Intapp Inc

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited condensed consolidated financial statements and related notes and other financial information included in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and related notes thereto included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023 filed with the SEC on September 7, 2023. The following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K, particularly in the section titled “Risk Factors.” Our historical results are not necessarily indicative of the results that may be expected for any period in the future. Unless otherwise noted, any reference to a year preceded by the word “fiscal” refers to the fiscal year ended June 30 of that year.

Current wording

The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited condensed consolidated financial statements and related notes and other financial information included in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and related notes thereto included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023 filed with the Securities and Exchange Commission (the “SEC”) on September 7, 2023. The following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K, particularly in the section titled “Risk Factors.” Our historical results are not necessarily indicative of the results that may be expected for any period in the future. Unless otherwise noted, any reference to a year preceded by the word “fiscal” refers to the fiscal year ended June 30 of that year.

Previous wording

ARR was $365.0 million and $301.3 million as of December 31, 2023 and 2022, respectively, an increase of 21%.

Current wording

ARR was $382.7 million and $315.6 million as of March 31, 2024 and 2023, respectively, an increase of 21%.

Previous wording

Cloud ARR was $256.1 million and $191.8 million as of December 31, 2023 and 2022, respectively, an increase of 34%, and represented 70% and 64% of ARR as of December 31, 2023 and 2022, respectively.

Current wording

Cloud ARR was $274.2 million and $206.3 million as of March 31, 2024 and 2023, respectively, an increase of 33%, and represented 72% and 65% of ARR as of March 31, 2024 and 2023, respectively.

Previous wording

We believe our ability to increase the number of clients on our platform is a key indicator of the growth of our business and our future business opportunities. We define a client at the end of any reporting period as an entity with at least one active subscription as of the measurement date. As of December 31, 2023, we had over 2,400 clients. No single client represented more than 10% of total revenues for either of the three and six months ended December 31, 2023 and 2022.

Current wording

We believe our ability to increase the number of clients on our platform is a key indicator of the growth of our business and our future business opportunities. We define a client at the end of any reporting period as an entity with at least one active subscription as of the measurement date. As of March 31, 2024, we had over 2,450 clients. No single client represented more than 10% of total revenues for either of the three and nine months ended March 31, 2024 and 2023.

Previous wording

Our client base includes some of the largest and most reputable professional and financial services firms globally. These clients have the financial and operating resources needed to purchase, deploy, and successfully use the full capabilities of our software platform, and as such, we believe the number of our clients with contracts greater than $100,000 of ARR is an important metric for highlighting our progress on the path to full adoption of our platform by our professional and financial services clients. As of December 31, 2023 and 2022, we had 649 and 561 clients, respectively, with contracts greater than $100,000 of ARR.

Current wording

Our client base includes some of the largest and most reputable professional and financial services firms globally. These clients have the financial and operating resources needed to purchase, deploy, and successfully use the full capabilities of our software platform, and as such, we believe the number of our clients with contracts greater than $100,000 of ARR is an important metric for highlighting our progress on the path to full adoption of our platform by our professional and financial services clients. As of March 31, 2024 and 2023, we had 673 and 572 clients, respectively, with contracts greater than $100,000 of ARR.

Previous wording

We generate recurring revenues from the sale of our SaaS solutions, subscriptions to our term software applications, and from providing support for those applications. We generate non-recurring revenues primarily by delivering professional services for the configuration, implementation and upgrade of our solutions. Our recurring revenues accounted for 87% and 86% of our total revenues during the six months ended December 31, 2023 and 2022, respectively.

Current wording

We generate recurring revenues from the sale of our SaaS solutions, subscriptions to our term software applications, and from providing support for those applications. We generate non-recurring revenues primarily by delivering professional services for the configuration, implementation and upgrade of our solutions. Our recurring revenues accounted for 87% and 86% of our total revenues during the nine months ended March 31, 2024 and 2023, respectively.

