Vertex, Inc.

Previous wording

We employ a hybrid deployment model to align to our customers’ technology preferences for their core financial management software across on-premise, cloud deployments or any combination of these models. Over time, we expect both existing and newly acquired customers to continue to shift towards cloud deployment models. Cloud-based subscription sales to new customers have grown at a faster rate than on-premise software subscription sales, which is a trend that we expect to continue over time. We generated 55% and 49% of software subscription revenue from cloud-based subscriptions during the three months ended June 30, 2025 and 2024, respectively, and 54% and 48% for the six months ended June 30, 2025 and 2024, respectively. While our on-premise software subscription revenue comprised 45% and 51% of our software subscription revenue during the three months ended June 30, 2025 and 2024, respectively, and 46% and 52% during the six months ended June 30, 2025 and 2024, respectively, it continues to decrease as a percentage of total software subscriptions revenues as cloud-based subscriptions grow.

Current wording

We employ a hybrid deployment model to align to our customers’ technology preferences for their core financial management software across on-premise, cloud deployments or any combination of these models. Over time, we expect both existing and newly acquired customers to continue to shift towards cloud deployment models. Cloud-based subscription sales to new customers have grown at a faster rate than on-premise software subscription sales, which is a trend that we expect to continue over time. We generated 56% and 49% of software subscription revenue from cloud-based subscriptions during the three months ended September 30, 2025 and 2024, respectively, and 55% and 48% for the nine months ended September 30, 2025 and 2024, respectively. While our on-premise software subscription revenue comprised 44% and 51% of our software subscription revenue during the three months ended September 30, 2025 and 2024, respectively, and 45% and 52% during the nine months ended September 30, 2025 and 2024, respectively, it continues to decrease as a percentage of total software subscriptions revenues as cloud-based subscriptions grow.

Previous wording

We believe that global commerce and the compliance environment provides durable and accelerating growth opportunities for our business. We generated revenue of $184.6 million and $161.1 million for the three months ended June 30, 2025 and 2024, respectively, and $361.6 million and $317.9 million for the six months ended June 30, 2025 and 2024, respectively. We had net income (loss) of $(1.0) million and $5.2 million for the three months ended June 30, 2025 and 2024, respectively, and $10.2 million and $7.8 million for the six months ended June 30, 2025 and 2024, respectively. These amounts are presented in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”).

Current wording

We believe that global commerce and the compliance environment provides durable and accelerating growth opportunities for our business. We generated revenue of $192.1 million and $170.4 million for the three months ended September 30, 2025 and 2024, respectively, and $553.7 million and $488.3 million for the nine months ended September 30, 2025 and 2024, respectively. We had net income of $4.0 million and $7.2 million for the three months ended September 30, 2025 and 2024, respectively, and $14.2 million and $15.1 million for the nine months ended September 30, 2025 and 2024, respectively. These amounts are presented in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”).

Previous wording

We define Adjusted EBITDA as net loss or income before interest (including adjustments to the settlement value of deferred purchase commitment liabilities), taxes, depreciation, and amortization, as adjusted to exclude charges for stock-based compensation expense, amortization of cloud computing arrangement implementation costs, severance expense, acquisition contingent consideration, changes in the fair value of acquisition contingent earn-outs, changes in the settlement value of deferred purchase commitment liabilities recorded as interest expense, and transaction costs. Adjusted EBITDA was $38.4 million and $38.5 million for the three months ended June 30, 2025 and 2024, respectively, and $75.6 million and $75.3 million for the six months ended June 30, 2025 and 2024, respectively. Adjusted EBITDA is a non-GAAP financial measure. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Business Metrics” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Use and Reconciliation of Non-GAAP Financial Measures” for further discussion of key business metrics and non-GAAP financial measures and their comparison to GAAP financial measures.

Current wording

We define Adjusted EBITDA as net loss or income before interest (including adjustments to the settlement value of deferred purchase commitment liabilities), taxes, depreciation, and amortization, as adjusted to exclude charges for stock-based compensation expense, amortization of cloud computing arrangement implementation costs, severance expense, acquisition contingent consideration, changes in the fair value of acquisition contingent earn-outs, changes in the settlement value of deferred purchase commitment liabilities recorded as interest expense, and transaction costs. Adjusted EBITDA was $43.5 million and $38.6 million for the three months ended September 30, 2025 and 2024, respectively, and $119.1 million and $113.9 million for the nine months ended September 30, 2025 and 2024, respectively. Adjusted EBITDA is a non-GAAP financial measure. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Business Metrics” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Use and Reconciliation of Non-GAAP Financial Measures” for further discussion of key business metrics and non-GAAP financial measures and their comparison to GAAP financial measures.

