Palo Alto Networks

“If we do not accurately predict, prepare for, and respond promptly to rapidly evolving technological and market developments and successfully manage product and subscription introductions and transitions to meet changing end-customer needs in the enterprise security industry, our competitive position and prospects will be harmed. The enterprise security industry has grown quickly and continues to evolve rapidly.”

Annual report 2026A · The company itself

“Vulnerabilities within our AI systems may be identified by researchers or malicious actors before we detect or remediate them, which could result in security incidents, data privacy issues, reputational damage, or loss of customer confidence.”

Annual report 2026A · The company itself

“Defects, errors, or vulnerabilities in our products, subscriptions, or support offerings, the failure of our products or subscriptions to block a virus or prevent a security breach or incident, misuse of our products, or risks of product liability claims could harm our reputation and adversely impact our operating results. Because our products and subscriptions are complex, they have contained and may contain design or manufacturing defects, vulnerabilities, or errors that are not detected until after deployment.”

Annual report 2026A · The company itself

“For example, in May 2026, we became aware of an authentication bypass vulnerability in certain versions of our PAN-OS software and published a security advisory, provided software updates, and engaged in customer outreach, support, and remediation efforts.”

Annual report 2026A · The company itself

“Defects, errors, or a technical failure of our products may temporarily or permanently disable our end-customers’ networks, IT infrastructure, or other systems. Our products must interoperate with end-customers’ existing infrastructure, which often has varied specifications, multiple protocol standards, and products from multiple vendors.”

Annual report 2026A · The company itself

“The sale and support of our products and subscriptions also entails the risk of product liability claims.”

Annual report 2026A · The company itself

“Our shared responsibility security model relies on customers to configure and use our products securely, and customer errors could harm our reputation even when we are not at fault. We deliver certain of our products under a model in which we are responsible for the security of the underlying platform and infrastructure and our customers are responsible for configuring, deploying, patching, and using our products and configuring and implementing the security controls and posture within their environments.”

Annual report 2026A · The company itself

“A key element of our strategy is to help our customers simplify their security architectures through consolidating disparate point products. We execute on this strategy by developing our capabilities and packaging our offerings into platforms, which are able to cover many of our customers’ needs in the markets in which we operate. Our platformization strategy combines various products and services into a tightly integrated architecture for more secure, faster, and cost-effective outcomes.”

Annual report 2026A · The company itself

“RESEARCH AND DEVELOPMENT Our research and development efforts are strategically centered on expanding our leadership within the enterprise security industry through AI-powered innovation. We focus on enhancing our integrated platforms and developing new software and hardware capabilities. Our engineering teams apply deep expertise in AI and machine learning across networking security, cloud security, endpoint security, security operations, and identity security to address the rapidly evolving threat landscape.”

Annual report 2026A · The company itself

“(“Chronosphere”), a privately-held observability technology company, forming our next-generation observability platform; in February 2026, we completed the acquisition of CyberArk Software Ltd.”

Annual report 2026A · The company itself

“(“CyberArk”), an identity security company, forming our next-generation identity security platform; in April 2026, we completed the acquisition of Koi, a privately-held endpoint posture management company, which adds agentic endpoint security capabilities to our security operations platform and enhances Prisma® AIRS™; in May 2026, we completed the acquisition of Portkey, Inc.”

Annual report 2026A · The company itself

“Business General Palo Alto Networks, Inc. is a global artificial intelligence (“AI”) cybersecurity provider and our vision is a world where each day is safer and more secure than the one before.”

Annual report 2026A · The company itself

“Our platforms and services help secure enterprise users, networks, clouds, endpoints, AI apps and agents, and identities by delivering comprehensive cybersecurity backed by AI and automation, and provide real-time visibility and monitoring across cloud infrastructure, applications and AI workloads.”

Annual report 2026A · The company itself

“Network & AI Security Our Network & AI Security platform is designed to deliver complete zero trust solutions to our customers. The platform includes: •Secure Access Service Edge (“SASE”). Prisma® Access, when combined with Prisma SD-WAN, provides a comprehensive AI-powered SASE solution that secures users, branches, data, AI apps and agents from the most evasive threats in the new AI landscape. Our Prisma Browser™ further extends zero-trust security and data protection to the browser, where the majority of work is done today, providing users with the freedom to work securely using our secure browser from any device. •Next-Generation Firewalls.”

Annual report 2026A · The company itself

“•Cloud-Delivered Security Services (“CDSS”). Our network security platform integrates a suite of Precision AI powered security capabilities that complements our SASE and NGFW solutions. These include Advanced Threat Prevention, Advanced WildFire®, Advanced URL Filtering, Advanced DNS Security, Device Security, Quantum Security, Next-Gen Trust Protection (“NGTS”), GlobalProtect®, Prisma Access Agent, Enterprise Data Loss Prevention (“Enterprise DLP”), Software as a Service (“SaaS”) Security, and AI Access Security™.”

Annual report 2026A · The company itself

“Prisma AIRS™ is our comprehensive AI security platform designed to help organizations discover, assess, and protect AI agents, applications, models and data across the AI lifecycle. It supports key enterprise use cases, including securing AI-assisted software development, protecting custom AI applications from development through runtime, and governing autonomous AI agents. Prisma AIRS™ brings together AI Gateway, Agent Security, AI Red Teaming, AI Runtime Security™, AI Model Security, and AI Posture Management in a unified platform.”

Annual report 2026A · The company itself

“•Strata Cloud Manager (“SCM”). SCM is our AI-powered unified network security management and operations solution. It enables customers to manage and monitor their NGFW and SASE environments through a single, streamlined interface.”

Annual report 2026A · The company itself

“Cortex Our AI-powered Cortex® platform transforms end-to-end security operations and observability with unified data, AI, and automation for more secure, faster, and cost effective outcomes. •Security Operations. We deliver the next generation of security operations capabilities that unifies standalone Security Information and Event Management (“SIEM”) tools, endpoint security, security automation, cloud detection and response (“CDR”), as well as attack surface management (“ASM”) capabilities on our Cortex platform. These include Cortex XSIAM®, for AI-powered security operations replacing traditional SIEM tools; Cortex XDR®, for the prevention, detection, and response to complex cybersecurity attacks; Cortex XSOAR®, for security orchestration, automation, and response (“SOAR”); Cortex Xpanse®, for ASM; and Koi Agentic Endpoint Security.”

Annual report 2026A · The company itself

“•Cloud Security. We deliver comprehensive security across the cloud application development lifecycle through Cortex Cloud®, delivered as a scalable SaaS offering. As a comprehensive Cloud Native Application Protection Platform (“CNAPP”) combined with CDR, Cortex Cloud secures multi- and hybrid-cloud environments for applications, data, generative AI (“GenAI”) ecosystem, and the cloud native technology stack across the full development lifecycle, from code to cloud to security operations.”

