FTI CONSULTING INC

Previous wording

The following is a discussion and analysis of our consolidated financial condition, results of operations, and liquidity and capital resources for the three and six months ended June 30, 2024 and 2023, and significant factors that could affect our prospective financial condition and results of operations. This discussion should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes and with our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the United States (“U.S.”) Securities and Exchange Commission (“SEC”). In addition to historical information, the following discussion includes forward-looking statements based on current expectations that involve risks, uncertainties and assumptions, such as our plans, objectives, expectations and intentions. Although we believe that the expectations reflected in the forward-looking statements contained herein are reasonable, these expectations or any of the forward-looking statements could prove to be incorrect, and actual results could differ materially from those projected or assumed in the forward-looking statements.

Current wording

The following is a discussion and analysis of our consolidated financial condition, results of operations, and liquidity and capital resources for the three and nine months ended September 30, 2024 and 2023, and significant factors that could affect our prospective financial condition and results of operations. This discussion should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes and with our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the United States (“U.S.”) Securities and Exchange Commission (“SEC”). In addition to historical information, the following discussion includes forward-looking statements based on current expectations that involve risks, uncertainties and assumptions, such as our plans, objectives, expectations and intentions. Although we believe that the expectations reflected in the forward-looking statements contained herein are reasonable, these expectations or any of the forward-looking statements could prove to be incorrect, and actual results could differ materially from those projected or assumed in the forward-looking statements.

Previous wording

Revenues for the three months ended June 30, 2024 increased $84.6 million, or 9.8%, to $949.2 million, compared to the three months ended June 30, 2023, primarily due to higher demand in our Corporate Finance, Economic Consulting and Technology segments.

Current wording

Revenues for the three months ended September 30, 2024 increased $32.8 million, or 3.7%, to $926.0 million, compared to the three months ended September 30, 2023. The increase in revenues was primarily due to higher demand and realized bill rates in our Economic Consulting segment and higher demand in our Technology segment, which was partially offset by lower demand and realized bill rates in our Corporate Finance segment.

Previous wording

Net income for the three months ended June 30, 2024 increased $21.6 million, or 34.5%, to $83.9 million, compared to the three months ended June 30, 2023. The increase in net income was primarily due to higher revenues, a lower effective tax rate and an FX remeasurement gain compared to a loss in the same quarter in the prior year, which was partially offset by an increase in direct compensationand selling, general and administrative (“SG&A”) expenses.

Current wording

Net income for the three months ended September 30, 2024 decreased $16.9 million, or 20.2%, to $66.5 million, compared to the three months ended September 30, 2023. The decrease in net income was primarily due to an increase in direct compensation and selling, general and administrative (“SG&A”) expenses and an FX remeasurement loss compared to a gain in the same quarter in the prior year, which was partially offset by higher revenues.

Previous wording

Adjusted EBITDA for the three months ended June 30, 2024 increased $15.7 million, or 15.7%, to $115.9 million, compared to the three months ended June 30, 2023. Adjusted EBITDA Margin of 12.2% for the three months ended June 30, 2024 compared to 11.6% for the three months ended June 30, 2023. The increase in Adjusted EBITDA was primarily due to higher revenues, which was partially offset by increased direct compensation and SG&A expenses.

Current wording

Adjusted EBITDA for the three months ended September 30, 2024 decreased $15.8 million, or 13.3%, to $102.9 million, compared to the three months ended September 30, 2023. Adjusted EBITDA Margin of 11.1% for the three months ended September 30, 2024 compared to 13.3% for the three months ended September 30, 2023. The decrease in Adjusted EBITDA was primarily due to an increase in direct compensation and SG&A expenses, which was partially offset by higher revenues.

Previous wording

EPS for the three months ended June 30, 2024 increased $0.59 to $2.34 compared to $1.75 for the three months ended June 30, 2023. The increase in EPS was primarily due to higher net income as described above.

Current wording

EPS for the three months ended September 30, 2024 decreased $0.49 to $1.85 compared to $2.34 for the three months ended September 30, 2023. The decrease in EPS was primarily due to lower net income as described above.

Previous wording

Adjusted EPS was equal to EPS for the three months ended June 30, 2024 and 2023, respectively.

