
)%
|
|
(2.8
|
)%
|
|
|
|
|
|
January 31, 2020
|
|
July 31, 2019
|
||||
|
|
|
|
||||
|
(in millions)
|
||||||
Working capital
|
$
|
1,738.7
|
|
|
$
|
1,611.5
|
|
Cash, cash equivalents, and investments:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
2,000.0
|
|
|
$
|
961.4
|
|
Investments
|
1,451.8
|
|
|
2,417.1
|
|
||
Total cash, cash equivalents, and investments
|
$
|
3,451.8
|
|
|
$
|
3,378.5
|
|
|
Six Months Ended January 31,
|
||||||
2020
|
|
2019
|
|||||
|
|
|
|
||||
|
(in millions)
|
||||||
Net cash provided by operating activities
|
$
|
532.1
|
|
|
$
|
527.7
|
|
Net cash provided by (used in) investing activities
|
680.9
|
|
|
(1,236.9
|
)
|
||
Net cash used in financing activities
|
(173.2
|
)
|
|
(669.6
|
)
|
||
Net increase (decrease) in cash, cash equivalents, and restricted cash
|
$
|
1,039.8
|
|
|
$
|
(1,378.8
|
)
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
•
|
our ability to attract and retain new end-customers or sell additional products and subscriptions to our existing end-customers;
|
•
|
the budgeting cycles, seasonal buying patterns, and purchasing practices of our end-customers;
|
•
|
changes in end-customer, distributor or reseller requirements, or market needs;
|
•
|
price competition;
|
•
|
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 end-customers and strategic partnerships entered into by and between our competitors;
|
•
|
changes in the mix of our products, subscriptions, and support, including changes in multi-year subscriptions and support;
|
•
|
our ability to successfully and continuously expand our business domestically and internationally;
|
•
|
changes in the growth rate of the enterprise security market;
|
•
|
deferral of orders from end-customers in anticipation of new products or product enhancements announced by us or our competitors;
|
•
|
the timing and costs related to the development or acquisition of technologies or businesses or strategic partnerships;
|
•
|
lack of synergy or the inability to realize expected synergies, resulting from acquisitions or strategic partnerships;
|
•
|
our inability to execute, complete or integrate efficiently any acquisitions that we may undertake;
|
•
|
increased expenses, unforeseen liabilities, or write-downs and any impact on our operating results from any acquisitions we consummate;
|
•
|
our ability to increase the size and productivity of our distribution channel;
|
•
|
decisions by potential end-customers to purchase security solutions from larger, more established security vendors or from their primary network equipment vendors;
|
•
|
changes in end-customer penetration or attach and renewal rates for our subscriptions;
|
•
|
timing of revenue recognition and revenue deferrals;
|
•
|
our ability to manage production and manufacturing related costs, global customer service organization costs, inventory excess and obsolescence costs, and warranty costs;
|
•
|
insolvency or credit difficulties confronting our end-customers, which could adversely affect their ability to purchase or pay for our products and subscription and support offerings, or confronting our key suppliers, including our sole source suppliers, which could disrupt our supply chain;
|
•
|
any disruption in our channel or termination of our relationships with important channel partners, including as a result of consolidation among distributors and resellers of security solutions;
|
•
|
our inability to fulfill our end-customers’ orders due to supply chain delays or events that impact our manufacturers or their suppliers, including a localized health risk such as the coronavirus;
|
•
|
the cost and potential outcomes of litigation, which could have a material adverse effect on our business;
|
•
|
seasonality or cyclical fluctuations in our markets;
|
•
|
future accounting pronouncements or changes in our accounting policies;
|
•
|
increases or decreases in our expenses caused by fluctuations in foreign currency exchange rates, as an increasing amount of our expenses is incurred and paid in currencies other than the U.S. dollar;
|
•
|
political, economic and social instability caused by the referendum in June 2016, in which voters in the United Kingdom (the “U.K.”) approved an exit from the European Union (the “E.U.”) and the U.K. government subsequently notified the E.U. of its withdrawal, which is commonly referred to as “Brexit,” continued hostilities in the Middle East, terrorist activities, and any disruption these events may cause to the broader global industrial economy; and
|
•
|
general macroeconomic conditions, both domestically and in our foreign markets that could impact some or all regions where we operate.