Annual report 2026A · The company itself

“Idira Idira™, our next-generation identity security platform, is designed to secure human, agentic, and machine identities across the enterprise with intelligent privilege controls and continuous threat prevention. By unifying identity access management, privilege access management, and identity governance and administration, organizations can continuously discover and protect against identity risk throughout the end-to-end identity lifecycle.”

Annual report 2026A · The company itself

“The platform includes: •Workforce Identity Security. Our solutions apply identity assurance and modern access controls for the entire workforce, including through adaptive multi-factor authentication (“MFA”), single sign-on (“SSO”), secure browsing, web session protection, workforce password management, and automated identity lifecycle management. Our approach enforces least privilege by elevating access only when required. •Information Technology (“IT”) and Developer Identity Security (Modern Privilege Access Management).”

Annual report 2026A · The company itself

“Our solutions secure high-risk access for IT administrators, third-party vendors, developers, and cloud operations teams across hybrid and multi-cloud environments, delivering just-in-time privileged access, session isolation, credential protection, and zero standing privileges, while providing native, secure access to cloud services, workloads, and development and operations pipelines.”

Annual report 2026A · The company itself

“•Machine Identity Security. Our solutions secure the growing volume of non-human identities—such as workloads, applications, containers, service accounts, certificates, and keys, including through centralized discovery and management of secrets, certificate lifecycle automation, workload identity issuance, public key infrastructure-as-a-service, Kubernetes certificate management, and secure code signing. •Identity Governance and Administration (“IGA”).”

Annual report 2026A · The company itself

“IGA enables visibility into entitlements, automated joiner–mover–leaver processes, access certification, and ongoing identity compliance. AI-supported policy automation helps organizations govern access at scale and enforce a zero-trust model across all identities. •AI Agents Security.”

Annual report 2026A · The company itself

“Threat Intelligence and Advisory Services •Unit 42® brings together world-renowned expertise across threat research, incident response, and security consulting to deliver intelligence-driven, response-ready outcomes that help customers reduce cyber risk. Our elite consultants serve as trusted advisors to our customers by assessing and testing their security controls against sophisticated threats, including Frontier AI, transforming their security strategy with a threat-informed approach, and responding to security incidents on behalf of our clients.”

Annual report 2026A · The company itself

“In April 2026, we launched a new suite of Unit 42 Frontier AI Defense services to help customers proactively discover and neutralize threats introduced by next-generation AI models.”

Annual report 2026A · The company itself

“Prisma Access is a cloud-delivered security offering that helps organizations deliver consistent AI-driven security to remote networks and mobile users. With more than 100 locations around the world, Prisma Access offers global coverage, consistently inspecting all traffic across all ports and providing bidirectional networking to enable branch-to-branch and branch-to-headquarter traffic. Prisma Access consolidates point products into a single cloud-delivered solution, transforming network security and allowing organizations to enable secure hybrid work.”

Annual report 2026A · The company itself

“Our Prisma SD-WAN solution is a next-generation SD-WAN solution that makes the secure cloud-delivered branch possible. Prisma SD-WAN enables organizations to replace traditional wide area network (“WAN”) architectures with affordable broadband and internet transport types that promote improved bandwidth availability, redundancy, and performance. Prisma SD-WAN leverages real-time application performance SLAs and visibility to control and intelligently steer application traffic to deliver a powerful user experience.”

Annual report 2026A · The company itself

“Our hardware and software ML-Powered NGFWs use AI—including machine learning and deep learning—to stop zero-day threats in real time, and detect and secure the entire enterprise including Internet of Things (“IoT”). All of our hardware and software firewalls incorporate the PAN-OS® operating system and include the same rich set of features, ensuring consistent operation across our entire product line. This includes SD-WAN capabilities to intelligently steer traffic to data centers, branches, and the cloud, natively integrated into our NGFWs.”

Annual report 2026A · The company itself

“Cloud-Delivered Security Services •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. In addition, we offer inline deep learning to deliver real-time detection and prevention of unknown, evasive, and targeted command-and-control (“C2”) communications over HTTP, unknown-TCP, unknown-UDP, and encrypted over SSL.”

Annual report 2026A · The company itself

“Advanced Threat Prevention is the industry’s only offering to protect the enterprise from unknown command and control in real-time with the power of Precision AITM. •Advanced WildFire. This cloud-delivered security service 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. 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.”

Annual report 2026A · The company itself

“•Advanced URL Filtering. This cloud-delivered security service offers the industry’s first Inline Deep Learning powered web protection engine. We deliver real-time detection and prevention of unknown, evasive, and targeted web-based threats, such as phishing.”

Annual report 2026A · The company itself

“In addition, the service 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 threats, such as phishing, malware, and C2. •Advanced DNS Security. This cloud-delivered security service uses machine learning to proactively block malicious domains and stop attacks in progress. The service allows our network security platform access to Domain Name System (“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.”

Annual report 2026A · The company itself

“•Device Security. This cloud-delivered security service uses machine learning to accurately identify and classify various IoT, connected medical, operational technology (“OT”), and unmanaged IT devices, including never-been-seen-before devices, critical devices, and unmanaged legacy systems. The service uses machine learning to baseline normal behavior, identify anomalous activity, assess and prioritize risk, provide virtual patching, and provide policy and remediation recommendations. •SaaS Security API.”

Annual report 2026A · The company itself

“SaaS Security API is a multi-mode, cloud access security broker (“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 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.”

Annual report 2026A · The company itself

“•SaaS Security Inline. SaaS Security Inline adds an inline service to automatically gain visibility and control over thousands of known and newly sanctioned, unsanctioned and tolerated SaaS applications in use within organizations today. The service provides enterprise data protection and compliance across all SaaS applications and prevents cloud threats in real time.”

Annual report 2026A · The company itself

“GlobalProtect provides protection for users of both traditional laptop and mobile devices. It expands the boundaries of the end-users’ physical network, effectively establishing a logical perimeter that encompasses remote laptop and mobile device users irrespective of their location. Regardless of the operating system, laptops, tablets, and phones will stay connected to the corporate network when they are on a network of any kind and as a result, are protected as if they never left the corporate campus.”

Annual report 2026A · The company itself

“•Prisma Access Agent. Prisma Access Agent provides secure, remote access to corporate resources for employees working from any location or device. The agent establishes an encrypted tunnel to Prisma Access or our NGFW, ensuring consistent security, data protection, and threat prevention for a distributed workforce accessing any application. •Enterprise DLP.”

Annual report 2026A · The company itself

“This cloud-delivered security service provides consistent and reliable protection of sensitive data, such as personally identifiable information and intellectual property, for all traffic types, applications, and users. Native integration with our products makes the service simple to deploy, while advanced machine learning minimizes management complexity. Enterprise DLP allows organizations to consistently discover, classify, monitor, and protect sensitive data, wherever it may reside. •AI Access Security.”