Current wording

Adjusted EPS was equal to EPS for the three months ended September 30, 2024 and 2023.

Previous wording

Netcash provided by operating activities for the three months ended June 30, 2024 increased $146.2 million to$135.2 million, compared to net cash used in operating activities of$11.0 million for the three months ended June 30, 2023. The increase in net cash provided by operating activities was primarily due to an increase in cash collections resulting from higher revenues, which was partially offset by higher operating expenses and an increase in compensation payments, primarily related to variable compensation, annual salary increases and headcount growth. Days sales outstanding (“DSO”) of 105 days at June 30, 2024 compared to 111 days at June 30, 2023. The decrease in DSO was primarily due to cash collections that outpaced the increase in revenues.

Current wording

Netcash provided by operating activities for the three months ended September 30, 2024 increased $112.7 million, or 105.6%, to $219.4 million, compared to the three months ended September 30, 2023. The increase in net cash provided by operating activities was primarily due toan increase in cash collections. Days sales outstanding (“DSO”) of 108 days at September 30, 2024 compared to 114 days at September 30, 2023. The decrease in DSO was primarily due to cash collections that outpaced the increase in revenues.

Previous wording

Free Cash Flow was aninflow of $125.2 million and an outflow of $22.0 million for the three months ended June 30, 2024 and 2023, respectively. The increase in Free Cash Flow for the three months ended June 30, 2024 was primarily due to higher net cash provided by operating activities, as described above, and a decrease in net cash used for purchases of property and equipment.

Current wording

Free Cash Flow for the three months ended September 30, 2024 increased $119.9 million, or 129.6%, to $212.3 million, compared to the three months ended September 30, 2023. The increase was primarily due to higher net cash provided by operating activities, as described above, and a decrease in net cash used for purchases of property and equipment.

Previous wording

The following table includes the net headcount additions (reductions) by segment and in total for the six months ended June 30, 2024.

Current wording

The following table includes the net headcount additions (reductions) by segment and in total for the nine months ended September 30, 2024.

Previous wording

Net Income and EPS were equal to Adjusted Net Income and Adjusted EPS, respectively, for the three and six months ended June 30, 2024 and 2023.

Current wording

Net Income and EPS were equal to Adjusted Net Income and Adjusted EPS, respectively, for the three and nine months ended September 30, 2024 and 2023.

Previous wording

Unallocated corporate expenses for the three months ended June 30, 2024 increased $3.9 million, or 9.9%, to $42.9 million compared to $39.0 million for the three months ended June 30, 2023. The increase was primarily due to higher compensation expenses and investments related to artificial intelligence (“AI”) capabilities, which was partially offset by lower expenses for corporate initiatives.

Current wording

Unallocated corporate expenses for the three months ended September 30, 2024 increased $11.7 million, or 42.5%, to $39.3 million compared to $27.6 million for the three months ended September 30, 2023. The increase was primarily due to higher compensation expenses, investments related to artificial intelligence (“AI”) capabilities and an increase in legal expenses.

Previous wording

Interest income and other, which includes FX gains and losses, increased $2.5 million to $1.9 million for the three months ended June 30, 2024 compared to a $0.6 million loss for the three months ended June 30, 2023. The increase was primarily due to a $0.5 million FX gain for the three months ended June 30, 2024 compared to a $2.4 million FX loss for the three months ended June 30, 2023.

Current wording

Interest income and other, which includes FX gains and losses, decreased $6.1 million to a $0.9 million loss for the three months ended September 30, 2024 compared to a $5.1 million gain for the three months ended September 30, 2023. The decrease was primarily due to a $2.5 million FX loss for the three months ended September 30, 2024 compared to a $2.8 million FX gain for the three months ended September 30, 2023.

Previous wording

Interest expense for the three months ended June 30, 2024 increased $0.3 million, or 9.8%, to $3.3 million compared to $3.0 million for the three months ended June 30, 2023. The increase was primarily due to higher interest rates on our borrowings, which was partially offset by lower borrowings. Our borrowings in the prior year quarter included amounts owed on our 2.0% convertible senior notes due 2023 (“2023 Convertible Notes”), which matured in August 2023, as well as our borrowings on our senior secured bank revolving credit facility (“Credit Facility”).

