ServiceTitan, Inc.

Description of Business

ServiceTitan, Inc. (“ServiceTitan” or the “Company”) is incorporated in the state of Delaware and its headquarters are in Glendale, California. The Company also has subsidiaries in Yerevan, Armenia and British Columbia, Canada that primarily serve as research and development and support centers. ServiceTitan is an end-to-end technology platform built for contractors to transform the performance of their businesses. The Company’s platform provides business owners, technicians, customer service representatives and other key office staff with technology tools designed to help customers grow revenue, drive operational efficiencies, deliver a superior end-customer experience and monitor key business drivers in real-time.

Completion of Initial Public Offering

In December 2024, the Company completed its initial public offering (“IPO”) of shares of Class A common stock. The Company received aggregate proceeds of $674.1 million, net of underwriting costs and offering expenses. Immediately prior to the completion of the IPO, the Company amended and restated its certificate of incorporation and entered into an exchange agreement with Ara Mahdessian and Vahe Kuzoyan (the “Co-Founders”) and certain of their affiliates, resulting in the reclassification of all shares of the Company’s common stock outstanding prior to completion of the IPO into an equivalent number of shares of Class A common stock and the exchange of all shares of Class A common stock held by the Co-Founders and their affiliates for an equivalent number of shares of Class B common stock. In addition, all outstanding shares of the Company’s redeemable convertible preferred stock were automatically converted into Class A common stock immediately prior to the completion of the IPO. The Company used a portion of the proceeds from the IPO to redeem in full all outstanding shares of its non-convertible preferred stock.

Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements and accompanying notes have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and regulations of the Securities and Exchange Commission (“SEC”) and include the operations of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

The Company’s fiscal year ends on January 31. The Company’s fiscal years ended January 31, 2025, January 31, 2024, and January 31, 2023 are referred to herein as fiscal 2025, fiscal 2024, and fiscal 2023, respectively.

For fiscal 2025, fiscal 2024, and fiscal 2023, the Company had no material other comprehensive income (loss) items. Accordingly, a separate statement of comprehensive loss has not been presented in these consolidated financial statements.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make, on an ongoing basis, estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and accompanying notes. Actual results may ultimately differ from management’s estimates.

On a periodic basis, management evaluates its estimates based on historical data and experience, as well as various other factors that management believes to be reasonable under the circumstances, the result of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. In addition, the Company routinely engages third-party valuation specialists to assist in the fair value measurement of certain assets acquired and liabilities assumed in a business combination and for periods prior to the Company’s IPO, the Company engaged third-party valuation specialists to assist in the valuation of common stock used in determining stock-based compensation, and other equity instruments.

Concentrations of Risk

As of January 31, 2025 and 2024, receivables from a third-party processor used for customer payments and financing accounted for 22% and 27% of accounts receivable, respectively. Fees from a third-party processor represented approximately 14% of total revenue for fiscal 2025, fiscal 2024 and fiscal 2023.

Segments

The Company provides an end-to-end, cloud-based software platform that helps customers to manage a wide array of business workflows in the trades such as advertising, job scheduling and management, dispatching, generating estimates and invoices, payment processing and more. The Company derives substantially all revenue from platform services.

The Company’s chief operating decision maker (“CODM”) is the Chief Executive Officer. The CODM evaluates the Company’s financial performance and decides how to allocate resources based on financial information at the consolidated level. Accordingly, the Company has determined that it operates in asingle operating and reportable segment.

The CODM manages the segment performance and resource allocation based on consolidated net income (loss) and total consolidated assets as reported in the consolidated statements of operations and balance sheets. Significant segment expenses regularly provided to the CODM include cost of revenue, sales and marketing, research and product development, and general and administrative expenses, other expenses, net, and provision for income taxes as reported on the consolidated statements of operations. Since the Company operates as one operating segment, financial segment information, including profit or loss and asset information, can be found in the consolidated financial statements. The CODM reviews actual results of operations compared to forecasts when assessing performance and making decisions about allocating resources.

Substantially all of the Company’s long-lived assets, consisting of property and equipment and right-of-use (“ROU”) assets, are concentrated in the United States as of January 31, 2025 and 2024. Long-lived assets outside the United States are not material.

Foreign Currency

Foreign currency transaction gains and losses, including gains and losses from intercompany agreements between the Company and its subsidiaries, are recorded in other income, net, in the consolidated statements of operations. Foreign currency gains and losses were not material for fiscal 2025, fiscal 2024, and fiscal 2023.

The functional currency for the Company’s Armenian and Canadian subsidiaries is the U.S. dollar. The local currency financial statements of the Armenian and Canadian subsidiaries are remeasured into U.S. dollars with monetary assets and liabilities remeasured using exchange rates at the balance sheet date and nonmonetary assets and liabilities remeasured using the exchange rate at the date the item was initially recognized with the resulting foreign currency gain or loss on remeasurement included in other income, net in the consolidated statements of operations.

Cash and Cash Equivalents

Cash and cash equivalents consist of checking accounts and money market funds. The Company considers highly liquid investments with short-term maturities that are readily convertible to cash to be cash equivalents. Cash equivalents are recorded at fair value.

Restricted Cash

Restricted cash represents cash pledged under letters of credit for certain of the Company’s facility lease agreements.

Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. Fair value measurements are based on a fair value hierarchy, based on three levels of inputs, of which the first two are considered observable and the last unobservable, which are the following:

Financial assets and financial liabilities are classified in their entirety based on the lowest level input that is significant to the fair value measurement.

Accounts Receivable and Allowance for Credit Losses

Accounts receivable consists of trade receivables from customers that do not pay monthly via a credit card, debit card or Automated Clearing House (“ACH”), receivables from third-party processors used for payment and financing, and amounts receivable from the Company’s payment merchant processor. Merchant processor receivables arise from the time taken to clear transactions through external payment networks, which typically ranges between two to ten business days. Accounts receivable are recorded at the invoiced amount, net of allowance for credit losses, are unsecured, and do not bear interest. The Company determines the need for an allowance for credit losses based upon various factors, including past collection experience, credit quality of the customer, age of the receivable balance, and current economic conditions, as well as specific circumstances arising with individual customers. Accounts receivables are written off against the allowance when management determines a balance is uncollectible and the Company no longer actively pursues collection of the receivable.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives ofthree years for computer and office equipment and software andfive years for all other asset categories except leasehold improvements, which are amortized over the shorter of the lease term or the expected useful life of the leasehold improvements, which ranges from three toseven years. Construction in progress is related to the construction or development of property and equipment that have not yet been placed in service for their intended use. Maintenance and repairs are expensed as incurred. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the Company’s loss from operations.

Asset Retirement Obligations (“ARO”)

The Company establishes an ARO based on the present value of contractually required estimated future costs to retire long-lived assets at the termination or expiration of a lease. The asset associated with the ARO is amortized over the corresponding lease term to operating expense and the ARO is accreted to the end of lease obligation value over the same term. As of January 31, 2025 and 2024, the Company had ARO liabilities of $2.1 million and $2.0 million, respectively, included in other noncurrent liabilities on the consolidated balance sheet.

Internal-use Software

Software development costs include costs to develop software to be used to meet internal needs and applications used to deliver the Company’s services. The Company capitalizes internal-use software development costs when (i) the preliminary project stage is completed, (ii) management has authorized further funding for the completion of the project and (iii) it is probable that the project will be completed and performed as intended. These capitalized costs include external direct costs of materials and services consumed in developing or obtaining the software, personnel and related expenses for employees who are directly associated with and who devote time to internal-use software projects and, when material, interest costs incurred during the development. Capitalization of these costs ceases once the project is substantially complete and the software is ready for its intended purpose. Costs incurred for significant upgrades and enhancements to the Company’s software solutions are also capitalized. Costs incurred for post-configuration training, maintenance and minor modifications or enhancements are expensed as incurred. Capitalized software development costs are amortized using the straight-line method over an estimated useful life ofthree years, commencing when the software is ready for its intended use.

Leases

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease ROU assets and operating lease liabilities in the consolidated balance sheet. The Company does not have any finance leases.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments, over the lease term at the lease commencement date. As the rates implicit in the leases are not readily determinable, the Company uses its estimated incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives received and initial direct costs incurred prior to lease commencement. Lease terms may include options to extend or terminate the lease when it is reasonably certain the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Variable lease payments, which do not vary based on an index or rate, are excluded from the ROU asset and lease liability determination. Variable lease payments are typically usage-based and are recorded in the period in which the obligation for those payments is incurred. Subsequent to an impairment, the Company continues to amortize the lease liability using the same effective interest method, but the impaired ROU asset is amortized on a straight-line basis over the remaining lease term.

The Company does not record ROU assets and operating lease liabilities for operating leases with an initial term of 12 months or less.