Annual report 2026A · The company itself

“AI Access Security classifies and prioritizes GenAI applications to assess risk, detect anomalies, and visualize insights across multiple GenAI-specific attributes. The service prevents sensitive data loss and defends against malicious responses, ensuring safe and effective AI adoption.”

Annual report 2026A · The company itself

“Serves as the centralized AI security control plane through which all enterprise AI traffic flows—including LLM calls, tool invocations, agent interactions, and prompt data. AI Gateway enables organizations to govern AI agents, secure AI coding tools, and safely enable enterprise AI apps from a single control plane. The gateway provides real-time visibility into usage, tracks token consumption and cost, and inspects every interaction to prevent data leakage, prompt injection, and unsafe outputs.”

Annual report 2026A · The company itself

“•AI Runtime Security. Provides continuous, real-time protection for live AI autonomous agents, applications and models operating in production. It actively intercepts mid-conversation threats, such as prompt injections, indirect injections, malicious URLs, retrieval manipulation, and tool abuse while enforcing enterprise-grade Data Loss Prevention (“DLP”) across prompts and outputs.”

Annual report 2026A · The company itself

“By stopping exploits as they unfold and preventing unauthorized data exfiltration, AI Runtime Security ensures business continuity, protects high-value enterprise data, and keeps operational agents acting safely within policy boundaries to secure enterprise AI apps and AI-assisted coding. •AI Model Security. Protects the foundation of the AI ecosystem by extending continuous scanning to underlying model architectures, weights, operators, agent artifacts, code dependencies, and skills. AI Model Security inspects components in-place to identify hidden malware, poisoned assets, unsafe permissions, and indirect injection paths before they reach production.”

Annual report 2026A · The company itself

“•AI Posture Management. Provides continuous, real-time risk assessment across cloud, SaaS, and endpoint environments to help eliminate "Shadow AI" blind spots. It discovers deployed chatbots and agents, maps data flows, and enforces policy rules aligned with frameworks like the E.U.”

Annual report 2026A · The company itself

“Strata Cloud Manager (“SCM”). SCM enables our customers to easily manage their Palo Alto Networks’ Network Security infrastructure—including NGFWs and SASE deployments—from the cloud, via one unified management interface. As an AI-powered, unified cloud management solution, SCM enables organizations to enhance their network security posture and streamline operations.”

Annual report 2026A · The company itself

“CORTEX •Cortex XSIAM. Our cloud-based AI-powered security operations platform harnesses the power of AI to significantly improve security outcomes and transform security operations. Cortex XSIAM customers are able to consolidate multiple products into a single unified platform that delivers security information and event management, extended detection and response (“XDR”), SOAR, network traffic analysis, ASM, threat intelligence management (“TIM”), identity threat detection and response, and CDR.”

Annual report 2026A · The company itself

“•Cortex XDR. This cloud-based service enables organizations to collect telemetry from endpoint, network, identity, and cloud data sources and apply advanced analytics and machine learning to quickly find and stop targeted attacks, insider abuse, and compromised endpoints. Cortex XDR has two product tiers: XDR Prevent and XDR Pro.”

Annual report 2026A · The company itself

“•Cortex XSOAR. Available as a stand-alone, cloud-based service, an on-premises virtual appliance, or delivered natively through Cortex XSIAM, Cortex XSOAR is a comprehensive SOAR offering that unifies playbook automation, case management, real-time collaboration, and threat intelligence management to serve security teams across the incident lifecycle. With Cortex XSOAR, security teams can standardize processes, automate repeatable tasks, and manage incidents across their security product stack to improve response time and analyst productivity.”

Annual report 2026A · The company itself

“•Cortex Xpanse. Available as a stand-alone, cloud-based service and a cloud-based subscription module within Cortex XSIAM, Cortex Xpanse provides ASM, which is the ability for an organization to identify what an attacker would see among all of its sanctioned and unsanctioned Internet-facing assets. In addition, Cortex Xpanse detects risky or out-of-policy communications between Internet-connected assets that can be exploited for data breaches or ransomware attacks.”

Annual report 2026A · The company itself

“Available as a stand-alone, cloud-based service or an add-on to Cortex XDR or to Cortex XSIAM. Cortex Cloud, the next generation of Prisma Cloud, merges CNAPP with CDR for real-time cloud security. The solution allows you to harness the power of AI and automation to prioritize cloud risks with runtime context, enable remediation at scale, and stop attacks as they happen.”

Annual report 2026A · The company itself

“IDIRA •Privileged Access Management (“PAM”). Available as a core cloud-native platform module or software, Idira PAM establishes a modern framework for securing high-risk administrative access across multi-cloud, on-premises, and hybrid infrastructures. The solution enforces a strict Zero Standing Privilege (“ZSP”) model by utilizing Just-in-Time (“JIT”) dynamic privilege elevation, ensuring that administrative pathways exist exclusively for the duration of an authorized task and are terminated immediately upon completion.”

Annual report 2026A · The company itself

“By continually discovering hidden access paths and unmanaged accounts, Idira PAM helps customers reduce the privilege gaps associated with administrative environments. •Identity and Access Management (“IAM”). Our cloud-based service enables organizations to deliver secure application and infrastructure connectivity for a decentralized workforce. Idira IAM unifies core identity services—including SSO, phishing-resistant MFA, and automated lifecycle management—into a single high-availability identity hub.”

Annual report 2026A · The company itself

“•Workforce Password Management. This cloud-delivered solution extends security capabilities to corporate applications, SaaS tools, and web portals that lack native support for federated SSO protocols. Idira Workforce Password Management allows security teams to bring unmanaged password-based applications under centralized administrative oversight.”

Annual report 2026A · The company itself

“By integrating directly into the user’s browser workflow, it enables frictionless passwordless entry experiences for the workforce while providing IT leadership with complete visibility into application usage, credential strength, and shared account vulnerabilities. •Vendor Privileged Access. Designed to mitigate third-party supply chain liabilities, this solution secures and governs remote access for external contractors, supply partners, and service vendors without requiring corporate agents or complex virtual private network (“VPN”) infrastructure. Idira Vendor Privileged Access establishes an isolated, browser-based secure gateway that authenticates external contributors using strict multi-factor checks and contextual policies.”

Annual report 2026A · The company itself

“THREAT INTELLIGENCE AND ADVISORY SERVICES •Customer Support. Global customer support helps our customers achieve their security outcomes with services and support capabilities covering the customer's entire journey with Palo Alto Networks. This post-sales, global organization advances our customers’ security maturity, supporting them when, where, and how they need it.”

Annual report 2026A · The company itself

“•Threat Intelligence, Incident Response and Security Consulting. Unit 42 brings together world-renowned threat researchers, incident responders, and security consultants to create an intelligence-driven, response-ready organization that is passionate about helping clients proactively manage cyber risk. We help security leaders assess and test their security controls, transform their security strategy with a threat-informed approach, and respond to incidents rapidly.”