Current wording

Interest expense for the three months ended September 30, 2024 decreased $3.3 million, or 73.2%, to $1.2 million compared to $4.5 million for the three months ended September 30, 2023. The decrease was primarily due to lower borrowings, which was partially offset by higher interest rates on our borrowings. Our borrowings in the prior year quarter included amounts owed on our 2.0% convertible senior notes due 2023 (“2023 Convertible Notes”), which matured in August 2023, as well as our borrowings on our senior secured bank revolving credit facility (“Credit Facility”).

Previous wording

Our income tax provision increased $0.6 million, or 1.5%, to $38.3 million for the six months ended June 30, 2024 compared to $37.7 million for the six months ended June 30, 2023. Our effective tax rate of 18.9% for the six months ended June 30, 2024 compared to 25.5% for the six months ended June 30, 2023. The increase in the income tax provision was due to an increase in income before income tax provision, which was partially offset by a decrease in the tax rate. The tax rate for the six months ended June 30, 2024 was impacted by a favorable tax benefit related to share-based compensation, as a larger number of non-qualified stock options were exercised as compared to the same period in the prior year, and a decrease in foreign taxes as compared to the six months ended June 30, 2023.

Current wording

Our income tax provision decreased $2.1 million, or 8.5%, to $22.3 million for the three months ended September 30, 2024 compared to $24.4 million for the three months ended September 30, 2023. Our effective tax rate of 25.1% for the three months ended September 30, 2024 compared to 22.6% for the three months ended September 30, 2023. The decrease in the income tax provision was primarily due to a decrease in income before income tax provision, which was partially offset by a higher tax rate related to an unfavorable tax return adjustment as compared to the prior year income tax provision.

Previous wording

Unallocated corporate expenses for the six months ended June 30, 2024 increased $8.7 million, or 11.7%, to $82.4 million compared with $73.8 million for the six months ended June 30, 2023. The increase was primarily due to higher compensation expenses, investments related to AI capabilities and an increase legal expenses, which was partially offset by lower expenses for corporate initiatives.

Current wording

Unallocated corporate expenses for the nine months ended September 30, 2024 increased $20.4 million, or 20.1%, to $121.7 million compared with $101.3 million for the nine months ended September 30, 2023. The increase was primarily due to higher compensation expenses, investments related to AI capabilities and an increase in legal expenses, which was partially offset by lower expenses for corporate initiatives.

Previous wording

Interest expense for the six months ended June 30, 2024 decreased $0.9 million to $5.0 million compared with $6.0 million for the six months ended June 30, 2023. The decrease was primarily due to lower borrowings, which was partially offset by higher interest rates on our borrowings. Our borrowings in the same period in the prior year included amounts owed on our 2023 Convertible Notes, which matured in August 2023, as well as borrowings on our Credit Facility.

Current wording

Interest expense for the nine months ended September 30, 2024 decreased $4.2 million, or 40.2%, to $6.2 million compared with $10.4 million for the nine months ended September 30, 2023. The decrease was primarily due to lower borrowings, which was partially offset by higher interest rates on our borrowings. Our borrowings in the same period in the prior year included amounts owed on our 2023 Convertible Notes, which matured in August 2023, as well as borrowings on our Credit Facility.

Previous wording

Our income tax provision decreased $4.0 million, or 17.5%, to $18.7 million for the three months ended June 30, 2024 compared to $22.7 million for the three months ended June 30, 2023. Our effective tax rate of 18.2% for the three months ended June 30, 2024 compared to 26.7% for the three months ended June 30, 2023. The decrease in the income tax provision was primarily due to a favorable tax benefit related to share-based compensation, as a larger number of non-qualified stock options were exercised compared to the prior year quarter, and a decrease in foreign taxes as compared to the three months ended June 30, 2023.

Current wording

Our income tax provision decreased $1.5 million, or 2.4%, to $60.6 million for the nine months ended September 30, 2024 compared to $62.1 million for the nine months ended September 30, 2023. Our effective tax rate of 20.8% for the nine months ended September 30, 2024 compared to 24.3% for the nine months ended September 30, 2023. The decrease in the income tax provision was primarily due to a favorable tax benefit related to share-based compensation, as a larger number of non-qualified stock options were exercised during the nine months ended September 30, 2024 compared to the same period in the prior year, and a decrease in foreign taxes as compared to the nine months ended September 30, 2023.

