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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 January 31, 2024
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 001-35594
PALO ALTO NETWORKS, INC.
(Exact name of registrant as specified in its charter)  
 
Delaware20-2530195
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
3000 Tannery Way
Santa Clara, California 95054
(Address of principal executive offices, including zip code)
(408753-4000
(Registrant’s telephone number, including area code)
NA
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, $0.0001 par value per sharePANW
The Nasdaq Stock Market LLC
(Nasdaq Global Select Market)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filerEmerging growth company
Non-accelerated filerSmaller reporting company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes      No  
The number of shares outstanding of the registrant’s common stock as of February 12, 2024 was 323.1 million.


Table of Contents
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.

- 1 -

Part I
Item 1. Financial Statements
PALO ALTO NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except per share data)
January 31, 2024July 31, 2023
(unaudited)
Assets
Current assets:
Cash and cash equivalents$1,782.5 $1,135.3 
Short-term investments1,588.5 1,254.7 
Accounts receivable, net of allowance for credit losses of $6.5 and $7.8 as of January 31, 2024 and July 31, 2023, respectively
1,896.3 2,463.2 
Short-term financing receivables, net445.5 388.8 
Short-term deferred contract costs328.0 339.2 
Prepaid expenses and other current assets405.9 466.8 
Total current assets6,446.7 6,048.0 
Property and equipment, net352.3 354.5 
Operating lease right-of-use assets355.8 263.3 
Long-term investments3,619.6 3,047.9 
Long-term financing receivables, net639.9 653.3 
Long-term deferred contract costs504.6 547.1 
Goodwill3,372.7 2,926.8 
Intangible assets, net440.1 315.4 
Deferred tax assets2,234.3 23.1 
Other assets326.0 321.7 
Total assets$18,292.0 $14,501.1 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
$178.8 $132.3 
Accrued compensation452.6 548.3 
Accrued and other liabilities394.2 390.8 
Deferred revenue4,918.1 4,674.6 
Convertible senior notes, net1,821.8 1,991.5 
Total current liabilities
7,765.5 7,737.5 
Long-term deferred revenue4,900.3 4,621.8 
Deferred tax liabilities588.5 28.1 
Long-term operating lease liabilities362.7 279.2 
Other long-term liabilities317.8 86.1 
Total liabilities13,934.8 12,752.7 
Commitments and contingencies (Note 10)
Stockholders’ equity:
Preferred stock; $0.0001 par value; 100.0 shares authorized; none issued and outstanding as of January 31, 2024 and July 31, 2023
  
Common stock and additional paid-in capital; $0.0001 par value; 1,000.0 shares authorized; 322.7 and 308.3 shares issued and outstanding as of January 31, 2024 and July 31, 2023, respectively
3,650.0 3,019.0 
Accumulated other comprehensive loss(6.5)(43.2)
Retained earnings (accumulated deficit)713.7 (1,227.4)
Total stockholders’ equity4,357.2 1,748.4 
Total liabilities and stockholders’ equity$18,292.0 $14,501.1 
See notes to condensed consolidated financial statements.
- 2 -

PALO ALTO NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in millions, except per share data)
Three Months Ended January 31,Six Months Ended January 31,
2024202320242023
Revenue:
Product$390.7 $352.9 $731.8 $682.9 
Subscription and support1,584.4 1,302.2 3,121.4 2,535.6 
Total revenue1,975.1 1,655.1 3,853.2 3,218.5 
Cost of revenue:
Product88.2 100.5 165.6 220.6 
Subscription and support410.9 365.7 806.3 707.5 
Total cost of revenue499.1 466.2 971.9 928.1 
Total gross profit1,476.0 1,188.9 2,881.3 2,290.4 
Operating expenses:
Research and development447.9 404.1 857.4 775.9 
Sales and marketing673.0 625.5 1,333.5 1,240.5 
General and administrative301.5 119.4 421.6 218.9 
Total operating expenses1,422.4 1,149.0 2,612.5 2,235.3 
Operating income
53.6 39.9 268.8 55.1 
Interest expense(2.8)(6.9)(5.7)(13.7)
Other income, net84.7 51.4 155.0 77.4 
Income before income taxes
135.5 84.4 418.1 118.8 
Provision for (benefit from) income taxes(1,611.4)0.2 (1,523.0)14.6 
Net income
$1,746.9 $84.2 $1,941.1 $104.2 
Net income per share, basic
$5.47 $0.28 $6.16 $0.35 
Net income per share, diluted
$4.89 $0.25 $5.49 $0.31 
Weighted-average shares used to compute net income per share, basic
319.6 302.3 314.9 301.0 
Weighted-average shares used to compute net income per share, diluted
357.5 331.6 353.7 335.0 
See notes to condensed consolidated financial statements.
- 3 -