Previous wording

Our subscription licenses provide the client with the right to functional intellectual property and are distinct performance obligations as the client can benefit from the subscription licenses on their own. The transaction price allocated to subscription license arrangements is recognized as revenues at a point in time when control is transferred to the client, which generally occurs at the time of delivery for a new contract or commencement of the renewal term for renewals. Subscription license fees are generally payable in advance on an annual basis over the term of the license arrangement, which is typically noncancelable.

Current wording

Our subscription licenses provide the client with the right to functional intellectual property and are distinct performance obligations as the client can benefit from the subscription licenses on their own. The transaction price allocated to subscription license arrangements is recognized as revenues at a point in time when control is transferred to the client, which generally occurs at the time of delivery for a new contract or commencement of the renewal term for renewals. Subscription license fees are generally payable in advance on an annual basis over the term of the license arrangement, which is typically non-cancelable.

Previous wording

Our professional services primarily consist of implementation, configuration and upgrade services provided to clients. These engagements are billed to clients either on a time and materials or milestone basis; revenues are recognized as invoiced or in proportion to the work performed, respectively. We expect the demand for our professional services to increase due to client growth and the need for implementation, upgrade, and migration services for new and existing clients. This demand will be affected by the mix of professional services that are provided by us versus provided by our third-party implementation partners. Our professional services are currently loss making (after allocated overhead costs for facilities and IT) and accounted for 13% and 14% of our total revenues during the six months ended December 31, 2023 and 2022, respectively.

Current wording

Our professional services primarily consist of implementation, configuration and upgrade services provided to clients. These engagements are billed to clients either on a time and materials or milestone basis; revenues are recognized as invoiced or in proportion to the work performed, respectively. We expect the demand for our professional services to increase due to client growth and the need for implementation, upgrade, and migration services for new and existing clients. This demand will be affected by the mix of professional services that are provided by us versus provided by our third-party implementation partners. Our professional services are currently loss making (after allocated overhead costs for facilities and IT) and accounted for 13% and 14% of our total revenues during the nine months ended March 31, 2024 and 2023, respectively.

Previous wording

Interest and other income (expense), net consists primarily of interest income from our cash and cash equivalents, non-cash interest expense related to the amortization of deferred financing costs, realized and unrealized foreign exchange gains and losses resulting from fluctuations in foreign currency exchange rates on monetary assets and liabilities denominated in currencies other than the U.S. dollar.

Current wording

Interest and other income (expense), net consists primarily of interest income from our cash and cash equivalents, non-cash interest expense related to the amortization of deferred financing costs, realized and unrealized foreign exchange gains and losses resulting from fluctuations in foreign currency exchange rates on monetary assets and liabilities denominated in currencies other than the United States (“U.S.”) dollar.

Previous wording

Our income tax expense consists of an estimate of federal, state, and foreign income taxes based on enacted federal, state, and foreign tax rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in the valuation of our deferred tax assets and liabilities, and changes in tax laws. We maintain a full valuation allowance on our federal and state deferred tax assets as we have concluded that it is more likely than not that the deferred tax assets will not be realized.

Current wording

Our income tax benefit (expense) consists of an estimate of federal, state, and foreign income taxes based on enacted federal, state, and foreign tax rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in the valuation of our deferred tax assets and liabilities, and changes in tax laws. We maintain a full valuation allowance on our federal and state deferred tax assets as we have concluded that it is more likely than not that the deferred tax assets will not be realized.

Previous wording

Comparison of the Three and Six Months Ended December 31, 2023 and 2022

Current wording

Comparison of the Three and Nine Months Ended March 31, 2024 and 2023

Previous wording

Recurring revenues from the sale of our SaaS solutions, from subscriptions to our term software solutions, and from providing support for these solutions increased by $18.7 million, or 26%, and $36.6 million, or 26%, respectively, in the three and six months ended December 31, 2023 compared to the same periods in the prior year.

Current wording

Recurring revenues from the sale of our SaaS solutions, from subscriptions to our term software solutions, and from providing support for these solutions increased by $17.7 million, or 22%, and $54.3 million, or 25%, respectively, in the three and nine months ended March 31, 2024 compared to the same periods in the prior year.