Previous wording

We evaluate the performance of each of our operating segments based on Adjusted Segment EBITDA, which is a GAAP financial measure. The following table reconciles net income to Total Adjusted Segment EBITDA, a non-GAAP financial measure, for the three and six months ended June 30, 2024 and 2023:

Current wording

We evaluate the performance of each of our operating segments based on Adjusted Segment EBITDA, which is a GAAP financial measure. The following table reconciles net income to Total Adjusted Segment EBITDA, a non-GAAP financial measure, for the three and nine months ended September 30, 2024 and 2023:

Previous wording

(2)The number of revenue-generating professionals for the Technology segment excludes as-needed professionals, who we employ based on demand for the segment’s services. We employed an average of 899 as-needed employees during the three months ended June 30, 2024 compared with 630 as-needed employees during the three months ended June 30, 2023.

Current wording

(1)The number of revenue-generating professionals for the Technology segment excludes as-needed professionals, who we employ based on demand for the segment’s services. We employed an average of 855 as-needed employees during the three months ended September 30, 2024 compared with 792 as-needed employees during the three months ended September 30, 2023.

Previous wording

(3)We calculate the utilization rate for our billable professionals by dividing the number of hours that all of our billable professionals worked on client assignments during a period by the total available working hours for all of our billable professionals during the same period. Available hours are determined by the standard hours worked by each employee, adjusted for part-time hours, U.S. standard work weeks and local country holidays. Available working hours include vacation and professional training days, but exclude holidays. Utilization rates are presented for our segments that primarily bill clients on an hourly basis. We have not presented utilization rates for our Technology and Strategic Communications segments as most of the revenues of these segments are not generated on an hourly basis.

Current wording

(2)We calculate the utilization rate for our billable professionals by dividing the number of hours that all of our billable professionals worked on client assignments during a period by the total available working hours for all of our billable professionals during the same period. Available hours are determined by the standard hours worked by each employee, adjusted for part-time hours, U.S. standard work weeks and local country holidays. Available working hours include vacation and professional training days, but exclude holidays. Utilization rates are presented for our segments that primarily bill clients on an hourly basis. We have not presented utilization rates for our Technology and Strategic Communications segments as most of the revenues of these segments are not generated on an hourly basis.

Previous wording

(4)For engagements where revenues are based on number of hours worked by our billable professionals and fixed-fee arrangements, average billable rate per hour is calculated by dividing revenues (excluding revenues from success fees, pass-through revenues and outside consultants) for a period by the number of hours worked on client assignments during the same period. We have not presented average billable rates per hour for our Technology and Strategic Communications segments as most of the revenues of these segments are not based on billable hours.

Current wording

(3)For engagements where revenues are based on number of hours worked by our billable professionals and fixed-fee arrangements, average billable rate per hour is calculated by dividing revenues (excluding revenues from success fees, pass-through revenues and outside consultants) for a period by the number of hours worked on client assignments during the same period. We have not presented average billable rates per hour for our Technology and Strategic Communications segments as most of the revenues of these segments are not based on billable hours.

Previous wording

Revenues increased $80.4 million, or 12.7%, to $714.0 million for the six months ended June 30, 2024, primarily due to higher realized bill rates and demand for our business transformation & strategy and transactions services and higher realized bill rates for our restructuring services.

Current wording

Revenues increased $74.4 million, or 7.6%, to $1,055.5 million for the nine months ended September 30, 2024, primarily due to higher demand and realized bill rates for our transactions services, higher realized bill rates for our restructuring services and higher demand for our business transformation & strategy services.

Previous wording

Gross profit increased $12.3 million, or 20.6%, to $71.8 million for the three months ended June 30, 2024. Gross profit margin increased 1.6 percentage points for the three months ended June 30, 2024. The increase in gross profit margin was primarily due to higher realized bill rates and lower variable compensation as a percentage of revenues.

Current wording

Gross profit increased $40.2 million, or 12.8%, to $353.8 million for the nine months ended September 30, 2024. Gross profit margin increased 1.6 percentage points for the nine months ended September 30, 2024. The increase in gross profit margin was primarily due to higher realized bill rates.