Annual report 2026A · The company itself

“The Unit 42 Threat Intelligence team provides threat research that enables security teams to understand adversary intent and attribution, while enhancing protections offered by our products and services to stop advanced attacks. Our security consultants serve as trusted partners with state-of-the-art cyber risk expertise and incident response capabilities, helping customers build effective security programs, uncover critical exposures to prevent incidents, and, should incidents occur, respond to them with speed and confidence. Additionally, Unit 42 experts help customers proactively discover and neutralize threats introduced by next-generation AI models with the Frontier AI Defense service.”

Annual report 2026A · The company itself

“•Professional Services. Professional services are primarily delivered directly by Palo Alto Networks and through a global network of authorized channel partners to our end-customers and include on-location and remote, hands-on experts who plan, design, and deploy effective security solutions tailored to our end-customers’ specific requirements. These services include architecture design and planning, implementation, configuration, and firewall migrations for all our products, including Prisma and Cortex deployments.”

Annual report 2026A · The company itself

“COMPETITION We operate in the intensely competitive enterprise security industry that is characterized by constant change and innovation. Changes in the application, threat, and technology landscape result in evolving customer requirements for the protection from threats and the safe enablement of applications.”

Annual report 2026A · The company itself

“As AI transforms the cybersecurity landscape, we continue to invest in our workforce to build AI fluency that enables our employees to innovate, adapt, and meet evolving customer needs while delivering on our mission of protecting our digital way of life.”

Annual report 2026A · The company itself

“A growing portion of our revenue is generated from offerings priced on a consumption or usage basis, including certain of our observability and AI-related offerings. Pricing on this basis may result in significant near-term revenue growth as customers scale their usage but also creates exposure to customer optimization behavior, where customers who have rapidly increased usage subsequently seek to reduce, optimize, or reconfigure their consumption or usage to lower costs. This dynamic has been observed in the industry with cloud-native customers and, more recently, with AI-native customers, whose data volumes and usage patterns can fluctuate significantly.”

Annual report 2026A · The company itself

“Issues in the development, deployment, or use of AI may result in reputational harm, legal liability, and could adversely affect our business and operating results. We have incorporated, and are continuing to develop and deploy, AI into many of our products, solutions, and business operations.”

Annual report 2026A · The company itself

“Vulnerabilities within our AI systems may be identified by researchers or malicious actors before we detect or remediate them, which could result in security incidents, data privacy issues, reputational damage, or loss of customer confidence.”

Annual report 2026A · The company itself

“To the extent customers, investors, or other market participants perceive that AI can automate or commoditize aspects of cybersecurity functions, the perceived value of certain cybersecurity solutions could diminish, and customer buying patterns, competitive dynamics, and demand for our products, subscriptions, and support offerings could be adversely affected.”

Annual report 2026A · The company itself

“The use or adoption of AI technologies in our products may result in exposure to claims by third parties, including alleging copyright infringement or other intellectual property misappropriation, which may require us to pay compensation or license fees to third parties, as well as regulatory action and enforcement.”

Annual report 2026A · The company itself

“The emergence of AI agents as a new class of identity presents both opportunities and risks that could impact our identity security offerings. The rapid deployment of generative AI systems and AI agents is creating a new class of identity that requires authenticated, secure access to sensitive resources at a scale and speed exceeding traditional identity models designed for human users.”

Annual report 2026A · The company itself

“Demand for cloud computing infrastructure and specialized computing resources, including for AI and machine learning workloads, has increased significantly across industries, and our third-party providers may prioritize other customers or uses, limit our access to capacity, or be unable to meet our requirements.”

Annual report 2026A · The company itself

“Our future success depends, in part, on our ability to continue to attract, retain, and motivate the members of our management team and other key employees. For example, we are substantially dependent on the continued service of our engineering personnel because of the complexity of our offerings. Competition for highly skilled personnel, particularly in engineering, including in the areas of AI and machine learning, is intense, especially in the San Francisco Bay Area, where we have a substantial presence and need for such personnel.”

Annual report 2026A · The company itself

“RESEARCH AND DEVELOPMENT Our research and development efforts are strategically centered on expanding our leadership within the enterprise security industry through AI-powered innovation. We focus on enhancing our integrated platforms and developing new software and hardware capabilities. Our engineering teams apply deep expertise in AI and machine learning across networking security, cloud security, endpoint security, security operations, and identity security to address the rapidly evolving threat landscape.”

Annual report 2026A · The company itself

“(“CyberArk”), an identity security company, forming our next-generation identity security platform; in April 2026, we completed the acquisition of Koi, a privately-held endpoint posture management company, which adds agentic endpoint security capabilities to our security operations platform and enhances Prisma® AIRS™; in May 2026, we completed the acquisition of Portkey, Inc.”

Annual report 2026A · The company itself

“(“Portkey”), a privately-held AI Gateway company, which enhances the capabilities of Prisma AIRS; in July 2026, we entered into a definitive agreement to acquire Embrace Mobile, Inc.”

Annual report 2026A · The company itself

“(“Embrace”), a privately-held Real User Monitoring (“RUM”) company that we expect will add RUM capabilities to our observability platform; and in July 2026, we entered into a definitive agreement to acquire Console Systems, Inc. (“Console”), a privately-held company providing an AI-native platform that enables agentic workflows across enterprise operations, which we expect to deepen our agentic capabilities in Cortex.”

Annual report 2026A · The company itself

“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. Our investments in research and development, including investments in AI, may not result in design or performance improvements, marketable products, subscriptions, or features, or may not achieve the cost savings or additional revenue that we expect.”

Annual report 2026A · The company itself

“The cybersecurity industry is undergoing a transformation as customers increasingly expect AI-native solutions that are designed from the ground up to leverage AI capabilities. If we fail to anticipate, invest in, or execute on the transition to AI-native platforms, or if our competitors develop AI-native offerings that achieve greater market acceptance, we may miss critical opportunities for growth and market leadership, and our business, including our gross margin, and competitive position could be materially harmed.”

Annual report 2026A · The company itself

“Business General Palo Alto Networks, Inc. is a global artificial intelligence (“AI”) cybersecurity provider and our vision is a world where each day is safer and more secure than the one before.”

Annual report 2026A · The company itself

“Our platforms and services help secure enterprise users, networks, clouds, endpoints, AI apps and agents, and identities by delivering comprehensive cybersecurity backed by AI and automation, and provide real-time visibility and monitoring across cloud infrastructure, applications and AI workloads.”

Annual report 2026A · The company itself

“Network & AI Security Our Network & AI Security platform is designed to deliver complete zero trust solutions to our customers. The platform includes: •Secure Access Service Edge (“SASE”). Prisma® Access, when combined with Prisma SD-WAN, provides a comprehensive AI-powered SASE solution that secures users, branches, data, AI apps and agents from the most evasive threats in the new AI landscape. Our Prisma Browser™ further extends zero-trust security and data protection to the browser, where the majority of work is done today, providing users with the freedom to work securely using our secure browser from any device. •Next-Generation Firewalls.”

