Palo Alto Networks (PANW) 10-K risk factor changes: FY2023 vs FY2022

In addition, the impacts of [removed: COVID-19 and] any worsening of the economic environment may exacerbate the risks described below, any of which could have a material impact on [removed: us.][added: us.*]

- Our operating results may vary significantly from period to [removed: period and be unpredictable,] [added: period,] which [added: makes our results difficult to predict and] could cause [removed: the market price of] our [removed: common stock] [added: results] to [removed: decline.][added: fall short of expectations, and such results may not be indicative of future performance.]

- Our revenue growth rate in recent periods may not be indicative of our future [removed: performance.][added: performance, and we may not be able to maintain profitability, which could cause our business, financial condition, and operating results to suffer.]

[removed: - We have a history] [added: Our revenue growth rate in recent periods may not be indicative] of [removed: losses, anticipate increasing] our [removed: operating expenses in the future,] [added: future performance,] and [added: we] may not be able to [removed: achieve or] maintain [removed: profitability or maintain or increase cash flow on a consistent basis,] [added: profitability,] which could cause our business, financial condition, and operating results to [removed: suffer.][added: suffer.]

- If we are unable to sell new and additional product, subscription, and support offerings to our end-customers, [added: especially to large enterprise customers,] our future revenue and operating results will be harmed.

- A network or data security incident may allow unauthorized access to our network or data, harm our reputation, create additional [removed: liability] [added: liability,] and adversely impact our financial results.

- If we are unable to [removed: hire, integrate, train,] [added: attract,] retain, and motivate [removed: qualified personnel] [added: our key technical, sales,] and [removed: senior management,] [added: management personnel,] our business could suffer.

- We rely on revenue from subscription and support offerings, and because we recognize revenue from subscription and support over the term of the relevant service period, downturns or upturns in sales [added: or renewals] of these subscription and support offerings are not immediately reflected in full in our operating results.

- We rely on our channel partners to sell substantially all of our products, including subscriptions and support, and if these channel partners fail to perform, our ability to sell and distribute our products and subscriptions will be [removed: limited,] [added: limited] and our operating results will be harmed.

[removed: -] Our [removed: current] [added: investments in] research and [removed: development efforts] [added: development, including investments in AI,] may not [removed: produce successful] [added: result in design or performance improvements, marketable] products, subscriptions, or [removed: features that result in significant revenue,] [added: features, or may not achieve the] cost savings or [removed: other benefits in the near future, if at all.][added: additional revenue that we expect.]

- We may acquire other businesses, which could subject us to adverse claims or liabilities, require significant management attention, disrupt our business, adversely affect our operating results, may not result in the expected benefits of such [removed: acquisitions] [added: acquisitions,] and may dilute stockholder value.

- Because we depend on manufacturing partners to build and ship our [added: hardware] products, we are susceptible to manufacturing and logistics delays and pricing fluctuations that could prevent us from shipping customer orders on time, if at all, or on a cost-effective basis, which may result in the loss of sales and end-customers.

- Managing the supply of our [added: hardware] products and product components is complex.

- Because some of the key components in our [added: hardware] products come from limited sources of supply, we are susceptible to supply shortages or supply changes, [removed: which has] [added: which, in certain cases, have] disrupted or delayed our scheduled product deliveries to our end-customers, [removed: increase] [added: increased] our costs and may result in the loss of sales and end-customers.

- The sales prices of our products, [removed: subscriptions] [added: subscriptions,] and support offerings may decrease, which may reduce our [added: revenue and] gross profits and adversely impact our financial results.

- We are exposed to the credit and liquidity risk of [removed: some of] our [removed: channel partners and end-customers,] [added: customers,] and to credit exposure in weakened markets, which could result in material losses.

Risks Related to Our [removed: Business and Our Industry][added: Business]

As a result, our employee headcount has [removed: increased significantly,] [added: increased,] and we expect it to continue to grow over the next year.

For example, from the end of fiscal [removed: 2021] [added: 2022] to the end of fiscal [removed: 2022,] [added: 2023,] our headcount increased from [removed: 10,473 to] 12,561 [added: to 13,948] employees.

In addition, as we have grown, [removed: our] [added: the] number of end-customers has also [removed: increased significantly,] [added: increased,] and we have [removed: increasingly] managed more complex deployments of our products and subscriptions with larger end-customers.

To manage any future growth effectively, we must continue to improve and expand our information technology and financial infrastructure, our operating and administrative systems and controls, and our ability to manage headcount, capital, and processes in an efficient [removed: manner, all of which may be more difficult to accomplish the longer that our employees must work remotely from home.][added: manner.]

We may not be able to successfully [removed: implement] [added: implement, scale,] or [removed: scale] [added: manage] improvements to our systems, processes, and controls in an efficient or timely [removed: manner.][added: manner, which could result in material disruptions of our operations and business.]

We may also experience difficulties in managing improvements to our systems, processes, and [removed: controls] [added: controls,] or in connection with third-party software licensed to help us with such improvements.

Failure to manage any future growth effectively could result in increased costs, disrupt our existing end-customer relationships, reduce demand for or limit us to smaller deployments of our products, or [added: materially] harm our business performance and operating results.

Our operating results may vary significantly from period to [removed: period and be unpredictable,] [added: period,] which [added: makes our results difficult to predict and] could cause [removed: the market price of] our [removed: common stock] [added: results] to [removed: decline.][added: fall short of expectations, and such results may not be indicative of future performance.]

This variability and unpredictability could [added: also] result in our failure to meet our revenue, margin, or other operating result expectations [added: contained in any forward-looking statements (including financial] or [added: business expectations we have provided) or] those of securities analysts or investors for a particular period.

If we fail to meet or exceed such expectations for [removed: these] [added: these,] or any [removed: other] [added: other,] reasons, the market price of our common stock could fall substantially, and we could face costly lawsuits, including securities class action suits.

The instability in the global credit markets, inflation, [removed: shortages and delays related to the global supply chain challenges, uncertainties related to the timing of the lifting of governmental restrictions to mitigate the spread of COVID-19, the current economic challenges in China,] changes in public policies such as domestic and international regulations, taxes, [removed: increase] [added: any increases] in interest rates, fluctuations in foreign currency exchange rates, or international trade agreements, international trade disputes, [removed: government shutdowns,] geopolitical [removed: turmoil] [added: turmoil,] and other disruptions to global and regional economies and markets continue to add uncertainty to global economic conditions.

Military actions or armed conflict, including Russia’s invasion of Ukraine and any related political or economic responses and counter-responses, and uncertainty [removed: about] [added: about,] or changes [removed: in] [added: in,] government and trade relationships, [removed: policies] [added: policies,] and treaties could also lead to worsening economic and market conditions and [removed: the] geopolitical environment.

Any continued or further uncertainty, weakness or deterioration in economic and market conditions or the geopolitical environment could have a material and adverse impact on our business, financial [removed: condition] [added: condition,] and results of operations, including reductions in sales of our products and subscriptions, longer sales cycles, reductions in subscription or contract duration and value, slower adoption of new technologies, alterations in the spending patterns or priorities of current and prospective customers (including delaying purchasing decisions), increased costs for the chips and components to manufacture our [removed: products] [added: products,] and increased price competition.

We have experienced revenue growth rates of [removed: 29.3%] [added: 25.3%] and [removed: 24.9%] [added: 29.3%] in fiscal [removed: 2022] [added: 2023] and fiscal [removed: 2021,] [added: 2022,] respectively.

Our revenue for any [removed: prior] quarterly or annual period should not be relied upon as an indication of our future revenue or revenue growth for any future period.

If we are unable to maintain consistent or increasing revenue or revenue growth, the market price of our common stock could be volatile, and it may be difficult for us to [removed: achieve and] maintain profitability or maintain or increase cash flow on a consistent basis.

Revenue growth may slow or revenue may decline for a number of possible reasons, including [removed: the downturn in the global and U.S. economy due to COVID-19,] slowing demand for our products or subscriptions, increasing competition, a decrease in the growth of, or a demand shift in, our overall market, or a failure to capitalize on growth opportunities.

Any failure to increase our revenue as we grow our business could prevent us from [removed: achieving or] maintaining profitability or maintaining or increasing cash flow on a consistent [removed: basis] [added: basis,] or satisfying our capital commitments.

If we are unable to sell new and additional product, subscription, and support offerings to our end-customers, [added: especially to large enterprise customers,] our future revenue and operating results will be harmed.

Our future success depends, in part, on our ability to expand the deployment of our portfolio with existing [removed: end-customers] [added: end-customers, especially large enterprise customers,] and create demand for our new offerings, [added: The rate at which our end-customers purchase additional products, subscriptions, and support depends on a number of factors,] including [removed: cloud security, AI,] [added: the perceived need for additional security products, including subscription] and [removed: analytics offerings.][added: support offerings, as well as general economic conditions.]

[removed: Further, existing] [added: Existing] end-customers have no contractual obligation [removed: to] [added: to,] and may [removed: not] [added: not,] renew their subscription and support contracts after the completion of their initial contract period.

[removed: Our end-customers’ renewal rates] [added: Sales and renewals of subscription and support contracts] may decline [removed: or] [added: and] fluctuate as a result of a number of factors, including [removed: their] [added: end-customers’] level of satisfaction with our [removed: subscriptions] [added: products] and [removed: our support offerings,] [added: subscriptions,] the frequency and severity of subscription outages, our product uptime or latency, [removed: and] the [removed: pricing] [added: prices] of [removed: our, or competing, subscriptions.][added: our products and subscriptions, and reductions in our end-customers’ spending levels.]

If our efforts to sell additional products and subscriptions to our end-customers are not [removed: successful or our end-customers do not renew their subscription and support agreements or renew them on less favorable terms,] [added: successful,] our revenues may grow more slowly than expected or decline.

- Issues in the development and deployment of Artificial Intelligence (“AI”) may result in reputational harm and legal liability and could adversely affect our results of operations.

- We face risks associated with having operations and employees located in Israel.

- We are subject to governmental export and import controls that could subject us to liability or impair our ability to compete in international markets.

- We may have exposure to greater than anticipated tax liabilities.

- If our estimates or judgments relating to our critical accounting policies are based on assumptions that change or prove to be incorrect, our operating results could fall below our publicly announced guidance or the expectations of securities analysts and investors, resulting in a decline in the market price of our common stock.

- We are obligated to maintain proper and effective internal control over financial reporting.

- Our reputation and/or business could be negatively impacted by environmental, social, and governance (“ESG”) matters and/or our reporting of such matters.

- Failure to comply with governmental laws and regulations could harm our business.

- We may not have the ability to raise the funds necessary to settle conversions of our Notes, repurchase our Notes upon a fundamental change, or repay our Notes in cash at their maturity, and our future debt may contain limitations on our ability to pay cash upon conversion or repurchase of our Notes.

- We may still incur substantially more debt or take other actions that would diminish our ability to make payments on our Notes when due.

- The convertible note hedge and warrant transactions may affect the value of our common stock.

- We do not intend to pay dividends for the foreseeable future.

- Our charter documents and Delaware law, as well as certain provisions contained in the indentures governing our Notes, could discourage takeover attempts and lead to management entrenchment, which could also reduce the market price of our common stock.

Risks Related to Global Economic and Geopolitical Conditions

In addition, we have incurred losses in fiscal years prior to fiscal 2023 and, as a result, we had an accumulated deficit of $1.2 billion as of July 31, 2023.

Our operating results have fluctuated in the past, and will likely continue to fluctuate in the future, as a result of a number of factors, many of which are outside of our control and may be difficult to predict, including those factors described in this Risk Factor section.

Due to these fluctuations, comparing our revenue, margins, or other operating results on a period-to-period basis may not be meaningful, and our past results should not be relied on as an indication of our future performance.

Sales to large enterprise end-customers, which is part of our growth strategy, involve risks that may not be present, or that are present to a lesser extent, with sales to smaller entities, such as (a) longer sales cycles and the associated risk that substantial time and resources may be spent on a potential end-customer that elects not to purchase our products, subscriptions, and support, and (b) increased purchasing power and leverage held by large end-customers in negotiating contractual arrangements.

Deployments for large enterprise end-customers are also more complex, require greater product functionality, scalability, and a broader range of services, and are more time-consuming.

Declining sales prices could adversely affect our revenue, gross profits, and profitability.

Increases in deferred payments result in payments being made over time, negatively impacting our short-term cash flows, and subject us to risk of non-payment by our customers, including as a result of insolvency.

Many of our competitors have greater financial, technical, marketing, sales, and other resources, greater name recognition, longer operating histories, and a larger base of customers than we do.

They may be able to devote greater resources to the promotion and sale of products and services than we can, and they may offer lower pricing than we do.

Further, they may have greater resources for research and development of new technologies, the provision of customer support, and the pursuit of acquisitions.

We also face competition from companies that have entrenched legacy offerings at end-user customers.

In addition, as our customers refresh the security products bought in prior years, they may seek to consolidate vendors, which may result in current customers choosing to purchase products from our competitors.

Due to budget constraints or economic downturns, organizations may add solutions to their existing network security infrastructure rather than replacing it with our products and subscriptions.

Our competitors and potential competitors may be able to develop new or disruptive technologies, products, or services, and leverage new business models that are equal or superior to ours, achieve greater market acceptance of their products and services, disrupt our markets, and increase sales by utilizing different distribution channels than we do.

In addition, new and enhanced technologies, including AI and machine learning, continue to increase our competition.

To compete successfully, we must accurately anticipate technology developments and deliver innovative, relevant, and useful products, services, and technologies in a timely manner.

If we are unable to compete successfully, or if competing successfully requires us to take aggressive pricing or other actions, our business, financial condition, and results of operations would be adversely affected.

If we fail to effectively anticipate, identify, and respond to rapidly evolving technological and market developments in a timely manner, our business will be harmed.

In order to anticipate and respond effectively to rapid technological changes and market developments, as well as evolving security threats, we must invest effectively in research and development to increase the reliability, availability, and scalability of our existing products and subscriptions and introduce new products and subscriptions.

In addition, new and evolving products and services, including those that use AI, require significant investment and raise ethical, technological, legal, regulatory, and other challenges, which may negatively affect our brands and demand for our products and services.

Because all of these investment areas are inherently risky, no assurance can be given that such strategies and offerings will be successful or will not harm our reputation, financial condition, and operating results.

Issues in the development and deployment of AI may result in reputational harm and legal liability and could adversely affect our results of operations.

We have incorporated, and are continuing to develop and deploy, AI into many of our products and solutions, including services that support our products and solutions.

AI presents challenges and risks that could affect our products and solutions, and therefore our business.

For example, AI algorithms may have flaws, and datasets used to train models may be insufficient or contain biased information.

These potential issues could subject us to regulatory risk, legal liability, including under new proposed legislation regulating AI in jurisdictions such as the EU and regulations being considered in other jurisdictions, and brand or reputational harm.

This situation is changing rapidly, and additional impacts may arise that we are not currently aware of.*

- The ongoing global COVID-19 pandemic could harm our business and results of operations.

- Reliance on shipments at the end of the quarter could cause our revenue for the applicable period to fall below expected levels.

- If we are not successful in executing our strategy to increase sales of our products, subscriptions and support offerings to new and existing enterprise end-customers, our operating results may suffer.

- False detection of applications, viruses, spyware, vulnerability exploits, data patterns, or URL categories could adversely affect our business.

The ongoing global COVID-19 pandemic could harm our business and results of operations.

The novel strain of COVID-19 identified in late 2019 has spread globally, including within the United States, and has resulted in government authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter in place orders, and shutdowns.

This pandemic has negatively impacted and will likely continue to have a negative impact on, worldwide economic activity and financial markets and has impacted, and will further impact, our workforce and operations, the operations of our end-customers, and those of our respective channel partners, vendors and suppliers.

In light of the uncertain and rapidly evolving situation relating to the spread of this virus and various government restrictions and guidelines, we have taken measures intended to mitigate the spread of the virus and minimize the risk to our employees, channel partners, end-customers, and the communities in which we operate.

Through our FLEXWORK program, our employees may choose to work from home or in the office for a set number of days per week.

Although we continue to monitor the situation and may adjust our current policies as more information and public health guidance become available, including progress made through vaccinations, these precautionary measures that we have adopted could negatively affect our customer success efforts, sales and marketing efforts, delay and lengthen our sales cycles, and create operational or other challenges, any of which could harm our business and results of operations.

In addition, COVID-19 will likely continue to disrupt the operations of our end-customers and channel partners for an indefinite period of time, including as a result of travel restrictions and/or business shutdowns, all of which could negatively impact our business and results of operations, including cash flows.

