Vertex, Inc.

Previous wording

Vertex is a leading provider of enterprise compliance technology for global commerce. Our software, data, and services help businesses operate with confidence by automating and governing transaction-based compliance obligations that arise wherever they buy, sell, and move goods and services around the world. Our mission is to deliver the most trusted tax technology enabling global businesses to transact, comply, and grow with confidence. Vertex provides cloud-based and on-premise solutions that can be tailored to specific industries for every major line of indirect tax, including sales and consumer use, value added (including e-invoicing), and payroll. Headquartered in North America, and with offices in South America and Europe, Vertex employs over 2,100 professionals and serves companies across the globe.

Current wording

Vertex provides cloud-based and on-premise solutions that can be tailored to specific industries for every major line of indirect tax, including sales and consumer use, value added (including e-invoicing), and payroll.

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 58% and 53% of software subscription revenue from cloud-based subscriptions during the three months ended March 31, 2026 and 2025, respectively. While our on-premise software subscription revenue comprised 42% and 47% of our software subscription revenue during the three months ended March 31, 2026 and 2025, 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 58% and 55% of software subscription revenue from cloud-based subscriptions during the three months ended June 30, 2026 and 2025, respectively, and 58% and 54% for the six months ended June 30, 2026 and 2025, respectively. While our on-premise software subscription revenue comprised 42% and 45% of our software subscription revenue during the three months ended June 30, 2026 and 2025, respectively, and 42% and 46% during the six months ended June 30, 2026 and 2025, 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 $196.6 million and $177.1 million for the three months ended March 31, 2026 and 2025, respectively. We had net income (loss) of $(2.5) million and $11.1 million for the three months ended March 31, 2026 and 2025, 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 $204.0 million and $184.6 million for the three months ended June 30, 2026 and 2025, respectively, and $400.6 million and $361.6 million for the six months ended June 30, 2026 and 2025, respectively. We had net income (loss) of $9.0 million and $(1.0) million for the three months ended June 30, 2026 and 2025, respectively, and $6.5 million and $10.2 million for the six months ended June 30, 2026 and 2025, 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, 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, acquisition-related retained employee compensation, and transaction costs. Adjusted EBITDA was $44.1 million and $37.2 million for the three months ended March 31, 2026 and 2025, 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, 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, acquisition-related retained employee compensation, and transaction costs. Adjusted EBITDA was $51.0 million and $38.4 million for the three months ended June 30, 2026 and 2025, respectively, and $95.1 million and $75.6 million for the six months ended June 30, 2026 and 2025, 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

On March 2, 2026 (the “Acquisition Date”), we completed our acquisition of 100% of the equity interests of Finta Inc. and its subsidiaries (collectively, “Brinta” or the “Acquisition”). Headquartered in Uruguay, Brinta is a Latin American provider of business-to-business integration services, specializing in indirect tax calculation, tax filing, and e-invoicing. We plan to fully integrate Brinta, leveraging its e-invoicing capabilities to immediately expand the Company’s coverage across the Latin American region. Total purchase consideration for the Acquisition was $22.0 million, net of $0.04 million of cash acquired. For further information refer to Note 3, “Acquisitions” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Current wording

On March 2, 2026 (the “Acquisition Date”), we completed our acquisition of 100% of the equity interests of Finta Inc. and its subsidiaries (collectively, “Brinta” or the “Acquisition”). Headquartered in Uruguay, Brinta is a Latin American provider of business-to-business integration services, specializing in indirect tax calculation, tax filing, and e-invoicing. We plan to fully integrate Brinta, leveraging its e-invoicing capabilities to immediately expand the Company’s coverage across the Latin American region. Total purchase consideration for the Acquisition was $22.1 million, net of $0.04 million of cash acquired. For further information, refer to Note 3, “Acquisitions” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Previous wording

On April 28, 2026, we announced that our Board approved a global Value Creation Plan (the “Plan”) with the intention to become a more AI-enabled company, focusing investments on key growth opportunities and driving operational efficiency to better align our workforce and resources with our long-term strategic priorities. The Plan includes a reduction in force of approximately 170 employees along with a significant reduction of third party spend across the Company. In connection with the Plan, we recognized a pre-tax charge of $6.2 million in the three months ended March 31, 2026. This charge consists primarily of cash expenditures related to employee severance, notice pay, statutory termination indemnities, and other employee separation benefits. All related cash payments are expected to be made during 2026. Any changes to our estimates or timing of the Plan will be reflected in our results of operations in future periods.