|
•
|
large companies that incorporate security features in their products, such as Cisco Systems, Inc. (“Cisco”) and Juniper Networks, Inc. (“Juniper”), or those that have acquired, or may acquire, large network and endpoint security vendors and have the technical and financial resources to bring competitive solutions to the market;
|
•
|
independent security vendors, such as Check Point Software Technologies Ltd. (“Check Point”) and Fortinet, Inc., that offer a mix of network and endpoint security products; and
|
•
|
small and large companies that offer point solutions and/or cloud security services that compete with some of the features present in our platforms.
|
•
|
greater name recognition and longer operating histories;
|
•
|
larger sales and marketing budgets and resources;
|
•
|
broader distribution and established relationships with distribution partners and end-customers;
|
•
|
greater customer support resources;
|
•
|
greater resources to make strategic acquisitions or enter into strategic partnerships;
|
•
|
lower labor and development costs;
|
•
|
larger and more mature intellectual property portfolios; and
|
•
|
substantially greater financial, technical, and other resources.
|
•
|
end-customers with a December 31 fiscal year-end choosing to spend remaining unused portions of their discretionary budgets before their fiscal year-end, which potentially results in a positive impact on our revenue in our second fiscal quarter;
|
•
|
our sales compensation plans, which are typically structured around annual quotas and commission rate accelerators, which potentially results in a positive impact on our revenue in our fourth fiscal quarter;
|
•
|
seasonal reductions in business activity during August in the United States, Europe and certain other regions, which potentially results in a negative impact on our first fiscal quarter revenue; and
|
•
|
the timing of end-customer budget planning at the beginning of the calendar year, which can result in a delay in spending at the beginning of the calendar year potentially resulting in a negative impact on our revenue in our third fiscal quarter.
|
•
|
competition from larger competitors, such as Cisco, Check Point, and Juniper, that traditionally target larger enterprises, service providers, and government entities and that may have pre-existing relationships or purchase commitments from those end-customers;
|
•
|
increased purchasing power and leverage held by large end-customers in negotiating contractual arrangements with us;
|
•
|
more stringent requirements in our worldwide support contracts, including stricter support response times and penalties for any failure to meet support requirements; and
|
•
|
longer sales cycles, in some cases over 12 months, and the associated risk that substantial time and resources may be spent on a potential end-customer that elects not to purchase our products and subscriptions.
|
•
|
expenditure of significant financial and product development resources in efforts to analyze, correct, eliminate, or work-around errors or defects or to address and eliminate vulnerabilities;
|
•
|
loss of existing or potential end-customers or channel partners;
|
•
|
delayed or lost revenue;
|
•
|
delay or failure to attain market acceptance;
|
•
|
an increase in warranty claims compared with our historical experience, or an increased cost of servicing warranty claims, either of which would adversely affect our gross margins; and
|
•
|
litigation, regulatory inquiries, or investigations, each of which may be costly and harm our reputation.