Annual report 2026A · The company itself

“Prisma AIRS™ is our comprehensive AI security platform designed to help organizations discover, assess, and protect AI agents, applications, models and data across the AI lifecycle. It supports key enterprise use cases, including securing AI-assisted software development, protecting custom AI applications from development through runtime, and governing autonomous AI agents. Prisma AIRS™ brings together AI Gateway, Agent Security, AI Red Teaming, AI Runtime Security™, AI Model Security, and AI Posture Management in a unified platform.”

Annual report 2026A · The company itself

“•Strata Cloud Manager (“SCM”). SCM is our AI-powered unified network security management and operations solution. It enables customers to manage and monitor their NGFW and SASE environments through a single, streamlined interface.”

Annual report 2026A · The company itself

“Cortex Our AI-powered Cortex® platform transforms end-to-end security operations and observability with unified data, AI, and automation for more secure, faster, and cost effective outcomes. •Security Operations. We deliver the next generation of security operations capabilities that unifies standalone Security Information and Event Management (“SIEM”) tools, endpoint security, security automation, cloud detection and response (“CDR”), as well as attack surface management (“ASM”) capabilities on our Cortex platform. These include Cortex XSIAM®, for AI-powered security operations replacing traditional SIEM tools; Cortex XDR®, for the prevention, detection, and response to complex cybersecurity attacks; Cortex XSOAR®, for security orchestration, automation, and response (“SOAR”); Cortex Xpanse®, for ASM; and Koi Agentic Endpoint Security.”

Annual report 2026A · The company itself

“Chronosphere, our next-generation observability platform, delivers real-time visibility and monitoring across cloud-native infrastructure, applications, and AI workloads. Purpose-built to handle the massive data volumes of the AI era, Chronosphere enables organizations to maintain system resilience and uptime with high cost-efficiency and reliability. Our observability platform provides comprehensive visibility into complex digital environments and automated troubleshooting of issues.”

Annual report 2026A · The company itself

“Idira Idira™, our next-generation identity security platform, is designed to secure human, agentic, and machine identities across the enterprise with intelligent privilege controls and continuous threat prevention. By unifying identity access management, privilege access management, and identity governance and administration, organizations can continuously discover and protect against identity risk throughout the end-to-end identity lifecycle.”

Annual report 2026A · The company itself

“IGA enables visibility into entitlements, automated joiner–mover–leaver processes, access certification, and ongoing identity compliance. AI-supported policy automation helps organizations govern access at scale and enforce a zero-trust model across all identities. •AI Agents Security.”

Annual report 2026A · The company itself

“In April 2026, we launched a new suite of Unit 42 Frontier AI Defense services to help customers proactively discover and neutralize threats introduced by next-generation AI models.”

Annual report 2026A · The company itself

“Our hardware and software ML-Powered NGFWs use AI—including machine learning and deep learning—to stop zero-day threats in real time, and detect and secure the entire enterprise including Internet of Things (“IoT”). All of our hardware and software firewalls incorporate the PAN-OS® operating system and include the same rich set of features, ensuring consistent operation across our entire product line. This includes SD-WAN capabilities to intelligently steer traffic to data centers, branches, and the cloud, natively integrated into our NGFWs.”

Annual report 2026A · The company itself

“AI Access Security classifies and prioritizes GenAI applications to assess risk, detect anomalies, and visualize insights across multiple GenAI-specific attributes. The service prevents sensitive data loss and defends against malicious responses, ensuring safe and effective AI adoption.”

Annual report 2026A · The company itself

“Serves as the centralized AI security control plane through which all enterprise AI traffic flows—including LLM calls, tool invocations, agent interactions, and prompt data. AI Gateway enables organizations to govern AI agents, secure AI coding tools, and safely enable enterprise AI apps from a single control plane. The gateway provides real-time visibility into usage, tracks token consumption and cost, and inspects every interaction to prevent data leakage, prompt injection, and unsafe outputs.”

Annual report 2026A · The company itself

“•AI Runtime Security. Provides continuous, real-time protection for live AI autonomous agents, applications and models operating in production. It actively intercepts mid-conversation threats, such as prompt injections, indirect injections, malicious URLs, retrieval manipulation, and tool abuse while enforcing enterprise-grade Data Loss Prevention (“DLP”) across prompts and outputs.”

Annual report 2026A · The company itself

“By stopping exploits as they unfold and preventing unauthorized data exfiltration, AI Runtime Security ensures business continuity, protects high-value enterprise data, and keeps operational agents acting safely within policy boundaries to secure enterprise AI apps and AI-assisted coding. •AI Model Security. Protects the foundation of the AI ecosystem by extending continuous scanning to underlying model architectures, weights, operators, agent artifacts, code dependencies, and skills. AI Model Security inspects components in-place to identify hidden malware, poisoned assets, unsafe permissions, and indirect injection paths before they reach production.”

Annual report 2026A · The company itself

“•AI Posture Management. Provides continuous, real-time risk assessment across cloud, SaaS, and endpoint environments to help eliminate "Shadow AI" blind spots. It discovers deployed chatbots and agents, maps data flows, and enforces policy rules aligned with frameworks like the E.U.”

Annual report 2026A · The company itself

“Strata Cloud Manager (“SCM”). SCM enables our customers to easily manage their Palo Alto Networks’ Network Security infrastructure—including NGFWs and SASE deployments—from the cloud, via one unified management interface. As an AI-powered, unified cloud management solution, SCM enables organizations to enhance their network security posture and streamline operations.”

Annual report 2026A · The company itself

“CORTEX •Cortex XSIAM. Our cloud-based AI-powered security operations platform harnesses the power of AI to significantly improve security outcomes and transform security operations. Cortex XSIAM customers are able to consolidate multiple products into a single unified platform that delivers security information and event management, extended detection and response (“XDR”), SOAR, network traffic analysis, ASM, threat intelligence management (“TIM”), identity threat detection and response, and CDR.”

Annual report 2026A · The company itself

“•Cortex XDR. This cloud-based service enables organizations to collect telemetry from endpoint, network, identity, and cloud data sources and apply advanced analytics and machine learning to quickly find and stop targeted attacks, insider abuse, and compromised endpoints. Cortex XDR has two product tiers: XDR Prevent and XDR Pro.”

Annual report 2026A · The company itself

“Available as a stand-alone, cloud-based service or an add-on to Cortex XDR or to Cortex XSIAM. Cortex Cloud, the next generation of Prisma Cloud, merges CNAPP with CDR for real-time cloud security. The solution allows you to harness the power of AI and automation to prioritize cloud risks with runtime context, enable remediation at scale, and stop attacks as they happen.”