Current wording

On April 28, 2026, we announced that our Board approved a global Value Creation Plan (the “Plan”) with the intention to become a more AI-enabled company, focusing investments on key growth opportunities and driving operational efficiency to better align our workforce and resources with our long-term strategic priorities. The Plan includes a reduction in force of approximately 170 employees along with a significant reduction of third party spend across the Company. In

Previous wording

We generate services revenue primarily in support of our customers’ needs associated with our software and to enable them to realize the full benefit of our solutions. These software subscription-related services include configuration, data migration and implementation, and premium support and training. In addition, we generate services revenue through our managed services offering which allows customers to outsource all or a portion of their indirect tax operations to us. These services include indirect tax return preparation, filing and tax payment, and notice management. We generally bill for

Current wording

We generate services revenue primarily in support of our customers’ needs associated with our software and to enable them to realize the full benefit of our solutions. These software subscription-related services include configuration, data migration and implementation, and premium support and training. In addition, we generate services revenue through our

Previous wording

General and administrative expenses consist primarily of personnel and related expenses for administrative, finance, information technology, legal, risk management, facilities, and human resources staffing, including salaries, benefits, bonuses, severance, stock-based compensation, professional fees, insurance premiums, facility costs, amortization of cloud computing arrangement implementation costs, and other internal support and infrastructure costs. Additionally, the three months ended March 31, 2026 period includes severance costs related to the Plan. For further information refer to Note 15, “Restructuring” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Current wording

General and administrative expenses consist primarily of personnel and related expenses for administrative, finance, information technology, legal, risk management, facilities, and human resources staffing, including salaries, benefits, bonuses, severance, stock-based compensation, professional fees, insurance premiums, facility costs, amortization of cloud computing arrangement implementation costs, and other internal support and infrastructure costs. The three and six months ended June 30, 2026 periods include severance and other costs related to the Plan. For further information, refer to Note 15, “Restructuring” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. Additionally, the three and six months ended June 30, 2026 periods include compensation expense recognized related to the Additional Cash Consideration (as defined in the notes to the condensed consolidated financial statements) to the obligation associated with the acquisition of Brinta. For further information, refer to Note 3, “Acquisitions” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

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 2025 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.

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 2025 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.

Previous wording

Revenues increased $19.6 million, or 11.1%, to $196.6 million for the three months ended March 31, 2026 compared to $177.1 million for the same period in 2025. The increase in software subscriptions revenues of $16.4 million, or 10.9%, 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 6.0% and 8.1% of total software subscriptions revenues in the three months ended March 31, 2026 and 2025, respectively.

Current wording

Revenues increased $19.4 million, or 10.5%, to $204.0 million for the three months ended June 30, 2026 compared to $184.6 million for the same period in 2025. The increase in software subscriptions revenues of $16.9 million, or 10.7%, 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 6.0% and 8.4% of total software subscriptions revenues in the three months ended June 30, 2026 and 2025, respectively.

Previous wording

The $3.2 million increase in services revenues was primarily driven by a $1.5 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. Additionally, our managed services offering experienced a $1.7 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.

Current wording

The $2.5 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 $0.7 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 $6.9 million, or 15.7%, to $51.2 million for the three months ended March 31, 2026 compared to $44.2 million for the same period in 2025. The increase was primarily driven by a $4.2 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 $2.7 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.