PALO ALTO NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited, in millions)
Three Months Ended January 31,Six Months Ended January 31,
2024202320242023
Net income
$1,746.9 $84.2 $1,941.1 $104.2 
Other comprehensive income, net of tax:
Change in unrealized gains (losses) on investments60.1 33.5 41.9 5.7 
Cash flow hedges:
Change in unrealized gains (losses)27.6 63.1 (13.3)20.6 
Net realized (gains) losses reclassified into earnings
(1.2)3.4 8.1 18.2 
Net change on cash flow hedges26.4 66.5 (5.2)38.8 
Other comprehensive income
86.5 100.0 36.7 44.5 
Comprehensive income$1,833.4 $184.2 $1,977.8 $148.7 
See notes to condensed consolidated financial statements.
- 4 -

PALO ALTO NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited, in millions)
Three Months Ended January 31, 2024

Common Stock and Additional Paid-In Capital
Accumulated Other Comprehensive Loss
Retained Earnings (Accumulated Deficit)
Total Stockholders’ Equity
 
SharesAmount
Balance as of October 31, 2023313.7 $3,296.7 $(93.0)$(1,033.2)$2,170.5 
Net income— — — 1,746.9 1,746.9 
Other comprehensive income
— — 86.5 — 86.5 
Issuance of common stock in connection with employee equity incentive plans3.1 55.3 — — 55.3 
Taxes paid related to net share settlement of equity awards— (3.8)— — (3.8)
Share-based compensation for equity-based awards— 302.1 — — 302.1 
Settlement of convertible notes0.8 (0.3)— — (0.3)
Settlement of note hedges
(0.8)— — — — 
Settlement of warrants5.9 — — — — 
Balance as of January 31, 2024322.7 $3,650.0 $(6.5)$713.7 $4,357.2 

Three Months Ended January 31, 2023
 
Common Stock and Additional Paid-In Capital
Accumulated Other Comprehensive Loss
Accumulated Deficit
Total Stockholders’ Equity
 
SharesAmount
Balance as of October 31, 2022302.3 $2,266.2 $(111.1)$(1,647.1)$508.0 
Net income
— — — 84.2 84.2 
Other comprehensive income
— — 100.0 — 100.0 
Issuance of common stock in connection with employee equity incentive plans1.9 0.8 — — 0.8 
Taxes paid related to net share settlement of equity awards— (1.5)— — (1.5)
Share-based compensation for equity-based awards— 287.5 — — 287.5 
Repurchase and retirement of common stock(1.8)(250.0)— — (250.0)
Balance as of January 31, 2023302.4 $2,303.0 $(11.1)$(1,562.9)$729.0 
- 5 -

Six Months Ended January 31, 2024
 
Common Stock and Additional Paid-In Capital
Accumulated Other Comprehensive Loss
Retained Earnings (Accumulated Deficit)
Total Stockholders’ Equity
 SharesAmount
Balance as of July 31, 2023308.3 $3,019.0 $(43.2)$(1,227.4)$1,748.4 
Net income— — — 1,941.1 1,941.1 
Other comprehensive income— — 36.7 — 36.7 
Issuance of common stock in connection with employee equity incentive plans5.7 142.3 — — 142.3 
Taxes paid related to net share settlement of equity awards— (19.3)— — (19.3)
Share-based compensation for equity-based awards— 575.2 — — 575.2 
Repurchase and retirement of common stock(0.3)(66.7)— — (66.7)
Settlement of convertible notes1.1 (0.5)— — (0.5)
Settlement of note hedges
(1.1)— — — — 
Settlement of warrants9.0 — — — — 
Balance as of January 31, 2024322.7 $3,650.0 $(6.5)$713.7 $4,357.2 