Previous wording

SG&A expenses increased $0.2 million, or 0.3%, to $52.5 million for the three months ended June 30, 2024. SG&A expenses of 15.1% of revenues for the three months ended June 30, 2024 compared with 16.5% of revenues for the three months ended June 30, 2023. The increase in SG&A expenses was primarily due to higher bad debt, compensation, outside services, and other general and administrative expenses, which was partially offset by the reversal of expenses for business acquisition liabilities.

Current wording

SG&A expenses increased $7.0 million, or 4.5%, to $161.8 million for the nine months ended September 30, 2024. SG&A expenses of 15.3% of revenues for the nine months ended September 30, 2024 compared with 15.8% of revenues for the nine months ended September 30, 2023. The increase in SG&A expenses was primarily due to higher bad debt, compensation, infrastructure support and business development expenses, which was partially offset by the reversal of expenses for business acquisition liabilities.

Previous wording

Revenues increased $4.7 million, or 2.9%, to $169.5 million for the three months ended June 30, 2024. Acquisition-related revenues contributed $1.9 million, or 1.2% of the increase, compared to the same quarter in the prior year. Excluding the acquisition-related impact, revenues increased $2.8 million, or 1.7%, primarily due to higher realized bill rates for our construction solutions and health solutions services and higher demand for our disputes services, which was partially offset by lower demand for our investigations services.

Current wording

Revenues increased $2.6 million, or 1.6%, to $168.8 million for the three months ended September 30, 2024. Acquisition-related revenues contributed $1.9 million, or 1.1% of the increase. Excluding the acquisition-related revenues, the $0.8 million, or 0.5%, increase in revenues was primarily due to higher construction solutions and disputes revenues, which was partially offset by lower data & analytics and investigations revenues.

Previous wording

Revenues increased $29.1 million, or 14.4%, to $230.9 million for the three months ended June 30, 2024, primarily due to higher demand and realized bill rates for our M&A-related antitrust and financial economics services, which was partially offset by lower demand and realized bill rates for our non-M&A related antitrust services.

Current wording

Revenues increased $28.2 million, or 14.5%, to $222.0 million for the three months ended September 30, 2024, primarily due to higher demand for our M&A-related antitrust services, which was partially offset by lower demand for our non-M&A-related antitrust services.

Previous wording

Revenues increased $64.0 million, or 17.2%, to $435.4 million for the six months ended June 30, 2024, primarily due to higher demand and realized bill rates for our financial economics, M&A-related antitrust and non-M&A-related antitrust services.

Current wording

Revenues increased $92.2 million, or 16.3%, to $657.5 million for the nine months ended September 30, 2024, primarily due to higher demand and realized bill rates for our M&A-related antitrust, financial economics and non-M&A-related antitrust services.

Previous wording

Gross profit increased $46.7 million, or 23.6%, to $244.2 million for the six months ended June 30, 2024. Gross profit margin increased 3.0 percentage points for the six months ended June 30, 2024. The increase in gross profit margin was primarily due to higher realized bill rates and a 2 percentage point increase in utilization.

Current wording

Gross profit increased $28.0 million, or 18.4%, to $180.8 million for the nine months ended September 30, 2024. Gross profit margin increased 0.5 percentage points for the nine months ended September 30, 2024. The increase in gross profit margin was primarily due to higher realized bill rates and a 1 percentage point increase in utilization.

Previous wording

SG&A expenses increased $10.6 million, or 20.9%, to $61.1 million for the six months ended June 30, 2024. SG&A expenses of 14.0% of revenues for the six months ended June 30, 2024 compared with 13.6% of revenues for the six months ended June 30, 2023. The increase in SG&A expenses was primarily driven by higher bad debt, compensation and infrastructure support expenses.

Current wording

SG&A expenses increased $11.4 million, or 14.3%, to $91.1 million for the nine months ended September 30, 2024. SG&A expenses of 13.9% of revenues for the nine months ended September 30, 2024 compared with 14.1% of revenues for the nine months ended September 30, 2023. The increase in SG&A expenses was primarily driven by higher bad debt, compensation and infrastructure support expenses.