Cloud Computing Arrangements

The Company incurs costs to implement cloud computing arrangements that are service contracts. Implementation costs, such as integration, configuration and software customization, incurred during the application development stage are capitalized within other assets in the consolidated balance sheet until the software is ready for its intended purpose. Capitalized implementation costs are then amortized on a straight-line basis over the term of the associated hosting arrangement, plus any reasonably certain renewal periods, which generally range fromsix months tofive years. Amortization of capitalized implementation costs are recognized in the same line item in the consolidated statements of operations as the expenses for fees for the associated service arrangement. Cash payments for capitalized implementation costs are included in operating cash flows in the consolidated statements of cash flows.

Acquisitions

The Company assesses whether an acquisition is a business combination or an asset acquisition. If substantially all of the gross assets acquired are concentrated in a single asset or group of similar assets, then the acquisition is accounted for as an asset acquisition, where the purchase consideration is allocated on a relative fair value basis to the assets acquired. Contingent consideration in an asset acquisition is recorded when the amounts payable are probable and estimable. Goodwill is not recorded in an asset acquisition. If the gross assets are not concentrated in a single asset or group of similar assets, then the Company determines if the set of assets acquired represents a business. A business is an integrated set of activities and assets capable of being conducted and managed for the purpose of providing a return. Depending on the nature of the acquisition, judgment may be required to determine if the set of assets acquired is a business combination or not.

The Company accounts for an acquisition of a business using the purchase method of accounting, which requires the Company to recognize separately from goodwill the assets acquired and the liabilities assumed at their acquisition date fair values. The Company allocates the purchase price, including the fair value of contingent consideration, to the identifiable assets and liabilities of the acquired business at their acquisition date fair values. The excess of the purchase price over the amount allocated to the identifiable assets and liabilities, if any, is recorded as goodwill. The results of a business acquired in a business combination are included in the consolidated financial statements from the date of acquisition.

Determining the fair value of assets acquired and liabilities assumed requires management to make judgments and estimates that may be significant, including the selection of valuation methodologies, estimates of future revenue and cash flows, discount rates and selection of comparable companies. The Company engages the assistance of valuation specialists in concluding on fair value measurements in connection with determining fair values of assets acquired and liabilities assumed in a business combination. While the Company uses its best estimates and judgments, estimates are inherently uncertain and subject to refinement. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed, with the corresponding offset to goodwill to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. At the conclusion of the measurement period, any subsequent adjustments are reflected in the Company’s consolidated statements of operations.

When the Company grants equity to selling stockholders in connection with an acquisition, it evaluates whether the awards are compensatory. This evaluation includes whether vesting of a stock award is contingent on the continued employment of the selling stockholder beyond the acquisition date. If continued employment is required for stock awards to vest, the award is treated as compensation for post-acquisition services and is recognized as compensation expense over the requisite service period.

Transaction costs related to a business acquisition are recorded in general and administrative expenses and expensed in the period in which the costs are incurred.

Goodwill

Goodwill is recorded as the difference, if any, between the aggregate consideration paid for a business acquisition and the fair value of the acquired net tangible and intangible assets. Goodwill is not amortized and is evaluated for impairment at the reporting unit level annually in the fourth quarter of the fiscal year or whenever events or changes in circumstances indicate the carrying amount of goodwill may not be recoverable.

Judgment is required in performing periodic goodwill impairment tests. To review for impairment, the Company first assesses qualitative factors to determine whether events or circumstances lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The Company’s qualitative assessment of the recoverability of goodwill, considers various macroeconomic, industry-specific and company-specific factors. Those factors include: (i) severe adverse industry or economic trends; (ii) significant company-specific actions, including exiting an activity in conjunction with restructuring of operations; or (iii) current, historical or projected deterioration of its financial performance. After assessing the totality of events and circumstances, if the Company determines that it is not more likely than not that the fair value of a reporting unit is less than the carrying amount, no further assessment is performed. If, however, the Company determines that it is more likely than not that the fair value of a reporting unit is less than the carrying amount, a quantitative analysis is performed and if the fair value of a reporting unit is less than the carrying amount, an impairment loss is recognized in an amount equal to the excess of the carrying amount above the fair value of the reporting unit, not to exceed the amount of goodwill allocated to the reporting unit. The Company hadone reporting unit as of January 31, 2025 and 2024.

Intangible Assets

Intangible assets consist of finite-lived acquired customer relationships, developed technology, intellectual property, and trade name assets. The Company determines the appropriate useful life of its intangible assets by performing an analysis of expected cash flows and considering specific facts and circumstances related to each intangible asset. Intangible assets are amortized over their estimated useful lives, ranging from 2 to 13 years, on a straight-line basis, which approximates the pattern in which the economic benefits of the assets are consumed.

Impairment of Intangible and Other Long-lived Assets

Long-lived assets, which consist primarily of property and equipment, finite-lived intangible assets, internal-use software, and ROU assets, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. The Company performs impairment testing at the asset group level that represents the lowest level for which identifiable cash flows are largely independent of cash flows of other assets and liabilities. The carrying amount of an asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset group. An impairment charge is recognized when the carrying amount of an asset group is not recoverable and exceeds its fair value. The impairment loss is measured by comparing the fair value with the carrying amount. Assets to be abandoned with no remaining future service potential are written down to amounts expected to be recovered.

Offering Costs

Offering costs related to the Company’s IPO of $8.9 million were initially deferred in other assets and upon the completion of the IPO were reclassified to stockholders’ equity (deficit) against the proceeds from the IPO. Offering costs included legal, accounting, printing and other IPO-related costs.

During fiscal 2023, the Company incurred offering costs of $3.0 million, which consisted of costs incurred in connection with the anticipated sale of common stock in an IPO. In fiscal 2023, the Company wrote off a total of $5.6 million of such offering costs, including $2.6 million of costs deferred in periods prior to fiscal 2023, to general and administrative expense due to the postponement of the then planned offering.

Revenue Recognition

Revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

The Company determines revenue recognition through the following steps:

(1)

Identification of the contract, or contracts, with a customer;

(2)

Identification of the performance obligations in the contract;

(3)

Determination of the transaction price;

(4)

Allocation of the transaction price to the performance obligations in the contract; and

(5)

Recognition of revenue when or as the Company satisfies the performance obligations.

The Company generates revenue primarily from platform services and from its professional services.

Platform revenue includes revenue from subscription and usage offerings. Usage offerings primarily include third-party payment processing or third-party financing services through the Company’s platform.

Subscription

The Company primarily enters into either annual or multi-year subscription contracts with customers for access to the Company’s proprietary hosted cloud platforms (the “Core platform”). Historically, the Company entered into monthly contracts with customers. These monthly contracts automatically renew each month for another monthly contract unless cancelled at the end of the monthly term or the customer subscribes to an annual or multi-year contract. The Company’s customers do not have the ability to take possession of the software.

The subscription contracts specify the contract term, the payment terms, and the services to be provided, and are noncancelable. Fees for access to the Company’s Core platform are charged based upon a per unit basis which may vary by product, primarily on a per technician per month basis, and are generally invoiced to the customer in advance on the first day of the monthly service period. Payments are generally due upon invoicing.

For annual and multi-year subscriptions, the contracts provide for a minimum subscription fee for the contract term and in most cases, customers can expand their subscription on a monthly basis for a fee commensurate with the per unit fee defined in the contract.

In addition, customers may subscribe to certain Pro products for additional services to supplement the Core platform and provide enhanced features. Fees for access to these subscription services are billed on a monthly basis at either the beginning or the end of each service period.

Revenue for subscription services is generally recognized evenly over the subscription term, commencing when the customer has access to services.

Usage

The Company receives usage-based fees arising from payment transactions as well as usage of certain Pro products features. Customers are offered additional features through the Company’s Core platform related to end-customer payment and financing services. The customer can select from a number of third-party payment or finance companies (“a third-party processor”) that provide different payment settlement options and, in certain instances, loans to the end customer to finance their property services. The Company acts as an agent by connecting the third-party processor with its customer. The third-party processor determines the eligibility of the end customer to participate in the programs, provides the payment settlement and financing options to the end customer and is responsible for the provision of the payment or financing services. The Company receives a fee from the third-party processors used for payment and financing, which is generally a fixed percentage of the transaction value or loan amount that such third party processed. For financing services, the Company recognizes its fee at funding of the loan financing, and for payment services, the Company recognizes its fee for each payment as the underlying transactions are processed. Such fees qualify for the “right-to-invoice” practical expedient where the amount invoiced corresponds directly with the value transferred to the customer for those services. These transaction fees are recorded as revenue on a net basis as the Company does not control the payment settlement or financing used by the end customer.

In addition, usage revenue includes fees from certain Pro products sold on a usage-basis such as direct mail services, and other transaction or usage-based services. Usage-based fees are recognized as revenue in the month of service as they qualify for the “right-to-invoice” practical expedient, as the amount invoiced corresponds directly with the value transferred to the customer for those services.

Professional services and other include onboarding, implementing and optimizing the customer’s software experience, as well as accounting migration, customer data migration, other optimization and consulting services, and training. Professional services and other revenue also includes live voice and chat services and other ancillary hardware products and services sold to customers. Fees for these services are generally invoiced separately at the commencement of the contract. Professional services do not result in significant customization of the Core platform. Revenue is recognized for professional services as the services are performed or products are delivered.