The ongoing impact of COVID-19 is fluid and uncertain, but it has caused and may continue to cause various negative effects, including an inability to meet with our existing or potential end-customers; our end-customers deciding to delay or abandon their planned purchases; increased requests for delayed payment terms or product discounts by our end-customers and channel partners; us delaying, canceling, or withdrawing from user and industry conferences and other marketing events, including some of our own; and changes in the demand for our products, which has caused us to reprioritize our engineering and research and development efforts and make changes to our original offering roadmap.

We have also seen supply chain challenges increase significantly, including chip and component shortages (in some cases, attributable to labor shortages), and at times we do not have sufficient inventory of certain of our products to promptly meet customer demand.

As a result, we have experienced at times extended delivery time and increased costs for chips and components compared to historic levels; our demand generation activities, and our ability to close transactions with end-customers and partners may be negatively impacted; our ability to provide 24x7 worldwide support and/or replacement parts to our end-customers may be adversely affected; and it has been and, until the COVID-19 outbreak is contained and global economic activity stabilizes, will continue to be more difficult for us to forecast our operating results.

More generally, the pandemic has not only significantly and adversely increased economic and demand uncertainty, but it has caused a global economic slowdown, and continuing global economic uncertainty which could decrease technology spending and adversely affect demand for our offerings and harm our business and results of operations.

Our operating results, in particular, our revenues, gross margins, operating margins, and operating expenses, have historically varied from period to period, and even though we have experienced growth, we expect variation to continue as a result of a number of factors, many of which are outside of our control and may be difficult to predict, including:

- 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, particularly in the current global economic slowdown and the escalation of military conflicts such as Russia’s invasion of Ukraine;

- changes in the growth rate of the enterprise security industry;

- 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;

- our obligation to repay the aggregate principal amount of the Notes as holders exercise their conversion rights under the Notes;

- 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, especially due to disruptions in our supply chain as a result of COVID-19 and the global semiconductor chip and component shortage;

- our ability to manage cloud hosting service costs and scale the cloud-based subscription offerings;

- insolvency or credit difficulties confronting our end-customers, including due to the continuing effects of COVID-19 and adversely affect their ability to purchase or pay for our products and subscription and support offerings in a timely manner or at all, 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 timely fulfill our end-customers’ orders due to supply chain delays or events that impact our manufacturers or their suppliers, including due to the effects of COVID-19 and the global semiconductor chip and component shortage;

- [removed: Overview.] [added: 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.

- [removed: Key] [added: Key] Financial Metrics. A summary of our [added: U.S.] GAAP and non-GAAP key financial metrics, which management monitors to evaluate our performance.

- [removed: Results] [added: Results] of Operations. A discussion of the nature and trends in our financial results and an analysis of our financial results comparing fiscal [removed: 2022] [added: 2023] to fiscal [removed: 2021.][added: 2022.]

For discussion and analysis related to our financial results comparing fiscal [removed: 2021] [added: 2022] to [removed: 2020,] [added: 2021,] refer to Part II, Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for fiscal [removed: 2021,] [added: 2022,] which was filed with the Securities and Exchange Commission on September [removed: 3, 2021.][added: 6, 2022.]

- [removed: Liquidity] [added: Liquidity] and Capital Resources. An analysis of changes on our balance sheets and cash flows, and a discussion of our financial condition and our ability to meet cash needs.

- [removed: Critical] [added: Critical] Accounting Estimates. A discussion of our accounting policies that require critical estimates, assumptions, and judgments.

Our cybersecurity platforms and services help secure enterprise users, networks, clouds, and endpoints by delivering comprehensive cybersecurity backed by [removed: industry leading] [added: industry-leading] artificial intelligence and automation.

We are a leading provider of zero trust [removed: solutions that start] [added: solutions, starting] with [removed: the] next-generation [removed: of] zero trust network access to secure [added: today’s] remote [added: hybrid] workforces and [removed: extend into] [added: extending to] securing all users, [removed: applications] [added: applications,] and infrastructure with zero trust principles.

Our company focuses on delivering value in [removed: five] [added: four] fundamental areas:

Our network security platform also includes our [removed: Cloud-Delivered Security Services,] [added: cloud-delivered security services,] such as [removed: Threat Prevention,] Advanced Threat Prevention, [added: Advanced] WildFire®, Advanced URL Filtering, DNS Security, [removed: IoT] [added: IoT/OT] Security, [removed: GlobalProtect™, SD-WAN,] [added: GlobalProtect®,] Enterprise Data Loss Prevention (“Enterprise DLP”), [added: Artificial Intelligence for Operations (“AIOps”),] SaaS Security [removed: API] [added: API,] and SaaS Security Inline.

Through these add-on security services, our customers are able to secure their content, applications, users, and devices across [removed: our network security platform as well as the Prisma® and Cortex® product lines.][added: their entire organization.]

[removed: Panorama™,] [added: Panorama®,] our network security management solution, [removed: available as hardware or virtual machine,] can centrally manage our network security platform irrespective of form factor, location, or scale.

[removed: Prisma] [added: Prisma®] Access, [added: our Security Services Edge (“SSE”) solution,] when combined with Prisma SD-WAN, provides a comprehensive single-vendor [removed: Secure Access Service Edge (“SASE”)] [added: SASE] offering that is used to secure remote workforces and enable the cloud-delivered branch.

- We enable [removed: cloud native] [added: cloud-native] security through our Prisma Cloud platform.

As a comprehensive Cloud Native Application Protection Platform (“CNAPP”), Prisma Cloud secures [removed: hybrid] [added: multi-] and [removed: multi-cloud] [added: hybrid-cloud] environments for applications, data, and the entire cloud native technology stack across the full development lifecycle; from code to runtime.

For inline network security on [removed: multi] [added: multi-] and hybrid-cloud environments, we also offer our VM-Series and CN-Series Firewall offerings.

- We deliver the next generation of [added: security automation, security analytics,] endpoint security, [removed: security analytics] and [removed: security automation] [added: attack surface management] solutions through our Cortex portfolio.

These include [added: Cortex XSIAM,] our [removed: industry-leading extended detection and response platform] [added: AI security automation platform,] Cortex XDR® [removed: to prevent, detect,] [added: for the prevention, detection,] and [removed: respond] [added: response] to complex cybersecurity [removed: attacks,] [added: attacks on the endpoint,] Cortex XSOAR® for security orchestration, automation, and response (“SOAR”), [added: and] Cortex [removed: Xpanse®] [added: XpanseTM] for attack surface management [removed: (“ASM”) and Cortex Data Lake allowing our customers to collect and analyze large amounts of context-rich data across endpoints, networks, and clouds.][added: (“ASM”).]

These products are delivered as [removed: software or] SaaS [added: or software] subscriptions.

For fiscal [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] total revenue was [removed: $5.5] [added: $6.9] billion and [removed: $4.3] [added: $5.5] billion, respectively, representing year-over-year growth of [removed: 29.3%.][added: 25.3%.]

As of July 31, [removed: 2022,] [added: 2023,] we had end-customers in over 180 countries.

Our end-customers represent a broad range of industries, including education, energy, financial services, government entities, healthcare, Internet and media, manufacturing, public sector, and telecommunications, and include almost all of the Fortune 100 companies and a majority of the Global 2000 [removed: companies in the world.][added: companies.]

Our product revenue grew to [removed: $1.4] [added: $1.6] billion or [removed: 24.8%] [added: 22.9%] of total revenue for fiscal [removed: 2022,] [added: 2023,] representing year-over-year growth of [removed: 21.7%.][added: 15.8%.]

Product revenue is [removed: primarily generated] [added: derived] from sales of our appliances, primarily our ML-Powered Next-Generation [removed: Firewall, which is available in a number of form factors, including as physical, virtual, and containerized appliances.][added: Firewall.]

Our subscription and support revenue grew to [removed: $4.1] [added: $5.3] billion or [removed: 75.2%] [added: 77.1%] of total revenue for fiscal [removed: 2022,] [added: 2023,] representing year-over-year growth of [removed: 32.0%.][added: 28.4%.]

During fiscal [removed: 2022,] [added: 2023,] we introduced several new offerings, including: [added: Cortex XSIAM 1.0, major updates to] Prisma Cloud [removed: 3.0,] [added: (including three new security modules),] Prisma Access [removed: 3.0, AIOps for NGFW,] [added: 4.0,] PAN-OS [removed: 10.2,] [added: 11.0, Cloud NGFW for AWS,] and Cloud NGFW for [removed: AWS.][added: Azure.]

Impact of [removed: COVID-19] [added: Macroeconomic Developments] and Other [removed: Macroeconomic] Factors on Our Business

[removed: In addition, our] [added: Our] overall performance depends in part on worldwide economic and geopolitical [removed: conditions.][added: conditions and their impact on customer behavior.]

Worsening economic conditions, including inflation, higher interest rates, [added: slower growth,] fluctuations in foreign exchange [removed: rates] [added: rates,] and other [removed: changes in economic] conditions, may adversely affect our [added: results of operations and] financial performance.

We discuss revenue, gross margin, and the components of operating [removed: loss] [added: income (loss)] and margin below under “Results of Operations.”

| | | | [added: 2023 | | | | | |] 2022 | | | | | | 2021 | | |

| | | | [removed: (in millions)] [added: (in millions)] | | | | | | | | |

| Total deferred revenue | | | $ | [removed: 6,994.0] [added: 9,296.4] | | | | | $ | [removed: 5,024.0] [added: 6,994.0] | |

| Cash, cash equivalents, and investments | | | $ | [removed: 4,686.4] [added: 5,437.9] | | | | | $ | [removed: 3,789.4] [added: 4,686.4] | |

| | | | [removed: 2022] [added: 2023] | | | | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | |

| Total revenue | | | $ | [removed: 5,501.5] [added: 6,892.7] | | | | | $ | [removed: 4,256.1] [added: 5,501.5] | | | | | $ | [removed: 3,408.4] [added: 4,256.1] | |

| Total revenue year-over-year percentage increase | | | [removed: 29.3] [added: 25.3] | | % | | | | [removed: 24.9] [added: 29.3] | | % | | | | [removed: 17.5] [added: 24.9] | | % |

| Gross margin | | | [removed: 68.8] [added: 72.3] | | % | | | | [removed: 70.0] [added: 68.8] | | % | | | | [removed: 70.7] [added: 70.0] | | % |

| Operating [removed: loss] [added: income (loss)] | | | $ | [removed: (188.8)] [added: 387.3] | | | | | $ | [removed: (304.1)] [added: (188.8)] | | | | | $ | [removed: (179.0)] [added: (304.1)] | |

- Our network security platform, designed to deliver complete zero trust solutions to our customers, includes our hardware and software ML-Powered Next-Generation Firewalls, as well as a cloud-delivered Secure Access Service Edge (“SASE”).

We have been recognized as a leader in network firewalls, SSE, and SD-WAN.

\- 38 \-

- Unit 42 brings together world-renowned threat researchers with an elite team of incident responders and security consultants to create an intelligence-driven, response-ready organization to help customers proactively manage cyber risk.

Our consultants serve as trusted advisors to our customers by assessing and testing their security controls against the right threats, transforming their security strategy with a threat-informed approach, and responding to security incidents on behalf of our clients.

Additionally, we acquired productive investments that fit well within our long-term strategy.

For example, in December 2022, we acquired Cider, which we expect will support our Prisma Cloud’s platform approach to securing the entire application security lifecycle from code to cloud.

\- 39 \-

We continue to experience supply chain disruption and incur increased costs resulting from inflationary pressures.

We are monitoring the tensions between China and Taiwan, and between the U.S. and China, which could have an adverse impact on our business or results of operations in future periods.

| | | | 2023 | | | | | | 2022 | | |

\- 40 \-

| Total revenue | | | $ | 6,892.7 | | | | | $ | 5,501.5 | | | | | $ | 4,256.1 | |

| Billings | | | $ | 9,194.4 | | | | | $ | 7,471.5 | | | | | $ | 5,452.2 | |

| Free cash flow (non-GAAP) | | | $ | 2,631.2 | | | | | $ | 1,791.9 | | | | | $ | 1,387.0 | |

\- 41 \-

| | | | 2023 | | | | | | 2022 | | | | | | 2021 | | |

\- 42 \-

Product revenue also includes revenue derived from software licenses of Panorama, SD-WAN, and the VM-Series.

Our appliances and software licenses include a broad set of built-in networking and security features and functionalities.

| | | | 2023 | | | | | | 2022 | | | | | | Change | | | | | | | | | | | | 2022 | | | | | | 2021 | | | | | | Change | | | | | | | | |

| | | | 2023 | | | | | | 2022 | | | | | | Change | | | | | | | | | | | | 2022 | | | | | | 2021 | | | | | | Change | | | | | | | | |

Our three geographic theaters had similar year-over-year revenue growth rates for fiscal 2023, with the Americas contributing the highest increase in revenue due to its larger scale.

| | | | 2023 | | | | | | 2022 | | | | | | Change | | | | | | | | | | | | 2022 | | | | | | 2021 | | | | | | Change | | | | | | | | |

Cost of product revenue decreased for fiscal 2023 compared to fiscal 2022 due to a favorable hardware product mix.

| | | | 2023 | | | | | | 2022 | | | | | | Change | | | | | | | | | | | | 2022 | | | | | | 2021 | | | | | | Change | | | | | | | | |

Cloud hosting service costs, which support our cloud-based subscription offerings, increased $101.0 million for fiscal 2023 compared to fiscal 2022.

| | | | 2023 | | | | | | | | | | | | 2022 | | | | | | | | | | | | 2021 | | | | | | | | |

Product gross margin increased for fiscal 2023 compared to fiscal 2022 primarily due to increased software revenue and a favorable hardware product mix.

| | | | 2023 | | | | | | 2022 | | | | | | Change | | | | | | | | | | | | 2022 | | | | | | 2021 | | | | | | Change | | | | | | | | |

| | | | 2023 | | | | | | 2022 | | | | | | Change | | | | | | | | | | | | 2022 | | | | | | 2021 | | | | | | Change | | | | | | | | |

| | | | 2023 | | | | | | 2022 | | | | | | Change | | | | | | | | | | | | 2022 | | | | | | 2021 | | | | | | Change | | | | | | | | |

The increase in general and administrative expense was further driven by slightly higher reserves due to increased receivables as a result of our business growth.

| | | | 2023 | | | | | | 2022 | | | | | | Change | | | | | | | | | | | | 2022 | | | | | | 2021 | | | | | | Change | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

Interest expense remained relatively flat for fiscal 2023 compared to fiscal 2022.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | 2023 | | | | | | 2022 | | | | | | Change | | | | | | | | | | | | 2022 | | | | | | 2021 | | | | | | Change | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

We regularly evaluate the need for a valuation allowance.

- Contractual Obligations and Commitments. An overview of our contractual obligations, contingent liabilities, commitments, and off-balance sheet arrangements outstanding as of July 31, 2022, including expected payment schedules.

- Recent Accounting Pronouncements. A discussion of expected impacts of impending accounting changes on financial information to be reported in the future.

- Our network security platform, which includes our ML-Powered Next-Generation Firewalls, available in a number of form factors, including physical, virtual, and containerized appliances, as well as a cloud-delivered service, has been a leader in the industry for ten consecutive years.

Secure Access Service Edge:

- Prisma Access is our next-generation Zero Trust Network Access (“ZTNA”) platform that provides secure network access for all employees with unified policy management and continuous threat inspection.

We have recently introduced ZTNA 2.0, which addresses major shortcomings in the first-generation ZTNA products in the industry (which we refer to as ZTNA 1.0).

Prisma Access delivers granular least-privileged access along with continuous trust verification and security inspection and protects security for all applications and data across the enterprise infrastructure.

- We enable security teams with up-to-date threat intelligence and deep cybersecurity expertise before, during and after attacks through our Unit 42 threat research and security consulting team.

Unit 42 offers incident response, risk management, board advisory and proactive cybersecurity assessment services.

We are actively monitoring, evaluating, and responding to developments relating to COVID-19, which has resulted in and is expected to continue to result in significant global, social, and business disruption.

While we instituted a global work-from-home policy beginning in March 2020, which has been modified to provide employees with the choice to work in our offices for a set number of days per week or completely remotely, we did not experience significant disruption in our work operations during fiscal 2022.

We will continue to actively monitor the situation, including progress made through vaccinations, and we will make further changes to our business operations as may be required by federal, state, or local authorities or that we determine are in the best interests of our employees, end-customers, partners, suppliers, and stockholders.