Previous wording

Our SaaS and support revenues grew $15.5 million, or 25%, and $31.8 million, or 27%, respectively, in the three and six months ended December 31, 2023 compared to the same periods in the prior year, due to sales to new clients and expansion of existing clients from both cross-selling and upselling sales motions. The continuation of clients migrating from using our on-premise solutions to our cloud solutions also contributed to the growth.

Current wording

Our SaaS and support revenues grew $14.8 million, or 22%, and $46.5 million, or 25%, respectively, in the three and nine months ended March 31, 2024 compared to the same periods in the prior year, due to sales to new clients and expansion of existing clients from both cross-selling and upselling sales motions. The continuation of clients migrating from using our on-premise solutions to our cloud solutions also contributed to the growth.

Previous wording

Subscription license revenues increased by $3.2 million, or 29%, and $4.8 million, or 21%, respectively, in the three and six months ended December 31, 2023 compared to the same periods in the prior year, reflecting larger multi-year renewals, as well as annual renewals on multi-year contracts upon expiration of their initial term and CPI-based price increases on annual renewals.

Current wording

Subscription license revenues increased by $2.9 million, or 22%, and $7.8 million, or 21%, respectively, in the three and nine months ended March 31, 2024 compared to the same periods in the prior year, due to sustained annual renewals on multi-year contracts upon expiration of their initial term, CPI-based price increases on annual renewals, and new multi-year contracts.

Previous wording

Professional services revenues increased by $0.6 million, or 5%, and $4.7 million, or 21%, respectively, for the three and six months ended December 31, 2023 compared to the same periods in the prior year. This reflects a continuation in demand for implementation, upgrade and migration services consistent with our revenue growth.

Current wording

Professional services revenues increased by $0.9 million, or 7%, and $5.6 million, or 16%, respectively, for the three and nine months ended March 31, 2024 compared to the same periods in the prior year. This reflects a continuation in demand for implementation, upgrade and migration services consistent with our revenue growth.

Previous wording

Cost of SaaS and support revenues increased by $2.0 million, or 16%, for the three months ended December 31, 2023 compared to the three months ended December 31, 2022. The increase can be attributed primarily to an increase in cloud hosting costs of $1.1 million.

Current wording

Cost of SaaS and support revenues increased by $1.3 million, or 9%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The increase can be attributed primarily to an increase in cloud hosting costs of $0.9 million.

Previous wording

Cost of SaaS and support revenues increased by $4.0 million or 16%, for the six months ended December 31, 2023 compared to the six months ended December 31, 2022. The increase can be attributed primarily to an increase in personnel-related costs of $1.3 million (which reflects a benefit of $2.7 million in the six months ended December 31, 2023 resulting from an operational and organizational realignment that reclassified expenses from cost of SaaS and support to research and development), and an increase in cloud hosting costs of $2.5 million.

Current wording

Cost of SaaS and support revenues increased by $5.2 million or 14%, for the nine months ended March 31, 2024 compared to the nine months ended March 31, 2023. The increase can be attributed primarily to increases in cloud hosting costs of $3.4 million, personnel-related costs of $1.2 million (which reflects a benefit of $4.1 million in the nine months ended March 31, 2024 resulting from an operational and organizational realignment that reclassified expenses from cost of SaaS and support to research and development), and royalty expense of $0.9 million relating to third-party products.

Previous wording

Cost of professional services revenues increased by $2.0 million, or 14%, for the three months ended December 31, 2023 compared to the three months ended December 31, 2022, primarily due to an increase in personnel-related costs of $1.7 million resulting from annual salary increases and increased headcount.

Current wording

Cost of professional services revenues increased by $0.8 million, or 6%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily due to an increase in personnel-related costs of $1.1 million resulting from annual salary increases and increased headcount, offset by a decrease of $0.4 million in travel related expenses.

Previous wording

Cost of professional services revenues increased by $6.2 million, or 23%, for the six months ended December 31, 2023 compared to the six months ended December 31, 2022, primarily due to an increase in personnel-related costs of $4.6 million resulting from annual salary increases and increased headcount, and sub-contractor costs of $1.5 million as we expanded our teams to provide implementation and migration services to our growing client base.