Disaggregated Revenue and Revenue by Geography

Disaggregated revenue was comprised as follows (in thousands):

Revenue from customers outside of the United States, based on the billing address of the customer, comprised less than 5% of total revenue for fiscal 2025, fiscal 2024, and fiscal 2023.

Significant Judgments

The Company’s contracts with customers often include promises to deliver multiple services. Determining whether services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Judgment is also required to determine the standalone selling price (“SSP”) for each distinct performance obligation. For contracts that contain multiple performance obligations, the Company allocates the transaction price to each distinct performance obligation on a relative SSP basis. The SSP is the price at which the Company would sell a service separately to a customer. The Company estimates SSP based on the Company’s overall pricing practices, taking into consideration customer demographics, packaged product features, business type, go-to-market strategy and other factors. As the Company’s go-to-market strategies evolve, the Company may modify its pricing practices in the future, which could result in changes to SSP. The Company also applies judgment in estimating the consideration it expects to receive for its services and estimates the amount of refunds or credits based on historical experience.

Remaining Performance Obligations

The transaction price allocated to remaining performance obligations represents the contracted transaction price that has not yet been recognized as revenue, which includes deferred revenue and amounts under non-cancellable contracts that will be recognized as revenue in future periods. As of January 31, 2025, the aggregate amount of the transaction price allocated to remaining performance obligations was $367.2 million, of which the Company expected to recognize approximately 50% as revenue in fiscal 2026 and substantially all of the remainder by January 31, 2028.

Remaining performance obligations exclude marketing automation usage-based fees and payment and financing solution fees for which the Company applies the “right to invoice” practical expedient.

Contract Assets

The Company recognizes a contract asset when revenue has been recognized but consideration is conditional upon the Company’s future performance. Contract assets and deferred revenue are presented net on an individual contract basis, separate from any accounts receivable.

A reconciliation of the beginning and ending contract assets is as follows (in thousands):

Contract assets primarily relate to revenue recognized for subscription services and fees allocated for such services are contingent upon the Company’s future performance. There wereno impairments of contract assets during fiscal 2025, fiscal 2024, and fiscal 2023. As of January 31, 2025 and 2024, the Company had an allowance for contract asset credit losses of $5.1 million and $3.8 million, respectively.

Deferred Revenue

The Company recognizes deferred revenue (contract liabilities) when the Company has received payment prior to recognizing revenue and for amounts that have been invoiced in advance of revenue recognition. The Company generally invoices for any fees for professional services and the fee for the first month of subscription services upon execution of the contract. Substantially all of the $7.9 million of deferred revenue as of January 31, 2022 was recognized as revenue during fiscal 2023. Substantially all of the $10.8 million of deferred revenue as of January 31, 2023 was recognized as revenue during fiscal 2024. Substantially all of the $11.2 million of deferred revenue as of January 31, 2024 was recognized as revenue during fiscal 2025. Deferred revenue of $16.8 million as of January 31, 2025 is expected to be fully recognized in fiscal 2026.

Deferred Contract Costs

The Company defers costs, which primarily consist of sales commissions, as these are considered incremental and recoverable costs of obtaining a contract with a customer. These costs are deferred and amortized on a straight-line basis over a period of benefit that the Company has estimated to bethree years.

The Company does not pay commissions for contract renewals that maintain existing terms. The Company estimates the period of benefit by taking into consideration the Company’s customer contract terms, the useful life of the internal-use software, average customer life and the Company’s commission policies, among other factors. During fiscal 2025, fiscal 2024, and fiscal 2023, the Company capitalized $15.8 million, $12.7 million, and $11.1 million of contract costs and amortized $11.5 million, $9.4 million, and $6.4 million of deferred contract costs, respectively. Amortization expense is included in sales and marketing expense in the consolidated statement of operations.

Cost of platform revenue consists of personnel-related costs in connection with product support and customer success, as well as costs related to the provisioning of the Company’s platform services. Costs related to the provisioning of the Company’s platform services is primarily comprised of fees paid to third-party service providers associated with delivery of Pro and FinTech products, platform infrastructure and server costs, call tracking fees, and payment processing fees. Personnel-related costs primarily include salary, employee benefits, bonuses and stock-based compensation. In addition, cost of platform revenue includes amortization of certain acquired intangible assets, amortization of capitalized internal-use software costs directly related to the Company’s cloud-based software solution and allocated overhead.

The Company accumulates certain costs such as depreciation, rent, utilities, and other facilities related costs and allocates them across the various expense categories based on headcount. The Company refers to these costs as “allocated overhead.”

Professional services and other cost of revenue consists primarily of personnel-related costs in connection with providing customer onboarding and customer implementation, live voice and chat services, amortization of certain acquired intangible assets, and allocated overhead. Personnel-related costs primarily include salary, employee benefits, bonuses, and stock-based compensation. Other cost of revenue includes the cost of certain other ancillary products and services sold to customers.

Sales and Marketing

Sales and marketing expense consists primarily of personnel-related costs, and consulting costs incurred in connection with the Company’s sales and marketing efforts. Personnel-related costs primarily include salary, commissions, employee benefits, bonus and stock-based compensation. Sales and marketing expense also includes marketing and advertising expenses, such as the Company’s annual customer conferences, Pantheon and Ignite, and travel and trade show expenses, amortization of acquired customer intangible assets, and allocated overhead.

Advertising costs are expensed as incurred and were $30.5 million and $27.1 million, and $25.1 million for fiscal 2025, fiscal 2024, and fiscal 2023, respectively.

Research and Development

Research and development expense consists primarily of personnel-related and other costs incurred in connection with product management and development efforts. Personnel-related costs primarily include salary, employee benefits, bonus and stock-based compensation. Research and development expense also includes fees to third-party product development resources, infrastructure and server costs, and allocated overhead.

Research and development costs are expensed as incurred, except for costs associated with internal-use software development that qualify for capitalization. Amortization of internal-use software development costs related to the Company’s cloud-based software solutions are included in platform cost of revenue.

General and Administrative

General and administrative expense consists primarily of personnel-related costs including salary, employee benefits, bonus and stock-based compensation for the Company’s executive, finance, legal, information systems, and operations and human resource teams. General and administrative expense also includes professional fees, other outside consulting expenses, acquisition- and disposal-related expenses, and allocated overhead.

Stock-based Compensation

The Company recognizes stock-based compensation expense for employees and non-employees based on the grant-date fair value of equity awards over the applicable service period. For awards that vest based only on continued service, stock-based compensation cost is recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the awards. For awards that contain performance vesting conditions, stock-based compensation cost is recognized on a graded vesting basis over the requisite service period when it is probable the performance condition will be achieved. If the performance condition is an initial public offering or a change in control event, the performance condition is not probable of being achieved for accounting purposes until the event occurs. Once it is probable that the performance condition will be achieved, the Company recognizes stock-based compensation cost over the remaining requisite service period on a graded vesting basis, with a cumulative adjustment for the portion of the service period that occurred for the period prior to the performance condition becoming probable of achievement, if any. Stock-based compensation expense for equity awards that contain performance and market vesting conditions is recognized on a graded vesting basis over the requisite service period commencing when it is probable the performance condition will be achieved even if the market condition is not satisfied. Forfeitures are recorded when they occur.

The grant date fair value of stock options that contain service or performance conditions is estimated using the Black-Scholes option-pricing model. The grant date fair value of restricted stock awards (“RSAs”) and restricted stock units (“RSUs”) that contain service vesting conditions are estimated based on the fair value of the underlying shares on the grant date. For awards with market vesting conditions, the fair value is estimated using a Monte Carlo simulation model, which incorporates the likelihood of achieving the market condition.

The assumptions and estimates used in the Black-Scholes option-pricing model and the Monte Carlo simulation model are as follows:

Fair Value of Common Stock

Because there was previously no public market for the Company’s common stock prior to the IPO, the board of directors (the “Board of Directors”) determined the fair value of the common stock by considering a number of objective and subjective factors including the Company’s actual operating and financial performance, market conditions and performance of comparable publicly traded companies, developments and milestones in the Company, the likelihood of achieving a liquidity event transaction involving the Company’s redeemable convertible preferred stock or common stock, recent sales of and the prices, rights, preferences and privileges of the Company’s redeemable convertible preferred stock and common stock, and the results of third-party valuations. The valuations use various models which include assumptions and estimates made by management, which may include forecasted revenues and costs, discount rates, the selection of comparable companies and related multiples and the likelihood and timing of an exit event, among other assumptions and estimates. The fair value was determined in accordance with applicable elements of the Accounting and Valuation Guide issued by the American Institute of Certified Public Accountants, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. For awards granted subsequent to the IPO, the fair value of common stock is determined based on the Company’s quoted stock price on the date of grant.