Our focus remains on the safety of our employees, and we strive to protect the health and well-being of the communities in which we operate, in part, by providing technology to our employees, end-customers, and partners to help them do their best work while working remotely.

COVID-19 has affected our end-customers’ spending and could lead them to delay or defer purchasing decisions, and lengthen sales cycles and payment terms, which could materially adversely impact our business, results of operations, and overall financial performance.

The extent of the impact of COVID-19 on our operational and financial performance will depend on developments, including the duration and spread of the virus and its variants, impact on our end-customers’ spending, volume of sales and length of our sales cycles, impact on our partners, suppliers, and employees, actions that may be taken by governmental authorities, and other factors identified in Part I, Item 1A “Risk Factors” in this Form 10-K.

The global supply chain and the semiconductor industry are experiencing significant challenges.

We have seen supply chain challenges increase, including chip and component shortages, which have, in certain cases, caused delays for us in acquiring chips, components and inventory and have resulted in increased costs as compared to historic levels.

While we incurred increased costs and experienced increased lead time for certain product deliveries to our end-customers, we continue to work to minimize the effects from supply chain challenges.

______________

With respect to geographic theaters, the Americas contributed the largest portion of the year-over-year increases in revenue for fiscal 2022 due to its larger and more established sales force compared to our other theaters.

| Number of employees at period end | | | 149 | | | | | | 127 | | | | | | 22 | | | | | | 17.3 | | % | | | | 127 | | | | | | 117 | | | | | | 10 | | | | | | 8.5 | | % |

The remaining increase in costs was primarily driven by supply chain challenges.

| Number of employees at period end | | | 2,515 | | | | | | 2,108 | | | | | | 407 | | | | | | 19.3 | | % | | | | 2,108 | | | | | | 1,402 | | | | | | 706 | | | | | | 50.4 | | % |

The remaining increase was primarily due to increased cloud hosting service costs to support our cloud-based subscription offerings, outside service costs for global customer support resulting from the expansions of our customer base and product portfolio, and shared costs.

Product gross margin decreased for fiscal 2022 compared to fiscal 2021 primarily due to higher costs related to our product offerings driven by supply chain challenges.

Subscription and support gross margin was relatively flat for fiscal 2022 compared to fiscal 2021.

| Number of employees at period end | | | 3,268 | | | | | | 2,595 | | | | | | 673 | | | | | | 25.9 | | % | | | | 2,595 | | | | | | 1,821 | | | | | | 774 | | | | | | 42.5 | | % |

The increase in research and development expense was further driven by increased shared costs and third-party product development costs.

| Number of employees at period end | | | 5,167 | | | | | | 4,493 | | | | | | 674 | | | | | | 15.0 | | % | | | | 4,493 | | | | | | 3,800 | | | | | | 693 | | | | | | 18.2 | | % |

\- 51 \-

| Number of employees at period end | | | 1,462 | | | | | | 1,150 | | | | | | 312 | | | | | | 27.1 | | % | | | | 1,150 | | | | | | 874 | | | | | | 276 | | | | | | 31.6 | | % |

The increase in personnel costs was primarily due to headcount growth, partially offset by lower share-based compensation related to accelerated vesting of equity awards in connection with acquisitions.

Interest expense decreased for fiscal 2022 compared to fiscal 2021 primarily because we no longer recognize interest expense for amortization of the debt discount as a result of the adoption of new debt guidance.

Refer to Note 1.

Description of Business and Summary of Significant Accounting Policies and Note 10.

\- 52 \-

We recorded an income tax provision for fiscal 2022.

Our provision for income taxes increased for fiscal 2022 compared to fiscal 2021, primarily due to foreign income and withholding taxes.

\- 53 \-

In February 2020, our board of directors approved the repurchase of $1.0 billion of our common stock through an accelerated share repurchase (“ASR”) transaction, which was in addition to our current authorization.

Our sales contracts are [removed: primarily] denominated in U.S. dollars.

A portion of our operating [removed: expenses] [added: expenditures] are incurred outside of the United States and are denominated in foreign currencies and are subject to fluctuations due to changes in foreign currency exchange rates.

The effect of an immediate 10% adverse change in foreign exchange rates on monetary assets and liabilities at July 31, [removed: 2022] [added: 2023] would not be material to our financial condition or results of operations.

As of July 31, [removed: 2022,] [added: 2023,] foreign currency transaction gains and losses and exchange rate fluctuations have not been material to our consolidated financial statements.

We enter into foreign currency derivative contracts with maturities of [removed: 16] [added: 24] months or [removed: less] [added: less,] which we designate as cash flow [removed: hedges] [added: hedges,] to manage the foreign currency exchange risk associated with our foreign currency denominated operating expenditures.

In addition, a weakening U.S. dollar can increase the costs of our international expansion and a strengthening U.S. dollar can increase the real cost of our products [added: and services] to our end-customers outside of the United States, leading to delays in the purchase of our products and services.

For additional information, see the risk factor entitled [removed: “*We] [added: *“We] are exposed to fluctuations in foreign currency exchange rates, which could negatively affect our financial condition and operating [removed: results.*”] [added: results.”*] in Part 1, Item 1A of this Annual Report on Form 10-K.

Based on investment positions as of July 31, [removed: 2022,] [added: 2023,] a hypothetical 100 basis point increase in interest rates across all maturities would result in a [removed: $20.6] [added: $55.5] million decline in the fair market value of the portfolio.

Conversely, a hypothetical 100 basis point decrease in interest rates would lead to a [removed: $20.6] [added: $55.5] million increase in the fair market value of the portfolio.

In [removed: July 2018, we issued $1.7 billion aggregate principal amount of 0.75% Convertible Senior Notes due 2023 (the “2023 Notes”) and in] June 2020, we issued $2.0 billion aggregate principal amount of 0.375% Convertible Senior Notes due 2025 (the “2025 Notes”).

We carry these instruments at face value less unamortized [removed: discount and unamortized] issuance costs on our consolidated balance sheets.

However, the fair value of fixed rate [added: debt] instruments fluctuates when interest rates change, and additionally, in the case of [removed: either series of] [added: the 2025] Notes, when the market price of our common stock fluctuates.

To minimize this risk, we maintain a diversified portfolio of cash, cash equivalents, and investments, consisting only of investment-grade securities.

\- 51 \-

To minimize this risk, we maintain our portfolio of cash, cash equivalents, and short-term investments in a variety of securities, including commercial paper, money market funds, U.S. government and agency securities, corporate debt securities, and asset-backed securities.

\- 57 \-

Our cybersecurity platforms and services help secure enterprise users, networks, clouds, and endpoints by delivering comprehensive cybersecurity backed by [removed: industry leading] [added: industry-leading] artificial intelligence and automation.

We are a leading provider of zero trust solutions, starting with next-generation zero trust network access to secure today’s remote hybrid workforces and extending to securing all users, [removed: applications] [added: applications,] and infrastructure with zero trust principles.

Our company focuses on delivering value in [removed: five] [added: four] fundamental areas:

Our network security platform also includes our [removed: Cloud-Delivered Security Services,] [added: cloud-delivered security services,] such as [removed: Threat Prevention,] Advanced Threat Prevention, [added: Advanced] WildFire®, Advanced URL Filtering, DNS Security, [removed: IoT] [added: IoT/OT] Security, [removed: GlobalProtect™, SD-WAN,] [added: GlobalProtect®,] Enterprise Data Loss Prevention (“Enterprise DLP”), [removed: AIOps,] [added: Artificial Intelligence for Operations (“AIOps”),] SaaS Security API, and SaaS Security Inline.

Through these add-on security services, our customers are able to secure their content, applications, users, and devices across [removed: our network security platform as well as the Prisma® and Cortex® product lines.][added: their entire organization.]

[removed: Panorama™,] [added: Panorama®,] our network security management solution, [removed: available as hardware or virtual machine,] can centrally manage our network security platform irrespective of form factor, location, or scale.

[removed: Prisma] [added: Prisma®] Access, [added: our Security Services Edge (“SSE”) solution,] when combined with Prisma SD-WAN, provides a comprehensive single-vendor [removed: Secure Access Service Edge (“SASE”)] [added: SASE] offering that is used to secure remote workforces and enable the cloud-delivered branch.

- We enable [removed: cloud native] [added: cloud-native] security through our Prisma Cloud platform.

As a comprehensive Cloud Native Application Protection Platform (“CNAPP”), Prisma Cloud secures [removed: hybrid] [added: multi-] and [removed: multi-cloud] [added: hybrid-cloud] environments for applications, data, and the entire cloud native technology stack across the full development lifecycle; from code to runtime.

For inline network security on [removed: multi] [added: multi-] and hybrid-cloud environments, we also offer our VM-Series and CN-Series Firewall offerings.

- We deliver the next generation of [added: security automation, security analytics,] endpoint security, [removed: security analytics] and [removed: security automation] [added: attack surface management] solutions through our Cortex portfolio.

These include [added: Cortex XSIAM,] our [removed: industry-leading extended detection and response platform] [added: AI security automation platform,] Cortex XDR® [removed: to prevent, detect,] [added: for the prevention, detection,] and [removed: respond] [added: response] to complex cybersecurity [removed: attacks,] [added: attacks on the endpoint,] Cortex XSOAR® for security orchestration, automation, and response (“SOAR”), [added: and] Cortex [removed: Xpanse®] [added: XpanseTM] for attack surface management [removed: (“ASM”), and Cortex Data Lake allowing our customers to collect and analyze large amounts of context-rich data across endpoints, networks, and clouds.][added: (“ASM”).]

These products are delivered as [removed: software subscriptions or] SaaS [added: or software] subscriptions.

Our [removed: products] [added: customer offerings] are available in the form of the product, subscription, and support offerings described [removed: below.][added: below:]

[added: Hardware and software firewalls.] Our ML-Powered Next Generation Firewalls embed machine learning in the core of the firewall and employ inline deep learning in the cloud, empowering our customers to stop zero-day threats in real time, see and secure their entire enterprise including IoT, and reduce errors with automatic policy recommendations.

All of our [removed: firewall appliances] [added: hardware] and software [added: firewalls] incorporate our PAN-OS® operating system and come with the same rich set of [removed: features] [added: features,] ensuring consistent operation across our entire product line.

The content, applications, users, and devices—the elements that run a business—become integral components of an enterprise’s security policy via our Content-ID™, App-ID™, User-ID™, and Device-ID [removed: technology.][added: technologies.]

Our [removed: firewall appliances] [added: firewalls] come in a [removed: physical] [added: hardware] form factor, a containerized form factor, called CN-Series, as well as a virtual form factor, called VM-Series, that is available for virtualization and cloud environments from companies such as VMware, Inc. (“VMware”), Microsoft Corporation (“Microsoft”), Amazon.com, Inc. (“Amazon”), and Google, Inc. (“Google”), and in Kernel-based Virtual Machine (“KVM”)/OpenStack environments.

We also offer Cloud NGFW, a managed next-generation firewall (“NGFW”) offering, to secure customers’ applications on Amazon Web Services [removed: (“AWS”).][added: (“AWS”) and Microsoft Azure (“Azure”).]

Panorama. Panorama is our centralized security management solution for global control of [removed: all of] our [removed: firewall appliances and software deployed on a customer’s network, as well as in their instances in public or private cloud environments.][added: network security platform.]

Panorama controls the security, network address translation (“NAT”), QoS, policy-based forwarding, decryption, application override, captive portal, and distributed denial of service/denial of service (“DDoS/DoS”) protection aspects of the [removed: appliances, software, virtual and containerized] [added: network security] systems under management.

Panorama offers network security monitoring through the ability to view logs and run reports [removed: from all managed appliances and software] [added: for our network security platform] in one location without the need to forward the logs and reliably expands log storage for long-term event investigation and analysis.

We offer a number of subscriptions as part of our [removed: portfolio.][added: network security platform.]

Of these subscription offerings, cloud-delivered security [removed: services like Threat Prevention,] [added: services, such as] Advanced Threat Prevention, [added: Advanced] WildFire, Advanced URL Filtering, DNS Security, [removed: IoT] [added: IoT/OT] Security, SaaS Security Inline, GlobalProtect, [removed: SD-WAN,] Enterprise [removed: DLP] [added: DLP,] and [removed: AIOps] [added: AIOps,] are sold as options to our [removed: firewall appliances] [added: hardware] and [removed: software,] [added: software firewalls,] whereas [removed: Prisma Cloud,] [added: SaaS Security API,] Prisma Access, Prisma SD-WAN, [removed: SaaS Security API,] [added: Prisma Cloud,] Cortex [added: XSIAM, Cortex] XDR, Cortex XSOAR, [removed: Cortex Xpanse] and Cortex [removed: Data Lake] [added: Xpanse] are sold on a per-user, per-endpoint, or capacity-based basis.

- [added: Advanced] Threat Prevention. This cloud-delivered security service provides intrusion detection and prevention capabilities and blocks vulnerability exploits, viruses, spyware, buffer overflows, denial-of-service attacks, and port scans from compromising and damaging enterprise information resources.

It includes [removed: mechanisms such] [added: mechanisms—such] as protocol decoder-based analysis, protocol anomaly-based protection, stateful pattern matching, statistical anomaly detection, heuristic-based analysis, custom vulnerability and spyware “phone home” signatures, and [removed: workflows to] [added: workflows—to] manage popular open-source signature formats to extend our [removed: leading] coverage.

[added: - Advanced URL Filtering.] This cloud-delivered security service [removed: builds on all of the capabilities of Threat Prevention, adding] [added: offers] the industry’s first Inline Deep Learning [added: powered web] protection [removed: engine for Command-and-Control (“C2”).][added: engine.]

[removed: It delivers] [added: In addition, it offers inline deep learning to deliver] real-time detection and prevention of unknown, evasive, and targeted [removed: C2] [added: command-and-control (“C2”)] communications over HTTP, unknown-TCP, [removed: unknown-UDP] [added: unknown-UDP,] and encrypted over SSL.

- [added: Advanced] WildFire. This cloud-delivered security service [removed: (which can also be delivered as an appliance)] provides protection against targeted malware and advanced persistent threats and provides a near real-time analysis engine for detecting previously unseen malware while resisting attacker evasion techniques.

[added: Advanced] WildFire combines dynamic and static analysis, recursive analysis, and a custom-built analysis environment with network traffic profiling and fileless attack detection to discover even the most sophisticated and evasive threats.

Once identified, whether in the cloud or inline, preventive measures are automatically generated and delivered in seconds or less [removed: across networks, clouds, endpoints, or wherever WildFire-enabled sensors are deployed.][added: to our network security platform.]

It delivers real-time detection and prevention of unknown, evasive, and targeted web-based [removed: threats] [added: threats,] such as phishing, malware, and [removed: command-and-control.][added: C2.]

In addition, it includes a cloud-based URL filtering database which consists of millions of URLs across many categories and is designed to analyze web traffic and prevent web-based [removed: threats] [added: threats,] such as phishing, malware, and [removed: command-and-control.][added: C2.]

- [removed: DNS] [added: DNS] Security. This cloud-delivered security service uses machine learning to proactively block malicious domains and [removed: stops] [added: stop] attacks in progress.

It allows [removed: firewalls] [added: our network security platform] access to DNS signatures that are generated using advanced predictive analysis, machine learning, and malicious domain data from a growing threat intelligence sharing community of which we are a part.

[removed: Using] [added: - IoT/OT Security. This cloud-delivered security service uses] machine learning [removed: and our App-ID technology, it can] [added: to] accurately identify and classify various IoT and operational technology (“OT”) devices, including never-been-seen-before devices, [removed: mission critical] [added: mission-critical] OT [removed: devices] [added: devices,] and unmanaged legacy systems.

It uses machine learning to baseline normal behavior, identify anomalous activity, assess risk, and provide policy recommendations to allow trusted behavior with a new Device-ID policy construct on our [removed: ML-Powered Next-Generation Firewalls.][added: network security platform.]

[removed: Our existing subscription-based security services] [added: Other subscriptions] have also been enhanced with IoT context to prevent threats on various devices, including IoT and OT devices.

- [removed: SaaS] [added: SaaS] Security API. SaaS Security API (formerly Prisma SaaS) is a multi-mode, cloud access security broker [removed: service] [added: (“CASB”)] that helps govern sanctioned SaaS application usage across all users and helps prevent breaches and non-compliance.

Specifically, the service enables the discovery and classification of data stored [removed: across the] [added: in] supported SaaS applications, protects sensitive data from accidental exposure, identifies and protects against known and unknown malware, and performs user activity monitoring to identify potential misuse or data exfiltration.