Annual report 2026A · The company itself

“Our consumption- or usage-based offerings may expose us to customer usage optimization behavior that could create revenue volatility. A growing portion of our revenue is generated from offerings priced on a consumption or usage basis, including certain of our observability and AI-related offerings.”

Annual report 2026A · The company itself

“A growing portion of our revenue is generated from offerings priced on a consumption or usage basis, including certain of our observability and AI-related offerings. Pricing on this basis may result in significant near-term revenue growth as customers scale their usage but also creates exposure to customer optimization behavior, where customers who have rapidly increased usage subsequently seek to reduce, optimize, or reconfigure their consumption or usage to lower costs. This dynamic has been observed in the industry with cloud-native customers and, more recently, with AI-native customers, whose data volumes and usage patterns can fluctuate significantly.”

Annual report 2026A · The company itself

“We must also continually adapt our products and strategy in response to changes in network infrastructure requirements, including the expanding use of cloud computing and third-party service providers.”

Annual report 2026A · The company itself

“We rely on data center facilities operated by third-party cloud service providers, and any limitations on capacity, or interference with our use could adversely affect our business, financial condition, and results of operations. We rely on data center facilities operated by third-party cloud service providers to host and operate our cloud-based products and services.”

Annual report 2026A · The company itself

“Demand for cloud computing infrastructure and specialized computing resources, including for AI and machine learning workloads, has increased significantly across industries, and our third-party providers may prioritize other customers or uses, limit our access to capacity, or be unable to meet our requirements.”

Annual report 2026A · The company itself

“For example, in January 2026, we completed the acquisition of Chronosphere, Inc.”

Annual report 2026A · The company itself

“(“Embrace”), a privately-held Real User Monitoring (“RUM”) company that we expect will add RUM capabilities to our observability platform; and in July 2026, we entered into a definitive agreement to acquire Console Systems, Inc. (“Console”), a privately-held company providing an AI-native platform that enables agentic workflows across enterprise operations, which we expect to deepen our agentic capabilities in Cortex.”

Annual report 2026A · The company itself

“Our platforms and services help secure enterprise users, networks, clouds, endpoints, AI apps and agents, and identities by delivering comprehensive cybersecurity backed by AI and automation, and provide real-time visibility and monitoring across cloud infrastructure, applications and AI workloads.”

Annual report 2026A · The company itself

“•Cloud Security. We deliver comprehensive security across the cloud application development lifecycle through Cortex Cloud®, delivered as a scalable SaaS offering. As a comprehensive Cloud Native Application Protection Platform (“CNAPP”) combined with CDR, Cortex Cloud secures multi- and hybrid-cloud environments for applications, data, generative AI (“GenAI”) ecosystem, and the cloud native technology stack across the full development lifecycle, from code to cloud to security operations.”

Annual report 2026A · The company itself

“Chronosphere, our next-generation observability platform, delivers real-time visibility and monitoring across cloud-native infrastructure, applications, and AI workloads. Purpose-built to handle the massive data volumes of the AI era, Chronosphere enables organizations to maintain system resilience and uptime with high cost-efficiency and reliability. Our observability platform provides comprehensive visibility into complex digital environments and automated troubleshooting of issues.”

Annual report 2026A · The company itself

“Available as a stand-alone, cloud-based service or an add-on to Cortex XDR or to Cortex XSIAM. Cortex Cloud, the next generation of Prisma Cloud, merges CNAPP with CDR for real-time cloud security. The solution allows you to harness the power of AI and automation to prioritize cloud risks with runtime context, enable remediation at scale, and stop attacks as they happen.”

Annual report 2026A · The company itself

“•Chronosphere Platform. Our observability platform enables Site Reliability Engineering (“SRE”) teams to efficiently identify and resolve customer-facing issues faster, while managing cloud-native complexity. It provides control over observability costs and access to a purpose-built, highly scalable observability SaaS platform for cloud-native environments.”

Annual report 2026A · The company itself

“We also sell our VM-Series virtual firewalls and Cloud NGFW via various cloud marketplaces. For example, our VM-Series virtual firewalls are sold on Amazon’s AWS Marketplace, Microsoft’s Azure Marketplace, Alphabet’s Google Cloud Marketplace, and Oracle Corporation’s Oracle Cloud Marketplace either directly to end-customers or as part of the respective cloud hosting service provider’s offerings under a usage-based licensing model.”

Annual report 2026A · The company itself

“Defects, errors, or a technical failure of our products may temporarily or permanently disable our end-customers’ networks, IT infrastructure, or other systems. Our products must interoperate with end-customers’ existing infrastructure, which often has varied specifications, multiple protocol standards, and products from multiple vendors.”

Annual report 2026A · The company itself

“Our subscription agreements typically contain service-level commitments, and failure to meet these commitments could reduce our revenue and harm our business. Our subscription agreements for certain of our product offerings typically contain service-level commitments, including uptime and response time requirements.”

Annual report 2026A · The company itself

“We rely on data center facilities operated by third-party cloud service providers, and any limitations on capacity, or interference with our use could adversely affect our business, financial condition, and results of operations. We rely on data center facilities operated by third-party cloud service providers to host and operate our cloud-based products and services.”

Annual report 2026A · The company itself

“Our ability to sell our products and subscriptions is dependent on the quality of our technical support services and those of our channel partners, and the failure to offer high-quality technical support services could have a material adverse effect on our end-customers’ satisfaction with our products and subscriptions, our sales, and our operating results. After our products and subscriptions are deployed, our end-customers depend on our technical support services and those of our channel partners.”

Annual report 2026A · The company itself

“•Chronosphere Platform. Our observability platform enables Site Reliability Engineering (“SRE”) teams to efficiently identify and resolve customer-facing issues faster, while managing cloud-native complexity. It provides control over observability costs and access to a purpose-built, highly scalable observability SaaS platform for cloud-native environments.”

Annual report 2026A · The company itself

“Customer trends toward vendor consolidation in cybersecurity may favor competitors offering broader platforms. Enterprise cybersecurity buyers are increasingly seeking to consolidate their vendors to reduce costs, complexity, and integration challenges.”

Annual report 2026A · The company itself

“As part of our business strategy, we acquire and make investments in complementary companies, products, or technologies.”

Annual report 2026A · The company itself

“•If we are unable to sell new and additional products, subscriptions, and support offerings to existing end-customers or attract new customers, especially large enterprise customers, our future revenue and operating results will be harmed. •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 or renewals of these subscription and support offerings are not immediately reflected in full in our operating results. •Our consumption- or usage-based offerings may expose us to customer usage optimization behavior that could create revenue volatility. •The sales prices of our products, subscriptions, and support offerings may decrease, which may reduce our revenue and gross profits and adversely impact our financial results.”

Annual report 2026A · The company itself

“Sales and renewals of subscription and support contracts may decline and fluctuate as a result of a number of factors, including end-customer satisfaction levels with our products and subscriptions, subscription outages, product uptime or latency, pricing, and reductions in our end-customers’ spending levels.”