|
•
|
political, economic and social uncertainty around the world, macroeconomic challenges in Europe, terrorist activities, and continued hostilities in the Middle East;
|
•
|
greater difficulty in enforcing contracts and accounts receivable collection and longer collection periods;
|
•
|
the uncertainty of protection for intellectual property rights in some countries;
|
•
|
greater risk of unexpected changes in foreign and domestic regulatory practices, tariffs, and tax laws and treaties, including regulatory and trade policy changes adopted by the current administration or foreign countries in response to regulatory changes adopted by the current administration;
|
•
|
risks associated with trade restrictions and foreign legal requirements, including the importation, certification, and localization of our products required in foreign countries;
|
•
|
greater risk of a failure of foreign employees, channel partners, distributors, and resellers to comply with both U.S. and foreign laws, including antitrust regulations, the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, U.S. or foreign sanctions regimes and export or import control laws, and any trade regulations ensuring fair trade practices, which non-compliance could include increased costs;
|
•
|
heightened risk of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements;
|
•
|
increased expenses incurred in establishing and maintaining office space and equipment for our international operations;
|
•
|
management communication and integration problems resulting from cultural and geographic dispersion; and
|
•
|
fluctuations in exchange rates between the U.S. dollar and foreign currencies in markets where we do business and related impact on sales cycles.
|
•
|
announcements of new products, subscriptions or technologies, commercial relationships, strategic partnerships, acquisitions or other events by us or our competitors;
|
•
|
price and volume fluctuations in the overall stock market from time to time;
|
•
|
news announcements that affect investor perception of our industry, including reports related to the discovery of significant cyberattacks;
|
•
|
significant volatility in the market price and trading volume of technology companies in general and of companies in our industry;
|
•
|
fluctuations in the trading volume of our shares or the size of our public float;
|
•
|
actual or anticipated changes in our operating results or fluctuations in our operating results;
|
•
|
whether our operating results meet the expectations of securities analysts or investors;
|
•
|
actual or anticipated changes in the expectations of securities analysts or investors, whether as a result of our forward- looking statements, our failure to meet such expectations or otherwise;
|
•
|
inaccurate or unfavorable research reports about our business and industry published by securities analysts or reduced coverage of our company by securities analysts;
|
•
|
litigation involving us, our industry, or both;
|
•
|
actions instituted by activist shareholders or others;
|
•
|
regulatory developments in the United States, foreign countries or both;
|
•
|
major catastrophic events;
|
•
|
sales or repurchases of large blocks of our common stock or substantial future sales by our directors, executive officers, employees and significant stockholders;
|
•
|
sales of our common stock by investors who view our 2023 Notes as a more attractive means of equity participation in us;
|
•
|
hedging or arbitrage trading activity involving our common stock as a result of the existence of our 2023 Notes;
|
•
|
departures of key personnel; or
|
•
|
economic uncertainty around the world, in particular, macroeconomic challenges in Europe.
|
•
|
establish that our board of directors is divided into three classes, Class I, Class II and Class III, with three-year staggered terms;
|
•
|
authorize our board of directors to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval;
|
•
|
provide our board of directors with the exclusive right to elect a director to fill a vacancy created by the expansion of our board of directors or the resignation, death or removal of a director;
|
•
|
prohibit our stockholders from taking action by written consent;
|
•
|
specify that special meetings of our stockholders may be called only by the chairman of our board of directors, our president, our secretary, or a majority vote of our board of directors;
|
•
|
require the affirmative vote of holders of at least 66 2/3% of the voting power of all of the then outstanding shares of the voting stock, voting together as a single class, to amend the provisions of our amended and restated certificate of incorporation relating to the issuance of preferred stock and management of our business or our amended and restated bylaws;
|
•
|
authorize our board of directors to amend our bylaws by majority vote; and
|
•
|
establish advance notice procedures with which our stockholders must comply to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting.
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(1)
|
||||||
November 1, 2019 to November 30, 2019(2)(3)
|
|
0.0
|
|
|
$
|
233.45
|
|
|
0.0
|
|
|
$
|
801.9
|
|
December 1, 2019 to December 31, 2019(2)
|
|
0.0
|
|
|
$
|
227.45
|
|
|
0.0
|
|
|
$
|
801.9
|
|
January 1, 2020 to January 31, 2020(2)
|
|
0.0
|
|
|
$
|
241.76
|
|
|
0.0
|
|
|
$
|
801.9
|
|
Total
|
|
0.0
|
|
|
$
|
235.26
|
|
|
0.0
|
|
|
|
(1)
|
On February 26, 2019, we announced that our board of directors authorized a $1.0 billion share repurchase program which will be funded from available working capital. Repurchases may be made at management’s discretion from time to time on the open market, through privately negotiated transactions, transactions structured through investment banking institutions, block purchase techniques, 10b5-1 trading plans, or a combination of the foregoing. The repurchase authorization will expire on December 31, 2020, and may be suspended or discontinued at any time.