Previous wording

Gross profit increased $6.5 million, or 17.7%, to $43.4 million for the three months ended June 30, 2024. Gross profit margin decreased 0.4 percentage points for the three months ended June 30, 2024. The decrease in gross profit margin was primarily due to a lower mix of our higher margin hosting services and decreased profitability of our consulting services, which was partially offset by a higher mix and profitability of our processing and managed review services.

Current wording

Gross profit increased $1.5 million, or 4.0%, to $38.8 million for the three months ended September 30, 2024. Gross profit margin decreased 2.6 percentage points for the three months ended September 30, 2024. The decrease in gross profit margin was primarily due to lower profitability and a decreased mix of our higher margin hosting services and lower profitability of our managed review services, which was partially offset by higher profitability of our processing services.

Previous wording

Revenues increased $18.4 million, or 18.9%, to $115.9 million for the three months ended June 30, 2024, primarily due to higher demand for M&A-related “second request” services, which was partially offset by lower demand for investigations services.

Current wording

Revenues increased $40.1 million, or 14.0%, to $327.0 million for the nine months ended September 30, 2024, primarily due to higher demand for M&A-related “second request,” information governance, privacy & security and litigation services, which was partially offset by lower demand for our investigations services.

Previous wording

Gross profit increased $6.5 million, or 8.9%, to $80.1 million for the six months ended June 30, 2024. Gross profit margin decreased by 2.1 percentage points for the six months ended June 30, 2024. The decrease in gross profit margin was primarily due to lower profitability of our consulting services and a lower mix of our higher margin hosting services, which was partially offset by a higher mix of our managed review services.

Current wording

Gross profit increased $8.0 million, or 7.3%, to $118.9 million for the nine months ended September 30, 2024. Gross profit margin decreased by 2.3 percentage points for the nine months ended September 30, 2024. The decrease in gross profit margin was primarily due to a decreased mix and lower profitability of our higher margin hosting services and lower profitability of our consulting services, which was partially offset by higher profitability and an increased mix of our processing services.

Previous wording

Revenues increased $2.3 million, or 2.8%, to $84.9 million for the three months ended June 30, 2024. Pass-through revenues contributed $1.7 million, or 2.1% of the increase, compared to the same quarter in the prior year. Excluding the pass-through revenues impact, revenues increased $0.6 million, or 0.7%, primarily due to higher public affairs revenues, which was partially offset by lower corporate reputation revenues.

Current wording

Revenues decreased $3.5 million, or 4.1%, to $83.3 million for the three months ended September 30, 2024, which included a 1.0% estimated positive impact from FX. Excluding the estimated impact from FX, revenues decreased $4.4 million, or 5.1%. Pass-through revenues contributed $3.1 million, or 3.6% of the decrease, compared to the same quarter in the prior year. Excluding the pass-through and FX revenues impact, revenues decreased $1.3 million, or 1.5%, primarily due to lower corporate reputation revenues, which was partially offset by higher public affairs revenues.

Previous wording

Gross profit increased $0.6 million, or 2.0%, to $30.2 million for the three months ended June 30, 2024. Gross profit margin decreased 0.3 percentage points for the three months ended June 30, 2024. The decrease in gross profit margin was primarily due to higher compensation expenses as a percentage of revenues excluding revenues related to pass-through expenses.

Current wording

Gross profit was flat at $30.4 million for the three months ended September 30, 2024. Gross profit margin increased 1.5 percentage points for the three months ended September 30, 2024. The increase in gross profit margin was primarily due to lower compensation expenses as a percentage of revenues, excluding revenues related to pass-through expenses.

Previous wording

Gross profit increased $4.6 million, or 8.3%, to $59.4 million for the six months ended June 30, 2024. Gross profit margin increased 0.6 percentage points for the six months ended June 30, 2024. The increase in gross profit margin was primarily due to lower compensation expenses as a percentage of revenues.

Current wording

Gross profit increased $4.6 million, or 5.4%, to $89.9 million for the nine months ended September 30, 2024. Gross profit margin increased 0.9 percentage points for the nine months ended September 30, 2024. The increase in gross profit margin was primarily due to lower compensation expenses as a percentage of revenues.