Current wording

Cost of professional services revenues increased by $7.1 million, or 17%, for the nine months ended March 31, 2024 compared to the nine months ended March 31, 2023, primarily due to an increase in personnel-related costs of $5.7 million resulting from annual salary increases and increased headcount, and sub-contractor costs of $1.4 million as we expanded our teams to provide implementation and migration services to our growing client base.

Previous wording

Gross profit increased by $15.3 million, or 26%, for the three months ended December 31, 2023 compared to the three months ended December 31, 2022. Of this increase, $13.5 million was attributable to growth in SaaS and support revenues and the reduction in SaaS and support costs resulting from the operational and organizational realignment of part of the development operations team to research and development. The improvement in gross profit was also attributable to the increase in subscription license revenue which contributed $3.2 million, offset by an increase of $1.4 million in losses on professional services.

Current wording

Gross profit increased by $16.5 million, or 26%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. Of this increase, $13.5 million was attributable to growth in SaaS and support revenues and a lower increase in SaaS and support costs as a percentage of related revenues resulting from the operational and organizational realignment of part of the development operations team to research and development. The improvement in gross profit was also attributable to the increase in subscription license revenue which contributed $2.9 million.

Previous wording

Gross profit increased by $31.1 million, or 28%, for the six months ended December 31, 2023 compared to the six months ended December 31, 2022. Of this increase, $27.8 million was attributable to growth in SaaS and support revenues and the reduction in SaaS and support costs resulting from the operational and organizational realignment of part of the development operations team to research and development. The improvement in gross profit was also attributable to the increase in subscription license revenue which contributed $4.8 million, offset by an increase of $1.5 million in losses on professional services.

Current wording

Gross profit increased by $47.6 million, or 27%, for the nine months ended March 31, 2024 compared to the nine months ended March 31, 2023. Of this increase, $41.3 million was attributable to growth in SaaS and support revenues and a lower increase in SaaS and support costs as a percentage of related revenues resulting from the operational and organizational realignment of part of the development operations team to research and development. The improvement in gross profit was also attributable to the increase in subscription license revenue which contributed $7.8 million, offset by an increase of $1.5 million in losses on professional services.

Previous wording

Research and development expenses increased by $4.6 million, or 20%, for the three months ended December 31, 2023 compared to the three months ended December 31, 2022. Personnel-related costs increased by $2.9 million due to annual salary increases and increased headcount ($1.4 million of which was due to the operational and organizational realignment of part of the development operations team to research and development). Contractor costs increased by $1.1 million as we increased contract resources to support on-going development of our cloud offerings. Cloud hosting costs and allocated overhead costs increased by $0.7 million.

Current wording

Research and development expenses increased by $2.0 million, or 8%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. Personnel-related costs increased by $2.9 million due to annual salary increases and increased headcount ($1.4 million of which was due to the operational and organizational realignment of part of the development operations team to research and development). Contractor costs increased by $0.7 million as we increased contract resources to support on-going development of our cloud offerings. Cloud hosting costs and allocated overhead costs increased by $0.6 million. These increases were partially offset by a decrease of $2.1 million in stock-based compensation expense primarily due to forfeitures of unvested performance stock awards.

Previous wording

Research and development expenses increased by $13.4 million, or 31%, for the six months ended December 31, 2023 compared to the six months ended December 31, 2022. Personnel-related costs increased by $6.7 million due to annual salary increases and increased headcount ($2.7 million of which was due to the operational and organizational realignment of part of the development operations team to research and development). Contractor costs increased by $2.6 million as we increased contract resources to support on-going development of our cloud offerings. Stock-based compensation expense increased by $2.3 million, primarily due to an increase in stock awards granted combined with an increase in the grant date fair value of such awards and reversal of stock-based compensation expense on forfeitures of unvested performance stock awards in the same period in the prior year. Cloud hosting costs and allocated overhead costs increased by $1.6 million.