Six Months Ended January 31, 2023
 
Common Stock and Additional Paid-In Capital
Accumulated Other Comprehensive Loss
Accumulated Deficit
Total Stockholders’ Equity
 SharesAmount
Balance as of July 31, 2022298.8 $1,932.7 $(55.6)$(1,667.1)$210.0 
Net income— — — 104.2 104.2 
Other comprehensive income
— — 44.5 — 44.5 
Issuance of common stock in connection with employee equity incentive plans5.4 69.0 — — 69.0 
Taxes paid related to net share settlement of equity awards— (15.4)— — (15.4)
Share-based compensation for equity-based awards— 566.7 — — 566.7 
Repurchase and retirement of common stock(1.8)(250.0)— — (250.0)
Balance as of January 31, 2023302.4 $2,303.0 $(11.1)$(1,562.9)$729.0 
See notes to condensed consolidated financial statements.
- 6 -

4PALO ALTO NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in millions)
Six Months Ended January 31,
20242023
Cash flows from operating activities
Net income
$1,941.1 $104.2 
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation for equity-based awards543.0 549.3 
Deferred income taxes
(1,691.3)2.5 
Depreciation and amortization132.9 140.6 
Amortization of deferred contract costs214.4 196.0 
Amortization of debt issuance costs2.1 3.5 
Reduction of operating lease right-of-use assets26.1 24.6 
Amortization of investment premiums, net of accretion of purchase discounts(30.9)(14.3)
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable, net568.0 864.6 
Financing receivables, net(43.3)(86.5)
Deferred contract costs(159.3)(152.9)
Prepaid expenses and other assets45.9 (78.4)
Accounts payable47.3 0.7 
Accrued compensation(98.3)(68.3)
Accrued and other liabilities199.8 (113.9)
Deferred revenue518.5 559.6 
Net cash provided by operating activities2,216.0 1,931.3 
Cash flows from investing activities
Purchases of investments(2,011.4)(3,719.3)
Proceeds from sales of investments431.2 499.6 
Proceeds from maturities of investments808.3 998.9 
Business acquisitions, net of cash and restricted cash acquired
(610.6)(185.6)
Purchases of property, equipment, and other assets
(72.0)(77.9)
Net cash used in investing activities(1,454.5)(2,484.3)
Cash flows from financing activities
Repayments of convertible senior notes
(172.3) 
Repurchases of common stock
(66.7)(272.7)
Proceeds from sales of shares through employee equity incentive plans
143.9 68.4 
Payments for taxes related to net share settlement of equity awards
(19.3)(15.4)
Net cash used in financing activities
(114.4)(219.7)
Net increase (decrease) in cash, cash equivalents, and restricted cash647.1 (772.7)
Cash, cash equivalents, and restricted cash - beginning of period1,142.2 2,124.8 
Cash, cash equivalents, and restricted cash - end of period $1,789.3 $1,352.1 
Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets
Cash and cash equivalents$1,782.5 $1,346.3 
Restricted cash included in prepaid expenses and other current assets6.3 5.8 
Restricted cash included in other assets0.5  
Total cash, cash equivalents, and restricted cash$1,789.3 $1,352.1 
Non-cash investing and financing activities
Equity consideration for business acquisitions$(27.4)$(0.3)
See notes to condensed consolidated financial statements.
- 7 -