Annual report 2026A · The company itself

“RISKS RELATED TO OUR PRODUCTS AND TECHNOLOGY If we are unable to sell new and additional products, subscriptions, and support offerings to existing end-customers or attract new customers, especially 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 and new offerings with existing end-customers, especially large enterprise customers, including through our platformization and go-to-market strategies, and to attract new customers.”

Annual report 2026A · The company itself

“Cortex Our AI-powered Cortex® platform transforms end-to-end security operations and observability with unified data, AI, and automation for more secure, faster, and cost effective outcomes. •Security Operations. We deliver the next generation of security operations capabilities that unifies standalone Security Information and Event Management (“SIEM”) tools, endpoint security, security automation, cloud detection and response (“CDR”), as well as attack surface management (“ASM”) capabilities on our Cortex platform. These include Cortex XSIAM®, for AI-powered security operations replacing traditional SIEM tools; Cortex XDR®, for the prevention, detection, and response to complex cybersecurity attacks; Cortex XSOAR®, for security orchestration, automation, and response (“SOAR”); Cortex Xpanse®, for ASM; and Koi Agentic Endpoint Security.”

Annual report 2026A · The company itself

“•Cortex XSOAR. Available as a stand-alone, cloud-based service, an on-premises virtual appliance, or delivered natively through Cortex XSIAM, Cortex XSOAR is a comprehensive SOAR offering that unifies playbook automation, case management, real-time collaboration, and threat intelligence management to serve security teams across the incident lifecycle. With Cortex XSOAR, security teams can standardize processes, automate repeatable tasks, and manage incidents across their security product stack to improve response time and analyst productivity.”

Annual report 2026A · The company itself

“Government demand and payment for our products, subscriptions, and support offerings may be impacted by government shutdowns, changes in administrations, budgetary cycles, contracting policies, fiscal policies, and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our products, subscriptions, and support offerings.”

Annual report 2026A · The company itself

“A portion of our revenue is generated by sales to government entities, which are subject to a number of challenges and risks. Sales to government entities are subject to a number of risks.”

Annual report 2026A · The company itself

“We must also continually adapt our products and strategy in response to changes in network infrastructure requirements, including the expanding use of cloud computing and third-party service providers.”

Annual report 2026A · The company itself

“The success of our strategy depends on maintaining a broad ecosystem of integrations with third-party technologies, which requires significant ongoing investment. The success of our strategy depends in part on the breadth and depth of our integrations with third-party technologies, including cloud infrastructure providers, identity providers, security tools, and business applications.”

Annual report 2026A · The company itself

“Our end-customers operate in a variety of industries, including education, energy, financial services, government entities, healthcare, Internet and media, manufacturing, public sector, and telecommunications.”

Annual report 2026A · The company itself

“A portion of our revenue is generated by sales to government entities, which are subject to a number of challenges and risks. Sales to government entities are subject to a number of risks.”

Annual report 2026A · The company itself

“Our end-customers operate in a variety of industries, including education, energy, financial services, government entities, healthcare, Internet and media, manufacturing, public sector, and telecommunications.”

Annual report 2026A · The company itself

“Our end-customers operate in a variety of industries, including education, energy, financial services, government entities, healthcare, Internet and media, manufacturing, public sector, and telecommunications.”

Annual report 2026A · The company itself

“Our end-customers operate in a variety of industries, including education, energy, financial services, government entities, healthcare, Internet and media, manufacturing, public sector, and telecommunications.”

Annual report 2026A · The company itself

“Our end-customers operate in a variety of industries, including education, energy, financial services, government entities, healthcare, Internet and media, manufacturing, public sector, and telecommunications.”

Annual report 2026A · The company itself

“We operate globally, and our business and revenues are impacted by global economic and geopolitical conditions. Instability in global credit markets, inflation, changes in public policies, changes in domestic and international regulations, changes in interest rates, foreign currency exchange rate fluctuations, trade regulations and tariffs, international trade disputes and agreements, changes in tax laws, geopolitical turmoil, and other disruptions to global and regional economies and markets continue to add uncertainty to global economic conditions.”

Annual report 2026A · The company itself

“Military actions or armed conflict, including the hostilities in Israel and the surrounding region, the Russia-Ukraine war and related political or economic responses, and uncertainty about, or changes in, government and trade relationships could further worsen economic and market conditions and the geopolitical environment.”

Annual report 2026A · The company itself

“The geopolitical environment, including the Russia-Ukraine war and other global events as described in "Risks Related to Global Economic and Geopolitical Conditions" above, increase the risk of cyberattacks on our infrastructure and operations.”

Annual report 2026A · The company itself

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

Annual report 2026A · The company itself

“Additionally, our international sales and operations are subject to a number of risks, including the following: •political, economic, and social uncertainty around the world, health risks such as epidemics and pandemics, macroeconomic challenges, terrorist activities, the Russia-Ukraine war, tensions between China and Taiwan, the hostilities in Israel and the surrounding region, and continued hostilities in the Middle East; •unexpected changes in, or the application of, foreign and domestic laws and regulations (including intellectual property rights protections), regulatory practices or enforcement policies, trade restrictions, international trade agreements, and foreign legal requirements, including those applicable to the importation, certification, localization and regulatory approval of our products, tariffs, and tax laws and treaties, including regulatory and trade policy changes adopted by the current administration, such as sanctions, or foreign countries’ response to regulatory changes adopted by the current administration; and •non-compliance with U.S. and foreign laws, including antitrust regulations, anti-corruption laws, such as the U.S.”

Annual report 2026A · The company itself

“Our hardware products rely on key components, including integrated circuit components, purchased from a limited number of suppliers, including sole source providers. The manufacturing operations of some suppliers are geographically concentrated in Asia, making our supply chain vulnerable to regional disruptions and international regulations, including tariffs, sanctions, and export controls.”

Annual report 2026A · The company itself

“The rapid evolution of AI, including current and future government regulation of AI, requires us to invest significant resources to develop, test, and maintain AI in our products and services in a manner that meets evolving requirements and expectations. The laws, rules, and regulations that have and continue to be adopted by policymakers, and the manner in which such requirements are interpreted or enforced, may require us to incur additional costs to comply with such requirements or make changes to our business practices, including our products and services that incorporate AI.”

Annual report 2026A · The company itself

“Moreover, new legislation affecting the scope of personal data and information, especially relating to IP addresses, machine identification, AI and machine learning, location data, health information, and other information, may limit or inhibit our ability to operate or expand our business and may require significant additional expenditures to comply. Data localization laws may mandate that personal data collected in a foreign country be processed and stored within that country, potentially requiring costly restructuring of our cloud infrastructure.”

Annual report 2026A · The company itself

“These laws and regulations may also impact our ability to develop new technologies, including emerging technologies such as AI.”