Previous wording

Net cash used in operating activities of $139.6 million for the six months ended June 30, 2024 compared to $265.2 million for the six months ended June 30, 2023. The decrease of $125.6 million, or 47.4%, in net cash used in operating activities was primarily due to an increase in cash collections resulting from higher revenues, which was partially offset by an increase in salaries largely related to annual salary increases and headcount growth, and higher annual bonus payments, operating expenses, forgivable loan issuances and income tax payments as compared to the same period in the prior year. DSO was 105 and 111 days as of June 30, 2024 and 2023, respectively. The decrease in DSO was primarily due to cash collections that outpaced the increase in revenues.

Current wording

Net cash provided by operating activities of $79.8 million for the nine months ended September 30, 2024 compared to net cash used in operating activities of $158.5 million for the nine months ended September 30, 2023. The increase of $238.3 million in net cash provided by operating activities was primarily due to an increase in cash collections, which was partially offset by an increase in salaries largely related to annual salary increases and headcount growth, and higher annual bonus payments, forgivable loan issuances, operating expenses and income tax payments as compared to the same period in the prior year. DSO was 108 and 114 days as of September 30, 2024 and 2023, respectively. The decrease in DSO was primarily due to cash collections that outpaced the increase in revenues.

Previous wording

Net cash provided by investing activities of $10.5 million for thesix months ended June 30, 2024 compared to net cash used in investing activities of $29.0 million for thesix months ended June 30, 2023. The increase of $39.6 million in net cash provided by investing activities was primarily due to short-term investments of $25.2 million maturing during the six months ended June 30, 2024, as there were no proceeds from short-term investments during the six months ended June 30, 2023, and a $14.3 million decrease in capital expenditures primarily driven by lower spend on leasehold improvements and cloud computing costs as compared to the same period in the prior year, which was partially offset by an increase in purchases of software licenses.

Current wording

Net cash provided by investing activities of $3.5 million for thenine months ended September 30, 2024 compared to net cash used in investing activities of $67.6 million for thenine months ended September 30, 2023. The increase of $71.1 million in net cash provided by investing activities was primarily due to a $24.4 million payment for a short-term investment during the nine months ended September 30, 2023 and the maturity of the short-term investment of $25.2 million during the nine months ended September 30, 2024. In addition, there was a $21.5 million decrease in capital expenditures primarily driven by lower spend on leasehold improvements and cloud computing costs as compared to the nine months ended September 30, 2023.

Previous wording

Net cash provided by financing activities of $58.3 million forthesix months ended June 30, 2024 compared to net cash used in financing activities of $8.9 million for thesix months ended June 30, 2023. The increase of $67.3 million in net cash provided by financing activities was primarily due to an increase in net borrowings of $35.0 million under our Credit Facility, a decrease of $21.0 million in payments for common stock repurchases under the Repurchase Program and an increase in proceeds on stock option exercises of $9.4 million as compared to the same period in the prior year.

Current wording

Net cash used in financing activities of $4.9 million forthe nine months ended September 30, 2024 compared to $67.1 million for thenine months ended September 30, 2023. The decrease of $62.2 million, or 92.7%, in net cash used in financing activities was primarily due to the repayment of the $315.8 million principal amount of our 2023 Convertible Notes atmaturity during the nine months ended September 30, 2023, a decrease of $21.0 million in payments for common stock repurchases under the Repurchase Program and an increase in proceeds on stock option exercises of $9.4 million, which was partially offset by a decrease in net borrowings of $285.0 million under our Credit Facility as compared to the same period in the prior year.

Previous wording

The effect of exchange rate changes on cash and cash equivalents had an unfavorable impact of $6.1 million for the six months ended June 30, 2024 compared to a favorable impact of $15.0 million for the six months ended June 30, 2023.

Current wording

The effect of exchange rate changes on cash and cash equivalents had a favorable impact of $4.7 million and $2.6 million for the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

For the six months ended June 30, 2024, cash paid for income taxes and tax credits, net of tax refunds included $23.5 million of payments for the purchase of tax credits.

Current wording

For the nine months ended September 30, 2024, cash paid for income taxes and tax credits, net of tax refunds included $23.5 million of payments for the purchase of tax credits.