Previous wording

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration expected to be received in exchange for those products or services. We enter into contracts that include various combinations of products and services, which are generally capable of being distinct and accounted for as separate

Current wording

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration expected to be received in exchange for those products or services. We enter into contracts that include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net of allowance for subscription and non-renewal cancellations and any taxes collected from customers that are subsequently remitted to governmental authorities.

Previous wording

Fluctuations in services revenue are directly correlated to fluctuations in our subscription revenues with respect to implementation and training services as we have historically experienced an attachment rate to subscription sales for these services of approximately 60%. In addition, our managed services offering has continued to experience increased revenues associated with returns processing volume increases attributable to regulatory changes, as customers expanded their tax filings into more jurisdictions.

Current wording

services of approximately 60%. In addition, our managed services offering has continued to experience increased revenues associated with returns processing volume increases attributable to regulatory changes, as customers expanded their tax filings into more jurisdictions.

Previous wording

Selling and marketing expenses consist primarily of personnel and related expenses in support of sales and marketing efforts. These costs include salaries, benefits, bonuses and stock-based compensation. In addition, selling and marketing expenses include costs related to advertising and promotion efforts, branding costs, partner-based commissions, costs associated with our annual customer conferences and amortization of certain acquired intangible assets. We intend to continue to invest in our sales and marketing capabilities in the future to continue to increase our brand awareness and expect these costs to increase on an absolute dollar basis as we grow our business and continue to expand our market and partner ecosystem penetration. Sales and marketing expense in absolute dollars and as a percentage of total revenue may fluctuate from period-to-period based on total revenue levels and the timing of our investments in our sales and marketing functions, as these investments will occur in advance of experiencing the benefits from such investments and may vary in scope and scale over future periods.

Current wording

Selling and marketing expenses consist primarily of personnel and related expenses in support of sales and marketing efforts. These costs include salaries, benefits, bonuses and stock-based compensation. In addition, selling and marketing expenses include costs related to advertising and promotion efforts, branding costs, partner-based commissions, costs associated with our annual customer conferences and amortization of certain acquired intangible assets. We intend to continue to invest in our sales and marketing capabilities in the future to continue to increase our brand awareness and expect these costs to increase on an absolute dollar basis as we grow our business and continue to expand our market and

Previous wording

Interest expense consists primarily of interest incurred related to the Notes (as defined below), Term Loan (as defined below), Credit Agreement (as defined below), and leases. Interest expense includes amortization of deferred financing fees over the term of the credit facility or write-downs of such costs upon redemption of debt. Interest expense will vary as a result of fluctuations in the level of debt outstanding as well as interest rates on such debt. In addition, interest expense will include adjustments to the fair value of contracts that may be entered into to hedge risks associated with currency fluctuations for cash receipts or cash payments denominated in currencies other than U.S. dollars and which do not qualify for hedge accounting, as well as changes in the settlement value of the future payment obligation for the Systax Sistemas Fiscais LTDA (“Systax”) acquisition, which was fully settled on June 5, 2024. Interest income reflects earnings on investments of our cash on hand and our investment securities. Interest income will vary as a result of fluctuations in the future level of funds available for investment and the rate of return available in the market on such funds.

Current wording

Interest expense consists primarily of interest incurred related to the Notes (as defined below), a term loan in the aggregate amount of $50.0 million (the “Term Loan”), Credit Agreement (as defined below), and leases. Interest expense includes amortization of deferred financing fees over the term of the credit facility or write-downs of such costs upon redemption of debt. Interest expense will vary as a result of fluctuations in the level of debt outstanding as well as interest rates on such debt. In addition, interest expense will include adjustments to the fair value of contracts that may be entered into to hedge risks associated with currency fluctuations for cash receipts or cash payments denominated in currencies other than U.S. dollars and which do not qualify for hedge accounting, as well as changes in the settlement value of the future payment obligation for the Systax Sistemas Fiscais LTDA (“Systax”) acquisition, which was fully settled on June 5, 2024. Interest income reflects earnings on investments of our cash on hand and our investment securities. Interest income

Previous wording

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q, and our consolidated financial statements and the notes thereto included in our 2024 Annual Report. The period-to-period comparison of financial results is not necessarily indicative of financial results to be achieved in future periods. The following table sets forth our condensed consolidated statements of comprehensive income (loss) for the periods indicated.

Current wording

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q, and our consolidated financial statements and the notes thereto included in our 2024 Annual Report. The period-to-period comparison of financial results is not necessarily indicative of financial results to be achieved in future periods. The following table sets forth our condensed consolidated statements of comprehensive income for the periods indicated.

Previous wording

Revenues increased $23.5 million, or 14.6%, to $184.6 million for the three months ended June 30, 2025 compared to $161.1 million for the same period in 2024. The increase in software subscriptions revenues of $21.4 million, or 15.7%, was primarily driven by increases from our existing customers through cross-selling new products, and to a lesser extent, increases due to expanded use and price increases. Software subscriptions revenues derived from new customers averaged 8.4% and 5.8% of total software subscriptions revenues in the three months ended June 30, 2025 and 2024, respectively.