Expected Term

The expected term represents the weighted-average period that the stock options are expected to remain outstanding. To determine the expected term for stock option awards with exercise prices equal to the fair value of the underlying common stock on the date of grant, and that vest based solely on continued service, the Company applies the simplified approach, in which the expected term of an award is presumed to be the mid-point between the vesting date and the expiration date of the award. For non-standard awards, the Company determines the expected term based on historical and estimates of future exercise behavior.

Volatility

Because the Company does not have a trading history for its common stock, the Company determines the price volatility based on the historical volatilities of a publicly traded peer group based on daily price observations over a period equivalent to the expected term of the award. The Company will continue to monitor peer companies and other relevant factors used to measure expected volatility for future stock option grants.

Risk-free Interest Rate

The risk-free interest rate is based on the yields of U.S. Treasury securities with maturities approximating the expected term of the awards.

Dividend Yield

The dividend yield iszero because the Company has never declared or paid a dividend and does not expect to in the foreseeable future.

Income Taxes

Deferred income tax assets and liabilities are determined based upon the net tax effects of the differences between the financial statement carrying amounts and the tax basis of assets and liabilities and are measured using the enacted tax rate expected to apply to taxable income in the years in which the differences are expected to be reversed.

A valuation allowance is established if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company considers all available evidence, both positive and negative, including historical levels of income or loss, and expectations and risk associated with estimates of future taxable income in assessing the need for a valuation allowance.

The Company recognizes a tax benefit from an uncertain position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on its technical merits. If this threshold is met, the Company measures the tax benefit as the largest amount of the benefit that is greater than fifty percent likely of being realized upon ultimate settlement.

The Company recognizes penalties and interest accrued with respect to uncertain tax positions, if any, in the provision for or benefit from income taxes in the consolidated statements of operations. As of January 31, 2025 and 2024, accrued penalties and interest related to uncertain tax positions were not material.

Contingencies

From time to time, the Company has become involved in claims and other legal matters arising in the ordinary course of business. The Company investigates these claims as they arise. The Company records a loss contingency when it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. The Company also discloses material contingencies when it is believed a loss is not probable but reasonably possible and discloses the amount of possible loss or range of loss when a reliable estimate can be made. Accounting for contingencies requires the Company to use judgment related to both the likelihood of a loss and the estimate of the amount, or range, of loss.

Net Loss Per Share

The Company computes earnings per share using the two-class method where net income is allocated between common stock and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. Net losses were not allocated to the redeemable convertible preferred stock as the holders of the redeemable convertible preferred stock do not have a contractual obligation to share in any losses. The Company’s redeemable convertible preferred stock were participating securities as they had rights to participate in dividends with the common stockholders. Net losses attributable to common stockholders are adjusted for accretion of non-convertible preferred stock, deemed dividends relating to down round adjustments to conversion prices of redeemable convertible preferred stock, and losses on extinguishment of the Company’s preferred stock.

Basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of Class A and Class B common stock outstanding during the period, net of the weighted-average unvested restricted stock and unvested early exercised options subject to repurchase, if any, during the period. Diluted net loss per share is calculated by giving effect to potentially dilutive securities outstanding for the period. Potentially dilutive securities include stock options, unvested early exercised options, and restricted stock computed using the treasury stock method and redeemable convertible preferred stock using the if-converted method. As the Company has reported net losses attributable to common stockholders all potentially dilutive securities are antidilutive, and accordingly, basic net loss per share attributable to common stockholders equals diluted net loss per share attributable to common stockholders.

Recent Accounting Pronouncements

As an “emerging growth company,” the Jumpstart our Business Startups Act of 2012, as amended (the “JOBS Act”), allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are applicable to private companies. The Company has elected to use this extended transition period under the JOBS Act until such time the Company is no longer considered to be an emerging growth company. The adoption dates discussed below reflect this election.

Recently Adopted Accounting Pronouncements

Debt—Debt with Conversion and Other Options

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). The FASB reduced the number of accounting models for convertible debt and convertible preferred stock instruments and made certain disclosure amendments to improve the information provided to users. In addition, the FASB amended the derivative guidance for the “own stock” scope exception and certain aspects of the earnings per share guidance including the impact of down-round features. The

Company adopted ASU 2020-06 as of February 1, 2024 and elected to apply ASU 2020-06 using the modified retrospective method to all financial instruments outstanding as of February 1, 2024. The cumulative effect of initially applying ASU 2020-06 resulted in an increase to additional paid-in capital and a deemed dividend of $6.3 million representing the impact of the down-round adjustments to the conversion prices of the Series F and Series G redeemable convertible preferred stock in fiscal 2023 and 2024. As the Company does not have retained earnings to record the deemed dividend, the deemed dividend was charged against additional paid-in capital resulting in no net impact to additional paid-in capital. Comparative periods have not been restated and continue to be reported under the accounting standard in effect for those periods.

Segments

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. All disclosure requirements under ASU 2023-07 are also required for public entities with a single reportable segment. The Company adopted this ASU for fiscal 2025. See “Segments” above for additional disclosures.

Recent Accounting Pronouncements Not Yet Adopted

Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosure, requiring enhanced income tax disclosures. This ASU requires disclosure of specific categories and disaggregation of information in the rate reconciliation table. This ASU also requires disclosure of disaggregated information related to income taxes paid, income or loss from continuing operations before income tax expense or benefit disaggregated between domestic and foreign, and income tax expense or benefit from continuing operations disaggregated between federal, state, and foreign. The requirements of this ASU are effective for annual periods beginning with the Company’s fiscal 2026. Early adoption is permitted and the amendments should be applied on a prospective basis. Retrospective application is permitted. The Company is currently evaluating the impact of the new guidance on the disclosure within its consolidated financial statements.

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosure (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disclosure, in the notes to the financial statements, of additional information about certain costs and expenses for interim and annual reporting periods. The amendments are effective beginning with the Company's fiscal 2028 and interim periods beginning with the Company’s fiscal 2029 on a prospective basis and retrospective application is permitted. The Company is currently evaluating the impact of the new guidance on the disclosure within its consolidated financial statements.

Fair Value Measurements

Financial assets and liabilities measured and recorded at fair value on a recurring basis consisted of the following(in thousands):

The money market funds are considered Level 1 as fair value is based on market prices for identical assets.

As of January 31, 2025 and 2024, the fair value of the Company’s financial instruments included in current assets and current liabilities (including restricted cash, accounts receivable, accounts payable, and accrued expenses) approximated carrying value due to the short-term nature of such items.

As of January 31, 2025, the fair value of the Company’s outstanding debt approximated its carrying value. As of January 31, 2024, the fair value of the Company’s outstanding debt was $159.6 million. The fair value of debt was estimated using Level 2 inputs, based on interest rates available for debt with terms and maturities similar to the Company’s debt.

There were no changes to the Company’s valuation techniques used to measure the fair value of assets and liabilities on a recurring basis during fiscal 2025, fiscal 2024, and fiscal 2023. There were no transfers of assets from Level 2 to Level 3 during fiscal 2025, fiscal 2024, and fiscal 2023.

Contingent consideration related to the acquisitions of Aspire LLC (“Aspire”) and the GIS Dynamics LLC (“GIS”) were subject to measurement at fair value on a recurring basis using Level 3 measurements. The following represents the activity for the contingent liability:

Certain assets, including goodwill, intangible assets and other long-lived assets are also subject to measurement at fair value on a nonrecurring basis using Level 3 measurements, but only when they are deemed to be impaired as a result of an impairment review. For fiscal 2025 and fiscal 2024, the Company recorded an impairment of long-lived assets of $39.1 million and $4.9 million to reduce the carrying value to estimated fair value (see Note 4). For fiscal 2023, no impairments were identified on those assets required to be measured at fair value on a nonrecurring basis.

Balance Sheet Components

Prepaid Expenses

Prepaid expenses consisted of the following (in thousands):

Internal-use Software

Internal-use software development costs were as follows (in thousands):

Capitalized software development costs were $22.7 million and $17.4 million for fiscal 2025 and fiscal 2024, respectively. Amortization expense for software development costs was $16.2 million, $11.8 million, and $7.0 million for fiscal 2025, fiscal 2024, fiscal 2023, respectively. Amortization had not started on $3.2 million and $5.8 million of capitalized internal-use software development costs that were not yet ready for their intended use as of January 31, 2025 and January 31, 2024, respectively.

As of January 31, 2025, expected future amortization expense related to capitalized internal-use software development costs is as follows (in thousands):

Property and Equipment, net

Property and equipment consisted of the following (in thousands, except years):

Depreciation expense was $18.1 million, $19.3 million, and $5.2 million for fiscal 2025, fiscal 2024 and fiscal 2023, respectively.

In fiscal 2025 and fiscal 2024, the Company ceased use of certain office space and determined to sublease such space for the remainder of the lease term, which resulted in the Company reassessing its asset groupings. The Company determined the office space asset groups, comprised primarily of an ROU asset, the related leasehold improvements and other property and equipment, were impaired and recorded an aggregate impairment loss of $39.1 million and $4.9 million in fiscal 2025 and fiscal 2024, respectively, to reduce the carrying value of the asset groups to their estimated fair value. The impairments resulted in a reduction of the ROU asset by $13.1 million and $1.1 million in fiscal 2025 and fiscal 2024, respectively, and leasehold improvements, furniture and fixtures and office equipment by $26.0 million and $3.7 million in fiscal 2025 and fiscal 2024, respectively. There wereno impairments in fiscal 2023.