- Our network security platform, designed to deliver complete zero trust solutions to our customers, includes our hardware and software ML-Powered Next-Generation Firewalls, as well as a cloud-delivered Secure Access Service Edge (“SASE”).

We have been recognized as a leader in network firewalls, SSE, and SD-WAN.

- Unit 42 brings together world-renowned threat researchers with an elite team of incident responders and security consultants to create an intelligence-driven, response-ready organization to help customers proactively manage cyber risk.

Our consultants serve as trusted advisors to our customers by assessing and testing their security controls against the right threats, transforming their security strategy with a threat-informed approach, and responding to security incidents on behalf of our clients.

In addition, Advanced WildFire defeats highly evasive modern malware at scale with a new infrastructure and patented analysis techniques, including intelligent runtime memory analysis, dependency emulation, malware family fingerprinting, and more.

- AIOps: AIOps is available in both free and licensed premium versions.

Prisma SD-WAN also provides the flexibility of deploying with an on-premises controller to help businesses meet their industry-specific security compliance requirements and manage deployments with application-defined policies.

The platform helps developers prevent risks as they code and build the application, secures the software supply chain and the continuous integration and continuous development (“CI/CD”) pipeline, and provides complete visibility and real-time protection for applications in the cloud.

With its code-to-cloud security capabilities, Prisma Cloud uniquely stitches together a complete security picture by tracing back thousands of cloud risks and vulnerabilities that occur in the application runtime to their origin in the code-and-build phase of the application.

The platform enables organizations to “shift security left” and fix issues at the source (in code) before they proliferate as a large number of risks in the cloud.

The contextualized visibility to alerts, attack paths, and vulnerabilities delivered by Prisma Cloud facilitates collaboration between security and development teams to drive down risks and deliver better security outcomes.

The context helps security teams block attacks in the cloud runtime and developers fix risks in source code.

With a flexible, integrated platform that enables customers to license and activate cloud security capabilities that match their need, Prisma Cloud helps secure organizations at every stage in their cloud adoption journey.

The platform enables security teams to consolidate multiple products that address individual risks with an integrated solution that also delivers best-in-class capabilities.

Including the recently launched CI/CD security module, Prisma Cloud’s code-to-cloud CNAPP delivers comprehensive protection for applications and their code, infrastructure (workloads, network, and storage), data, APIs, and associated identities.

*•*Cortex XSIAM. This cloud-based subscription is the AI security automation platform for the modern SOC, harnessing the power of AI to radically improve security outcomes and transform security operations.

Cortex XSIAM customers can consolidate multiple products into a single unified platform, including EDR, XDR, SOAR, ASM, user behavior analytics (“UBA”), threat intelligence platform (“TIP”), and security information and event management (“SIEM”).

Using a security-specific data model and applying AI, Cortex XSIAM automates data integration, analysis, and triage to respond to most alerts, enabling analysts to focus on only the incidents that require human intervention.

Our scale and position in multiple areas of the security market enable us to leverage core competencies across hardware, software, and SaaS and also share expertise and research around threats, which allows us to respond to the rapidly changing threat landscape.

For example, we acquired Cider Security Ltd. (“Cider”), which we expect will support our Prisma Cloud’s platform approach to securing the entire application security lifecycle from code to cloud.

We pursue sales opportunities both through our direct sales force and as assisted by our channel partners, including leveraging cloud service provider marketplaces.

Our approach is grounded on core tenants: respect each employee as an individual, demonstrate fairness and equity in all we do, facilitate flexibility, personalization, and choice whenever possible, and nurture a culture where employees are supported in doing the best work of their careers.

Our values of disruption, execution, collaboration, inclusion, and integrity were co-created with employees and serve as the foundation of our culture.

In an effort to foster career growth within Palo Alto Networks, we prioritize internal mobility.

This allows current employees to progress either through a traditional career path or by exploring roles across various business functions, often culminating in promotions.

We encourage existing employees to refer qualified individuals for our open positions, thus leveraging the collective networks of our team to attract a diverse range of expertise and perspectives.

We have made strides to understand job requirements and implement structured interviewing practices to identify candidates of the highest quality.

By conducting thorough job analyses and creating success profiles, we have developed a deeper understanding of what is required for success in critical roles.

We equip our hiring managers with essential training to identify and mitigate potential unconscious biases.

Our interviewing process emphasizes values and competencies that we believe enhance our culture.

This commitment extends to conducting interviews with diverse panelists and providing a balanced evaluation and quality interview experience for a diverse slate of candidates.

We remain steadfast in our commitment to fairness, bias reduction, and equal opportunities for all potential hires.

A key to our hiring process is the Global Hiring Committees, introduced in fiscal 2023.

These committees play a significant role in elevating our hiring standards by promoting shared understanding, reducing biases, enhancing objectivity, and ensuring the recruitment of diverse talent.

The Committees foster effective collaboration using a common language and consensus-driven decision-making.

Onboard & Develop. We believe that each member of our workforce is unique, and that their integration into Palo Alto Networks and their career journey involve unique needs, interests, and goals.

That is why our development programs are grounded on individualization, flexibility, and choice.

From onboarding to ongoing development, our FLEXLearn philosophy offers multiple paths to assess, develop, and grow.

Our onboarding experience starts with “pre-boarding.” Before an employee’s start date, they are provided access to foundational tools to help them prepare to join Palo Alto Networks.

We view pre-boarding as fundamental to introducing new employees to our culture, building trust, and facilitating rapid productivity.

- Our network security platform, which includes our ML-Powered Next-Generation Firewalls, available in a number of form factors, including physical, virtual, and containerized appliances, as well as a cloud-delivered service, has been recognized as a leader in the industry.

Secure Access Service Edge:

- Prisma Access is our next-generation Zero Trust Network Access (“ZTNA”) platform that provides secure network access for all employees with unified policy management and continuous threat inspection.

We have recently introduced ZTNA 2.0, which addresses major shortcomings in the first-generation ZTNA products in the industry (which we refer to as ZTNA 1.0).

Prisma Access delivers granular least-privileged access along with continuous trust verification and security inspection, and protects security for all applications and data across the enterprise infrastructure.

- We enable security teams with up-to-date threat intelligence and deep cybersecurity expertise before, during and after attacks through our Unit 42 threat research and security consulting team.

Unit 42 offers incident response, risk management, board advisory, and proactive cybersecurity assessment services.

Firewall Appliances and Software.

Virtual System Upgrades. Virtual System Upgrades are available as extensions to the Virtual System capacity that ships with our physical appliances.

Virtual Systems provide a mechanism to support multiple distinct security policies and administrative access for tenants on the same hardware device, which is applicable to our large enterprise and service provider customers.

- Advanced Threat Prevention.

The core component of this subscription goes beyond traditional sandbox environments and can operate on an end-customers’ local environment, private cloud or our public cloud.

By providing this as a cloud-based subscription, all of our end-customers benefit from malware found on any of our end-customers’ networks.

- Advanced URL Filtering.

This cloud-delivered security service offers the industry’s first Inline Deep Learning powered web protection engine.

- IoT Security. IoT Security is a cloud-delivered security service on our ML-Powered Next-Generation Firewalls with backward compatibility to older versions of PAN-OS.

- GlobalProtect.

- AIOps for NGFW: AIOps for NGFW is a new cloud-delivered security service available on ML-Powered Next-Generation Firewalls and Panorama that run on PAN‑OS 10.0 and above, and is available in both free and licensed premium versions.

It dynamically discovers public cloud resources as they are deployed and correlates cloud data services (resource configurations, flow logs, audit logs, host and container logs, etc.) to provide timely security and compliance insights for cloud applications.

The platform uses machine learning to profile user, workload, and application behaviors to identify and prevent advanced threats.

For security and development and operations teams, Prisma Cloud removes the impedance mismatch between security and cloud-driven agility by integrating with continuous integration and continuous development (“CI/CD”) tool chains to provide full lifecycle vulnerability management, compliance, infrastructure-as-code scanning, and runtime defense.

Prisma Cloud accomplishes this through deep context-sharing that spans infrastructure, PaaS, users, development platforms, data, and application workloads.

Prisma Cloud delivers cloud security posture management, cloud workload protection platform, cloud network security, cloud code security, and cloud identity security capabilities that provide continuous visibility and protection across an organization’s hybrid, and multi-cloud infrastructure.

- Prisma Access.

- Prisma SD-WAN.

These capabilities build on each other such that a customer can start with XDR Prevent, then upgrade to XDR Pro for endpoints or XDR Pro for cross-data analytics.

- Cortex Data Lake. This cloud-based subscription allows our customers to collect and analyze large amounts of context-rich network security data.

This includes a collection of enhanced network logs generated by our security offerings, including those of our ML-Powered Next-Generation Firewalls and Prisma Access subscription, eliminating the need to plan for local data storage.

In addition to our focus on hardware and software, our research and development team is focused on research into applications and threats, which allows us to respond to the rapidly changing application and threat landscape.

- large and small companies, such as Crowdstrike, Inc. (“Crowdstrike”), that offer solutions for security operations and endpoint security.

Our end-customer deployments typically involve at least one pair of our products along with one or more of our subscriptions, depending on size, security needs and requirements, and network complexity.

With a global workforce of 12,561 as of July 31, 2022, we take our People Strategy and FLEXWORK philosophy seriously and care for our employees.

FLEXWORK. Throughout the COVID-19 pandemic, while prioritizing the health and safety of our employees, we have learned how to collaborate in a distributed hybrid work reality and to create opportunities for employees to maintain a sense of belonging and focus on well-being.

In the future, we aim to continue to disrupt the nature of work.

Our philosophy is simple: place our employees at the center of their working life by providing employees flexibility, personalization, and choice regarding how they work, the benefits they choose, the way they consume learning and, where possible, where and when they work.

We believe that the more our employees have choice and demonstrate mutual trust and respect, the more engaged they will be.

FLEXWORK adds even more opportunity to scale our efforts to improve Inclusion and Diversity (“I&D”).

It further enables us to recognize each individual as unique, with their own priorities and needs, and gives the employee greater agency to personalize their decisions and utilize our programs and initiatives to meet those interests and desires.

Our university relations team partners with hundreds of academic institutions, including colleges and universities that focus on serving diverse populations, to provide career pathways for early-in-career candidates.

We also encourage current employees to provide qualified referrals, and to utilize our internal mobility program to grow their careers.

For the fiscal year ended July 31, [removed: 2022][added: 2023]

For the transition period [removed: from to][added: from to]

Commission File [removed: Number 001-35594][added: Number 001-35594]

| (State or other jurisdiction [removed: of incorporation] [added: of incorporation] or organization) | | | (I.R.S. [removed: Employer Identification] [added: Employer Identification] No.) | | |

The aggregate market value of voting stock held by non-affiliates of the registrant was [removed: $49,978,456,856] [added: $47,351,509,692] as of January 31, [removed: 2022,] [added: 2023,] the last business day of the registrant’s most recently completed second fiscal quarter (based on the closing sales price for the common stock on the Nasdaq Global Select Market on such date).

On August [removed: 22, 2022, 99,737,936] [added: 18, 2023, 308,594,604] shares of the registrant’s common stock, $0.0001 par value, were outstanding.

Portions of the information called for by Part III of this Annual Report on Form 10-K is hereby incorporated by reference from the definitive proxy statement for the registrant’s [removed: 2022] [added: 2023] annual meeting of stockholders, which will be filed with the Securities and Exchange Commission not later than 120 days after the registrant’s fiscal year ended July 31, [removed: 2022.][added: 2023.]

| Item 1. | | | [removed: [Business](#id86d15df0543432988e8ae716cf527ed_13)] [added: [Business](#i8a1fb889ef014ec6885c8e58d3d08420_13)] | | | [removed: [4](#id86d15df0543432988e8ae716cf527ed_13)] [added: [4](#i8a1fb889ef014ec6885c8e58d3d08420_13)] | | |

| Item 1A. | | | [Risk [removed: Factors](#id86d15df0543432988e8ae716cf527ed_52)] [added: Factors](#i8a1fb889ef014ec6885c8e58d3d08420_52)] | | | [removed: [14](#id86d15df0543432988e8ae716cf527ed_52)] [added: [14](#i8a1fb889ef014ec6885c8e58d3d08420_52)] | | |

| Item 1B. | | | [Unresolved Staff [removed: Comments](#id86d15df0543432988e8ae716cf527ed_55)] [added: Comments](#i8a1fb889ef014ec6885c8e58d3d08420_55)] | | | [removed: [40](#id86d15df0543432988e8ae716cf527ed_55)] [added: [35](#i8a1fb889ef014ec6885c8e58d3d08420_55)] | | |

| Item 2. | | | [removed: [Properties](#id86d15df0543432988e8ae716cf527ed_58)] [added: [Properties](#i8a1fb889ef014ec6885c8e58d3d08420_58)] | | | [removed: [40](#id86d15df0543432988e8ae716cf527ed_58)] [added: [35](#i8a1fb889ef014ec6885c8e58d3d08420_58)] | | |

| Item 3. | | | [Legal [removed: Proceedings](#id86d15df0543432988e8ae716cf527ed_61)] [added: Proceedings](#i8a1fb889ef014ec6885c8e58d3d08420_61)] | | | [removed: [40](#id86d15df0543432988e8ae716cf527ed_61)] [added: [35](#i8a1fb889ef014ec6885c8e58d3d08420_61)] | | |

| Item 4. | | | [Mine Safety [removed: Disclosures](#id86d15df0543432988e8ae716cf527ed_64)] [added: Disclosures](#i8a1fb889ef014ec6885c8e58d3d08420_64)] | | | [removed: [40](#id86d15df0543432988e8ae716cf527ed_64)] [added: [35](#i8a1fb889ef014ec6885c8e58d3d08420_64)] | | |

| Item 5. | | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#id86d15df0543432988e8ae716cf527ed_70)] [added: Securities](#i8a1fb889ef014ec6885c8e58d3d08420_70)] | | | [removed: [41](#id86d15df0543432988e8ae716cf527ed_70)] [added: [36](#i8a1fb889ef014ec6885c8e58d3d08420_70)] | | |

| Item 6. | | | [removed: [\[Reserved\]](#id86d15df0543432988e8ae716cf527ed_73)] [added: [\[Reserved\]](#i8a1fb889ef014ec6885c8e58d3d08420_73)] | | | [removed: [42](#id86d15df0543432988e8ae716cf527ed_73)] [added: [37](#i8a1fb889ef014ec6885c8e58d3d08420_73)] | | |

| Item 7. | | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#id86d15df0543432988e8ae716cf527ed_76)] [added: Operations](#i8a1fb889ef014ec6885c8e58d3d08420_76)] | | | [removed: [43](#id86d15df0543432988e8ae716cf527ed_76)] [added: [38](#i8a1fb889ef014ec6885c8e58d3d08420_76)] | | |

| Item 7A. | | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#id86d15df0543432988e8ae716cf527ed_160)] [added: Risk](#i8a1fb889ef014ec6885c8e58d3d08420_160)] | | | [removed: [57](#id86d15df0543432988e8ae716cf527ed_160)] [added: [51](#i8a1fb889ef014ec6885c8e58d3d08420_160)] | | |

| Item 8. | | | [Financial Statements and Supplementary [removed: Data](#id86d15df0543432988e8ae716cf527ed_163)] [added: Data](#i8a1fb889ef014ec6885c8e58d3d08420_163)] | | | [removed: [58](#id86d15df0543432988e8ae716cf527ed_163)] [added: [52](#i8a1fb889ef014ec6885c8e58d3d08420_163)] | | |

| Item 9. | | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#id86d15df0543432988e8ae716cf527ed_277)] [added: Disclosure](#i8a1fb889ef014ec6885c8e58d3d08420_289)] | | | [removed: [98](#id86d15df0543432988e8ae716cf527ed_277)] [added: [92](#i8a1fb889ef014ec6885c8e58d3d08420_289)] | | |

| Item 9A. | | | [Controls and [removed: Procedures](#id86d15df0543432988e8ae716cf527ed_280)] [added: Procedures](#i8a1fb889ef014ec6885c8e58d3d08420_292)] | | | [removed: [98](#id86d15df0543432988e8ae716cf527ed_280)] [added: [92](#i8a1fb889ef014ec6885c8e58d3d08420_292)] | | |

| Item 9B. | | | [Other [removed: Information](#id86d15df0543432988e8ae716cf527ed_283)] [added: Information](#i8a1fb889ef014ec6885c8e58d3d08420_298)] | | | [removed: [98](#id86d15df0543432988e8ae716cf527ed_283)] [added: [93](#i8a1fb889ef014ec6885c8e58d3d08420_298)] | | |