Current wording

Revenues increased $21.7 million, or 12.7%, to $192.1 million for the three months ended September 30, 2025 compared to $170.4 million for the same period in 2024. The increase in software subscriptions revenues of $18.6 million, or 12.7%, was primarily driven by increases from our existing customers through cross-selling new products, and to a lesser extent, increases due to expanded use and price increases. Software subscriptions revenues derived from new customers averaged 5.9% and 6.0% of total software subscriptions revenues in the three months ended September 30, 2025 and 2024, respectively.

Previous wording

The $3.4 million increase in services revenues was primarily driven by a $4.2 million increase in recurring services revenues due to returns processing volume increases related to customer business growth and regulatory changes as customers expanded their tax filings into more jurisdictions, as well as an increase in interest received from our funds held for customers. These increases were partially offset by a $0.8 million decrease in service revenues primarily from the impact of our efforts to steer more implementation opportunities to our channel partners, who are an important referral source for new software opportunities.

Current wording

The $3.1 million increase in services revenues was primarily driven by a $1.8 million increase in recurring services revenues due to returns processing volume increases related to customer business growth and regulatory changes as customers expanded their tax filings into more jurisdictions, as well as an increase in interest received from our funds held for customers. Additionally, our managed services offering experienced a $1.3 million increase in service revenues associated with the growth in subscription revenues, which includes new customers implementing our solutions and existing customers upgrading to newer versions of our solutions.

Previous wording

Cost of software subscriptions revenues increased $2.2 million, or 5.2%, to $44.5 million for the three months ended June 30, 2025 compared to $42.3 million for the same period in 2024. The increase was primarily driven by an increase in depreciation and amortization of capitalized software and acquired intangible assets associated with our ongoing investments in internal-use software for cloud-based subscription solutions, software developed for sale for new products and enhancements to existing products, and costs associated with the increased amortization of acquired intangible assets.

Current wording

Cost of software subscriptions revenues increased $6.4 million, or 14.6%, to $50.0 million for the three months ended September 30, 2025 compared to $43.6 million for the same period in 2024. The increase was primarily driven by a $3.9 million increase in depreciation and amortization of capitalized software and acquired intangible assets associated with our ongoing investments in internal-use software for cloud-based subscription solutions, software developed for sale for new products and enhancements to existing products, and costs associated with the increased amortization of acquired intangible assets. Additionally, there was a $2.4 million increase in costs of personnel supporting period-over-period growth of sales and customers, ongoing infrastructure investments and support costs to enable the continued expansion of customer transaction volumes for our cloud-based subscription customers.

Previous wording

Cost of services revenues increased $2.7 million, or 17.0%, to $18.9 million for the three months ended June 30, 2025, compared to $16.2 million for the same period in 2024. The increase was primarily due to an increase in costs of service delivery personnel to support revenue growth in software subscription-related services and our managed services offering.

Current wording

Cost of services revenues increased $4.5 million, or 27.6%, to $20.8 million for the three months ended September 30, 2025, compared to $16.3 million for the same period in 2024. The increase was primarily due to an increase in costs of service delivery personnel to support revenue growth in software subscription-related services and our managed services offering.

Previous wording

Research and development expenses increased $6.0 million, or 40.8%, to $20.6 million for the three months ended June 30, 2025 compared to $14.6 million for the same period in 2024. This increase in research and development expenses was primarily due to an increase in personnel costs related to development work associated with new solutions to address end-to-end data analysis and compliance needs of our customers, and continued expansion of connectors and application program interfaces to customer ERP and other software platforms. Additionally, this increase reflects additional research and development investments related to the commercialization of our AI-based Smart Categorization product, other AI-related internal tools and new product initiatives, and other emerging technologies.

Current wording

Research and development expenses increased $4.3 million, or 27.6%, to $19.9 million for the three months ended September 30, 2025 compared to $15.6 million for the same period in 2024. This increase in research and development expenses was primarily due to an increase in personnel costs related to development work associated with new solutions to address end-to-end data analysis and compliance needs of our customers, and continued expansion of connectors and application program interfaces to customer ERP and other software platforms. Additionally, this increase reflects additional research and development investments related to the commercialization of our AI-based Smart Categorization product, other AI-related internal tools and new product initiatives, and other emerging technologies.

Previous wording

Selling and marketing expenses increased $7.9 million, or 19.5%, to $48.5 million for the three months ended June 30, 2025 compared to $40.5 million for the same period in 2024. This increase was primarily driven by a $4.3 million increase in payroll and related expenses associated with the growth in period-over-period subscription sales and services revenues and expansion of our partner and channel management programs. Additionally, there was an increase of $3.6 million in advertising and promotional spending related to expanded brand awareness efforts.