The impairments were recorded in the consolidated statement of operations as follows:

The estimated fair value of the asset groups was determined by using a discounted cash flow method which is a non-recurring fair value measurement based on Level 3 inputs. Key inputs used in this estimate included projected sublease income and a discount rate which incorporated the risk of achievement associated with the forecast.

Accounts Payable and Other Accrued Expenses

Accounts payable and other accrued expenses consisted of the following (in thousands):

The Company collects and remits sales and use, value added taxes, and other taxes (“tax liabilities”) relating to services provided where required. In instances in which the Company determines there is additional exposure for uncollected tax liabilities relating to services provided due to uncertainty arising from the complexity and interpretation of applicable state and local laws, rules and regulations, or lack of widely known and accepted practices, the Company accrues for these taxes. The accrual requires the use of estimates and is complex. The Company accrues for the amount of taxes that are due, or when the amounts due are uncertain, the Company accrues for the amount of taxes that are probable and estimable. The Company updates its estimates each period considering the impacts of state or local authority audits, settlement of these liabilities or when new information becomes available regarding the Company’s tax obligations. The amount of taxes that the Company may ultimately pay may differ from these estimates.

Accrued Personnel Related Expenses

Accrued personnel related expenses consisted of the following (in thousands):

Business Combination

Convex Labs Inc.

In April 2024, the Company acquired 100% of the outstanding equity of Convex Labs Inc. (“Convex”). The acquisition of Convex provides the Company additional tools to modernize the commercial services industry with data-driven solutions. The purchase price of $25.8 million consisted of 373,118 shares of the Company’s common stock, valued at $23.5 million in addition to $2.3 million in cash. Of the 373,118 shares, the Company held back

41,959 shares of common stock, valued at $2.6 million at the acquisition date, to cover post-closing purchase price adjustments and potential indemnities which are to be released 15 months after the close of the acquisition.

Goodwill, which primarily relates to expected synergies and assembled workforce, is not deductible for U.S. federal income tax purposes.

The fair values of the developed technology and trade name were determined using the relief-from-royalty relief method, and the fair value of customer relationships was determined using the multiple-period excess earnings method.

Pro forma financial information for fiscal 2025 and fiscal 2024, and revenue and losses for the period post-acquisition have not been presented because such amounts are not material to the consolidated financial statements.

The Company incurred transaction costs of$2.3 million related to the acquisition of Convex during fiscal 2025.

Schedule Engine

In August 2022, the Company acquired all the ownership interest of Ignite-Schedule Engine, Inc. (“Schedule Engine”), a provider of online booking for home and commercial services, for purchase consideration of $13.5 million in cash and 818,962 shares of common stock valued at $45.3 million at the acquisition date. The Company held back 74,646 shares of common stock valued at $4.1 million at the acquisition date to cover indemnities, which were released 15 months from the date of acquisition in fiscal 2024.

Goodwill, which primarily relates to expected synergies and assembled workforce, is partially deductible for U.S. federal income tax purposes.

The fair values of the developed technology and trade name were determined using the royalty relief method, and the fair value of customer relationships was determined using the multiple-period excess earnings method.

The Company incurred transaction costs of $2.5 million related to the acquisition of Schedule Engine during fiscal 2023.

In connection with the acquisition, certain awards in the equity of the seller of Schedule Engine that were held by employees that joined the Company were modified and allowed to continue to vest based on the employees’ service in the Company post-acquisition. The fair value of these awards was $3.6 million at the acquisition date. For fiscal 2025, fiscal 2024, and fiscal 2023, the Company recorded, $0.1 million, $0.2 million and $1.8 million of expense, respectively, related to these awards as stock-based compensation expense. The awards will be recorded at fair value each period through the respective vesting dates.

For the period from the acquisition date to January 31, 2023, Schedule Engine contributed $8.7 million to the Company’s consolidated revenue. Due to the integration of operations post-acquisition, presenting the operating losses that Schedule Engine contributed to the Company’s consolidated operating loss since the acquisition date is impracticable. Pro forma financial information and revenue and earnings of Schedule Engine from the acquisition date through January 31, 2023, was not material.

FieldRoutes

In February 2022, the Company acquired 100% of the membership interests of FSH Topco, LLC dba PestRoutes (“FieldRoutes”), a cloud-based and mobile SaaS provider in the pest control industry, for purchase consideration of $576.9 million in cash, primarily to expand the Company’s existing technology suite. The Company paid $8.9 million of the cash purchase price into escrow for potential breaches of representations and warranties. The escrow was released to the members of FieldRoutes on the anniversary of the acquisition date.

Goodwill, which primarily relates to expected synergies and assembled workforce, is partially deductible for U.S. federal income tax purposes.

The fair values of the developed technology and trade name were determined using the royalty relief method, and the fair value of customer relationships was determined using the multiple-period excess earnings method.

The Company incurred transaction costs and representations and warranties insurance costs of $3.4 million during fiscal 2023. In addition, the Company incurred bonus expenses related to the transaction of $3.3 million during fiscal 2023.

In connection with the acquisition, the Company issued 134,388 restricted stock units with athree-year vesting period to certain FieldRoutes employees. The grant date fair value of these units was $14.1 million and was expensed as stock-based compensation over the vesting period ofthree years.

Intangible Assets and Goodwill

Intangible Assets

Thenet book values of intangible assets were as follows (in thousands, except years):

Amortization expense for intangible assets was as follows (in thousands):

As of January 31, 2025, estimated future amortization expense related to the intangible assets is as follows (in thousands):

Goodwill

The changes to goodwill were as follows (in thousands):

There wasno impairment of goodwill during fiscal 2025, fiscal 2024, and fiscal 2023.

Debt Arrangements

In January 2023, the Company entered into a secured credit agreement with Wells Fargo Bank, N.A., as administrative and collateral agent, and certain lenders, that included (i) a term loan facility in an initial aggregate principal amount of $180.0 million and (ii) a revolving credit facility in an initial aggregate principal amount of $70.0 million. In September 2024, the Company entered into an amendment to the secured credit agreement (as amended, the“Credit Agreement”) that converted its existing term loan balance of $177.3 million and $70.0 million revolving credit facility to a term loan of $107.3 million (as amended, the“Term Loan”) and $140.0 million revolving credit facility (as amended, the“Revolver Facility”), effective October 1, 2024, such that, immediately post amendment, $107.3 million was outstanding on the Term Loan, $70.0 million was outstanding under the Revolver Facility, and $70.0 million was available for borrowing under the Revolver Facility. Subsequent to the IPO, the Company paid down the Revolver Facility resulting inno outstanding borrowings and $140.0 million availableon the Revolver Facility as of January 31, 2025. The Credit Agreement contains the standard and customary covenants for agreements of this type, including various reporting, affirmative and negative covenants. Among other things, these covenants set forth minimum revenue thresholds and maintenance of minimum liquidity and certain limits to the Company’s and its subsidiaries’ ability to create or incur liens on assets, make acquisitions of or investments in businesses, engage in any material line of business substantially different from the Company’s current lines of business, incur additional indebtedness or contingent obligations, sell or dispose of assets, pay dividends and make loans or advances to employees.

The Credit Agreement will mature in January 2028 and bears interest at a floating rate at the Company’s option of either (i) a term Secured Overnight Financing Rate (“SOFR”) based rate for a specified interest period plus an applicable margin, which is initially 2.5% per annum and ranges from 2.25% to 3.00% per annum based on a ratio of outstanding debt to annual recurring revenue, or (ii) a base rate plus an applicable margin, which is initially 1.5% per annum and ranges from 1.25% to 2.0% per annum based on the ratio of total outstanding debt to annual recurring revenue. On the first day of each calendar quarter, the Company has been required to repay an aggregate principal amount equal to 0.25% of the aggregate original principal amount of the Term Loan, which repayment amount will be approximately $0.3 million beginning January 1, 2025. The Revolver Facility will incur a 0.25% annual fee for undrawn amounts. The effective interest rate on the Loan Facility is 7.88% as of January 31, 2025.

The future payment on the Term Loan is as follows (in thousands):

The Company was in compliance with all covenants as of January 31, 2025.

Long-term debt comprised the following (in thousands):

The Company had unsecured letters of credit issued in the face amount of $1.0 million and $2.2 million outstanding as of January 31, 2025 and January 31, 2024, respectively.

Commitments and Contingencies

Noncancellable Commitments

As of January 31, 2025, the Company had long-term noncancellable agreements related primarily to its cloud hosting arrangements in addition to marketing events and management consulting projects. The estimated payments by future period, which for certain cloud computing arrangements are based on estimated usage, are as follows (in thousands):

Litigation

During the ordinary course of business, the Company may become subject to legal proceedings, claims and litigation. Such matters are subject to many uncertainties and outcomes are not predictable with assurance. If the Company determines that it is probable that a loss has been incurred and the amount is reasonably estimable, the Company will record a liability.