| Item 9C. | | | [Disclosure Regarding Foreign Jurisdictions That Prevent [removed: Inspections](#id86d15df0543432988e8ae716cf527ed_286)] [added: Inspections](#i8a1fb889ef014ec6885c8e58d3d08420_301)] | | | [removed: [98](#id86d15df0543432988e8ae716cf527ed_286)] [added: [93](#i8a1fb889ef014ec6885c8e58d3d08420_301)] | | |

| Item 10. | | | [Directors, Executive [removed: Officers, and] [added: Officers](#i8a1fb889ef014ec6885c8e58d3d08420_307) [and] Corporate [removed: Governance](#id86d15df0543432988e8ae716cf527ed_292)] [added: Governance](#i8a1fb889ef014ec6885c8e58d3d08420_307)] | | | [removed: [99](#id86d15df0543432988e8ae716cf527ed_292)] [added: [94](#i8a1fb889ef014ec6885c8e58d3d08420_307)] | | |

| Item 11. | | | [Executive [removed: Compensation](#id86d15df0543432988e8ae716cf527ed_295)] [added: Compensation](#i8a1fb889ef014ec6885c8e58d3d08420_310)] | | | [removed: [99](#id86d15df0543432988e8ae716cf527ed_295)] [added: [94](#i8a1fb889ef014ec6885c8e58d3d08420_310)] | | |

| Item 12. | | | [Security Ownership of Certain Beneficial Owners and Management and Related [removed: Stockholder Matters](#id86d15df0543432988e8ae716cf527ed_298)] [added: Stockholder](#i8a1fb889ef014ec6885c8e58d3d08420_313) [](#i8a1fb889ef014ec6885c8e58d3d08420_313)[Matters](#i8a1fb889ef014ec6885c8e58d3d08420_313)] | | | [removed: [99](#id86d15df0543432988e8ae716cf527ed_298)] [added: [94](#i8a1fb889ef014ec6885c8e58d3d08420_313)] | | |

| Item 13. | | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#id86d15df0543432988e8ae716cf527ed_301)] [added: Independence](#i8a1fb889ef014ec6885c8e58d3d08420_316)] | | | [removed: [99](#id86d15df0543432988e8ae716cf527ed_301)] [added: [94](#i8a1fb889ef014ec6885c8e58d3d08420_316)] | | |

| Item 14. | | | [Principal Accountant Fees and [removed: Services](#id86d15df0543432988e8ae716cf527ed_304)] [added: Services](#i8a1fb889ef014ec6885c8e58d3d08420_319)] | | | [removed: [99](#id86d15df0543432988e8ae716cf527ed_304)] [added: [94](#i8a1fb889ef014ec6885c8e58d3d08420_319)] | | |

| Item 15. | | | [Exhibits and Financial Statement [removed: Schedules](#id86d15df0543432988e8ae716cf527ed_310)] [added: Schedules](#i8a1fb889ef014ec6885c8e58d3d08420_325)] | | | [removed: [100](#id86d15df0543432988e8ae716cf527ed_310)] [added: [95](#i8a1fb889ef014ec6885c8e58d3d08420_325)] | | |

- statements regarding trends in billings, our mix of product and subscription and support revenue, cost of revenue, gross margin, cash flows, operating expenses, including future share-based compensation expense, income taxes, investment [removed: plans] [added: plans,] and liquidity;

- expected recurring revenues resulting from [removed: expected] growth in our [removed: installed base] [added: end-customers] and increased adoption of our products and [removed: cloud-based subscription services;][added: cloud-delivered security solutions;]

- our expectations regarding future investments in research and [added: development and product] development, customer support, in our employees and in our sales force, including expectations regarding growth in our sales headcount;

- our expectation that we will continue to expand [removed: internationally;][added: our global presence;]

- our expectation that we will expand our facilities or add new facilities as we add employees and enter new geographic [removed: markets and expectations related to charges incurred in connection with exiting our former headquarter facilities;][added: markets;]

- the sufficiency of our cash flow from operations with existing cash, cash [removed: equivalents] [added: equivalents,] and investments to meet our cash needs for the foreseeable future;

- our ability to successfully acquire and integrate companies and [removed: assets;][added: assets and our expectations and intentions with respect to the products and technologies that we acquire and introduce;]

- the timing and amount of capital expenditures and share repurchases; [added: and]

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).

| Item 16. | | | [Form 10-K Summary](#i8a1fb889ef014ec6885c8e58d3d08420_3258) | | | [99](#i8a1fb889ef014ec6885c8e58d3d08420_3258) | | |

| | | | [Signatures](#i8a1fb889ef014ec6885c8e58d3d08420_328) | | | [100](#i8a1fb889ef014ec6885c8e58d3d08420_328) | | |

| | | | | | | | | |

| | | | [Signatures](#id86d15df0543432988e8ae716cf527ed_313) | | | [105](#id86d15df0543432988e8ae716cf527ed_313) | | |

- the effects of supply chain challenges and the global chip and component shortages and other factors affecting the manufacture, delivery and cost of certain of our products;

- the performance advantages of our products and subscription and support offerings and the potential benefits to our customers;

- our ability to and expectation that we will continue to grow our installed end-customer base;

- our ability to develop or acquire new product, subscription, and support offerings, improve our existing product, subscription, and support offerings, and increase the value of our product, subscription, and support offerings, including through deployment of new capabilities via security applications developed by third parties;

- our expectation that we will continue to renew existing contracts and increase sales to our existing customer base;

- expected impact of the adoption of certain recent accounting pronouncements and the anticipated timing of adopting such standards;

- our expectations regarding the future results of our People Strategy;

- our expectations regarding the impact of the discontinuance of the LIBO Rate upon our liquidity or financial position;

- future investments in product development, subscriptions, or technologies, and any related delays in the development or release of new product and subscription offerings;

- expectations and intentions with respect to the products and technologies that we acquire and introduce;

- our expectations regarding the impacts on our business, the business of our customers, suppliers and partners, and the economy as a result of the global COVID-19 pandemic and related public health measures; and

We also lease space for personnel around the world, including Israel and India.

We also lease space for personnel in Israel.

\- 35 \-

\- 40 \-

As of August [removed: 22, 2022,] [added: 18, 2023,] there were [removed: 355] [added: 414] holders of record of our common stock.

Any future determination as to the declaration and payment of dividends, if any, will be at the discretion of our board of directors, subject to applicable [removed: laws] [added: laws,] and will depend on then existing conditions, including our financial condition, operating results, contractual restrictions, capital requirements, business prospects, and other factors our board of directors may deem relevant.

During the three months ended July 31, [removed: 2022,] [added: 2023,] we issued a total of [removed: 35,004] [added: 3,569] shares of our unregistered common stock [removed: pursuant to post-closing obligations] in connection with [added: certain of] our [removed: previous] acquisitions [removed: of The Crypsis Group, Gamma Networks, Inc., and Sinefa Group, Inc.] (the “Transactions”).

[removed: (1) On] [added: In] February [removed: 26,] 2019, we announced that our board of directors authorized a $1.0 billion share repurchase program, which is funded from available working capital.

In December [removed: 2020 and] [added: 2020,] August 2021, [added: and August 2022,] we announced additional $700.0 [removed: million and] [added: million,] $676.1 [added: million, and $915.0] million increases to this share repurchase program, respectively, bringing the total authorization to [removed: $2.4] [added: $3.3] billion, with [removed: $85.0] [added: $750.0] million remaining as of July 31, [removed: 2022.][added: 2023.]

The expiration date of this repurchase authorization was extended to December 31, [removed: 2022,] [added: 2023,] and our repurchase program may be suspended or discontinued at any time.

[removed: (2) Includes] [added: Between June 1, 2023 and June 30, 2023 and July 1, 2023 and July 31, 2023,] shares of restricted [removed: common] stock [added: were] delivered by certain employees upon vesting of equity awards to satisfy tax withholding requirements.

The number of shares delivered [removed: by these employees] to satisfy tax withholding requirements during [removed: the period] [added: these periods] was not significant.

This performance graph compares the cumulative total return on our common stock with that of the Nasdaq 100 Index, the Standard & Poor’s 500 Index, [added: and] the Standard & [removed: Poor] [added: Poor’s 500] Information Technology [removed: Index, the NYSE Composite] Index [removed: and the NYSE Arca Tech 100 Index] for the five years ended July 31, [removed: 2022.][added: 2023.]

This performance graph assumes $100 was invested on July 31, [removed: 2017,] [added: 2018,] in each of the common stock of Palo Alto Networks, Inc., the Nasdaq 100 Index, the Standard & Poor’s 500 Index, [added: and] the Standard & Poor’s [added: 500] Information Technology Index, [removed: the NYSE Composite Index,] and [removed: the NYSE Arca Tech 100 Index, and] assumes the reinvestment of any dividends.

[removed: ][added: ]

| Company/Index | | | | | | [removed: 7/31/2017] [added: 7/31/2018] | | | | | | [removed: 7/31/2018] [added: 7/31/2019] | | | | | | [removed: 7/31/2019] [added: 7/31/2020] | | | | | | [removed: 7/31/2020] [added: 7/31/2021] | | | | | | [removed: 7/31/2021] [added: 7/31/2022] | | | | | | [removed: 7/31/2022] [added: 7/31/2023] | | |

During the three months ended July 31, 2023, we did not repurchase any shares pursuant to our share repurchase program.

\- 36 \-

The average value of shares delivered to satisfy tax withholding requirements during these periods were $246.53 per share and $243.33 per share, respectively.

Palo Alto Networks, Inc. Comparison of Total Return Performance

| Palo Alto Networks, Inc. | | | | | | $ | 100.00 | | | | | $ | 114.26 | | | | | $ | 129.08 | | | | | $ | 201.28 | | | | | $ | 251.74 | | | | | $ | 378.23 | |

| Nasdaq 100 Index | | | | | | $ | 100.00 | | | | | $ | 109.74 | | | | | $ | 154.04 | | | | | $ | 212.86 | | | | | $ | 185.61 | | | | | $ | 227.88 | |

| S&P 500 Index | | | | | | $ | 100.00 | | | | | $ | 107.99 | | | | | $ | 120.90 | | | | | $ | 164.96 | | | | | $ | 157.31 | | | | | $ | 177.78 | |

| S&P 500 Information Technology Index | | | | | | $ | 100.00 | | | | | $ | 115.72 | | | | | $ | 160.75 | | | | | $ | 225.10 | | | | | $ | 212.69 | | | | | $ | 269.79 | |

The following table summarizes stock repurchases during the three months ended July 31, 2022 (in millions, except per share amounts):

| | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| 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) | | |

| May 1, 2022 to May 31, 2022(1)(2) | | | | | | 0.0 | | | | | | $ | 436.37 | | | | | — | | | | | | $ | 450.0 | |

| June 1, 2022 to June 30, 2022(1)(2) | | | | | | 0.5 | | | | | | $ | 482.86 | | | | | 0.5 | | | | | | $ | 196.3 | |

| July 1, 2022 to July 31, 2022(1)(2) | | | | | | 0.3 | | | | | | $ | 486.05 | | | | | 0.3 | | | | | | $ | 85.0 | |

| Total | | | | | | 0.8 | | | | | | $ | 483.50 | | | | | 0.8 | | | | | | | | |

______________

\- 41 \-

Historically, we have compared the cumulative total return on our common stock with that of the NYSE Composite Index and the NYSE Arca Tech 100 Index.

As a result of the change in our listing from the NYSE to Nasdaq in October 2021, we have added the Nasdaq 100 Index, the Standard & Poor’s 500 Index and the Standard & Poor’s Information Technology Index to the indexes that we have historically used.

| Palo Alto Networks, Inc. | | | | | | $ | 100.00 | | | | | $ | 150.45 | | | | | $ | 171.91 | | | | | $ | 194.20 | | | | | $ | 302.82 | | | | | $ | 378.74 | |

| Nasdaq 100 Index | | | | | | $ | 100.00 | | | | | $ | 122.99 | | | | | $ | 133.48 | | | | | $ | 185.46 | | | | | $ | 254.41 | | | | | $ | 220.19 | |

| S&P 500 Index | | | | | | $ | 100.00 | | | | | $ | 114.01 | | | | | $ | 120.65 | | | | | $ | 132.42 | | | | | $ | 177.92 | | | | | $ | 167.20 | |

| S&P Information Technology Index | | | | | | $ | 100.00 | | | | | $ | 126.83 | | | | | $ | 144.57 | | | | | $ | 198.12 | | | | | $ | 274.74 | | | | | $ | 257.30 | |

| NYSE Composite Index | | | | | | $ | 100.00 | | | | | $ | 108.32 | | | | | $ | 109.18 | | | | | $ | 104.16 | | | | | $ | 138.73 | | | | | $ | 128.08 | |

| NYSE Arca Tech 100 Index | | | | | | $ | 100.00 | | | | | $ | 124.87 | | | | | $ | 134.35 | | | | | $ | 155.18 | | | | | $ | 215.23 | | | | | $ | 187.52 | |

\- 37 \-

\- 42 \-

| [Reports of Independent Registered Public Accounting [removed: Firm](#id86d15df0543432988e8ae716cf527ed_166)] [added: Firm](#i8a1fb889ef014ec6885c8e58d3d08420_166)] (PCAOB ID: 42) | | | [removed: [59](#id86d15df0543432988e8ae716cf527ed_166)] [added: [53](#i8a1fb889ef014ec6885c8e58d3d08420_166)] | | |

| [Consolidated Balance [removed: Sheets](#id86d15df0543432988e8ae716cf527ed_175)] [added: Sheets](#i8a1fb889ef014ec6885c8e58d3d08420_175)] | | | [removed: [62](#id86d15df0543432988e8ae716cf527ed_175)] [added: [56](#i8a1fb889ef014ec6885c8e58d3d08420_175)] | | |

| [Consolidated Statements of [removed: Operations](#id86d15df0543432988e8ae716cf527ed_178)] [added: Operations](#i8a1fb889ef014ec6885c8e58d3d08420_178)] | | | [removed: [63](#id86d15df0543432988e8ae716cf527ed_178)] [added: [57](#i8a1fb889ef014ec6885c8e58d3d08420_178)] | | |

| [Consolidated Statements of Comprehensive [removed: Loss](#id86d15df0543432988e8ae716cf527ed_181)] [added: Income (Loss)](#i8a1fb889ef014ec6885c8e58d3d08420_181)] | | | [removed: [64](#id86d15df0543432988e8ae716cf527ed_181)] [added: [58](#i8a1fb889ef014ec6885c8e58d3d08420_181)] | | |

| [Consolidated Statements of Stockholders’ [removed: Equity](#id86d15df0543432988e8ae716cf527ed_184)] [added: Equity](#i8a1fb889ef014ec6885c8e58d3d08420_184)] | | | [removed: [65](#id86d15df0543432988e8ae716cf527ed_184)] [added: [59](#i8a1fb889ef014ec6885c8e58d3d08420_184)] | | |

| [Consolidated Statements of Cash [removed: Flows](#id86d15df0543432988e8ae716cf527ed_187)] [added: Flows](#i8a1fb889ef014ec6885c8e58d3d08420_187)] | | | [removed: [66](#id86d15df0543432988e8ae716cf527ed_187)] [added: [60](#i8a1fb889ef014ec6885c8e58d3d08420_187)] | | |

| [Notes to Consolidated Financial [removed: Statements](#id86d15df0543432988e8ae716cf527ed_190)] [added: Statements](#i8a1fb889ef014ec6885c8e58d3d08420_190)] | | | [removed: [67](#id86d15df0543432988e8ae716cf527ed_190)] [added: [62](#i8a1fb889ef014ec6885c8e58d3d08420_190)] | | |

We have audited the accompanying consolidated balance sheets of Palo Alto Networks, Inc. (the Company) as of July 31, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] the related consolidated statements of operations, comprehensive [removed: loss,] [added: income (loss),] stockholders’ equity and cash flows for each of the three years in the period ended July 31, [removed: 2022,] [added: 2023,] and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at July 31, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] and the results of its operations and its cash flows for each of the three years in the period ended July 31, [removed: 2022,] [added: 2023,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of July 31, [removed: 2022,] [added: 2023,] based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated September [removed: 6, 2022] [added: 1, 2023] expressed an unqualified opinion thereon.