Current wording

Research and development expenses increased by $15.4 million, or 23%, for the nine months ended March 31, 2024 compared to the nine months ended March 31, 2023. Personnel-related costs increased by $9.8 million due to annual salary increases and increased headcount ($4.1 million of which was due to the operational and organizational realignment of part of the development operations team to research and development). Contractor costs increased by $3.0 million as we increased contract resources to support on-going development of our cloud offerings. Cloud hosting costs increased by $1.1 million due to increased usage in support of development activities. Allocated overhead costs increased by $1.0 million due to increased headcount.

Previous wording

Sales and marketing expenses increased by $1.7 million, or 5%, for the three months ended December 31, 2023 compared to the three months ended December 31, 2022. Personnel-related costs increased by $2.2 million primarily due to annual salary increases and increased headcount. Marketing expenses increased by $0.8 million largely due to increases in marketing events and travel related expenses. These increases were partially offset by a decrease of $1.5 million in stock-based compensation expense primarily due to a change in estimates on the timing of achieving performance milestones for performance stock awards.

Current wording

Sales and marketing expenses increased by $0.3 million, or 1%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. Marketing expenses increased by $1.2 million largely due to increases in marketing events and travel related expenses. Personnel-related costs increased by $0.9 million primarily due to annual salary increases and increased headcount. These increases were partially offset by a decrease of $1.8 million in stock-based compensation expense primarily due to forfeitures of unvested performance stock awards and the graded vesting of certain prior year grants which resulted in higher expense in the same period in prior year.

Previous wording

Sales and marketing expenses increased by $4.8 million, or 7%, for the six months ended December 31, 2023 compared to the six months ended December 31, 2022. Personnel-related costs increased by $4.3 million due to annual salary increases and increased headcount. Marketing expenses increased by $1.7 million largely due to increases in marketing events and travel related expenses. These increases were partially offset by a decrease of $1.9 million in stock-based compensation expense primarily due to a change in estimates on the timing of achieving performance milestones for performance stock awards.

Current wording

Sales and marketing expenses increased by $5.1 million, or 5%, for the nine months ended March 31, 2024 compared to the nine months ended March 31, 2023. Personnel-related costs increased by $5.2 million due to annual salary increases and increased headcount. Marketing expenses increased by $2.9 million largely due to increases in marketing events and travel related expenses. These increases were partially offset by a decrease of $3.7 million in stock-based compensation expense primarily due to forfeitures of unvested performance stock awards and the graded vesting of certain prior year grants which resulted in higher expense in the same period in prior year.

Previous wording

General and administrative expenses increased by $0.2 million, or 1%, for the three months ended December 31, 2023 compared to the three months ended December 31, 2022. This was primarily driven by an increase of $1.8 million in third-party professional fees and an increase of $1.2 million in personnel-related costs primarily due to annual salary increases and increased headcount. These increases were partially offset by a decrease of $2.4 million in stock-based compensation expense primarily due to the reversal on forfeitures of unvested performance stock awards and a decrease of $0.6 million from change in fair value of contingent consideration related to prior acquisitions.

Current wording

General and administrative expenses increased by $3.4 million, or 16%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. This was primarily driven by an increase of $1.9 million in personnel-related costs primarily due to annual salary increases and increased headcount, an increase of $1.1 million from change in fair value of contingent consideration related to prior acquisitions, an increase of $1.0 million in third-party professional fees and an increase of $0.7 million in bad debt expense. These increases were partially offset by a decrease of $1.3 million in stock-based compensation expense primarily due to forfeitures of unvested performance stock awards.

Previous wording

General and administrative expenses increased by $0.9 million, or 2%, for the six months ended December 31, 2023 compared to the six months ended December 31, 2022. This was primarily driven by an increase of $3.2 million in personnel-related costs primarily due to annual salary increases and increased headcount, an increase of $2.6 million in third-party professional fees and an increase of $0.6 million in bad debt expense. These increases were partially offset by a decrease of $2.4 million in stock-based compensation expense primarily due to the reversal on forfeitures of unvested performance stock awards, a decrease of $2.0 million from change in fair value of contingent consideration related to prior acquisitions and an increase of $1.3 million in costs allocated to other functions due to increased headcount in other departments.