Notes to Condensed Consolidated Financial Statements (Unaudited)
1. Description of Business and Summary of Significant Accounting Policies
Description of Business
Palo Alto Networks, Inc. (the “Company,” “we,” “us,” or “our”), headquartered in Santa Clara, California, was incorporated in March 2005 under the laws of the State of Delaware and commenced operations in April 2005. We empower enterprises, organizations, service providers, and government entities to secure their users, networks, clouds, and endpoints by delivering comprehensive cybersecurity enabled by artificial intelligence and automation.
Basis of Presentation and Principles of Consolidation
The accompanying condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”), consistent in all material respects with those applied in our Annual Report on Form 10-K for the fiscal year ended July 31, 2023, filed with the Securities and Exchange Commission (“SEC”) on September 1, 2023. The condensed consolidated financial statements include our accounts and our wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
The condensed consolidated financial statements are unaudited but include all adjustments of a normal recurring nature necessary for a fair presentation of our quarterly results. Our condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes in our Annual Report on Form 10-K for the fiscal year ended July 31, 2023.
Reclassification
Certain prior period amounts in the condensed consolidated financial statements have been reclassified to conform to the current period presentation.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the condensed consolidated financial statements and the accompanying notes. We base our estimates on assumptions, both historical and forward looking, that we believe are reasonable. Actual results could differ materially from those estimates due to risks and uncertainties, including uncertainty in the current economic environment.
Summary of Significant Accounting Policies
There have been no material changes to our significant accounting policies as of and for the six months ended January 31, 2024, as compared to the significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended July 31, 2023.
Recently Issued Accounting Pronouncements
Segment Reporting
In November 2023, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance that expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. The standard is effective for our annual periods beginning in fiscal 2025 and interim periods beginning in the first quarter of fiscal 2026, and requires retrospective application for all prior periods presented in the financial statements. Early adoption is permitted. We are currently evaluating the impact of this standard on our disclosures in the consolidated financial statements.
Income Tax Disclosures
In December 2023, the FASB issued authoritative guidance that requires consistent categories and greater disaggregation of information in the effective tax rate reconciliation and additional disclosures of income taxes paid by jurisdiction. The standard is effective for our annual periods beginning in fiscal 2026 and could be applied either prospectively or retrospectively. Early adoption is permitted. We are currently evaluating the impact of this standard on our disclosures in the consolidated financial statements.
- 8 -

2. Revenue
Disaggregation of Revenue
The following table presents revenue by geographic theater (in millions):
Three Months Ended January 31,Six Months Ended January 31,
2024202320242023
Revenue:
Americas
United States$1,248.2 $1,042.3 $2,452.5 $2,048.6 
Other Americas86.0 74.7 168.3 139.1 
Total Americas1,334.2 1,117.0 2,620.8 2,187.7 
Europe, the Middle East, and Africa (“EMEA”)406.8 341.5 771.7 649.4 
Asia Pacific and Japan (“APAC”)234.1 196.6 460.7 381.4 
Total revenue$1,975.1 $1,655.1 $3,853.2 $3,218.5 
The following table presents revenue for groups of similar products and services (in millions):
Three Months Ended January 31,Six Months Ended January 31,
2024202320242023
Revenue:
Product$390.7 $352.9 $731.8 $682.9 
Subscription and support
Subscription1,027.1 815.4 2,015.4 1,579.4 
Support557.3 486.8 1,106.0 956.2 
Total subscription and support1,584.4 1,302.2 3,121.4 2,535.6 
Total revenue$1,975.1 $1,655.1 $3,853.2 $3,218.5 
Deferred Revenue
During the six months ended January 31, 2024 and 2023, we recognized approximately $2.7 billion and $2.1 billion of revenue pertaining to amounts that were deferred as of July 31, 2023 and 2022, respectively.
Remaining Performance Obligations
Remaining performance obligations were $10.8 billion as of January 31, 2024, of which we expect to recognize as revenue approximately $5.2 billion over the next 12 months and the remainder thereafter.
3. Fair Value Measurements
The following table presents our financial assets and liabilities measured at fair value on a recurring basis as of January 31, 2024 and July 31, 2023 (in millions):
January 31, 2024July 31, 2023
Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Cash equivalents:
Money market funds$859.3 $ $ $859.3 $476.1 $ $ $476.1 
Certificates of deposit  11.0  11.0     
Commercial paper 252.1  252.1  151.4  151.4 
Corporate debt securities 8.1  8.1     
U.S. government and agency securities 10.0  10.0     
Total cash equivalents859.3 281.2  1,140.5 476.1 151.4  627.5 
- 9 -