[removed: | | | | | | |] Revenue Recognition [removed: | | |]

| [removed: *Description of] [added: *Description* *of] the Matter* | | | [removed: | | |] As described in Note 1 to the consolidated financial statements, the Company’s contracts with customers sometimes contain multiple performance obligations, which are accounted for separately if they are distinct. In such cases, the transaction price is then allocated to the distinct performance obligations on a relative standalone selling price basis, and revenue is recognized when control of the distinct performance obligation is transferred. For example, product revenue is recognized at the time of hardware shipment or delivery of software license, and subscription and support revenue is recognized over time as the services are performed. Auditing the Company’s revenue recognition was complex, including the identification and determination of distinct performance obligations and the timing of revenue recognition. For example, there were nonstandard terms and conditions that required judgment to determine the distinct performance obligations and the impact on the timing of revenue recognition. | | |

| *How We [removed: Addressed the] [added: Addressed* *the] Matter in Our Audit* | | | [removed: | | |] We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s process and controls to identify and determine the distinct performance obligations and the timing of revenue recognition. To test the identification and determination of the distinct performance obligations and the timing of revenue recognition, our audit procedures included, among others, reading the executed contract and purchase order to understand the contract, identifying the performance obligation(s), determining the distinct performance obligations, and evaluating the timing of revenue recognition for a sample of individual sales transactions. We evaluated the accuracy of the Company’s contract summary documentation, specifically related to the identification and determination of distinct performance obligations and the timing of revenue recognition. | | |

We have audited Palo Alto Networks, Inc.’s internal control over financial reporting as of July 31, [removed: 2022,] [added: 2023,] based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, Palo Alto Networks, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of July 31, [removed: 2022,] [added: 2023,] based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of July 31, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] the related consolidated statements of operations, comprehensive [removed: loss,] [added: income (loss),] stockholders’ equity and cash flows for each of the three years in the period ended July 31, [removed: 2022,] [added: 2023,] and the related notes and our report dated September [removed: 6, 2022] [added: 1, 2023] expressed an unqualified opinion thereon.

[removed: PALO ALTO] [added: PALO ALTO] NETWORKS, INC.

[removed: (In] [added: | CONSOLIDATED BALANCE SHEETS (In] millions, except per share data) [added: | | | | | | | | | | | |]

| | | | [added: 2023 | | | | | |] 2022 | | | | | | 2021 | | |

| Cash and cash equivalents | | | $ | [added: 1,135.3 | | | | | $ |] 2,118.5 | | | | | $ | 1,874.2 | |

| Short-term investments | | | [removed: 1,516.0] [added: 1,254.7] | | | | | | [removed: 1,026.9] [added: 1,516.0] | | |

| Accounts receivable, net of allowance for credit losses of [removed: $8.9] [added: $7.8] and [removed: $11.2] [added: $8.9] at July 31, [removed: 2022] [added: 2023] and July 31, [removed: 2021,] [added: 2022,] respectively | | | [removed: 2,142.5] [added: 2,463.2] | | | | | | [removed: 1,240.4] [added: 2,142.5] | | |

| Short-term deferred contract costs | | | [removed: 317.7] [added: 339.2] | | | | | | [removed: 276.5] [added: 317.7] | | |

| Prepaid expenses and other current assets | | | [removed: 320.2] [added: 466.8] | | | | | | [removed: 229.3] [added: 208.9] | | |

| Total current assets | | | [removed: 6,414.9] [added: 6,048.0] | | | | | | [removed: 4,647.3] [added: 6,414.9] | | |

| Property and equipment, net | | | [removed: 357.8] [added: 354.5] | | | | | | [removed: 318.4] [added: 357.8] | | |

| Operating lease right-of-use assets | | | [removed: 242.0] [added: 263.3] | | | | | | [removed: 262.9] [added: 242.0] | | |

| Long-term investments | | | [removed: 1,051.9] [added: 3,047.9] | | | | | | [removed: 888.3] [added: 1,051.9] | | |

| Long-term deferred contract costs | | | [removed: 550.1] [added: 547.1] | | | | | | [removed: 494.6] [added: 550.1] | | |

| Goodwill | | | [removed: 2,747.7] [added: 2,926.8] | | | | | | [removed: 2,710.1] [added: 2,747.7] | | |

| Intangible assets, net | | | [removed: 384.5] [added: 315.4] | | | | | | [removed: 498.6] [added: 384.5] | | |

| Total assets | | | $ | [removed: 12,253.6] [added: 14,501.1] | | | | | $ | [removed: 10,241.6] [added: 12,253.6] | |

| [removed: Liabilities, temporary equity] [added: Liabilities] and stockholders’ equity | | | | | | | | | | | |

| Accounts payable | | | $ | [removed: 128.0] [added: 132.3] | | | | | $ | [removed: 56.9] [added: 128.0] | |

| Accrued compensation | | | [removed: 461.1] [added: 548.3] | | | | | | [removed: 430.6] [added: 461.1] | | |

| Accrued and other liabilities | | | [removed: 399.2] [added: 390.8] | | | | | | [removed: 329.4] [added: 399.2] | | |

| Deferred revenue | | | [removed: 3,641.2] [added: 4,674.6] | | | | | | [removed: 2,741.9] [added: 3,641.2] | | |

| Convertible senior notes, net | | | [removed: 3,676.8] [added: 1,991.5] | | | | | | [removed: 1,557.9] [added: 3,676.8] | | |

| Total current liabilities | | | [removed: 8,306.3] [added: 7,737.5] | | | | | | [removed: 5,116.7] [added: 8,306.3] | | |

| Convertible senior [removed: notes, net] [added: notes] | | | [added: 17.9 | | | | | |] — | | | | | | [removed: 1,668.1] [added: —] | | |

| | | | Page | | |

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September 1, 2023

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September 1, 2023

\- 55 \-

| | | | 2023 | | | | | | 2022 | | |

| Other assets | | | 344.8 | | | | | | 312.6 | | |

\- 56 \-

| CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except per share data) | | | | | | | | | | | | | | | | | |

| Net income (loss) per share, basic | | | $ | 1.45 | | | | | $ | (0.90) | | | | | $ | (1.73) | |

| Net income (loss) per share, diluted | | | $ | 1.28 | | | | | $ | (0.90) | | | | | $ | (1.73) | |

| Weighted-average shares used to compute net income (loss) per share, diluted | | | 342.3 | | | | | | 295.6 | | | | | | 289.1 | | |

\- 57 \-

| Net income | | | — | | | | | | — | | | | | | — | | | | | | 439.7 | | | | | | 439.7 | | |

| Settlement of convertible notes | | | 11.4 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |

| Settlement of note hedges | | | (11.4) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |

| Balance as of July 31, 2023 | | | 308.3 | | | | | | $ | 3,019.0 | | | | | $ | (43.2) | | | | | $ | (1,227.4) | | | | | $ | 1,748.4 | |

| Net income (loss) | | | $ | 439.7 | | | | | $ | (267.0) | | | | | $ | (498.9) | |

| Financing receivables, net | | | (738.7) | | | | | | (30.1) | | | | | | (272.6) | | |

| CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) | | | | | | | | | | | | | | | | | |

*See notes to consolidated financial statements.*

Reclassification

Certain prior period amounts in the consolidated financial statements and accompanying notes have been reclassified to conform to the current period presentation.

The par value per share of our common stock remains unchanged at $0.0001 per share after the Stock Split.

All references made to share or per share amounts on the accompanying consolidated financial statements and applicable disclosures have been retroactively adjusted to reflect the effects of the Stock Split.

The estimated useful lives of our depreciable assets are as follows:

| Asset category | | | | | | Useful life | | |

| Computers, equipment, and software | | | | | | 3 - 5 years | | |

| Demonstration units | | | | | | 3 - 4 years | | |

| Furniture and fixtures | | | | | | 5 years | | |

| Leasehold improvements | | | | | | Lesser of 10 years or remaining lease term | | |

We recognize share-based compensation expense for awards with performance conditions when it is probable that the performance condition will be achieved.

| | | | 2023 | | | | | | 2022 | | | | | | 2021 | | |

| Product | | | $ | 1,578.4 | | | | | $ | 1,363.1 | | | | | $ | 1,120.3 | |

| Subscription | | | 3,335.4 | | | | | | 2,539.0 | | | | | | 1898.8 | | |

| Total revenue | | | $ | 6,892.7 | | | | | $ | 5,501.5 | | | | | $ | 4,256.1 | |

| Asset-backed securities | | | | | | — | | | | | | 4.2 | | | | | | — | | | | | | 4.2 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- |

[Ta](#id86d15df0543432988e8ae716cf527ed_7)[ble of](#id86d15df0543432988e8ae716cf527ed_7) [Contents](#id86d15df0543432988e8ae716cf527ed_7)

| | | | | | | | | |

September 6, 2022

CONSOLIDATED BALANCE SHEETS

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Other assets | | | 504.7 | | | | | | 421.4 | | |

| Temporary equity | | | — | | | | | | 129.1 | | |

CONSOLIDATED STATEMENTS OF OPERATIONS

| Net loss per share, basic and diluted | | | $ | (2.71) | | | | | $ | (5.18) | | | | | $ | (2.76) | |

(In millions)

| Balance as of July 31, 2019 | | | 96.8 | | | | | | $ | 2,490.9 | | | | | $ | (3.7) | | | | | $ | (900.9) | | | | | $ | 1,586.3 | |

| Settlement of warrants | | | 2.0 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |

| Equity component of convertible senior notes, net | | | — | | | | | | 398.7 | | | | | | — | | | | | | — | | | | | | 398.7 | | |

| Issuance of warrants | | | — | | | | | | 202.8 | | | | | | — | | | | | | — | | | | | | 202.8 | | |

| Gain related to facility exit | | | — | | | | | | — | | | | | | (3.1) | | |

| Proceeds from borrowings on convertible senior notes, net | | | — | | | | | | — | | | | | | 1,979.1 | | |

| Proceeds from issuance of warrants | | | — | | | | | | — | | | | | | 202.8 | | |

| Purchase of note hedges | | | — | | | | | | — | | | | | | (370.8) | | |

| Payment of deferred consideration related to prior year business acquisition | | | — | | | | | | — | | | | | | (1.3) | | |

Leasehold improvements are depreciated over the shorter of the estimated useful lives of the improvements or the remaining lease term.

Transaction costs related to the issuance of the notes are netted with the liability and are amortized on a straight-line basis, which approximates the effective interest rate method, to interest expense over the term of the notes.

If a contract contains a single performance obligation, no allocation is required.

The expected renewals are estimated based on historical renewal trends.

Recently Adopted Accounting Pronouncements

*Acquired Contract Assets and Contract Liabilities*

In October 2021, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance that requires companies to apply revenue guidance to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination on the acquisition date, instead of measuring them at fair value.

We early adopted this guidance in our first quarter of fiscal 2022 on a prospective basis.

The adoption of this standard did not have a material impact on our consolidated financial statements.

*Debt with Conversion Options*

In August 2020, the FASB issued authoritative guidance that simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments.

The standard reduces the number of models used to account for convertible instruments and simplifies the classification of debt on the balance sheet.

We adopted this standard in our first quarter of fiscal 2022 using the modified-retrospective approach, under which financial results reported in periods prior to fiscal 2022 were not adjusted.

The adoption of this standard resulted in an increase to convertible senior notes, net of $444.3 million, a decrease to accumulated deficit of $266.7 million, and a decrease to additional paid-in capital and temporary equity of $711.0 million upon adoption.

| Subscription | | | 2,539.0 | | | | | | 1,898.8 | | | | | | 1405.3 | | |

| | | | July 31, 2021 | | | | | | | | | | | | | | | | | | | | |

| Certificates of deposit | | | $ | 150.4 | | | | | $ | — | | | | | $ | — | | | | | $ | 150.4 | |

| Corporate debt securities | | | 1.0 | | | | | | — | | | | | | — | | | | | | 1.0 | | |

| Certificates of deposit | | | $ | 17.4 | | | | | $ | — | | | | | $ | — | | | | | $ | 17.4 | |

| Corporate debt securities | | | 389.2 | | | | | | 0.5 | | | | | | (0.1) | | | | | | 389.6 | | |

Based on our evaluation, our chief executive officer and chief financial officer concluded that, as of July 31, [removed: 2022,] [added: 2023,] our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission (“SEC”) rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Our management assessed the effectiveness of our internal control over financial reporting as of July 31, [removed: 2022,] [added: 2023,] based on the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control - Integrated Framework (2013 framework).

Based on that assessment, management concluded that, as of July 31, [removed: 2022,] [added: 2023,] our internal control over financial reporting was effective.

The effectiveness of our internal control over financial reporting as of July 31, [removed: 2022] [added: 2023] has been audited by Ernst & Young LLP, the independent registered public accounting firm that audits our consolidated financial statements, as stated in their report which is included in Part II, Item 8 of this Annual Report on Form 10-K.

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended July 31, [removed: 2022] [added: 2023] that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

\- 92 \-

Trading Plans of Directors and Executive Officers

Set forth below is certain information regarding Rule 10b5-1 trading plans adopted by our directors and officers (as defined in Rule 16a-1(f)) during the fourth quarter of fiscal 2023.

The Rule 10b5-1 trading plans listed below are each intended to satisfy the affirmative defense of Rule 10b5-1(c).

| | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Name | | | | | | Title | | | | | | Date Plan Was Adopted | | | | | | Expiration Date | | | | | | Total Amount of Common Stock to be Sold Under the Plan | | |

| Nikesh Arora | | | | | | Chairman and Chief Executive Officer | | | | | | June 8, 2023 | | | | | | August 30, 2024 or when all shares have been sold | | | | | | 2,000,000 | | |

| William “BJ” Jenkins, Jr. | | | | | | President | | | | | | May 26, 2023 | | | | | | June 29, 2024 or when all shares have been sold | | | | | | 13,000 | | |

No other officers or directors, as defined in Rule 16a-1(f), adopted, modified and/or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as defined in Regulation S-K Item 408, during the fourth quarter of fiscal 2023.

Not applicable.

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[Ta](#id86d15df0543432988e8ae716cf527ed_7)[ble of](#id86d15df0543432988e8ae716cf527ed_7) [Contents](#id86d15df0543432988e8ae716cf527ed_7)

The information required by this item will be contained in our definitive proxy statement to be filed with the SEC in connection with our [removed: 2022] [added: 2023] annual meeting of stockholders (the “Proxy Statement”), which is expected to be filed not later than 120 days after the end of our fiscal year ended July 31, [removed: 2022,] [added: 2023] and is incorporated [removed: in this report] [added: herein] by reference.