Current wording

General and administrative expenses increased by $4.3 million, or 7%, for the nine months ended March 31, 2024 compared to the nine months ended March 31, 2023. This was primarily driven by an increase of $5.1 million in personnel-related costs primarily due to annual salary increases and increased headcount, an increase of $3.6 million in third-party professional fees, an increase of $1.3 million in bad debt expense and an increase of $0.5 million in overhead costs. These increases were partially offset by a decrease of $3.7 million in stock-based compensation expense primarily due to forfeitures of unvested performance stock awards, a decrease of $0.9 million from change in fair value of contingent consideration related to prior acquisitions and an increase of $2.0 million in costs allocated to other functions due to increased headcount in other departments.

Previous wording

Lease modification and impairment net charge of $1.6 million during the six months ended December 31, 2022 related to accelerated amortization expense associated with a right-of-use leased asset on the early exit of a leased office space, offset by a benefit arising from an amendment to an underlying lease agreement which resulted in a reduction in the related lease payment obligation.

Current wording

Lease modification and impairment net charge of $1.6 million during the nine months ended March 31, 2023 related to accelerated amortization expense associated with a right-of-use leased asset on the early exit of a leased office space, offset by a benefit arising from an amendment to an underlying lease agreement which resulted in a reduction in the related lease payment obligation.

Previous wording

Income tax expense was $0.2 million and $0.6 million for the three and six months ended December 31, 2023, respectively, compared to an income tax expense of $0.5 million and $0.7 million recorded during the three and six months ended December 31, 2022, respectively. Our income tax expense during the three and six months ended December 31, 2023 and 2022 was primarily attributable to income tax expense in a number of U.S. state jurisdictions and foreign jurisdictions.

Current wording

Income tax expense was $0.2 million and $0.8 million for the three and nine months ended March 31, 2024, respectively, compared to an income tax benefit of $0.4 million and an income tax expense of $0.3 million for the three and nine months ended March 31, 2023, respectively. Our income tax expense during the three and nine months ended March 31, 2024 and the nine months ended March 31, 2023 was primarily attributable to income tax expense in a number of U.S. state jurisdictions and foreign jurisdictions. Our income tax benefit during the three months ended March 31, 2023 was primarily attributable to income tax benefits from net losses in our foreign jurisdictions.

Previous wording

As of December 31, 2023, we had cash, cash equivalents and restricted cash of $166.6 million. We finance our liquidity needs primarily through collections from clients and the issuance of equity securities. We generally bill and collect from our clients annually in advance. Our billings are subject to seasonality with billings in the fourth quarter higher than in the other quarters.

Current wording

As of March 31, 2024, we had cash, cash equivalents and restricted cash of $187.6 million. We finance our liquidity needs primarily through collections from clients and the issuance of equity securities. We generally bill and collect from our clients annually in advance. Our billings are subject to seasonality with billings in the fourth quarter higher than in the other quarters.

Previous wording

During the six months ended December 31, 2023, net cash provided by operating activities was $23.6 million, as our operating loss of $24.5 million was reduced by $48.1 million of adjustments. These adjustments consisted of $44.4 million of non-cash charges (principally comprising stock-based compensation and depreciation and amortization expense), and net cash inflow of $3.7 million from net changes in operating assets and liabilities. The net cash inflow from changes in operating assets and liabilities was primarily driven by a decrease in accounts receivable of $12.6 million due to the timing of billing and collections on our outstanding receivables and an increase in deferred revenue of $4.8 million due to the timing of invoicing to our clients, offset by an increase in unbilled receivables of $5.8 million, a decrease in operating lease liabilities of $2.3 million due to lease payments, an increase in prepaid expenses and other assets of $1.8 million, a decrease in accounts payable and accrued liabilities of $1.5 million primarily due to payments for annual bonuses and timing of payments, a decrease in other liabilities of $1.2 million and an increase in deferred commissions of $1.1 million due to increased sales.