Annual report 2026A · The company itself

“•If we are unable to attract, retain, and motivate our key technical, sales, and management personnel, our business could suffer. •We generate a significant amount of revenue from sales to distributors, resellers, and end-customers outside of the United States, and we are therefore subject to a number of risks associated with international sales and operations, including export and import controls that could subject us to liability or impair our ability to compete in international markets. •Our products and subscriptions are subject to certification, testing, and regulatory approval requirements in foreign jurisdictions, and our failure to obtain or maintain such approvals could limit our ability to sell in those markets. •We are exposed to fluctuations in foreign currency exchange rates, which could negatively affect our financial condition and operating results.”

Annual report 2026A · The company itself

“RISKS RELATED TO OPERATIONS We depend on manufacturing partners and limited sources of supply for our hardware products, making us susceptible to manufacturing delays, supply shortages, pricing fluctuations, and international trade risks that could prevent timely shipment of customer orders and result in the loss of sales and end-customers.”

Annual report 2026A · The company itself

“Our future success depends, in part, on our ability to continue to attract, retain, and motivate the members of our management team and other key employees. For example, we are substantially dependent on the continued service of our engineering personnel because of the complexity of our offerings. Competition for highly skilled personnel, particularly in engineering, including in the areas of AI and machine learning, is intense, especially in the San Francisco Bay Area, where we have a substantial presence and need for such personnel.”

Annual report 2026A · The company itself

“Our manufacturing and supply contracts, generally, do not guarantee a certain level of supply or fixed pricing, which increases our exposure to supply shortages or price increases.”

Annual report 2026A · The company itself

“Our hardware products rely on key components, including integrated circuit components, purchased from a limited number of suppliers, including sole source providers. The manufacturing operations of some suppliers are geographically concentrated in Asia, making our supply chain vulnerable to regional disruptions and international regulations, including tariffs, sanctions, and export controls.”

Annual report 2026A · The company itself

“For example, there is currently a global shortage of memory-related components, and certain of our hardware appliances require higher memory content, which has led to and may continue to lead to increased production costs.”

Annual report 2026A · The company itself

“RISKS RELATED TO OPERATIONS We depend on manufacturing partners and limited sources of supply for our hardware products, making us susceptible to manufacturing delays, supply shortages, pricing fluctuations, and international trade risks that could prevent timely shipment of customer orders and result in the loss of sales and end-customers.”

Annual report 2026A · The company itself

“We depend on manufacturing partners, primarily our EMS provider, Flex, to manufacture our hardware product lines.”

Annual report 2026A · The company itself

“For example, in China, our products may be required to comply with cybersecurity and data security laws, including the Cybersecurity Law, the Data Security Law, and related regulations, and may be subject to network security review, critical information infrastructure protection requirements, and mandatory product certifications. Other jurisdictions impose similar requirements, including local testing and certification requirements, in-country data storage or processing mandates, source code review or escrow obligations, and restrictions on the use of foreign-developed encryption or security technologies.”

Annual report 2026A · The company itself

“The GDPR restricts transfers of personal data outside of the European Economic Area (“EEA”) (or, in the case of the U.K. GDPR, the U.K.) to non-EEA countries, such as the United States, unless adequate safeguards are implemented or a derogation applies. We rely on standard contractual clauses approved under the GDPR to carry out such transfers and to receive personal data subject to the GDPR (directly or indirectly) in the United States.”

Annual report 2026A · The company itself

“We operate globally, and our business and revenues are impacted by global economic and geopolitical conditions. Instability in global credit markets, inflation, changes in public policies, changes in domestic and international regulations, changes in interest rates, foreign currency exchange rate fluctuations, trade regulations and tariffs, international trade disputes and agreements, changes in tax laws, geopolitical turmoil, and other disruptions to global and regional economies and markets continue to add uncertainty to global economic conditions.”

Annual report 2026A · The company itself

“In the past, we experienced supply chain disruption and have incurred increased costs resulting from inflationary pressures and changes in U.S. trade policy. For example, we experienced supply chain disruption and inflationary pressures during our fourth quarter of fiscal 2026, resulting in increased costs for memory and other components, which have negatively affected our gross margin and could continue to affect our gross margin.”

Annual report 2026A · The company itself

“Changes to international trade agreements, tariffs, or trade regulations could lead to sourcing or logistics disruptions and increased costs. For example, U.S. and Chinese import tariffs have impacted some of our components, increasing our costs and potentially requiring us to further raise prices on our hardware products.”

Annual report 2026A · The company itself

“Our corporate headquarters are located in the San Francisco Bay Area, a region known for seismic activity. In addition, climate-related events, including drought, flooding, heat waves, wildfires, increased storm severity, and sea level rise, may increase in frequency and intensity and could disrupt our business operations and damage our facilities.”

Annual report 2026A · The company itself

“In addition, the data centers and cloud infrastructure we and our third-party providers use to deliver our products, subscriptions, and support offerings are subject to risks from extreme weather events and power disruptions associated with climate change.”

Annual report 2026A · The company itself

“In addition, government-mandated restrictions on technology access, including export controls, import restrictions, or requirements that certain technologies not be made available in particular countries or regions, could limit our ability to sell or support our products and subscriptions in affected markets, require us to modify or discontinue certain products or features, or require us to exit certain markets.”

Annual report 2026A · The company itself

“In addition, because we incorporate encryption technology into our products, certain of our products are subject to U.S. export controls and may be exported outside the United States only with the required export license or license exception. U.S. export control laws and economic sanctions prohibit shipment of certain products to embargoed or sanctioned countries, governments, and persons.”

Annual report 2026A · The company itself

“We are exposed to the credit and liquidity risk of our customers, and to credit exposure in weakened markets, which could result in material losses. Most of our sales are made on an open credit basis, and we have also experienced demands for customer financing and deferred payments due to, among other things, macro-economic conditions.”

Annual report 2026A · The company itself

“A wide variety of laws, regulations, industry standards, contractual requirements, and other obligations apply to the collection, use, retention, protection, disclosure, transfer, and other processing of personal data in jurisdictions where we and our customers operate. Compliance with these laws and other obligations is difficult and costly, and they are subject to frequent and unexpected changes.”

Annual report 2026A · The company itself

“If our forecasts overestimate demand, we may be obligated to purchase excess inventory that we cannot sell, resulting in write-downs, increased carrying costs, and lower gross margins. Conversely, if our forecasts underestimate demand, we may experience insufficient supply, leading to product shortages, delayed deliveries, lost sales opportunities, and potential damage to customer relationships.”

Annual report 2026A · The company itself

“In addition, our future income tax obligations and effective tax rates could be adversely affected by changes in, or interpretations of, tax laws, regulations, policies, or decisions in the United States or in the other jurisdictions in which we operate including as a result of the U.S. federal tax legislation commonly referred to as the One Big Beautiful Bill Act, which was signed into law on July 4, 2025.”

Annual report 2026A · The company itself