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[Ta](#id86d15df0543432988e8ae716cf527ed_7)[ble of](#id86d15df0543432988e8ae716cf527ed_7) [Contents](#id86d15df0543432988e8ae716cf527ed_7)

[removed: 1.Consolidated] [added: 1.Consolidated] Financial Statements

[removed: 2.Financial] [added: 2.Financial] Statement Schedules

| [removed: [4.1](http://www.sec.gov/Archives/edgar/data/0001327567/000119312518217281/d471193dex41.htm)] [added: [4.](http://www.sec.gov/Archives/edgar/data/0001327567/000119312520163579/d936599dex41.htm)[1](http://www.sec.gov/Archives/edgar/data/0001327567/000119312520163579/d936599dex41.htm)] | | | | | | Indenture between the Registrant and U.S. Bank National Association, dated as of [removed: July 12, 2018.] [added: June 8, 2020.] | | | | | | 8-K | | | | | | 001-35594 | | | | | | 4.1 | | | | | | [removed: July 13, 2018] [added: June 8, 2020] | | | | | | | | |

| [removed: [4.2](http://www.sec.gov/Archives/edgar/data/0001327567/000119312520163579/d936599dex41.htm)] [added: [4.](http://www.sec.gov/Archives/edgar/data/0001327567/000119312520163579/d936599dex41.htm)[2](http://www.sec.gov/Archives/edgar/data/0001327567/000119312520163579/d936599dex41.htm)] | | | | | | [removed: Indenture between the Registrant and U.S. Bank National Association, dated as] [added: Form] of [removed: June 8, 2020.] [added: Global 0.375% Convertible Senior Note due 2025 (included in Exhibit 4.1).] | | | | | | 8-K | | | | | | 001-35594 | | | | | | [removed: 4.1] [added: 4.2] | | | | | | June 8, 2020 | | | | | | | | |

| [removed: [4.4](http://www.sec.gov/Archives/edgar/data/0001327567/000119312520163579/d936599dex41.htm)] [added: [10.34](http://www.sec.gov/Archives/edgar/data/1327567/000119312520163579/d936599dex102.htm)] | | | | | | Form of [removed: Global 0.375%] Convertible [removed: Senior] Note [removed: due 2023 (included in Exhibit 4.1).] [added: Hedge Confirmation.] | | | | | | 8-K | | | | | | 001-35594 | | | | | | [removed: 4.2] [added: 10.2] | | | | | | June 8, 2020 | | | | | | | | |

| [removed: [4.5](https://www.sec.gov/Archives/edgar/data/1327567/000132756722000028/panwex45q422.htm)] [added: [4](https://www.sec.gov/Archives/edgar/data/1327567/000132756723000024/panwex43q423.htm)[.3](https://www.sec.gov/Archives/edgar/data/1327567/000132756723000024/panwex43q423.htm)] | | | | | | Description of Registrant’s Securities. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| [removed: [10.](http://www.sec.gov/Archives/edgar/data/0001327567/000132756719000038/panwex102q1202012eip.htm)[2](http://www.sec.gov/Archives/edgar/data/0001327567/000132756719000038/panwex102q1202012eip.htm)*] [added: [10.2](http://www.sec.gov/Archives/edgar/data/0001327567/000132756719000038/panwex102q1202012eip.htm)*] | | | | | | 2012 Equity Incentive Plan and related form agreements. | | | | | | 10-Q | | | | | | 001-35594 | | | | | | 10.2 | | | | | | November 26, 2019 | | | | | | | | |

| [removed: [10.](https://www.sec.gov/Archives/edgar/data/1327567/000132756721000040/panw-ex104q122.htm)[3](https://www.sec.gov/Archives/edgar/data/1327567/000132756721000040/panw-ex104q122.htm)*] [added: [10.3](https://www.sec.gov/Archives/edgar/data/1327567/000132756721000040/panw-ex104q122.htm)*] | | | | | | Form of 2012 Equity Incentive Plan Performance-Based Restricted Stock Unit Award [removed: Agreement] [added: Agreement.] | | | | | | 10-Q | | | | | | 001-35594 | | | | | | 10.4 | | | | | | November 19, 2021 | | | | | | | | |

| [removed: [10.](https://www.sec.gov/Archives/edgar/data/1327567/000119312521359246/d170141dex991.htm)[4](https://www.sec.gov/Archives/edgar/data/1327567/000119312521359246/d170141dex991.htm)*] [added: [10.4](https://www.sec.gov/Archives/edgar/data/1327567/000119312521359246/d170141dex991.htm)*] | | | | | | 2021 Equity Incentive [removed: Plan] [added: Plan.] | | | | | | S-8 | | | | | | [removed: 333-261697] [added: 333-268930] | | | | | | 99.1 | | | | | | December [removed: 16, 2021] [added: 21, 2022] | | | | | | | | |

| [10.5](http://www.sec.gov/Archives/edgar/data/1327567/000119312521359246/d170141dex992.htm)* | | | | | | Form of 2021 Equity Incentive Plan Global Stock Option Award [removed: Agreement] [added: Agreement.] | | | | | | S-8 | | | | | | 333-261697 | | | | | | 99.2 | | | | | | December 16, 2021 | | | | | | | | |

| [removed: [10.](https://www.sec.gov/Archives/edgar/data/1327567/000119312521359246/d170141dex993.htm)[6](https://www.sec.gov/Archives/edgar/data/1327567/000119312521359246/d170141dex993.htm)*] [added: [10.6](https://www.sec.gov/Archives/edgar/data/1327567/000119312521359246/d170141dex993.htm)*] | | | | | | Form of 2021 Equity Incentive Plan Global Restricted Stock Unit Award [removed: Agreement] [added: Agreement.] | | | | | | S-8 | | | | | | 333-261697 | | | | | | 99.3 | | | | | | December 16, 2021 | | | | | | | | |

| [removed: [10.7](https://www.sec.gov/Archives/edgar/data/1327567/000132756722000028/panwex107q422espp.htm)*] [added: [10.7](http://www.sec.gov/Archives/edgar/data/1327567/000132756722000028/panwex107q422espp.htm)*] | | | | | | 2012 Employee Stock Purchase Plan, as amended and restated, and related form agreements. | | | | | | [added: 10-K] | | | | | | [added: 001-35594] | | | | | | [added: 10.7] | | | | | | [added: September 6, 2022] | | | | | | | | |

| [removed: [10](http://www.sec.gov/Archives/edgar/data/1327567/000119312518303084/d634580dex991.htm)[.](http://www.sec.gov/Archives/edgar/data/1327567/000119312518303084/d634580dex991.htm)[8](http://www.sec.gov/Archives/edgar/data/1327567/000119312518303084/d634580dex991.htm)*] [added: [10.8](http://www.sec.gov/Archives/edgar/data/1327567/000119312518303084/d634580dex991.htm)*] | | | | | | RedLock Inc. 2015 Stock Plan, as amended, and related form agreements under RedLock Inc. 2015 Stock Plan, as amended. | | | | | | S-8 | | | | | | 333-227901 | | | | | | 99.1 | | | | | | October 19, 2018 | | | | | | | | |

| [removed: [10.](http://www.sec.gov/Archives/edgar/data/1327567/000119312519094620/d723370dex991.htm)[9](http://www.sec.gov/Archives/edgar/data/1327567/000119312519094620/d723370dex991.htm)*] [added: [10.](http://www.sec.gov/Archives/edgar/data/1327567/000119312520003856/d850020dex991.htm)[9](http://www.sec.gov/Archives/edgar/data/1327567/000119312520003856/d850020dex991.htm)*] | | | | | | [removed: Demisto,] [added: Aporeto,] Inc. [added: Amended and Restated] 2015 Stock Option [removed: Plan, as amended.] [added: and Grant Plan.] | | | | | | S-8 | | | | | | [removed: 333-230663] [added: 333-235854] | | | | | | 99.1 | | | | | | [removed: April 1, 2019] [added: January 8, 2020] | | | | | | | | |

| [removed: [10.1](http://www.sec.gov/Archives/edgar/data/1327567/000119312519260766/d795787dex991.htm)[1](http://www.sec.gov/Archives/edgar/data/1327567/000119312519260766/d795787dex991.htm)*] [added: [10.1](http://www.sec.gov/Archives/edgar/data/1327567/000119312520320099/d35944dex991.htm)[3](http://www.sec.gov/Archives/edgar/data/1327567/000119312520320099/d35944dex991.htm)*] | | | | | | [removed: Zingbox,] [added: Expanse Holding Company,] Inc. [added: Amended and Restated 2012] Stock Incentive [removed: Plan, as amended and restated.] [added: Plan] | | | | | | S-8 | | | | | | [removed: 333-234059] [added: 333-251425] | | | | | | 99.1 | | | | | | [removed: October 2, 2019] [added: December 17, 2020] | | | | | | | | |

| [removed: [10.1](http://www.sec.gov/Archives/edgar/data/1327567/000119312520133786/d849861dex991.htm)[3](http://www.sec.gov/Archives/edgar/data/1327567/000119312520133786/d849861dex991.htm)*] [added: [10.1](http://www.sec.gov/Archives/edgar/data/1327567/000119312520133786/d849861dex991.htm)[0](http://www.sec.gov/Archives/edgar/data/1327567/000119312520133786/d849861dex991.htm)*] | | | | | | CloudGenix Inc. 2013 Equity Incentive Plan. | | | | | | S-8 | | | | | | 333-238014 | | | | | | 99.1 | | | | | | May 5, 2020 | | | | | | | | |

| [removed: [10.1](http://www.sec.gov/Archives/edgar/data/1327567/000119312520266352/d99009dex991.htm)[4](http://www.sec.gov/Archives/edgar/data/1327567/000119312520266352/d99009dex991.htm)*] [added: [10.11](http://www.sec.gov/Archives/edgar/data/1327567/000119312520266352/d99009dex991.htm)*] | | | | | | Crypsis Group Holdings, LLC 2017 Equity Incentive Plan. | | | | | | S-8 | | | | | | 333-249387 | | | | | | 99.1 | | | | | | October 8, 2020 | | | | | | | | |

| [removed: [10.1](http://www.sec.gov/Archives/edgar/data/1327567/000119312520320091/d23873dex991.htm)[5](http://www.sec.gov/Archives/edgar/data/1327567/000119312520320091/d23873dex991.htm)*] [added: [10.12](http://www.sec.gov/Archives/edgar/data/1327567/000119312520320091/d23873dex991.htm)*] | | | | | | Sinefa Group, Inc. 2020 Stock Plan. | | | | | | S-8 | | | | | | 333-251423 | | | | | | 99.1 | | | | | | December 17, 2020 | | | | | | | | |

| [removed: [10.1](https://www.sec.gov/Archives/edgar/data/0001327567/000119312521265618/d214080dex991.htm)[7](https://www.sec.gov/Archives/edgar/data/0001327567/000119312521265618/d214080dex991.htm)*] [added: [10.1](https://www.sec.gov/Archives/edgar/data/0001327567/000119312521265618/d214080dex991.htm)[4](https://www.sec.gov/Archives/edgar/data/0001327567/000119312521265618/d214080dex991.htm)*] | | | | | | Gamma Networks, Inc. 2018 Stock Option and Grant [removed: Plan] [added: Plan.] | | | | | | S-8 | | | | | | 333-259327 | | | | | | 99.1 | | | | | | September 3, 2021 | | | | | | | | |

| [removed: [10.1](http://www.sec.gov/Archives/edgar/data/1327567/000119312521074955/d51651dex991.htm)[8](http://www.sec.gov/Archives/edgar/data/1327567/000119312521074955/d51651dex991.htm)*] [added: [10.15](http://www.sec.gov/Archives/edgar/data/1327567/000119312521074955/d51651dex991.htm)*] | | | | | | Bridgecrew, Inc. 2019 Stock Incentive Plan. | | | | | | S-8 | | | | | | 333-254042 | | | | | | 99.1 | | | | | | March 9, 2021 | | | | | | | | |

| [removed: [10.](http://www.sec.gov/Archives/edgar/data/1327567/000132756714000043/panwex102q115.htm)[19](http://www.sec.gov/Archives/edgar/data/1327567/000132756714000043/panwex102q115.htm)*] [added: [10.18](http://www.sec.gov/Archives/edgar/data/1327567/000132756714000043/panwex102q115.htm)*] | | | | | | Employee Incentive Compensation Plan, as amended and restated. | | | | | | 10-Q | | | | | | 001-35594 | | | | | | 10.2 | | | | | | November 25, 2014 | | | | | | | | |

| [removed: [10.](http://www.sec.gov/Archives/edgar/data/1327567/000132756717000035/panwex103q118_clawbackpoli.htm)[2](http://www.sec.gov/Archives/edgar/data/1327567/000132756717000035/panwex103q118_clawbackpoli.htm)[0](http://www.sec.gov/Archives/edgar/data/1327567/000132756717000035/panwex103q118_clawbackpoli.htm)*] [added: [10.19](http://www.sec.gov/Archives/edgar/data/1327567/000132756717000035/panwex103q118_clawbackpoli.htm)*] | | | | | | Clawback Policy, adopted as of August 29, 2017. | | | | | | 10-Q | | | | | | 001-35594 | | | | | | 10.3 | | | | | | November 21, 2017 | | | | | | | | |

| [removed: [10.2](https://www.sec.gov/Archives/edgar/data/1327567/000132756722000008/panw-ex104q222.htm)[1](https://www.sec.gov/Archives/edgar/data/1327567/000132756722000008/panw-ex104q222.htm)*] [added: [10.2](https://www.sec.gov/Archives/edgar/data/1327567/000132756722000008/panw-ex104q222.htm)[0](https://www.sec.gov/Archives/edgar/data/1327567/000132756722000008/panw-ex104q222.htm)*] | | | | | | Amended and Restated Outside Director Compensation Policy (last amended February 16, [removed: 2022)] [added: 2022).] | | | | | | 10-Q | | | | | | 001-35594 | | | | | | 10.4 | | | | | | February 23, 2022 | | | | | | | | |

| [removed: [10.2](https://www.sec.gov/Archives/edgar/data/1327567/000132756722000016/panw-ex103q322.htm)[2](https://www.sec.gov/Archives/edgar/data/1327567/000132756722000016/panw-ex103q322.htm)*] [added: [10.2](https://www.sec.gov/Archives/edgar/data/1327567/000132756722000016/panw-ex103q322.htm)[1](https://www.sec.gov/Archives/edgar/data/1327567/000132756722000016/panw-ex103q322.htm)*] | | | | | | Continued Service [removed: Policy] [added: Policy.] | | | | | | 10-Q | | | | | | 001-35594 | | | | | | 10.3 | | | | | | May 20, 2022 | | | | | | | | |

| [removed: [10.23](https://www.sec.gov/Archives/edgar/data/1327567/000132756722000028/panwex1023q422deferredcomp.htm)*] [added: [10.22](http://www.sec.gov/Archives/edgar/data/1327567/000132756722000028/panwex1023q422deferredcomp.htm)*] | | | | | | Palo Alto Networks, Inc. Deferred Compensation Plan effective June 1, 2022 | | | | | | [added: 10-K] | | | | | | [added: 001-35594] | | | | | | [added: 10.23] | | | | | | [added: September 6, 2022] | | | | | | | | |

| [removed: [10.2](http://www.sec.gov/Archives/edgar/data/1327567/000132756718000011/ex101newofferlettermmclaug.htm)[4](http://www.sec.gov/Archives/edgar/data/1327567/000132756718000011/ex101newofferlettermmclaug.htm)*] [added: [10.2](http://www.sec.gov/Archives/edgar/data/1327567/000132756718000011/ex102offerletternarora.htm)[4](http://www.sec.gov/Archives/edgar/data/1327567/000132756718000011/ex102offerletternarora.htm)*] | | | | | | [removed: New] Offer Letter between the Registrant and [removed: Mark D. McLaughlin,] [added: Nikesh Arora,] dated May [removed: 31,] [added: 30,] 2018. | | | | | | 8-K | | | | | | 001-35594 | | | | | | [removed: 10.1] [added: 10.2] | | | | | | June 4, 2018 | | | | | | | | |

| [removed: [10.2](https://www.sec.gov/Archives/edgar/data/0001327567/000132756720000041/panwex101q121.htm)[5](https://www.sec.gov/Archives/edgar/data/0001327567/000132756720000041/panwex101q121.htm)*] [added: [10.2](https://www.sec.gov/Archives/edgar/data/0001327567/000132756720000041/panwex101q121.htm)[3](https://www.sec.gov/Archives/edgar/data/0001327567/000132756720000041/panwex101q121.htm)*] | | | | | | Employment Agreement between Palo Alto Networks (Israel Analytics) Ltd. and Nir Zuk, dated August 18, 2020. | | | | | | 10-Q | | | | | | 001-35594 | | | | | | 10.1 | | | | | | November 19, 2020 | | | | | | | | |

| [removed: [10.2](http://www.sec.gov/Archives/edgar/data/1327567/000132756718000011/ex102offerletternarora.htm)[6](http://www.sec.gov/Archives/edgar/data/1327567/000132756718000011/ex102offerletternarora.htm)*] [added: [10.28](http://www.sec.gov/Archives/edgar/data/1327567/000132756722000016/panw-ex101q322.htm)*] | | | | | | [added: Addendum to Employment] Offer Letter [added: by and] between the Registrant and [removed: Nikesh Arora,] [added: Dipak Golechha,] dated [removed: May 30, 2018.] [added: February 18, 2022.] | | | | | | [removed: 8-K] [added: 10-Q] | | | | | | 001-35594 | | | | | | 10.1 | | | | | | [removed: June 4, 2018] [added: May 20, 2022] | | | | | | | | |

| [removed: [10.2](https://www.sec.gov/Archives/edgar/data/1327567/000119312521267862/d200133dex101.htm)[7](https://www.sec.gov/Archives/edgar/data/1327567/000119312521267862/d200133dex101.htm)*] [added: [10.2](https://www.sec.gov/Archives/edgar/data/1327567/000119312521267862/d200133dex101.htm)[5](https://www.sec.gov/Archives/edgar/data/1327567/000119312521267862/d200133dex101.htm)*] | | | | | | Offer Letter between the Registrant and Josh Paul, dated August 5, 2021. | | | | | | 8-K | | | | | | 001-35594 | | | | | | 10.1 | | | | | | September 8, 2021 | | | | | | | | |