|
(2)
|
Includes shares of restricted common stock delivered by certain employees upon vesting of equity awards to satisfy tax withholding requirements. The number of shares delivered by these employees to satisfy tax withholding requirements during the period was not significant.
|
(3)
|
Includes repurchases under our share repurchase program, for which the average price paid per share excludes costs associated with the repurchases.
|
ITEM 5.
|
OTHER INFORMATION
|
•
|
specifying powers of the chairman of a stockholder meeting to establish rules of conduct and the order of business at the meeting;
|
•
|
clarifying provisions related to the adjournment and postponement and other procedural aspects of stockholder meetings; and
|
•
|
updating procedural mechanics and disclosure requirements in connection with stockholder nominations of directors and submission of stockholder proposals at stockholder meetings.
|
ITEM 6.
|
EXHIBITS
|
Exhibit
Number
|
|
Exhibit Description
|
|
Incorporated by Reference
|
||||||
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
||||
|
|
|
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|
|
|
Amended and Restated Bylaws of the Registrant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1*
|
|
Aporeto, Inc., Amended and Restated 2015 Stock Option and Grant Plan
|
|
S-8
|
|
333-235854
|
|
99.1
|
|
January 8, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease Termination Agreement (4301 Great America Parkway, Santa Clara, California)
|
|
8-K
|
|
001-35594
|
|
10.1
|
|
December 19, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease Termination Agreement (4401 Great America Parkway, Santa Clara, California)
|
|
8-K
|
|
001-35594
|
|
10.2
|
|
December 19, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certification of the Chief Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certification of the Chief Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.1†
|
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.2†
|
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101
|
|
The following financial information from Palo Alto Networks, Inc.’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2020 formatted in Inline XBRL includes: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive Loss, (iv) Condensed Consolidated Statements of Stockholders’ Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to the Condensed Consolidated Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
104
|
|
Cover Page Interactive Data File—(formatted as Inline XBRL and contained in Exhibit 101).
|
|
|
|
|
|
|
|
|
*
|
Indicates a management contract or compensatory plan or arrangement.
|
†
|
The certifications attached as Exhibit 32.1 and 32.2 that accompany this Quarterly Report on Form 10‑Q are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Palo Alto Networks, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10‑Q, irrespective of any general incorporation language contained in such filing.
|
|
PALO ALTO NETWORKS, INC.
|
|
|
By:
|
/s/ KATHLEEN BONANNO
|
|
|
Kathleen Bonanno
|
|
|
Chief Financial Officer
|
|
|
(Duly Authorized Officer and Principal Financial Officer)
|
|
PALO ALTO NETWORKS, INC.