As of January 31, 2025, the Company is not subject to any pending legal matters or claims that it believes could have a material adverse effect on its financial position, results of operations, or cash flows should such litigation be resolved unfavorably.

Indemnifications

In the ordinary course of business, the Company may provide indemnifications of varying scope and terms to customers, vendors, lessors, investors, directors, officers, employees and other parties with respect to certain matters, including, but not limited to, losses arising out of the Company’s breach of such agreements, products or services to be provided by the Company, or from intellectual property infringement claims made by third parties. These indemnifications may survive termination of the underlying agreement and the maximum potential amount of future payments the Company could be required to make under these indemnification provisions may not be subject to maximum loss clauses. The maximum potential amount of future payments the Company could be required to make under these indemnification provisions is indeterminable. The Company is not subject to any material indemnification claims that are probable or reasonably possible, and has not made any cash payments under its indemnification agreements that had a material effect on the financial position, results of operations or cash flows of the Company.

Leases

The Company has operating leases for its corporate offices. The leases have remaining lease terms ranging fromone tosix years, with certain leases having various term extensions available. These options to extend have not been recognized as part of the Company’s ROU assets and lease liabilities as it is not reasonably certain that the Company will exercise these options. The lease agreements donot contain any residual value guarantees or material restrictive covenants. The Company has lease agreements with lease and nonlease components, which the Company has elected to account for as single lease component for all assets. The lease costs are allocated within cost of revenue and operating expenses on the consolidated statements of operations.

Information related to the Company’s leases is as follows (in thousands, except years and percentages):

In fiscal 2025 and 2024, the Company recorded an impairment of $13.1 million and $1.1 million of an ROU asset, respectively (See Note 4).

Future minimum lease payments under noncancelable leases included in the calculation of lease liabilities as of January 31, 2025 were as follows (in thousands):

There wereno noncancelable leases executed, but which have not yet commenced as of January 31, 2025.

Stockholders’ Equity

Reclassification of Common Stock

Immediately prior to the completion of the IPO, the Company filed an amended and restated certificate of incorporation, which authorized a total of 1,000,000,000 shares of Class A common stock,100,000,000 shares of Class B common stock, and 100,000,000 of Class C common stock and each share of common stock then outstanding was reclassified as Class A common stock with the same rights and preferences. The Company also authorized 100,000,000 shares of preferred stock, the rights and preferences as may be designed by the Board of Directors. The rights of holders of Class A common stock, Class B common stock and Class C common stock are identical, except with respect to voting and conversion rights. Each share of Class A common stock is entitled toone vote. Each share of Class B common stock is entitled to 10 votes and is convertible at any time intoone share of Class A common stock. Each share of Class C common stock is entitled tono votes, except as otherwise required by law.

The Company also executed an exchange agreement with the Co-Founders prior to the completion of the IPO whereby 13,404,097 shares of Class A common stock held by the Co-Founders and their affiliates (after reclassification from common stock described above) were exchanged for an equivalent number of shares of Class B common stock.

Each share of Class B common stock is convertible into one share of Class A common stock at the option of the holder or automatically upon a sale or transfer by the holder, except for certain permitted transfers. In addition, each share of Class B common stock will convert automatically into one share of Class A common stock upon the earlier of (i) the 15-year anniversary of the completion of the IPO and (ii) the date fixed by the Board of Directors that is no less than 61 days and no more than 180 days following the first date following the completion of the IPO on which the number of shares of Class B common stock held by the Co-Founders and the permitted entities they control is less than 20% of the shares of Class B common stock (including securities convertible or exercisable into Class B common stock) held by the Co-Founders and the permitted entities they control on the date of the completion of the IPO.

In addition, options, RSAs and RSUs for common stock were reclassified to options, RSAs and RSUs for Class A common stock, with the exception of options and RSUs held by the Co-Founders which were designated as options and RSUs for Class B common stock.

Non-Convertible Preferred Stock and Warrants

In October 2022, the Company issued 250,000 shares of non-convertible preferred stock (“NCPS”) and warrants to purchase 1,262,516 shares of common stock for $0.01 per share, that were immediately exercised. The total net proceeds received by the Company was $249.2 million after $0.8 millionin costs associated with the issuance. The

Company allocated $174.5 million to the value of the NCPS and $75.5 million of the value allocated to the warrants based on their estimated relative fair values. Under the terms of the Secured Loan, the Company was required to use the proceeds to repay a portion of the Secured Loan (see Note 7. Debt Arrangements).

The NCPS had an initial liquidation preference of $1,000 per share. The holders were entitled to cumulative dividends at 10% per annum for the first five years and 15% per annum between the 5th and 6th anniversary. Dividends prior to the 6th anniversary were to be paid-in-kind and were added to the NCPS liquidation preference. After the 6th anniversary, the holders were entitled to cash dividends, payable quarterly, at an annual rate of 20% the NCPS liquidation preference. The Company had the right to redeem the NCPS at any time. In the event of voluntary or involuntary liquidation or a deemed liquidation event, or an optional redemption by the Company, the holders of NCPS were entitled to be paid an amount per share equal to the greater of (i)110% multiplied by the original issue price of $1,000 per share, or (ii) the original issuance price plus the accrued dividends on such share that are unpaid as of such time. The Company accreted the NCPS from its initial carrying value (after allocation of proceeds to the warrants) to its estimated redemption amount at the date the Company expected to redeem the NCPS using a constant effective yield. Judgment was required to estimate the expected life of the NCPS. The Company considered various factors in estimating the expected life including the timing of additional fundraises or equity offerings. The Company recorded accretion of $48.7 million, $45.9 million, and $13.5 million for fiscal 2025, fiscal 2024, and fiscal 2023, respectively.

Subsequent to the IPO, the Company redeemed all outstanding shares of its NCPS for $310.6 million, which included the $250.0 million redemption price and $60.6 million of accrued dividends. Upon redemption, the Company recorded an adjustment of $28.3 million to net loss to compute net loss attributable to common stockholders for the loss on redemption, measured as the difference between the redemption price and the then carrying value of the NCPS.

Redeemable Convertible Preferred Stock

As of January 31, 2024, redeemable convertible preferred stock consisted of the following (in thousands, except share and per share data):

The redeemable convertible preferred stock was convertible at the option of the holder at any time and automatically converted to common stock upon a qualified IPO, as defined. The conversion prices of the redeemable convertible preferred stock were subject to adjustment for certain down round and other adjustments. The conversion price of the Series H redeemable convertible preferred stock was subject to adjustment as described below. The redeemable convertible preferred stock was entitled to dividends, if and when declared prior to and in preference to the common stockholders, ranked senior in preference in the event of a liquidation or deemed liquidation event and was entitled to the number of votes equal to the number of shares of common stock into which such shares of redeemable convertible preferred Stock were then convertible.

Immediately prior to the completion of the IPO, all outstanding shares of redeemable convertible preferred stock were automatically converted into shares of Class A common stock as follows:

As the price per share for the Class A common stock offered and sold in the IPO was below the original issue prices of the Series F, G and H-1 redeemable convertible preferred stock, the conversion prices were adjusted in accordance with the Company's amended and restated certificate of incorporation in effect prior to the completion of the IPO, resulting in the issuance of additional shares of Class A common stock in connection with the conversion of such series of redeemable convertible preferred stock. The impact of this anti-dilution adjustment resulted in an adjustment to net loss to compute net loss attributable to common stockholders of approximately $12.6 million during fiscal 2025.

As the price per share for the Class A common stock offered and sold in the IPO was less than the conversion price of the Series H redeemable convertible preferred stock accreting at 11% per annum, accruing daily and compounding quarterly from and after May 22, 2024 (the “Ratchet Adjustment Denominator”), the conversion price of the Series H redeemable convertible preferred stock was reduced to an amount equal to the product of (a) the price per share for the Class A common stock offered and sold in the IPO, multiplied by (b) $84.5712 divided by the Ratchet Adjustment Denominator. The conversion of the Series H redeemable convertible preferred stock at the adjusted conversion price upon the completion of the IPO was accounted for as a stock-settled redemption, and resulted in an adjustment to net loss to compute net loss attributable to common stockholders of approximately $31.0 million in fiscal 2025, measured as the difference between the carrying value of $472.9 million and the fair value of $503.9 million of the Series H redeemable convertible preferred stock.

As of January 31, 2025, there wereno shares of redeemable convertible preferred stock issued and outstanding.

Equity Incentive Plans

The Company has granted stock-based awards under a 2015 Stock Plan. In fiscal 2025, the Company established the 2024 Incentive Stock Plan. Pursuant to the terms of the 2024 Incentive Stock Plan, additional shares of common stock may “roll over” to the 2024 Incentive Stock Plan in the event of the termination or lapse of stock options outstanding pursuant to the 2015 Stock Plan. As of January 31, 2025, there were 28,089,635 and 17,461,163 shares of common stock authorized and reserved for issuance under the 2015 Stock Plan and 2024 Stock Plan, respectively.