| [removed: [10.2](https://www.sec.gov/Archives/edgar/data/1327567/000132756718000031/panwex104q119.htm)[8](https://www.sec.gov/Archives/edgar/data/1327567/000132756718000031/panwex104q119.htm)*] [added: [10.26](https://www.sec.gov/Archives/edgar/data/1327567/000132756718000031/panwex104q119.htm)*] | | | | | | Confirmatory Employment Letter with Updated Change in Control Protection between the Registrant and Lee Klarich, dated December 19, 2011. | | | | | | 10-Q | | | | | | 001-35594 | | | | | | 10.4 | | | | | | November 30, 2018 | | | | | | | | |

| [removed: [10.29](http://www.sec.gov/Archives/edgar/data/0001327567/000119312521087516/d160663dex101.htm)*] [added: [10.27](http://www.sec.gov/Archives/edgar/data/0001327567/000119312521087516/d160663dex101.htm)*] | | | | | | Addendum to Employment Offer Letter by and between the Registrant and Dipak Golechha, dated March 17, 2021. | | | | | | 8-K | | | | | | 001-35594 | | | | | | 10.1 | | | | | | March 19, 2021 | | | | | | | | |

| [removed: [10.30](http://www.sec.gov/Archives/edgar/data/1327567/000132756722000016/panw-ex101q322.htm)*] [added: [10.30](https://www.sec.gov/Archives/edgar/data/1327567/000132756722000016/panw-ex102q322.htm)*] | | | | | | Addendum to Employment Offer Letter [removed: by and] between the Registrant and [removed: Dipak Golechha,] [added: William “BJ” Jenkins,] dated February 18, 2022. | | | | | | 10-Q | | | | | | 001-35594 | | | | | | [removed: 10.1] [added: 10.2] | | | | | | May 20, 2022 | | | | | | | | |

| [removed: [10.3](https://www.sec.gov/Archives/edgar/data/1327567/000119312521244832/d204334dex101.htm)[1](https://www.sec.gov/Archives/edgar/data/1327567/000119312521244832/d204334dex101.htm)*] [added: [10.29](https://www.sec.gov/Archives/edgar/data/1327567/000119312521244832/d204334dex101.htm)*] | | | | | | Employment Offer Letter by and between the Registrant and William “BJ” Jenkins, dated July 27, 2021. | | | | | | 8-K | | | | | | 001-35594 | | | | | | 10.1 | | | | | | August 12, 2021 | | | | | | | | |

| [removed: [10.3](https://www.sec.gov/Archives/edgar/data/1327567/000132756722000016/panw-ex102q322.htm)[2](https://www.sec.gov/Archives/edgar/data/1327567/000132756722000016/panw-ex102q322.htm)*] [added: [10.3](https://www.sec.gov/Archives/edgar/data/1327567/000132756721000029/panwex1027q421directoroffe.htm)[1](https://www.sec.gov/Archives/edgar/data/1327567/000132756721000029/panwex1027q421directoroffe.htm)*] | | | | | | [removed: Addendum to Employment] [added: Form of] Offer Letter between the Registrant and [removed: William “BJ” Jenkins dated February 18, 2022.] [added: its directors.] | | | | | | [removed: 10-Q] [added: 10-K] | | | | | | 001-35594 | | | | | | [removed: 10.2] [added: 10.27] | | | | | | [removed: May 20, 2022] [added: September 3, 2021] | | | | | | | | |

| [removed: [10.33](http://www.sec.gov/Archives/edgar/data/1327567/000119312518299312/d635314dex101.htm)*] [added: [10.39](http://www.sec.gov/Archives/edgar/data/1327567/000119312515347005/d59912dex101.htm)] | | | | | | [removed: Offer Letter] [added: Lease by and] between the Registrant and [removed: Amit K. Singh,] [added: Santa Clara Campus Property Owner I LLC,] dated October [removed: 11, 2018.] [added: 7, 2015.] | | | | | | [removed: 8-K] [added: 8-K/A] | | | | | | 001-35594 | | | | | | 10.1 | | | | | | October [removed: 15, 2018] [added: 19, 2015] | | | | | | | | |

| [removed: [10.3](http://www.sec.gov/Archives/edgar/data/1327567/000132756719000016/panwex101q319.htm)[7](http://www.sec.gov/Archives/edgar/data/1327567/000132756719000016/panwex101q319.htm)] [added: [10.3](http://www.sec.gov/Archives/edgar/data/1327567/000132756719000016/panwex101q319.htm)[2](http://www.sec.gov/Archives/edgar/data/1327567/000132756719000016/panwex101q319.htm)] | | | | | | Amended and Restated Flextronics Manufacturing Services Agreement, by and between the Registrant and Flextronics Telecom Systems Ltd., dated April 1, 2019. | | | | | | 10-Q | | | | | | 001-35594 | | | | | | 10.1 | | | | | | May 30, 2019 | | | | | | | | |

| [removed: [10.3](http://www.sec.gov/Archives/edgar/data/1327567/000132756721000029/panwex1029q421supplieragre.htm)[8](http://www.sec.gov/Archives/edgar/data/1327567/000132756721000029/panwex1029q421supplieragre.htm)] [added: [10.33](http://www.sec.gov/Archives/edgar/data/1327567/000132756721000029/panwex1029q421supplieragre.htm)] | | | | | | Vendor Information Security Terms between the Registrant and Flextronics Telecom Systems [removed: Ltd.] [added: Ltd.,] dated July 23, [removed: 2021] [added: 2021.] | | | | | | 10-K | | | | | | 001-35594 | | | | | | 10.29 | | | | | | September 3, 2021 | | | | | | | | |

| [removed: [10.42](http://www.sec.gov/Archives/edgar/data/1327567/000119312518217281/d471193dex103.htm)] [added: [10.35](http://www.sec.gov/Archives/edgar/data/1327567/000119312520163579/d936599dex103.htm)] | | | | | | Form of Warrant Confirmation. | | | | | | 8-K | | | | | | 001-35594 | | | | | | 10.3 | | | | | | [removed: July 13, 2018] [added: June 8, 2020] | | | | | | | | |

| [removed: [10.4](http://www.sec.gov/Archives/edgar/data/1327567/000132756715000027/panwex1029q415buildinge.htm)[6](http://www.sec.gov/Archives/edgar/data/1327567/000132756715000027/panwex1029q415buildinge.htm)] [added: [10.36](http://www.sec.gov/Archives/edgar/data/1327567/000132756715000027/panwex1029q415buildinge.htm)] | | | | | | Lease between the Registrant and Santa Clara Campus Property Owner I LLC, dated May 28, 2015. | | | | | | 10-K | | | | | | 001-35594 | | | | | | 10.29 | | | | | | September 17, 2015 | | | | | | | | |

| [removed: [10.4](http://www.sec.gov/Archives/edgar/data/1327567/000132756715000027/panwex1030q415buidlingf.htm)[7](http://www.sec.gov/Archives/edgar/data/1327567/000132756715000027/panwex1030q415buidlingf.htm)] [added: [10.37](http://www.sec.gov/Archives/edgar/data/1327567/000132756715000027/panwex1030q415buidlingf.htm)] | | | | | | Lease between the Registrant and Santa Clara Campus Property Owner I LLC, dated May 28, 2015. | | | | | | 10-K | | | | | | 001-35594 | | | | | | 10.30 | | | | | | September 17, 2015 | | | | | | | | |

3.Exhibits

\- 95 \-

| [10.1](http://www.sec.gov/Archives/edgar/data/1327567/000119312522310112/d424580dex991.htm)[6](http://www.sec.gov/Archives/edgar/data/1327567/000119312522310112/d424580dex991.htm)* | | | | | | Cider Security Ltd. 2020 Equity Incentive Plan. | | | | | | S-8 | | | | | | 333-268931 | | | | | | 99.1 | | | | | | December 21, 2022 | | | | | | | | |

| [10.17](http://www.sec.gov/Archives/edgar/data/1327567/000119312522310112/d424580dex992.htm)* | | | | | | US Sub-Plan to Cider Security Ltd. 2020 Equity Incentive Plan. | | | | | | S-8 | | | | | | 333-268931 | | | | | | 99.2 | | | | | | December 21, 2022 | | | | | | | | |

\- 96 \-

\- 97 \-

\- 98 \-

3.Exhibits

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| [4.3](http://www.sec.gov/Archives/edgar/data/0001327567/000119312518217281/d471193dex41.htm) | | | | | | Form of Global 0.75% Convertible Senior Note due 2023 (included in Exhibit 4.1). | | | | | | 8-K | | | | | | 001-35594 | | | | | | 4.2 | | | | | | July 13, 2018 | | | | | | | | |

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[Ta](#id86d15df0543432988e8ae716cf527ed_7)[ble of](#id86d15df0543432988e8ae716cf527ed_7) [Contents](#id86d15df0543432988e8ae716cf527ed_7)

| [10.1](http://www.sec.gov/Archives/edgar/data/1327567/000119312519194821/d614827dex991.htm)[0](http://www.sec.gov/Archives/edgar/data/1327567/000119312519194821/d614827dex991.htm)* | | | | | | Twistlock Ltd. Amended and Restated 2015 Share Option Plan. | | | | | | S-8 | | | | | | 333-232672 | | | | | | 99.1 | | | | | | July 16, 2019 | | | | | | | | |

| [10.1](http://www.sec.gov/Archives/edgar/data/1327567/000119312520003856/d850020dex991.htm)[2](http://www.sec.gov/Archives/edgar/data/1327567/000119312520003856/d850020dex991.htm)* | | | | | | Aporeto, Inc. Amended and Restated 2015 Stock Option and Grant Plan. | | | | | | S-8 | | | | | | 333-235854 | | | | | | 99.1 | | | | | | January 8, 2020 | | | | | | | | |

| [10.1](http://www.sec.gov/Archives/edgar/data/1327567/000119312520320099/d35944dex991.htm)[6](http://www.sec.gov/Archives/edgar/data/1327567/000119312520320099/d35944dex991.htm)* | | | | | | Expanse Holding Company, Inc. Amended and Restated 2012 Stock Incentive Plan. | | | | | | S-8 | | | | | | 333-251425 | | | | | | 99.1 | | | | | | December 17, 2020 | | | | | | | | |

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| [10.34](http://www.sec.gov/Archives/edgar/data/1327567/000132756721000040/panw-ex102q122.htm)* | | | | | | Addendum to Employment Offer Letter by and between the Registrant and Amit Singh, dated October 19, 2021. | | | | | | 10-Q | | | | | | 001-35594 | | | | | | 10.2 | | | | | | November 19, 2021 | | | | | | | | |

| [10.35](http://www.sec.gov/Archives/edgar/data/1327567/000132756722000008/panw-ex105q222.htm)* | | | | | | Second Addendum to Employment Offer Letter by and between the Registrant and Amit Singh, dated January 28, 2022. | | | | | | 10-Q | | | | | | 001-35594 | | | | | | 10.5 | | | | | | February 23, 2022 | | | | | | | | |

| [10.3](https://www.sec.gov/Archives/edgar/data/1327567/000132756721000029/panwex1027q421directoroffe.htm)[6](https://www.sec.gov/Archives/edgar/data/1327567/000132756721000029/panwex1027q421directoroffe.htm)* | | | | | | Form of Offer Letter between the Registrant and its directors. | | | | | | 10-K | | | | | | 001-35594 | | | | | | 10.27 | | | | | | September 3, 2021 | | | | | | | | |

| [10.39](http://www.sec.gov/Archives/edgar/data/1327567/000119312514215060/d734043dex101.htm) | | | | | | Settlement, Release and Cross-License Agreement, dated May 27, 2014, by and between the Registrant and Juniper Networks, Inc. | | | | | | 8-K | | | | | | 001-35594 | | | | | | 10.1 | | | | | | May 28, 2014 | | | | | | | | |

| [10.40](http://www.sec.gov/Archives/edgar/data/1327567/000119312518217281/d471193dex101.htm) | | | | | | Purchase Agreement, dated July 10, 2018, by and among the Registrant and Citigroup Global Markets Inc. and Wells Fargo Securities, LLC, as representatives of the several Initial Purchasers named therein. | | | | | | 8-K | | | | | | 001-35594 | | | | | | 10.1 | | | | | | July 13, 2018 | | | | | | | | |

| [10.4](http://www.sec.gov/Archives/edgar/data/1327567/000119312518217281/d471193dex102.htm)[1](http://www.sec.gov/Archives/edgar/data/1327567/000119312518217281/d471193dex102.htm) | | | | | | Form of Convertible Note Hedge Confirmation. | | | | | | 8-K | | | | | | 001-35594 | | | | | | 10.2 | | | | | | July 13, 2018 | | | | | | | | |

| [10.43](http://www.sec.gov/Archives/edgar/data/1327567/000119312520163579/d936599dex101.htm) | | | | | | Purchase Agreement, dated June 3, 2020, by and among the Registrant and Morgan Stanley & Co. LLC and Citigroup Global Markets Inc., as representatives of the several Initial Purchasers named therein. | | | | | | 8-K | | | | | | 001-35594 | | | | | | 10.1 | | | | | | June 8, 2020 | | | | | | | | |

| [10.44](http://www.sec.gov/Archives/edgar/data/1327567/000119312520163579/d936599dex102.htm) | | | | | | Form of Convertible Note Hedge Confirmation. | | | | | | 8-K | | | | | | 001-35594 | | | | | | 10.2 | | | | | | June 8, 2020 | | | | | | | | |

| [10.45](http://www.sec.gov/Archives/edgar/data/1327567/000119312520163579/d936599dex103.htm) | | | | | | Form of Warrant Confirmation. | | | | | | 8-K | | | | | | 001-35594 | | | | | | 10.3 | | | | | | June 8, 2020 | | | | | | | | |

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| [10.6](http://www.sec.gov/Archives/edgar/data/1327567/000132756717000035/panwex107q118_amendmentno5.htm)[3](http://www.sec.gov/Archives/edgar/data/1327567/000132756717000035/panwex107q118_amendmentno5.htm) | | | | | | Amendment No. 5 to Lease by and between the Registrant and Santa Clara Phase III EFH LLC, dated September 29, 2017. | | | | | | 10-Q | | | | | | 001-35594 | | | | | | 10.7 | | | | | | November 21, 2017 | | | | | | | | |

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on September 6, 2022.

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| --- | --- | --- | --- | --- | --- |

| PALO ALTO NETWORKS, INC. | | | | | |

| By: | | | /s/ NIKESH ARORA | | |

| | | | Nikesh Arora | | |

| | | | *Chairman and Chief Executive Officer* | | |

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POWER OF ATTORNEY

KNOW ALL THESE PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Nikesh Arora, Dipak Golechha, and Josh Paul, and each of them, as his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their, his or her substitutes, may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Signature | | | | | | Title | | | | | | Date | | |

| /s/ NIKESH ARORA | | | | | | Chairman, Chief Executive Officer and Director (Principal Executive Officer) | | | | | | September 6, 2022 | | |

| Nikesh Arora | | | | | | | | | | | | | | |

| /s/ DIPAK GOLECHHA | | | | | | Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer) | | | | | | September 6, 2022 | | |

Not applicable.

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Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on September 1, 2023.

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| PALO ALTO NETWORKS, INC. | | | | | |

| By: | | | /s/ NIKESH ARORA | | |

| | | | Nikesh Arora | | |

| | | | *Chairman and Chief Executive Officer* | | |

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Power of Attorney

KNOW ALL THESE PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Nikesh Arora, Dipak Golechha, and Josh Paul, and each of them, as his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their, his or her substitutes, may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Signature | | | | | | Title | | | | | | Date | | |

| | | | | | | | | | | | | | | |

| /s/ NIKESH ARORA | | | | | | Chairman, Chief Executive Officer and Director (Principal Executive Officer) | | | | | | September 1, 2023 | | |

| Nikesh Arora | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| /s/ DIPAK GOLECHHA | | | | | | Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer) | | | | | | September 1, 2023 | | |

| Dipak Golechha | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| /s/ JOSH PAUL | | | | | | Chief Accounting Officer (Duly Authorized Officer and Principal Accounting Officer) | | | | | | September 1, 2023 | | |

| Josh Paul | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| /s/ NIR ZUK | | | | | | Chief Technology Officer and Director | | | | | | September 1, 2023 | | |

| Nir Zuk | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| /s/ APARNA BAWA | | | | | | Director | | | | | | September 1, 2023 | | |

| Aparna Bawa | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| /s/ JOHN M. DONOVAN | | | | | | Director | | | | | | September 1, 2023 | | |

| John M. Donovan | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| /s/ CARL ESCHENBACH | | | | | | Director | | | | | | September 1, 2023 | | |

| Carl Eschenbach | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| /s/ DR. HELENE D. GAYLE | | | | | | Director | | | | | | September 1, 2023 | | |