Current wording

Selling and marketing expenses increased $5.3 million, or 12.5%, to $47.4 million for the three months ended September 30, 2025 compared to $42.1 million for the same period in 2024. This increase was primarily driven by a $4.2 million increase in payroll and related expenses associated with the growth in period-over-period subscription sales and services revenues and expansion of our partner and channel management programs. Additionally, there was an increase of $1.1 million in advertising and promotional spending related to expanded brand awareness efforts.

Previous wording

General and administrative expenses increased $7.5 million, or 21.0%, to $43.4 million for the three months ended June 30, 2025 compared to $35.9 million for the same period in 2024, primarily driven by planned strategic investments in information technology infrastructure, business process re-engineering and other initiatives to drive future operating leverage, as well as investments in employees, systems and other resources in support of our growth.

Current wording

General and administrative expenses increased $3.1 million, or 7.5%, to $44.6 million for the three months ended September 30, 2025 compared to $41.5 million for the same period in 2024, primarily driven by planned strategic investments in information technology infrastructure, business process re-engineering and other initiatives to drive future operating leverage, as well as investments in employees, systems and other resources in support of our growth.

Previous wording

Depreciation and amortization expenses increased $1.0 million, or 18.7%, to $6.2 million for the three months ended June 30, 2025 compared to $5.2 million for the same period in 2024. The increase was primarily due to the impact of infrastructure and technology purchases and other capitalized costs to support our growth.

Current wording

Depreciation and amortization expenses increased $1.2 million, or 22.2%, to $6.4 million for the three months ended September 30, 2025 compared to $5.2 million for the same period in 2024. The increase was primarily due to the impact of infrastructure and technology purchases and other capitalized costs to support our growth.

Previous wording

Change in fair value of acquisition contingent earn-outs was $2.3 million for the three months ended June 30, 2025 due entirely to adjustments to the fair values of our ecosio acquisition contingent Cash Earn-outs and Stock Earn-outs of $1.8 million and $0.5 million, respectively. For further information, refer to Note 4, “Financial Instruments and Fair Value Measurements” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Current wording

Change in fair value of acquisition contingent earn-outs was $(4.0) million for the three months ended September 30, 2025 due entirely to adjustments to the fair values of our ecosio acquisition contingent Cash Earn-outs and Stock Earn-outs of $5.1 million and $(9.1) million, respectively. For further information, refer to Note 4, “Financial Instruments and Fair Value Measurements” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Previous wording

Income tax expense (benefit) was $(1.7) million and $2.2 million for the three months ended June 30, 2025 and 2024, respectively. This change was primarily driven by higher tax benefits on exercises and vesting of stock awards recognized during the three months ended June 30, 2025, as well as income tax from fluctuations in income (loss). These income tax benefit increases were partially offset by fluctuations in valuation allowances on net deferred tax assets established for U.S. and certain foreign jurisdictions and a decrease in the impact of tax credits compared to the three months ended June 30, 2024.

Current wording

Income tax expense was $1.5 million and $0.6 million for the three months ended September 30, 2025 and 2024, respectively. This change was primarily driven by a decreased tax benefit on exercises and vesting of stock awards recognized during the three months ended September 30, 2025, as well as income tax from fluctuations in valuation allowances on net deferred tax assets established for U.S. and certain foreign jurisdictions. These income tax expense increases were partially offset by fluctuations in nondeductible contingent consideration liabilities and taxes in profitable jurisdictions, as well as tax credits.

Previous wording

Revenues increased $43.7 million, or 13.8%, to $361.6 million for the six months ended June 30, 2025 compared to $317.9 million for the same period in 2024. The increase in software subscriptions revenues of $40.3 million, or 15.0%, was primarily driven by increases from our existing customers through cross-selling new products, and to a lesser extent, increases due to expanded use and price increases. Software subscriptions revenues derived from new customers averaged 8.3% and 5.7% of total software subscriptions revenues in the six months ended June 30, 2025 and 2024, respectively.

Current wording

Revenues increased $65.4 million, or 13.4%, to $553.7 million for the nine months ended September 30, 2025 compared to $488.3 million for the same period in 2024. The increase in software subscriptions revenues of $58.9 million, or 14.2%, was primarily driven by increases from our existing customers through cross-selling new products, and to a lesser extent, increases due to expanded use and price increases. Software subscriptions revenues derived from new customers averaged 7.4% and 5.8% of total software subscriptions revenues in the nine months ended September 30, 2025 and 2024, respectively.

