We are exposed to market risk from changes in exchange rates, interest rates and inflation. All of these market risks arise in the ordinary course of business, as we do not engage in speculative trading activities. The following analysis provides additional information regarding these risks. Interest Rate Risk As of January 31, 2026, we had $116.9 million of Cash and cash equivalents and Restricted cash and cash equivalents and restricted bank time deposits. Interest-earning instruments carry a degree of interest rate risk. A hypothetical 10% change in interest rates would not have a material impact on our financial results for the years ended January 31, 2026 and 2025. We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure. Foreign Currency Exchange Risk Our reporting currency and the functional currency in most of our non-U.S. subsidiaries is U.S. dollar. The majority of our revenues were denominated in U.S. dollars and the remainder in other currencies. However, a significant portion of our operating costs in Israel, consisting principally of salaries and employee-related costs are denominated in NIS. This foreign currency exposure gives rise to market risk associated with exchange rate movements of the U.S. dollar against the NIS. To reduce the impact of foreign currency exchange risks associated with forecasted future cash flows and certain existing assets and liabilities and the volatility in our consolidated statements of operations, we have established a hedging policy. We utilize foreign currency contracts, primarily forward, with financial institutions to protect against foreign currency exchange risks, mainly the exposure to changes in the exchange rate of the NIS and SGD against the U.S. dollar that are 93 COGNYTE SOFTWARE LTD. associated with future cash flows denominated in NIS and SGD. Please also see the information set forth under “Note 14. Derivative Financial Instruments” of our consolidated financial statements. We account for our derivative instruments as either assets or liabilities and carry them at fair value in the consolidated balance sheets. The accounting for changes in the fair value of the derivative depends on the intended use of the derivative and the resulting designation. Our hedging activities reduce but do not eliminate the impact of currency exchange rate movements. We may in the future enter into other derivative financial instruments if it is determined that such hedging activities are appropriate to further reduce our foreign currency exchange risk. The effect of a hypothetical 10% weakening of the U.S. dollar compared to other currencies would have impacted our results of operation by $2.9 million increase for the year ended January 31, 2026. The major financing risks faced by us will be managed by our treasury function. For information about the effects of currency and interest rate fluctuations and how we manage currency and interest risk, see “Item 5. Operating and Financial Review and Prospects—5.B. Liquidity and Capital Resources.” Please also see the information set forth under “Note 14. Derivative Financial Instruments” of our consolidated financial statements and related notes included elsewhere in this Form 20-F.