|
|
|
By:
|
/s/ JEAN COMPEAU
|
|
|
Jean Compeau
|
|
|
Chief Accounting Officer
|
|
|
(Duly Authorized Officer and Principal Accounting Officer)
|
|
|
Page
|
|
ARTICLE I - CORPORATE OFFICES
|
1
|
|
|
1.1
|
REGISTERED OFFICE
|
1
|
|
1.2
|
OTHER OFFICES
|
1
|
|
ARTICLE II - MEETINGS OF STOCKHOLDERS
|
1
|
|
|
2.1
|
PLACE OF MEETINGS
|
1
|
|
2.2
|
ANNUAL MEETING
|
1
|
|
2.3
|
SPECIAL MEETING
|
1
|
|
2.4
|
ADVANCE NOTICE PROCEDURES
|
2
|
|
2.5
|
NOTICE OF STOCKHOLDERS’ MEETINGS
|
12
|
|
2.6
|
QUORUM
|
12
|
|
2.7
|
ADJOURNMENTS AND POSTPONEMENTS; NOTICE
|
12
|
|
2.8
|
CONDUCT OF BUSINESS
|
13
|
|
2.9
|
VOTING
|
13
|
|
2.10
|
STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
|
14
|
|
2.11
|
RECORD DATES
|
14
|
|
2.12
|
PROXIES
|
15
|
|
2.13
|
LIST OF STOCKHOLDERS ENTITLED TO VOTE
|
15
|
|
2.14
|
INSPECTORS OF ELECTION
|
15
|
|
2.15
|
PROXY ACCESS FOR DIRECTOR NOMINATIONS
|
16
|
|
ARTICLE III - DIRECTORS
|
23
|
|
|
3.1
|
POWERS
|
23
|
|
3.2
|
NUMBER OF DIRECTORS
|
23
|
|
3.3
|
ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS
|
23
|
|
3.4
|
RESIGNATION AND VACANCIES
|
23
|
|
3.5
|
PLACE OF MEETINGS; MEETINGS BY TELEPHONE
|
24
|
|
3.6
|
REGULAR MEETINGS
|
24
|
|
3.7
|
SPECIAL MEETINGS; NOTICE
|
24
|
|
3.8
|
QUORUM; VOTING
|
25
|
|
3.9
|
BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
|
25
|
|
3.10
|
FEES AND COMPENSATION OF DIRECTORS
|
26
|
|
3.11
|
REMOVAL OF DIRECTORS
|
26
|
|
ARTICLE IV - COMMITTEES
|
26
|
|
|
4.1
|
COMMITTEES OF DIRECTORS
|
26
|
|
4.2
|
COMMITTEE MINUTES
|
26
|
|
4.3
|
MEETINGS AND ACTION OF COMMITTEES
|
26
|
|
4.4
|
SUBCOMMITTEES
|
27
|
|
ARTICLE V - OFFICERS
|
27
|
|
|
5.1
|
OFFICERS
|
27
|
|
|
|
|
5.2
|
APPOINTMENT OF OFFICERS
|
27
|
|
5.3
|
SUBORDINATE OFFICERS
|
28
|
|
5.4
|
REMOVAL AND RESIGNATION OF OFFICERS
|
28
|
|
5.5
|
VACANCIES IN OFFICES
|
28
|
|
5.6
|
REPRESENTATION OF SHARES OF OTHER CORPORATIONS
|
28
|
|
5.7
|
AUTHORITY AND DUTIES OF OFFICERS
|
28
|
|
5.8
|
THE CHAIRPERSON OF THE BOARD OF DIRECTORS
|
29
|
|
5.9
|
THE VICE CHAIRPERSON OF THE BOARD OF DIRECTORS
|
29
|
|
5.1
|
THE CHIEF EXECUTIVE OFFICER
|
29
|
|
5.11
|
THE PRESIDENT
|
29
|
|
5.12
|
THE VICE PRESIDENTS AND ASSISTANT VICE PRESIDENTS
|
29
|
|
5.13
|
THE SECRETARY AND ASSISTANT SECRETARIES
|
29
|
|
5.14
|
THE CHIEF FINANCIAL OFFICER AND ASSISTANT TREASURERS
|
30
|
|
ARTICLE VI - STOCK
|
30
|
|
|
6.1
|
STOCK CERTIFICATES; PARTLY PAID SHARES
|
30
|
|
6.2
|
SPECIAL DESIGNATION ON CERTIFICATES
|
31
|
|
6.3
|
LOST, STOLEN OR DESTROYED CERTIFICATES
|
31
|
|
6.4
|
DIVIDENDS
|
32
|
|
6.5
|
TRANSFER OF STOCK
|
32
|
|
6.6
|
STOCK TRANSFER AGREEMENTS
|
32
|
|
6.7
|
REGISTERED STOCKHOLDERS
|
32
|
|
ARTICLE VII - MANNER OF GIVING NOTICE AND WAIVER
|
32
|
|
|
7.1
|
NOTICE OF STOCKHOLDERS’ MEETINGS
|
32
|
|
7.2
|
NOTICE BY ELECTRONIC TRANSMISSION
|
33
|
|
7.3
|
NOTICE TO STOCKHOLDERS SHARING AN ADDRESS
|
33
|
|
7.4
|
NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL
|
34
|
|
7.5
|
WAIVER OF NOTICE
|
34
|
|
ARTICLE VIII - INDEMNIFICATION
|
34
|
|
|
8.1
|
INDEMNIFICATION OF DIRECTORS AND OFFICERS IN THIRD PARTY PROCEEDINGS
|
34
|
|
8.2
|
INDEMNIFICATION OF DIRECTORS AND OFFICERS IN ACTIONS BY OR IN THE RIGHT OF THE CORPORATION
|