January 31, 2024July 31, 2023
Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Short-term investments:
Certificates of deposit 61.7  61.7  48.1  48.1 
Commercial paper 163.5  163.5  213.8  213.8 
Corporate debt securities 1,241.7  1,241.7  798.0  798.0 
U.S. government and agency securities 85.2  85.2  190.6  190.6 
Non-U.S. government and agency securities 33.9  33.9     
Asset-backed securities 2.5  2.5  4.2  4.2 
Total short-term investments 1,588.5  1,588.5  1,254.7  1,254.7 
Long-term investments:
Corporate debt securities 2,707.8  2,707.8  2,484.3  2,484.3 
U.S. government and agency securities 76.3  76.3  22.0  22.0 
Non-U.S. government and agency securities 54.4  54.4  36.6  36.6 
Asset-backed securities 781.1  781.1  505.0  505.0 
Total long-term investments 3,619.6  3,619.6  3,047.9  3,047.9 
Prepaid expenses and other current assets:
Foreign currency forward contracts 10.0  10.0  19.1  19.1 
Total prepaid expenses and other current assets 10.0  10.0  19.1  19.1 
Other assets:
Foreign currency forward contracts 1.9  1.9  1.7  1.7 
Total other assets 1.9  1.9  1.7  1.7 
Total assets measured at fair value$859.3 $5,501.2 $ $6,360.5 $476.1 $4,474.8 $ $4,950.9 
Accrued and other liabilities:
Foreign currency forward contracts$ $16.3 $ $16.3 $ $18.7 $ $18.7 
Total accrued and other liabilities 16.3  16.3  18.7  18.7 
Other long-term liabilities:
Foreign currency forward contracts 0.7  0.7  1.6  1.6 
Total other long-term liabilities 0.7  0.7  1.6  1.6 
Total liabilities measured at fair value$ $17.0 $ $17.0 $ $20.3 $ $20.3 
Refer to Note 9. Debt for the carrying amount and estimated fair value of our convertible senior notes as of January 31, 2024 and July 31, 2023.
- 10 -

4. Cash Equivalents and Investments
Available-for-sale Debt Securities
The following tables summarize the amortized cost, unrealized gains and losses, and fair value of our available-for-sale debt securities as of January 31, 2024 and July 31, 2023 (in millions):
January 31, 2024
Amortized Cost 
Unrealized Gains
Unrealized Losses
Fair Value
Cash equivalents:
Certificates of deposit$11.0 $ $ $11.0 
Commercial paper252.1   252.1 
Corporate debt securities8.1   8.1 
U.S. government and agency securities10.0   10.0 
Total available-for-sale cash equivalents$281.2 $ $ $281.2 
Investments:
Certificates of deposit$61.7 $ $ $61.7 
Commercial paper163.3 0.2  163.5 
Corporate debt securities3,937.2 22.5 (10.2)3,949.5 
U.S. government and agency securities160.5 1.1 (0.1)161.5 
Non-U.S. government and agency securities87.8 0.8 (0.3)88.3 
Asset-backed securities778.5 5.8 (0.7)783.6 
Total available-for-sale investments$5,189.0 $30.4 $(11.3)$5,208.1 
July 31, 2023
Amortized Cost 
Unrealized Gains
Unrealized Losses
Fair Value
Cash equivalents:
Commercial paper$151.4 $ $ $151.4 
Total available-for-sale cash equivalents$151.4 $ $ $151.4 
Investments:
Certificates of deposit$48.1 $ $ $48.1 
Commercial paper214.1  (0.3)213.8 
Corporate debt securities3,313.5 1.3 (32.5)3,282.3 
U.S. government and agency securities214.2  (1.6)212.6 
Non-U.S. government and agency securities37.2  (0.6)36.6 
Asset-backed securities512.0 0.2 (3.0)509.2 
Total available-for-sale investments$4,339.1 $1.5 $(38.0)$4,302.6 
As of January 31, 2024, the gross unrealized losses that have been in a continuous unrealized loss position for less than 12 months were $5.1 million, which were related to $1.5 billion of available-for-sale debt securities, and the gross unrealized losses that have been in a continuous unrealized loss position for more than 12 months were $6.2 million, which were related to $752.8 million of available-for-sale debt securities. As of July 31, 2023 the gross unrealized losses that have been in a continuous unrealized loss position for less than 12 months were $30.7 million, which were related to $3.4 billion of available-for-sale debt securities, and the gross unrealized losses that have been in a continuous unrealized loss position for more than 12 months were $7.3 million, which were related to $481.8 million of available-for-sale debt securities.
- 11 -