Previous wording

The $2.1 million increase in services revenues was primarily driven by a $2.5 million increase in recurring services revenues due to returns processing volume increases related to customer business growth and regulatory changes as customers expanded their tax filings into more jurisdictions, as well as an increase in interest received from our funds held for customers. These increases were partially offset by a $0.4 million decrease in service revenues, primarily from the impact of our efforts to steer more implementation opportunities to our channel partners, who are an important referral source for new software opportunities.

Current wording

The $6.5 million increase in services revenues was primarily driven by a $6.0 million increase in recurring services revenues due to returns processing volume increases related to customer business growth and regulatory changes as customers expanded their tax filings into more jurisdictions, as well as an increase in interest received from our funds held for customers. Additionally, there was a $0.5 million increase in software subscription-related services associated with the growth in subscription revenues, which includes new customers implementing our solutions and existing customers upgrading to newer versions of our solutions.

Previous wording

Cost of software subscriptions revenues increased $1.3 million, or 1.5%, to $88.7 million for the six months ended June 30, 2025 compared to $87.4 million for the same period in 2024. The increase was primarily driven by an increase in depreciation and amortization of capitalized software and acquired intangible assets associated with our ongoing investments in internal-use software for cloud-based subscription solutions, software developed for sale for new products and enhancements to existing products, and costs associated with the increased amortization of acquired intangible assets.

Current wording

Cost of software subscriptions revenues increased $7.7 million, or 5.9%, to $138.7 million for the nine months ended September 30, 2025 compared to $131.0 million for the same period in 2024. The increase was primarily driven by a $6.5 million increase in depreciation and amortization of capitalized software and acquired intangible assets associated with our ongoing investments in internal-use software for cloud-based subscription solutions, software developed for sale for new products and enhancements to existing products, and costs associated with the increased amortization of acquired intangible assets. Additionally, there was a $1.2 million increase in costs of personnel supporting period-over-period growth of sales and customers, ongoing infrastructure investments and support costs to enable the continued expansion of customer transaction volumes for our cloud-based subscription customers.

Previous wording

Cost of services revenues increased $6.7 million, or 20.9%, to $38.7 million for the six months ended June 30, 2025, compared to $32.0 million for the same period in 2024. The increase was primarily due to an increase in costs of service delivery personnel to support revenue growth in software subscription-related services and our managed services offering.

Current wording

Cost of services revenues increased $11.2 million, or 23.2%, to $59.5 million for the nine months ended September 30, 2025, compared to $48.3 million for the same period in 2024. The increase was primarily due to an increase in costs of service delivery personnel to support revenue growth in software subscription-related services and our managed services offering.

Previous wording

Research and development expenses increased $10.0 million, or 31.8%, to $41.5 million for the six months ended June 30, 2025 compared to $31.5 million for the same period in 2024. This increase in research and development expenses was primarily due to an increase in personnel costs related to development work associated with new solutions to address end-to-end data analysis and compliance needs of our customers, and continued expansion of connectors and application program interfaces to customer ERP and other software platforms. Additionally, this increase reflects additional research and development investments related to the commercialization of our AI-based Smart Categorization product, other AI-related internal tools and new product initiatives, and other emerging technologies.

Current wording

Research and development expenses increased $14.3 million, or 30.4%, to $61.4 million for the nine months ended September 30, 2025 compared to $47.1 million for the same period in 2024. This increase in research and development expenses was primarily due to an increase in personnel costs related to development work associated with new solutions to address end-to-end data analysis and compliance needs of our customers, and continued expansion of connectors and application program interfaces to customer ERP and other software platforms. Additionally, this increase reflects additional research and development investments related to the commercialization of our AI-based Smart Categorization product, other AI-related internal tools and new product initiatives, and other emerging technologies.

Previous wording

Selling and marketing expenses increased $15.6 million, or 19.2%, to $96.6 million for the six months ended June 30, 2025 compared to $81.0 million for the same period in 2024. This increase was primarily driven by an $8.8 million increase in payroll and related expenses associated with the growth in period-over-period subscription sales and services revenues and expansion of our partner and channel management programs. Additionally, there was an increase of $6.7 million in advertising and promotional spending related to expanded brand awareness efforts.

Current wording

Selling and marketing expenses increased $20.9 million, or 16.9%, to $144.0 million for the nine months ended September 30, 2025 compared to $123.1 million for the same period in 2024. This increase was primarily driven by an $10.9 million increase in payroll and related expenses associated with the growth in period-over-period subscription sales and services revenues and expansion of our partner and channel management programs. Additionally, there was an increase of $10.0 million in advertising and promotional spending related to expanded brand awareness efforts.

Previous wording

General and administrative expenses increased $17.0 million, or 23.8%, to $88.4 million for the six months ended June 30, 2025 compared to $71.4 million for the same period in 2024, primarily driven by planned strategic investments in information technology infrastructure, business process re-engineering and other initiatives to drive future operating leverage, as well as investments in employees, systems and other resources in support of our growth.