35
|
|
8.3
|
SUCCESSFUL DEFENSE
|
35
|
|
8.4
|
INDEMNIFICATION OF OTHERS
|
35
|
|
8.5
|
ADVANCED PAYMENT OF EXPENSES
|
36
|
|
8.6
|
LIMITATION ON INDEMNIFICATION
|
36
|
|
8.7
|
DETERMINATION; CLAIM
|
37
|
|
8.8
|
NON-EXCLUSIVITY OF RIGHTS
|
37
|
|
8.9
|
INSURANCE
|
37
|
|
8.10
|
SURVIVAL
|
37
|
|
8.11
|
EFFECT OF REPEAL OR MODIFICATION
|
38
|
|
8.12
|
CERTAIN DEFINITIONS
|
38
|
|
ARTICLE IX - GENERAL MATTERS
|
38
|
|
|
9.1
|
EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS
|
38
|
|
9.2
|
FISCAL YEAR
|
38
|
|
9.3
|
SEAL
|
38
|
|
9.4
|
CONSTRUCTION; DEFINITIONS
|
39
|
|
ARTICLE X - AMENDMENTS
|
39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ARTICLE I
|
- CORPORATE OFFICES
|
2.4
|
ADVANCE NOTICE PROCEDURES
|
(1)
|
a brief description of the business intended to be brought before the annual meeting and the reasons for conducting such business at the annual meeting;
|
(2)
|
the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the certificate of incorporation or the bylaws, the language of the proposed amendment)
|
(3)
|
the name and address, as they appear on the corporation’s books, of the stockholder proposing the business or making the nomination and any Stockholder Associated Person (as defined below);
|
(4)
|
the class and number of shares or other securities of the corporation or any affiliate thereof (collectively, the “Company Securities”) that are held of record or are beneficially owned by such stockholder or any Stockholder Associated Person and any derivative positions held or beneficially held by the stockholder or any Stockholder Associated Person, the date on which each such Company Security was acquired, the investment intent of such acquisition and evidence of such beneficial or record ownership;
|
(5)
|
the nominee holder for, and number of, any Company Securities owned beneficially but not of record by such stockholder or Stockholder Associated Person;
|
(6)
|
a complete and accurate description of any material interest in such business of the stockholder or a Stockholder Associated Person individually or in the aggregate, including any anticipated benefit to the stockholder or any Stockholder Associated Person therefrom;
|
(7)
|
all other information that would be required to be disclosed in solicitations of proxies in support of such proposed business by such stockholder or any Stockholder Associated Person, or is otherwise required, in each case pursuant to and in accordance with Section 14(a) of the 1934 Act, and the rules and regulations promulgated thereunder; and
|
(8)
|
a statement whether either such stockholder or any Stockholder Associated Person will deliver a proxy statement and form of proxy to holders of at least the percentage of the corporation’s voting shares required under applicable law to carry the proposal (such information provided and statements made as required by
|
(1)
|
the name, age, business address and residence address of the nominee;
|
(2)
|
the principal occupation or employment of the nominee;
|
(3)
|
the Company Securities that are held of record or are beneficially owned by such nominee and any derivative positions held or beneficially held by the nominee, the date on which each such Company Security was acquired, the investment intent of such acquisition and evidence of such beneficial or record ownership;