Unrealized losses related to our available-for-sale debt securities are primarily due to interest rate fluctuations as opposed to credit quality. We do not intend to sell any of the securities in an unrealized loss position and it is not likely that we would be required to sell these securities before recovery of their amortized cost basis, which may be at maturity. We did not recognize any credit losses related to our available-for-sale debt securities during the three and six months ended January 31, 2024 and 2023.
The following table summarizes the amortized cost and fair value of our available-for-sale debt securities as of January 31, 2024, by contractual years-to-maturity (in millions):
Amortized CostFair Value
Due within one year$1,873.7 $1,869.7 
Due between one and three years2,244.2 2,250.3 
Due between three and five years1,120.4 1,134.3 
Due between five and ten years138.8 140.1 
Due after ten years93.1 94.9 
Total$5,470.2 $5,489.3 
Marketable Equity Securities
Marketable equity securities consist of money market funds and are included in cash and cash equivalents on our condensed consolidated balance sheets. As of January 31, 2024 and July 31, 2023, the carrying values of our marketable equity securities were $859.3 million and $476.1 million, respectively. There were no unrealized gains or losses recognized for these securities during the three and six months ended January 31, 2024 and 2023.
5. Financing Receivables
The following table summarizes our short-term and long-term financing receivables as of January 31, 2024 and July 31, 2023 (in millions):
January 31, 2024July 31, 2023
Short-term financing receivables, gross$503.0 $435.1 
Unearned income
(49.1)(42.9)
Allowance for credit losses(8.4)(3.4)
Short-term financing receivables, net$445.5 $388.8 
Long-term financing receivables, gross$685.4 $698.6 
Unearned income
(39.0)(39.2)
Allowance for credit losses(6.5)(6.1)
Long-term financing receivables, net$639.9 $653.3 
Our financing receivables portfolio primarily consisted of high-quality investment-grade receivables as of January 31, 2024 and July 31, 2023. There was no significant activity in allowance for credit losses during the three and six months ended January 31, 2024 and 2023. Past due amounts on financing receivables were not material as of January 31, 2024 and July 31, 2023.
6. Derivative Instruments
We are exposed to foreign currency exchange risk. Our revenue is transacted in U.S. dollars, however, a portion of our operating expenditures are incurred outside of the United States and are denominated in foreign currencies, making them subject to fluctuations in foreign currency exchange rates. We enter into foreign currency derivative contracts with maturities of 24 months or less, which we designate as cash flow hedges, to manage the foreign currency exchange risk associated with our operating expenditures.
As of January 31, 2024 and July 31, 2023, the total notional amount of our outstanding foreign currency forward contracts was $1.2 billion and $957.5 million, respectively. Refer to Note 3. Fair Value Measurements for the fair value of our derivative instruments as reported on our condensed consolidated balance sheets as of January 31, 2024 and July 31, 2023.
As of January 31, 2024, unrealized gains and losses in accumulated other comprehensive income (“AOCI”) related to our cash flow hedges were a $6.2 million net loss, of which $5.4 million in losses are expected to be recognized into earnings within the next 12 months. As of July 31, 2023, unrealized gains and losses in AOCI related to our cash flow hedges were a $0.7 million net gain.
- 12 -