Current wording

General and administrative expenses increased $20.1 million, or 17.8%, to $133.0 million for the nine months ended September 30, 2025 compared to $112.9 million for the same period in 2024, primarily driven by planned strategic investments in information technology infrastructure, business process re-engineering and other initiatives to drive future operating leverage, as well as investments in employees, systems and other resources in support of our growth.

Previous wording

Depreciation and amortization expenses increased $1.8 million, or 18.1%, to $12.1 million for the six months ended June 30, 2025 compared to $10.2 million for the same period in 2024. The increase was primarily due to the impact of infrastructure and technology purchases and other capitalized costs to support our growth.

Current wording

Depreciation and amortization expenses increased $3.0 million, or 19.5%, to $18.4 million for the nine months ended September 30, 2025 compared to $15.4 million for the same period in 2024. The increase was primarily due to the impact of infrastructure and technology purchases and other capitalized costs to support our growth.

Previous wording

Change in fair value of acquisition contingent earn-outs was $12.4 million for the six months ended June 30, 2025 due entirely to adjustments to the fair values of our ecosio acquisition contingent Cash Earn-outs and Stock Earn-outs of $3.5 million and $(15.9) million, respectively. For further information, refer to Note 4, “Financial Instruments and Fair Value Measurements” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Current wording

Change in fair value of acquisition contingent earn-outs was $(16.4) million for the nine months ended September 30, 2025 due entirely to adjustments to the fair values of our ecosio acquisition contingent Cash Earn-outs and Stock Earn-outs of $8.6 million and $(25.0) million, respectively. For further information, refer to Note 4, “Financial Instruments and Fair Value Measurements” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Previous wording

Other operating expense (income), net was $4.1 million of other operating expense, net for the three months ended June 30, 2025 compared to $1.1 million of other operating income, net for the same period in 2024. This change was primarily driven by $2.9 million related to legal costs associated with a pending legal claim and $1.0 million of foreign currency transaction losses incurred. For further information regarding the referenced pending legal claim, refer to Note 12, “Commitments and Contingencies” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. Additionally, in the prior year period, we recorded a fair value adjustment of $(1.6) million to the contingent consideration liability for the acquisition of Tellutax, LLC in 2021. For further information regarding the Tellutax, LLC contingent consideration liability, refer to Note 4, “Financial Instruments and Fair Value Measurements” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Current wording

Other operating expense (income), net was $10.1 million of other operating expense, net for the nine months ended September 30, 2025 compared to $0.4 million of other operating income, net for the same period in 2024. This change was primarily driven by $8.1 million related to legal costs associated with a pending legal claim and $1.5 million in foreign currency transaction losses incurred. For further information regarding the referenced pending legal claim, refer to Note 12, “Commitments and Contingencies” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Previous wording

Interest expense (income), net was $2.8 million of interest income, net for the six months ended June 30, 2025, compared to $0.5 million of interest expense, net for the same period in 2024. This change was mainly due to several factors: a $3.0 million increase in interest income primarily due to increased dollars invested during the period, a reduction of $0.3 million of interest expense related to the valuation of our prior year foreign currency forward contracts due to market fluctuations, and a $1.0 million decrease in interest costs related to the repayment of our Term Loan, which was fully repaid in the second quarter of 2024. These interest income increases were partially offset by $0.7 million in interest expense and a $0.4 million increase in deferred financing costs related to our Notes (as defined below).

Current wording

Interest income, net was $4.0 million for the nine months ended September 30, 2025, compared to $2.5 million for the same period in 2024. This change was mainly due to several factors: (i) a $1.3 million increase in interest income primarily due to increased dollars invested during the period, (ii) a reduction of $0.4 million of interest expense related to the valuation of our prior year foreign currency forward contracts due to market fluctuations, and (iii) a $0.9 million decrease in interest costs related to the repayment of our Term Loan, which was fully repaid in the second quarter of 2024. These interest income increases were partially offset by $0.7 million in interest expense and a $0.4 million increase in deferred financing costs related to our Notes (as defined below).

Previous wording

Income tax benefit was $6.8 million and $2.3 million for the six months ended June 30, 2025 and 2024, respectively. The change in tax benefit was primarily driven by higher tax benefits on exercises and vesting of stock awards recognized during the six months ended June 30, 2025, as well as fluctuations in income (loss) and nondeductible contingent

Current wording

Income tax benefit was $5.3 million and $1.7 million for the nine months ended September 30, 2025 and 2024, respectively. The change in tax benefit was primarily driven by higher tax benefits on exercises and vesting of stock awards recognized during the nine months ended September 30, 2025, as well as fluctuations in nondeductible contingent consideration liabilities and lower taxes in profitable jurisdictions. These income tax benefit increases were partially offset by fluctuations in valuation allowances on net deferred tax assets established for U.S. and certain foreign jurisdictions and increased limitations on deductions of certain employees’ compensation.

