Leases

3 Months Ended

Oct. 31, 2023

Leases [Abstract]

Leases

8. Leases

We lease office facilities under non-cancellable operating lease arrangements. Our facility leases generally provide for periodic rent increases and may contain escalation clauses and renewal options. Our leases have remaining lease terms of up to 18 years, which include options to extend that are reasonably certain of being exercised. Some of our leases include one or more options to extend the leases for up to 10 years per option, which we are not reasonably certain to exercise. The options to extend are generally at rates to be determined in accordance with the agreements. Options to extend the lease are included in the lease liability if they are reasonably certain of being exercised. We do not have material finance leases.

We sublease certain office facilities to third parties. These subleases have remaining lease terms of up to 7 years, some of which include one or more options to extend the subleases for up to 5 years per option.

The components of lease expense were as follows:

	Three Months Ended
(In millions)	October 31, 2023		October 31, 2022
Operating lease cost (1)	$	26	$	28
Variable lease cost	6		4
Sublease income	(3)		(3)
Total net lease cost	$	29	$	29

(1)    Includes short-term leases, which were not material for each of the three months ended October 31, 2023 and 2022.

Supplemental cash flow information related to operating leases was as follows:

	Three Months Ended
(In millions)	October 31, 2023		October 31, 2022
Cash paid for amounts included in the measurement of operating lease liabilities	$	25	$	23
Right-of-use assets obtained in exchange for operating lease liabilities	$	14	$	16

Other information related to operating leases was as follows at the dates indicated:

	October 31, 2023		July 31, 2023
Weighted-average remaining lease term for operating leases	7.9 years		7.9 years
Weighted-average discount rate for operating leases	3.1	%	3	%

Future minimum lease payments under non-cancellable operating leases as of October 31, 2023 were as follows:

(In millions)	Operating Leases (1)
Fiscal year ending July 31,
2024 (excluding the three months ended October 31, 2023)	$	50
2025	97
2026	80
2027	72
2028	63
Thereafter	285
Total future minimum lease payments	647
Less imputed interest	(89)
Present value of lease liabilities	$	558

(1)    Non-cancellable sublease proceeds for the remainder of the fiscal year ending July 31, 2024 and the fiscal years ending July 31, 2025, 2026, 2027, 2028, and thereafter of $7 million, $6 million, $1 million, $1 million, $1 million, and $2 million, respectively, are not included in the table above.

Supplemental balance sheet information related to operating leases was as follows at the dates indicated:

(In millions)	October 31, 2023		July 31, 2023
Operating lease right-of-use assets	$	457	$	469
Other current liabilities	$	84	$	89
Operating lease liabilities	474		480
Total operating lease liabilities	$	558	$	569

As of October 31, 2023, we have an additional operating lease of $4 million for office facilities that has not yet commenced and therefore is not reflected on the condensed consolidated balance sheets nor in the tables above. This lease is expected to commence in fiscal year 2024 with a lease term of 6 years.