As of January 31, 2025, there were 1,322,101 and 17,461,163 shares of common stock available for future issuance under the 2015 Stock Plan and 2024 Stock Plan, respectively. The Company’s policy is to issue new shares upon exercise of stock options.

Additionally, the Company adopted an employee stock purchase program in fiscal 2025 (“2024 ESPP”) which allows eligible employees to purchase shares of our Class A common stock at periodic intervals using accumulated payroll deductions. As of January 31, 2025, there were 3,164,606 shares authorized under the 2024 ESPP. As of January 31, 2025, the first offering period under the 2024 ESPP had not commenced.

Fiscal 2024 Tender Offer

Concurrent with entering into the Series H-1 redeemable convertible preferred stock purchase agreement in July 2023, the Company facilitated a tender offer whereby the Series H-1 redeemable convertible preferred stock investors purchased shares of the Company’s common stock from current and former employees and consultants, and certain existing investors. The tender offer was completed in July 2023. As a result, Series H-1 redeemable convertible preferred stock investors purchased an aggregate of 1,942,709 shares ofthe Company’s common stock at a purchase price of $70.00 per share for proceeds to the selling stockholders of $136.0 million. The purchase price in this tender offer transaction was in excess of the estimated fair value of the common stock of $62.28 per share at the time of the transaction. As a result, during fiscal 2024, the Company recorded the excess of the purchase price over the fair value as stock-based compensation expense of $14.0 million which is included in the table below for shares purchased from current and former employees and consultants.

Fiscal 2025 Tender Offer

The Company presented a tender offer to employees who held stock options with exercise prices of $63.55 and above whereby the employees could exchange the options for restricted stock units (“RSUs”) at a ratio of one RSU for every two stock options. The tender offer window closed on May 15, 2024. As a result,207,784 stock options with service-only vesting conditions were cancelled and exchanged for 103,888 RSUs. The replacement RSUs vest upon the satisfaction of both atwo-year service condition and a performance condition that was satisfied upon the effectiveness of the IPO. The exchange was accounted for as a modification and resulted in an incremental stock-based compensation charge of $1.3 million upon the effectiveness of the IPO and $0.9 million to be recognized ratably over the remaining requisite service period ending June 15, 2026. In addition, as part of the fiscal 2025 tender offer,36,000 stock options with revenue performance vesting conditions and an exercise price of $63.55 were exchanged for 18,000 RSUs and retained the same revenue performance condition, resulting in an incremental stock-based compensation charge of $0.2 million at the time of the close of the tender offer and $0.2 million to be recognized ratably through October 31, 2025, assuming achievement of the performance condition remains probable.

Stock-based Compensation

The stock-based compensation expense by line item in the consolidated statements of operations is summarized as follows (in thousands):

Stock Options with Service-Only Conditions

Stock options granted to purchase shares of the Company’s common stock vest at varying rates, but generally over four years with 25% vesting upon completion ofone year of service and the remainder vesting monthly thereafter. All stock options with service-only conditions are exercisable into Class A common stock upon vesting. Activity for stock options that contain service only vesting conditions was as follows:

The weighted average grant date fair value of options granted during fiscal 2023 was $41.26 per share based upon the Black-Scholes option-pricing model using the following weighted-average assumptions:

There wereno stock options granted in fiscal 2025 or fiscal 2024.

Total unrecognized compensation cost related to stock options with service only vesting conditions as of January 31, 2025 was $13.5 million, which is expected to be recognized over a remaining weighted average period of approximately 1.04 years. The total intrinsic value of options exercised was $36.7 million, $43.4 million, and $60.1 million for fiscal 2025, fiscal 2024 and fiscal 2023, respectively.

Stock Options with Performance and Market Conditions

Stock option activity for awards with performance or market vesting conditions consisted of the following:

In October 2024, in conjunction with the grant of the Co-Founder RSUs (referenced below), the Company cancelled stock options held by the Co-Founders to purchase 340,676 shares of common stock that were subject to vesting upon the satisfaction of a service, performance and market condition.

As of January 31, 2025, the Company had 340,676 stock options outstanding held by the Co-Founders to purchase shares of Class B common stock that vest upon the satisfaction of both a service and performance condition. The performance condition was satisfied upon the effectiveness of the IPO and the service condition will be satisfied over a four-year period commencing on the IPO date with 25% vesting one year from the IPO and the remainder vesting monthly thereafter. The awards expireten years from issuance. The Company recognized $1.1 million in fiscal 2025 and unrecognized stock-based compensation expense for these stock options was $0.5 million as of January 31, 2025.

As of January 31, 2025, the Company had stock options outstanding to purchase 128,687 shares of Class A common stock that vest upon the satisfaction of both a service and performance condition. The performance condition was satisfied upon the effectiveness of the IPO and the service condition will be satisfied over a one-year period commencingone year from the date of the IPO. The awards expireten years from issuance. The Company recognized $4.8 million in fiscal 2025 and unrecognized stock-based compensation expense for these stock options was $1.7 million as of January 31, 2025.

Further, as of January 31, 2025, the Company had stock options outstanding to purchase 10,000 shares of Class A common stock that vest upon the satisfaction of a performance condition. The performance condition was satisfied upon the effectiveness of the IPO. The award expiresten years from issuance. The Company recognized $0.5 million in fiscal 2025.

During fiscal 2024 and fiscal 2023, the Company didnot recognize any stock-based compensation expense associated with stock options containing a liquidity event-related performance condition as the achievement of such condition was not deemed probable.

As of January 31, 2025, the Company had 320,885 stock options outstanding to purchase shares of Class A common stock that cliff vest upon the achievement of a performance condition of either (i) a revenue target, provided that the target is met before the end of fiscal 2026, or (ii) at the discretion of the Audit Committee of the Board of Directors, a trailing 12 month revenue target commensurate with a specified annual recurring revenue threshold, and the employees providing continuous service to the Company through the date the performance condition is met. At the end of fiscal 2024, the Company concluded it was probable that it would attain the revenue target by the end of fiscal 2026 and therefore the Company recognized expense of $10.1 million. For fiscal 2025, the Company recognized stock-based compensation expense associated with these stock options of $3.7 million. The remaining $3.0 million will be recognized ratably through October 31, 2025, assuming achievement of the performance condition remains probable.

RSUs and Restricted Stock Awards (“RSAs”) with Service-Only Conditions

RSAs and RSUs subject to service-only vesting condition requirements consisted of the following:

RSUs vest at varying rates, but generally over four years with 25% vesting upon completion ofone year of service and the remainder vesting quarterly thereafter. RSUs and RSAs with service-only conditions are settled in

Class A common stock upon vesting. The weighted average grant date fair value per share of RSUs granted during fiscal 2025, fiscal 2024, and fiscal 2023 was $64.27, $62.26, and $79.57 respectively. There wereno RSAs granted during fiscal 2025, fiscal 2024 or fiscal 2023. The total fair value of RSUs vested during fiscal 2025, fiscal 2024, and fiscal 2023 was $48.8 million, $49.3 million, and $12.7 million, respectively. The total fair value of RSAs vested during fiscal 2025, fiscal 2024 and fiscal 2023 was $5.8 million, $7.3 million and $12.2 million, respectively. Total unrecognized stock-based compensation expense related to RSUs as of January 31, 2025 was $270.6 million which is expected to be recognized over a remaining weighted average period of approximately 3.02 years.

RSUs with Performance Conditions

RSU activity for awards with performance or market vesting conditions consisted of the following:

As of January 31, 2025, the Company had 16,813 RSUs outstanding that cliff vest upon the achievement of a performance condition of either (i) a revenue target provided that target is met before the end of fiscal 2026 or (ii) at the discretion of the Audit Committee of the Board of Directors, a trailing 12-month revenue target commensurate with a specified annual recurring revenue threshold, and the employees providing continuous service to the Company through the date the performance condition is met. At the end of fiscal 2024, the Company concluded it was probable that the Company would attain the revenue target in fiscal 2026. During fiscal 2025, the Company recognized stock-based compensation expense of$0.6 million related to these awards. The remaining$0.6 million will be recognized ratably through October 31, 2025, assuming the performance condition remains probable. Also, during fiscal 2025, an additional 36,000 options with revenue performance conditions and an exercise price of $63.55 were exchanged for 18,000 RSUs, see Fiscal 2025 Tender Offer above. These RSUs are to be settled in Class A common stock upon vesting.