Previous wording

As of June 30, 2025, we had unrestricted cash and cash equivalents of $284.4 million. Our primary sources of capital include sales of our solutions, proceeds from bank lending facilities, and the offering of existing or future classes of stock.

Current wording

As of September 30, 2025, we had unrestricted cash and cash equivalents of $313.5 million. Our primary sources of capital include sales of our solutions, proceeds from bank lending facilities, and the offering of existing or future classes of stock.

Previous wording

Operating Activities. Net cash provided by operating activities of $60.8 million for the six months ended June 30, 2025 consisted of net income of $10.2 million and adjustments for non-cash charges of $69.7 million, which were partly offset by cash outflows of $19.0 million related to changes in operating assets and liabilities. The change in operating assets and liabilities was primarily driven by a decrease in accrued and deferred compensation and an increase in prepaid expenses and other current assets due to the timing of cash payments during the period. These changes were partially offset by a decrease in accounts receivable due to the timing of cash collections during the period.

Current wording

Operating Activities. Net cash provided by operating activities of $123.3 million for the nine months ended September 30, 2025 consisted of net income of $14.2 million, adjusted for non-cash charges of $104.6 million, and cash inflows of $4.6 million related to changes in operating assets and liabilities, which were partially offset by $0.2 million in payments for purchase commitment and contingent consideration liabilities in excess of their initial fair value. The change in operating assets and liabilities was primarily driven by a decrease in accounts receivable due to the timing of cash collections during the period. This change was partially offset by an increase in prepaid expenses and other current assets, a decrease in accrued and deferred compensation and a decrease in deferred revenue.

Previous wording

Net cash provided by operating activities of $82.3 million for the six months ended June 30, 2024 consisted of net income of $7.8 million, adjusted for non-cash charges of $60.7 million and cash inflows of $18.1 million from changes in operating assets and liabilities, which were partially offset by $4.7 million in payments for purchase commitment and contingent consideration liabilities in excess of their initial fair value. The change in operating assets and liabilities was primarily driven by a decrease in accounts receivable and an increase in deferred revenue, primarily due to cash collections

Current wording

Net cash provided by operating activities of $123.7 million for the nine months ended September 30, 2024 consisted of net income of $15.1 million, adjusted for non-cash charges of $93.5 million, and cash inflows of $19.5 million from changes in operating assets and liabilities, which were partially offset by $4.4 million in payments for purchase commitment and contingent consideration liabilities in excess of their initial fair value. The change in operating assets and liabilities was primarily driven by a decrease in accounts receivable and an increase in deferred revenue, primarily due to cash collections and customer growth during the period. These changes were partially offset by an increase in prepaid expenses and other current assets. These movements were primarily due to the timing of cash payments.

Previous wording

Investing Activities. Net cash used in investing activities of $59.3 million for the six months ended June 30, 2025 consisted of investments in property and equipment, and capitalized software of $42.9 million and $10.6 million, respectively, related to investments in infrastructure, new products, and enhancements to existing products. During the second quarter of 2025, we invested $15.0 million in the Kintsugi Investment. Additionally, we invested $2.4 million in available-for-sale investment securities, which was more than offset by proceeds of $11.6 million received during the period for sales and maturities in our investment securities. For further information on the Kintsugi Investment, refer to Note 3, “Investments” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Current wording

Investing Activities. Net cash used in investing activities of $91.6 million for the nine months ended September 30, 2025 consisted of investments in property and equipment, and capitalized software of $69.3 million and $16.4 million, respectively, related to investments in infrastructure, new products, and enhancements to existing products. During the second quarter of 2025, we invested $15.0 million in the Kintsugi Investment. Additionally, we invested $2.4 million in available-for-sale investment securities, which was more than offset by proceeds of $11.6 million received during the period for sales and maturities in our investment securities. For further information on the Kintsugi Investment, refer to Note 3, “Investments” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Previous wording

Net cash used in investing activities of $47.8 million for the six months ended June 30, 2024 consisted of investments in property and equipment, and capitalized software of $29.7 million and $11.1 million, respectively, related to investments in infrastructure, new products, and enhancements to existing products. Additionally, we invested $7.8 million in available-for-sale investment securities, which was more than offset by proceeds of $8.9 million received during the period for sales and maturities in our investment securities.** **Finally, we paid $6.1 million related to an asset acquisition completed during the second quarter of 2024.