Current wording

During the nine months ended March 31, 2024, net cash provided by operating activities was $40.2 million, as our operating loss of $31.4 million was reduced by $71.6 million of adjustments. These adjustments consisted of $65.7 million of non-cash charges (principally comprising of stock-based compensation and depreciation and amortization), and net cash inflow of $5.9 million from net changes in operating assets and liabilities. The net cash inflow from changes in operating assets and liabilities was primarily driven by a decrease in accounts receivable of $10.1 million due to the timing of billing and collections on our outstanding receivables, an increase in accounts payable and accrued liabilities of $6.3 million primarily due to timing of payments and an increase in deferred revenue of $4.9 million due to the timing of invoicing to our clients, offset by an increase in unbilled receivables of $5.8 million, an increase in prepaid expenses and other assets of $4.1 million, a decrease in operating lease liabilities of $3.5 million due to lease payments, an increase in deferred commissions of $1.8 million due to increased sales.

Previous wording

During the six months ended December 31, 2022, net cash provided by operating activities was $13.3 million, as our operating loss of $39.8 million was reduced by $53.1 million of adjustments. These adjustments consisted of $48.0 million of non-cash charges (principally comprising stock-based compensation expense, depreciation and amortization, amortization of operating lease right-of-use assets and lease modification and impairment), and net cash inflow of $5.1 million from net changes in operating assets and liabilities. The net cash inflow from changes in operating assets and liabilities was primarily driven by an increase in deferred revenue of $18.8 million due to our revenue growth, an increase of $2.0 million in other liabilities and a decrease of $1.0 million in prepaid expenses and other assets due to the timing of payments. These changes were partially offset by a decrease in accounts payable and accrued liabilities of $8.1 million primarily due to payments for annual bonuses, a decrease in operating lease liabilities of $3.1 million due to lease payments, an increase in unbilled receivables of $2.4 million due to the timing of invoicing to our clients, an increase in deferred commissions of $1.6 million due to increased sales and an increase in accounts receivable of $1.5 million due to the timing of billing and collections on our outstanding receivables.

Current wording

During the nine months ended March 31, 2023, net cash provided by operating activities was $16.8 million, as our operating loss of $58.0 million was reduced by $74.8 million of adjustments. These adjustments consisted of $71.5 million of non-cash charges (principally comprising stock-based compensation expense, depreciation and amortization, amortization of operating lease right-of-use assets, lease modification and impairment and provision of doubtful accounts), and net cash inflow of $3.3 million from net changes in operating assets and liabilities. The net cash inflow from changes in operating assets and liabilities was primarily driven by an increase in deferred revenue of $22.3 million due to our revenue growth and an increase in other liabilities of $1.2 million due to the timing of payments. These changes were partially offset by an increase in unbilled receivables of $5.9 million due to the timing of invoicing to our clients, a decrease in accounts payable and accrued liabilities of $5.5 million primarily due to payments for annual bonuses, a decrease in operating lease liabilities of $4.6 million due to lease payments, an increase in accounts receivable of $2.4 million due to the timing of billing and collections on our outstanding receivables and an increase in deferred commissions of $2.1 million due to increased sales.

Previous wording

During the six months ended December 31, 2023, net cash used in investing activities was $4.8 million, consisting of capitalized internal-use software costs of $3.5 million and capital expenditures of $1.3 million on property and equipment largely of computer software and development costs.

Current wording

During the nine months ended March 31, 2024, net cash used in investing activities was $6.9 million, consisting of capitalized internal-use software costs of $5.2 million and capital expenditures of $1.7 million on property and equipment consisting largely of computer software and development costs.

Previous wording

During the six months ended December 31, 2022, net cash used in investing activities was $4.4 million, consisting of capital expenditures of $1.7 million on property and equipment largely of computer equipment and leasehold improvements to our London office in the U.K., and capitalized internal-use software costs of $2.7 million.

Current wording

During the nine months ended March 31, 2023, net cash used in investing activities was $6.4 million, consisting of capitalized internal-use software costs of $3.9 million, capital expenditures of $2.0 million on property and equipment largely of computer equipment and leasehold improvements to our London office in the U.K., and investment in note receivable of $0.5 million.