7. Acquisitions
Dig Security Solutions Ltd.
On December 5, 2023, we completed our acquisition of Dig Security Solutions Ltd. (“Dig”), a privately-held cyber security company. We expect the acquisition will enhance our Prisma Cloud capabilities with a data security posture management solution that is intended to provide customers with visibility into, and secure data stored across, their multi-cloud environments. The total purchase consideration for the acquisition of Dig was $255.4 million, which consisted of the following (in millions):
Amount
Cash$247.6 
Fair value of replacement awards7.8 
Total$255.4 
As part of the acquisition, we issued replacement equity awards, which included 0.2 million shares of our restricted common stock. The total fair value of the replacement equity awards was $72.0 million, of which the portion attributable to services performed prior to the acquisition date was allocated to purchase consideration. The remaining fair value was allocated to future services and will be expensed over the remaining service periods as share-based compensation.
We have accounted for this transaction as a business combination and allocated the purchase consideration to assets acquired and liabilities assumed based on preliminary estimated fair values, as presented in the following table (in millions):
Amount
Goodwill$192.2 
Identified intangible assets45.4 
Cash and restricted cash22.1 
Net liabilities assumed(4.3)
Total$255.4 
Goodwill generated from this business combination is primarily attributable to the assembled workforce and expected post-acquisition synergies from integrating Dig technology into our platforms. The goodwill is not expected to be deducible for income tax purposes.
The following table presents details of the identified intangible asset acquired (in millions, except years):
Fair ValueEstimated Useful Life
Developed technology$45.4 5 years
Talon Cyber Security Ltd.
On December 28, 2023, we completed our acquisition of Talon Cyber Security Ltd. (“Talon”), a privately-held cyber security company. We expect the acquisition will support Prisma SASE’s approach to provide secure access to business applications for unmanaged and personal devices with an enterprise browser. The total purchase consideration for the acquisition of Talon was $458.6 million, which consisted of the following (in millions):
Amount
Cash$439.0 
Fair value of replacement awards19.6 
Total$458.6 
As part of the acquisition, we issued replacement equity awards, which included 0.3 million shares of our restricted common stock. The total fair value of the replacement equity awards was $109.6 million, of which the portion attributable to services performed prior to the acquisition date was allocated to purchase consideration. The remaining fair value was allocated to future services and will be expensed over the remaining service periods as share-based compensation.
- 13 -

We have accounted for this transaction as a business combination and allocated the purchase consideration to assets acquired and liabilities assumed based on preliminary estimated fair values, as presented in the following table (in millions):
Amount
Goodwill$253.7 
Identified intangible assets131.4 
Cash and restricted cash53.9 
Net assets acquired19.6 
Total$458.6 
Goodwill generated from this business combination is primarily attributable to the assembled workforce and expected post-acquisition synergies from integrating Talon technology into our platforms. The goodwill is not expected to be deductible for income tax purposes.
The following table presents details of the identified intangible asset acquired (in millions, except years):
Fair ValueEstimated Useful Life
Developed technology$131.4 5 years
8. Goodwill and Intangible Assets
Goodwill
The following table presents details of our goodwill during the six months ended January 31, 2024 (in millions):
Amount
Balance as of July 31, 2023$2,926.8 
Goodwill acquired445.9 
Balance as of January 31, 2024$3,372.7 
Purchased Intangible Assets
The following table presents details of our purchased intangible assets as of January 31, 2024 and July 31, 2023 (in millions):
January 31, 2024July 31, 2023
Gross Carrying Amount
Accumulated Amortization
Net Carrying Amount
Gross Carrying Amount
Accumulated Amortization
Net Carrying Amount
Intangible assets subject to amortization:
Developed technology$813.9 $(471.0)$342.9 $633.2 $(429.4)$203.8 
Customer relationships172.7 (84.7)88.0 172.7 (73.9)98.8 
Acquired intellectual property15.8 (7.0)8.8 14.6 (6.2)8.4 
Trade name and trademarks9.4 (9.4) 9.4 (9.4) 
Other0.9 (0.5)0.4 0.9 (0.4)0.5 
Total intangible assets subject to amortization1,012.7 (572.6)440.1 830.8 (519.3)311.5 
Intangible assets not subject to amortization:
In-process research and development —  3.9— 3.9 
Total purchased intangible assets$1,012.7 $(572.6)$440.1 $834.7 $(519.3)$315.4 
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We recognized amortization expense of $28.4 million and $53.3 million for the three and six months ended January 31, 2024, respectively, and $24.8 million and $53.9 million for the three and six months ended January 31, 2023, respectively.
The following table summarizes estimated future amortization expense of our intangible assets subject to amortization as of January 31, 2024 (in millions):