|
(4)
|
a written questionnaire with respect to the background and qualifications of such nominee completed by the nominee in the form required by the corporation (which form the stockholder shall request in writing from the secretary and which the secretary shall provide to such stockholder within 10 days of receiving such request);
|
(5)
|
the nominee’s written representation and agreement in the form required by the corporation (which form the stockholder shall request in writing from the secretary and which the secretary shall provide to such stockholder within 10 days of receiving such request) that: (A) such nominee is not, and will not become party to, any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the corporation or any Voting Commitment that could limit or interfere with such person's ability to comply, if elected as a director of the corporation, with such person’s fiduciary duties under applicable law; (B) such nominee is not, and will not become, a party to any agreement, arrangement or understanding with any person or entity other than the corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed to the corporation; (C) such nominee would, if elected as a director, comply with applicable law of the exchange upon which the corporation’s shares of common stock trade, all of the corporation’s corporate governance, ethics, conflict of interest, confidentiality and stock ownership and trading policies
|
(6)
|
a description of all material monetary agreements, arrangements or understandings, and any other material relationships, between or among the stockholders or any Stockholder Associated Person, on the one hand, and such nominee, his or her respective affiliates or associates, and any other person or persons (including their names) acting in concert therewith, on the other hand, including all information that would be required to be disclosed pursuant to Item 404 promulgated under Regulation S-K of the 1934 Act, as if the stockholder making the nomination and any beneficial owner on whose behalf the nomination is made, if any, or any affiliate or associate thereof or person acting in concert therewith, were the “registrant” for purposes of such regulation and the nominee were a director or executive officer of such registrant;
|
(7)
|
any other information that would be required to be disclosed if proxies were being solicited for the election or re‑election of the nominee as a director, or that is otherwise required, in each case pursuant to Regulation 14A under the 1934 Act (including, without limitation, disclosures required in connection with a contested election of directors, and the nominee’s written consent to being named in the proxy statement, if any, as a nominee); and
|
(1)
|
the information required to be provided pursuant to clauses (3) through (7) of Section 2.4(i)(b); and
|
(2)
|