As of January 31, 2025, the Company had 1,223,188 RSUs outstanding that vest upon the satisfaction of both a performance and service condition, where the performance condition was satisfied upon the effectiveness of the IPO and the service condition is satisfied over a period of approximately four years from the date of grant subject to the employee continuing to provide service to the Company through the date that is two weeks following the expiration of the restrictions on sales of common stock following the IPO, which is expected to be approximately June 24, 2025 (the “RSU Release Date”). In addition, the Company had 76,859 RSUs outstanding that vest upon the satisfaction of a performance and a service condition, where the performance condition was satisfied upon the completion of the IPO and the service condition will be satisfied over four quarterly periods commencing approximately one year after the IPO. During fiscal 2025, the Company recognized stock-based compensation expense of$47.2 million related to these awards and unrecognized stock-based compensation expense for these RSUs was $35.3 million as of January 31, 2025. These RSUs are to be settled in Class A common stock upon vesting.

As a result of the fiscal 2025 tender offer, the Company had 101,388 RSUs outstanding that vest upon the satisfaction of both atwo-year service condition and a performance condition where the performance condition was satisfied upon the effectiveness of the IPO and the service condition is satisfied over a period of approximately two years from the date the tender offer closed, subject to the employee continuing to provide service to the Company through the RSU Release Date. During fiscal 2025, the Company recognized stock-based compensation expense of $1.4 million related to these awards and unrecognized stock-based compensation expense for these RSUs was $0.8 million as of January 31, 2025. These RSUs are to be settled in Class A common stock upon vesting.

Infiscal 2025, the Company issued RSUs to certain employees that vest upon the achievement of certain performance conditions. The amount of RSUs that will vest is derived from a specified percentage of the value of incrementalnew customer activity through January 31, 2025 and January 31, 2026. For RSUs where the performance condition has been met during this period, the RSUs will vest 45 days from the date the performance conditions are met. The initial target number of RSUs under this award agreement is 17,738 RSUs. During fiscal 2025,2,782 of these RSUs vested and the Company recognized $0.4 million in expense. These RSUs are to be settled in Class A common stock upon vesting.

In October 2024, the Company granted each of the Co-Founders an award of 3,241,544 performance-based RSUs (“Co-Founder RSUs”). Each performance-based RSU represents the right to be issued a share of Class B common stock following vesting. The performance-based RSUs vest on or after 180 days following the completion of an initial public offering based on achieving volume weighted-average closing trading prices of the Company’s common stock over a six-month or 90-day period, as applicable, ranging from $140.00 per share to $440.00 per share (the “stock price hurdle”), subject to the Co-Founders being employed as Chief Executive Officer, co-Chief Executive Officer or President as of the vesting date. Any RSUs for which the applicable stock price hurdle has not been achieved on or before October 21, 2034 will automatically be forfeited. The Company’s estimate of the grant date fair value of these RSUs of $263.6 million was estimated using a Monte Carlo simulation model that incorporates the likelihood of achieving the stock price hurdles. The Company commenced recognition of stock-based compensation expense upon completion of the IPO over the estimated weighted-average derived service period of approximately five years, and recognized aggregate stock-based compensation for the portion of the service period satisfied through January 31, 2025 during the fourth quarter of fiscal 2025. During fiscal 2025, the Company recognized stock-based compensation expense of$15.0 million related to these awards and unrecognized stock-based compensation expense for these RSUs was $248.6 million as of January 31, 2025. These RSUs are to be settled in Class B common stock upon vesting.

During fiscal 2024 and fiscal 2023, the Company didnot recognize any stock-based compensation expense associated with RSUs containing a liquidity event-related performance condition as the achievement of such condition was not deemed probable.

Income Taxes

The domestic and foreign components of income (loss) before income taxes consists of the following (in thousands):

The income tax provision consists of the following (in thousands, except percentages):

A reconciliation of the U.S. Federal statutory rate to the Company’s effective tax rate is as follows (in thousands, except percentages):

The temporary differences, which give rise to the Company’s deferred tax assets and liabilities consisted of the following (in thousands):

In determining the need for a valuation allowance, management reviewed all available positive and negative evidence, primarily the prior and forecasted losses of the Company, and determined its U.S. deferred tax assets are not realizable under the more-likely-than-not measurement, and as such, a full valuation allowance was recorded against U.S. deferred tax assets as of January 31, 2025 and 2024, respectively.

As a result of the Company’s certain prior acquisitions, the Company generated indefinite-lived deferred tax liabilities from tax amortizable goodwill, which are not an available source of income for the realization of definite-lived deferred tax assets.

The following table summarizes the change in the Company’s valuation allowance (in thousands):

As of January 31, 2025, the Company had cumulative U.S. net operating losses (“NOLs”) consisting of carryforwards for federal income tax purposes of $416.2 million, which have an indefinite carryforward period. As of January 31, 2025, the Company had cumulative state NOL carryforwards of $304.9 million. State NOL carryforwards will begin to expire in fiscal 2028.

As of January 31, 2025, the Company has federal research tax credit carryforwards of $36.9 million and state research tax credit carryforwards of $19.5 million. The Company’s federal research tax credit carryforwards will begin to expire in fiscal 2036, while its state research tax credit carryforwards will begin to expire in fiscal 2029. As of January 31, 2025, the Company has other state tax credit carryforwards of $1.5 million. The carryforwards have begun to expire in fiscal 2025.

NOLs and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders over athree-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code as well as similar state provisions. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. The Company conducted a formal study through January 31, 2025 that concluded that although there had been prior ownership changes, there were no actual limitations on the use of the Company’s NOLs. Similar provisions of state tax law may also apply to limit the use of the Company’s state NOL carryforwards.

Uncertain Tax Benefits

The Company has provided what it believes to be an appropriate amount of tax for items that involve interpretation of the tax law. However, events may occur in the future that will cause the Company to reevaluate its current reserves and may result in an adjustment to the reserve for taxes.

The following table summarizes the change in the Company’s reserve for unrecognized tax benefits (in thousands):

As of January 31, 2025, the Company had $14.7 million of gross unrecognized tax benefits, of which an immaterial amount would impact the effective tax rate, if recognized. The remaining gross unrecognized tax benefits relate to income tax positions which, if recognized, would not impact the effective rate due to the valuation allowance against its federal and state deferred taxes. The Company does not expect any significant changes in its unrecognized tax benefits within 12 months of the reporting date.

The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. No tax years for the Company are currently under examination by the U.S. Internal Revenue Service or state and local tax authorities for income tax purposes. Due to net operating loss and tax credit carryforwards, all years are open for examination and may become subject to examination in the future.

The Company also files income tax returns in Armenia, starting in 2019. The Company’s tax return for 2021, 2022, 2023, and 2024 are subject to regular audit by the Armenian tax authorities for income tax purposes in fiscal 2026.

The Company also files income tax returns in Canada, starting in 2023. No tax years for the Company are currently under examination by the Canadian tax authorities for income tax purposes. The Company’s fiscal 2023 and fiscal 2024 remain open for examination and assessment.

Net Loss Per Share

The rights, including the liquidation and dividend rights, of the holders of Class A and Class B common stock are identical, except with respect to voting, conversion, and transfer rights. As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis to each class of common stock and the resulting basic and diluted net loss per share attributable to common stockholders are the same for both Class A and Class B common stock on both an individual and combined basis.

The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders (in thousands, except share and per share data):

The following potentially dilutive securities were excluded from the computation of diluted net loss per share attributable to common stockholders as of January 31, 2025, 2024 and 2023 because including them would have been anti-dilutive:

Employee Benefit Plan

The Company has an employee savings and retirement plan (the “401(k) Plan”) for its eligible employees. The 401(k) Plan is available to all U.S. employees and provides employees with tax-deferred salary deductions and alternative investment options. Employees may contribute up to the federal limitation for that year. For fiscal 2025, fiscal 2024, and fiscal 2023, the Company expensed $10.0 million, $8.4 million, and $7.4 million, respectively, for discretionary employer matching contributions, of which $2.1 million and $2.3 million was accrued for and included in accrued personnel-related expenses as of January 31, 2025 and 2024 respectively.

Restructuring

In March 2024, the Company committed to a plan to align its investments more closely with its strategic priorities by reducing the Company’s workforce by 42 employees. The Company incurred total pre-tax charges of approximately$2.5 million of employee-related costs, including severance and other termination benefits, which were paid in fiscal 2025.

In February 2023, the Company committed to a plan to align its investments more closely with its strategic priorities by reducing the Company’s workforce by 221 employees. The Company incurred total pre-tax charges of approximately $8.2 million of employee-related costs, including severance and other termination benefits, which were paid in fiscal 2024.

The restructuring charge by line item in the consolidated statements of operations for these events is summarized as follows (in thousands):

Subsequent Events

In February 2025, the Company ceased use of and determined to sublease for the remainder of the lease term certain office space at its corporate headquarters. The Company determined that the asset grouping, comprising primarily of a ROU asset, the related leasehold improvements and property and equipment, was impaired and recorded an impairment loss of $8.0 million in the first quarter of fiscal 2026. The impairment loss was measured as the excess of the carrying value of the asset grouping over its fair value. The fair value was estimated using discounted cash flows which is a non-recurring fair value measurement based on Level 3 inputs. Key inputs used in this estimate include sublease income and a discount rate which reflects the risk associated with the cash flows.