Current wording

Net cash used in investing activities of $133.3 million for the nine months ended September 30, 2024 consisted of investments in property and equipment, and capitalized software of $47.5 million and $16.4 million, respectively, related to investments in infrastructure, new products, and enhancements to existing products. Additionally, we paid $71.8 million related to acquisitions completed during the second and third quarters of 2024. Finally, we invested $12.2 million in available-for-sale investment securities, which was more than offset by proceeds of $14.6 million received during the period for sales and maturities in our investment securities.

Previous wording

Financing Activities. Net cash used in financing activities of $20.2 million for the six months ended June 30, 2025 consisted of $26.1 million in payments for taxes related to the net share settlement of stock-based awards as well as a $3.5 million decrease in customer funds obligations, primarily due to timing differences between receipt of funds from customers and taxing jurisdiction withdrawals of these funds, partly offset by $7.7 million in proceeds from the exercise of stock options, and $1.8 million in proceeds from the purchase of stock under our employee stock purchase plan (“ESPP”).

Current wording

Financing Activities. Net cash used in financing activities of $22.2 million for the nine months ended September 30, 2025 consisted of $27.2 million in payments for taxes related to the net share settlement of stock-based awards as well as a $4.5 million decrease in customer funds obligations, primarily due to timing differences between receipt of funds from customers and taxing jurisdiction withdrawals of these funds, partly offset by $7.7 million in proceeds from the exercise of stock options and $1.8 million in proceeds from the purchase of stock under our employee stock purchase plan (“ESPP”).

Previous wording

Net cash provided by financing activities of $238.1 million for the six months ended June 30, 2024 consisted of $345.0 million in gross proceeds from our Notes, as well as a $15.0 million increase in customer funds obligations, primarily due to timing differences between receipt of funds from customers and taxing jurisdiction withdrawals of these funds, $3.3 million in proceeds from the exercise of stock options, and $1.4 million in proceeds from the purchase of stock under our ESPP. These transactions were partly offset by $46.9 million for the repayment of our Term Loan, $42.4 million for the purchase of the Capped Call Transactions, $18.3 million in payments for taxes related to the net share settlement of stock-based awards, $11.4 million for payments related to deferred financing costs, and $7.6 million for payments on purchase commitment and contingent consideration liabilities.

Current wording

Net cash provided by financing activities of $225.0 million for the nine months ended September 30, 2024 consisted of $345.0 million in gross proceeds from our Notes, a $6.0 million increase in customer funds obligations, primarily due to timing differences between receipt of funds from customers and taxing jurisdiction withdrawals of these funds, and $1.4 million in proceeds from the purchase of stock under our ESPP. These transactions were partly offset by $46.9 million for the repayment of our Term Loan, $42.4 million for the purchase of the Capped Call Transactions, $3.9 million in payments of third-party debt, $20.0 million in payments for taxes related to the net share settlement of stock-based awards, $11.4 million for payments related to deferred financing costs and $7.6 million for payments on purchase commitment and contingent consideration liabilities.

Previous wording

ARR increased by $88.2 million, or 16.1%, at June 30, 2025, as compared to June 30, 2024. The increase was primarily driven by $43.7 million of growth in revenues from existing customers through their expanded use of our solutions as well as price increases, and $33.7 million in growth of subscriptions of our solutions to new customers. Additionally, $10.8 million was added to ARR due to the ecosio acquisition during the third quarter of 2024. Excluding the impact of ecosio, the ARR growth rate would have been 14.1%.

Current wording

ARR increased by $71.4 million, or 12.4%, at September 30, 2025, as compared to September 30, 2024. The increase was primarily driven by $37.1 million of growth in revenues from existing customers through their expanded use of our solutions as well as price increases, and $34.3 million in growth of subscriptions of our solutions to new customers.

Previous wording

We had 4,862 direct customers and AARPC was approximately $130,934 at June 30, 2025. At June 30, 2024, we had 4,438 direct customers and approximately $123,570 of AARPC. The increase in AARPC was primarily due to expansion of usage by existing customers and adding new customers through organic growth. Additionally, the inclusion of ecosio added 473 customers to the second quarter of 2025.

Current wording

We had 4,856 direct customers and AARPC was approximately $133,484 at September 30, 2025. At September 30, 2024, we had 4,855 direct customers and approximately $118,800 of AARPC. The increase in AARPC was primarily due to expansion of usage by existing customers and adding new customers through organic growth.

Previous wording

NRR decreased by 2.0%, at June 30, 2025, as compared to June 30, 2024. The decrease was largely due to lower growth of additional entitlements as our customers’ annual growth has slowed, keeping them within current bands of usage, as well as delayed deal activity seen for some of our large multinational customers due to the macroeconomic environment.

Current wording

NRR decreased by 4.0%, at September 30, 2025, as compared to September 30, 2024. The decrease was largely due to lower growth of additional entitlements as our customers’ annual growth has slowed, keeping them within current bands of usage, as well as delayed deal activity seen for some of our large multinational customers due to the macroeconomic environment.