a statement whether either such stockholder or a Stockholder Associated Person will deliver a proxy statement and form of proxy to holders of a number of the corporation’s voting shares reasonably believed by such stockholder or Stockholder Associated Person to be necessary to elect or re-elect such nominee(s) (such information
|
2.5
|
NOTICE OF STOCKHOLDERS’ MEETINGS
|
2.6
|
QUORUM
|
2.7
|
ADJOURNMENTS AND POSTPONEMENTS; NOTICE
|
2.8
|
CONDUCT OF BUSINESS
|
2.9
|
VOTING
|
2.10
|
STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
|
2.11
|
RECORD DATES
|
2.12
|
PROXIES
|
2.13
|
LIST OF STOCKHOLDERS ENTITLED TO VOTE
|
2.14
|
INSPECTORS OF ELECTION
|
2.15
|
PROXY ACCESS FOR DIRECTOR NOMINATIONS
|
3.1
|
POWERS
|
3.2
|
NUMBER OF DIRECTORS
|
3.3
|
ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS
|
3.4
|
RESIGNATION AND VACANCIES
|
3.5
|
PLACE OF MEETINGS; MEETINGS BY TELEPHONE
|
3.6
|
REGULAR MEETINGS
|
3.7
|
SPECIAL MEETINGS; NOTICE
|
3.8
|
QUORUM; VOTING
|
3.9
|
BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
|
3.10
|
FEES AND COMPENSATION OF DIRECTORS
|
3.11
|
REMOVAL OF DIRECTORS
|
4.1
|
COMMITTEES OF DIRECTORS
|
4.2
|
COMMITTEE MINUTES
|
4.3
|
MEETINGS AND ACTION OF COMMITTEES
|
4.4
|
SUBCOMMITTEES
|
5.1
|
OFFICERS
|
5.2
|
APPOINTMENT OF OFFICERS
|
5.3
|
SUBORDINATE OFFICERS
|
5.4
|
REMOVAL AND RESIGNATION OF OFFICERS
|
5.5
|
VACANCIES IN OFFICES
|
5.6
|
REPRESENTATION OF SHARES OF OTHER CORPORATIONS
|
5.7
|
AUTHORITY AND DUTIES OF OFFICERS
|
5.8
|
THE CHAIRPERSON OF THE BOARD OF DIRECTORS
|
5.9
|
THE VICE CHAIRPERSON OF THE BOARD OF DIRECTORS
|
5.10
|
THE CHIEF EXECUTIVE OFFICER
|
5.11
|
THE PRESIDENT
|
5.12
|
THE VICE PRESIDENTS AND ASSISTANT VICE PRESIDENTS
|
5.13
|
THE SECRETARY AND ASSISTANT SECRETARIES
|
5.14
|
THE CHIEF FINANCIAL OFFICER AND ASSISTANT TREASURERS
|
6.1
|
STOCK CERTIFICATES; PARTLY PAID SHARES
|
6.2
|
SPECIAL DESIGNATION ON CERTIFICATES
|
6.3
|
LOST, STOLEN OR DESTROYED CERTIFICATES
|
6.4
|
DIVIDENDS
|
6.5
|
TRANSFER OF STOCK
|
6.6
|
STOCK TRANSFER AGREEMENTS
|
6.7
|
REGISTERED STOCKHOLDERS
|
7.1
|
NOTICE OF STOCKHOLDERS’ MEETINGS
|
7.2
|
NOTICE BY ELECTRONIC TRANSMISSION
|
7.3
|
NOTICE TO STOCKHOLDERS SHARING AN ADDRESS
|
7.4
|
NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL
|
7.5
|
WAIVER OF NOTICE
|
ARTICLE VIII
|
- INDEMNIFICATION
|
8.1
|
INDEMNIFICATION OF DIRECTORS AND OFFICERS IN THIRD PARTY PROCEEDINGS
|
8.2
|
INDEMNIFICATION OF DIRECTORS AND OFFICERS IN ACTIONS BY OR IN THE RIGHT OF THE CORPORATION
|
8.3
|
SUCCESSFUL DEFENSE
|
8.4
|
INDEMNIFICATION OF OTHERS
|
8.5
|
ADVANCED PAYMENT OF EXPENSES
|
8.6
|
LIMITATION ON INDEMNIFICATION
|
8.7
|
DETERMINATION; CLAIM
|
8.8
|
NON-EXCLUSIVITY OF RIGHTS
|
8.9
|
INSURANCE
|
8.10
|
SURVIVAL
|
8.11
|
EFFECT OF REPEAL OR MODIFICATION
|
8.12
|
CERTAIN DEFINITIONS
|
9.1
|
EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS
|
9.2
|
FISCAL YEAR
|
9.3
|
SEAL
|
9.4
|
CONSTRUCTION; DEFINITIONS
|
|
|
|
/s/ Jeffrey C. True
|
|
|
Jeffrey C. True
|
|
|
|
Executive Vice President, General Counsel and
|
|
|
|
Secretary
|
/s/ NIKESH ARORA
|
Nikesh Arora
|
Chief Executive Officer and Director
|
/s/ KATHLEEN BONANNO
|
Kathleen Bonanno
|
Chief Financial Officer
|
/s/ NIKESH ARORA
|
Nikesh Arora
|
Chief Executive Officer and Director
|
/s/ KATHLEEN BONANNO
|
Kathleen Bonanno
|
Chief Financial Officer
|