Previous wording

During the six months ended December 31, 2023, net cash provided by financing activities was $16.3 million, primarily comprised of $17.9 million of proceeds from stock option exercises and $1.7 million of proceeds from employee stock purchase plan, offset by $2.6 million of payments for the final contingent consideration and cash holdback related to prior acquisitions and $0.7 million of payments related to deferred offering costs in connection with our follow-on public offering.

Current wording

During the nine months ended March 31, 2024, net cash provided by financing activities was $23.6 million, primarily comprised of $25.2 million of proceeds from stock option exercises and $1.7 million of proceeds from employee stock purchase plan, offset by $2.6 million of payments for the final contingent consideration and cash holdback related to prior acquisitions and $0.7 million of payments related to deferred offering costs in connection with our follow-on public offering.

Previous wording

During the six months ended December 31, 2022, net cash used in financing activities was $10.3 million, primarily comprised of payments of $11.1 million which represented the final contingent consideration and cash holdback related to the acquisition of Repstor and $4.9 million of payments related to employee payroll tax withholding on vested equity awards, partially offset by $4.5 million of proceeds from stock option exercises and $1.2 million of proceeds from employee stock purchase plan.

Current wording

During the nine months ended March 31, 2023, net cash used in financing activities was $10.3 million, primarily comprised of payments of $22.3 million which represented the final contingent consideration and cash holdback related to the acquisition of Repstor, Limited and deferred purchase consideration related to the acquisition of the Billstream business from Billstream LLC and $4.9 million of payments related to employee payroll tax withholding on vested equity awards, partially offset by $15.7 million of proceeds from stock option exercises and $1.2 million of proceeds from the employee stock purchase plan.

Previous wording

In February 2024, we entered into a lease agreement to lease an office space in New York City for a six-year term ending in February 2030. The total undiscounted base rent under this lease is approximately $7.3 million, and we will be responsible for the payment of additional rent for our proportionate share of certain operating expenses.

Current wording

In February 2024, we entered into a lease agreement to lease an office space in New York, New York for a six-year term ending in February 2030. The total undiscounted base rent under this lease is approximately $7.3 million, and we will be responsible for the payment of additional rent for our proportionate share of certain operating expenses.

Previous wording

We report our financial results in accordance with GAAP, however, management believes evaluating our ongoing operating results may be enhanced if investors have additional non-GAAP financial measures. Specifically, management reviews non-GAAP gross profit, non-GAAP recurring gross profit, and non-GAAP operating profit, each of which is a non-GAAP financial measure, to manage our business, make planning decisions, evaluate our performance and allocate resources and, for the reasons described below, considers them to be useful indicators, for both management and investors, of our financial performance over time. These non-GAAP financial measures, which may be different than similarly-titled measures used by other companies, should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

Current wording

We report our financial results in accordance with generally accepted accounting principles in the United States of America (“GAAP”), however, management believes evaluating our ongoing operating results may be enhanced if investors have additional non-GAAP financial measures. Specifically, management reviews non-GAAP gross profit, non-GAAP recurring gross profit, and non-GAAP operating profit, each of which is a non-GAAP financial measure, to manage our business, make planning decisions, evaluate our performance and allocate resources and, for the reasons described below, considers them to be useful indicators, for both management and investors, of our financial performance over time. These non-GAAP financial measures, which may be different than similarly-titled measures used by other companies, should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

Previous wording

We define non-GAAP operating profit as GAAP operating loss excluding stock-based compensation expense, amortization of intangible assets, lease modification and impairment, change in fair value of contingent consideration and transaction costs related to acquisitions and certain non-capitalized offering-related expenses. We believe non-GAAP operating profit provides investors and other users of our financial information consistency and comparability with our past financial performance and facilitates period-to-period comparisons of GAAP operating loss.

Current wording

We define non-GAAP operating profit as GAAP operating loss excluding stock-based compensation expense, amortization of intangible assets, lease modification and impairment, change in fair value of contingent consideration, transaction costs related to acquisitions and certain non-capitalized offering-related expenses and restructuring and other costs. We believe non-GAAP operating profit provides investors and other users of our financial information consistency and comparability with our past financial performance and facilitates period-to-period comparisons of GAAP operating loss.