Current wording

Cost of software subscriptions revenues increased $7.7 million, or 17.3%, to $52.2 million for the three months ended June 30, 2026 compared to $44.5 million for the same period in 2025. The increase was primarily driven by a $5.2 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 $2.5 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 $0.8 million, or 3.9%, to $20.6 million for the three months ended March 31, 2026, compared to $19.8 million for the same period in 2025. 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 $1.6 million, or 8.5%, to $20.5 million for the three months ended June 30, 2026, compared to $18.9 million for the same period in 2025. 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 $3.7 million, or 17.5%, to $24.6 million for the three months ended March 31, 2026 compared to $20.9 million for the same period in 2025. 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 $4.2 million, or 20.5%, to $24.8 million for the three months ended June 30, 2026 compared to $20.6 million for the same period in 2025. 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

General and administrative expenses increased $9.3 million, or 20.7%, to $54.3 million for the three months ended March 31, 2026 compared to $45.0 million for the same period in 2025, 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. Additionally, $6.2 million of severance expense and $2.6 million of execution costs related to our Value Creation Plan were recorded in the first three months ended March 31, 2026. For further information refer to Note 15, “Restructuring” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Current wording

General and administrative expenses increased $7.8 million, or 17.9%, to $51.1 million for the three months ended June 30, 2026 compared to $43.4 million for the same period in 2025, 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. Additionally, $1.7 million of severance expense and $6.3 million of execution costs related to our Value Creation Plan were recorded in the three months ended June 30, 2026. For further information, refer to Note 15, “Restructuring” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. The three months ended June 30, 2026 period also includes $1.3 million in compensation expense recognized related to the Additional Cash Consideration obligation associated with the acquisition of Brinta. For further information, refer to Note 3, “Acquisitions” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Previous wording

Depreciation and amortization expenses increased $0.6 million, or 9.6%, to $6.4 million for the three months ended March 31, 2026 compared to $5.9 million for the same period in 2025. 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 $0.5 million, or 8.6%, to $6.7 million for the three months ended June 30, 2026 compared to $6.2 million for the same period in 2025. 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 $(5.7) million for the three months ended March 31, 2026 due to adjustments to the fair values of our ecosio acquisition contingent Cash Earn-outs and Stock Earn-outs of $(0.3) million and $(5.4) million, respectively. Change in fair value of acquisition contingent earn-outs was $(14.7) million for the three months ended March 31, 2025 due to adjustments to the fair values of our ecosio acquisition contingent Cash Earn-outs and Stock Earn-outs of $1.7 million and $(16.4) 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 $(0.1) million for the three months ended June 30, 2026 due to adjustments to the fair values of our ecosio acquisition contingent Cash Earn-outs and Stock Earn-outs of $0.3 million and $(0.4) million, respectively. Change in fair value of acquisition contingent earn-outs was $2.3 million for the three months ended June 30, 2025 due 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.

Previous wording

Other operating expense, net was $3.2 million for the three months ended March 31, 2026 compared to $3.3 million for the same period in 2025. Legal costs associated with a pending legal claim were $2.7 million and $2.4 million in the first three months ended March 31, 2026 and 2025, respectively. For further information, refer to Note 12, “Commitments and Contingencies” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. Additionally, foreign currency transaction gains (losses) were $(0.2) million and $0.6 million for the first three months ended March 31, 2026 and 2025, respectively.

Current wording

Other operating expense, net was $1.3 million for the three months ended June 30, 2026 compared to $4.1 million for the same period in 2025. Legal costs associated with a pending legal claim were $1.1 million and $2.9 million for the three months ended June 30, 2026 and 2025, respectively. For further information, refer to Note 12, “Commitments and Contingencies” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. Additionally, foreign currency transaction losses were $0.1 million and $1.0 million for the three months ended June 30, 2026 and 2025, respectively.

Previous wording

Interest income, net was $1.0 million for the three months ended March 31, 2026 compared to $1.5 million for the same period in 2025. This change was mainly due to a $0.6 million decrease in interest income, driven by lower dollars invested and lower interest rates during the period.

Current wording

Interest income, net was $(0.3) million for the three months ended June 30, 2026 compared to $(1.2) million for the same period in 2025. This change was mainly due to a $0.9 million decrease in interest income, driven by lower dollars invested and lower interest rates during the period.

Previous wording

Selling and marketing expenses increased $4.5 million, or 9.3%, to $52.6 million for the three months ended March 31, 2026 compared to $48.2 million for the same period in 2025. This increase was primarily driven by a $2.9 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 $1.5 million in advertising and promotional spending related to expanded brand awareness efforts.

Current wording

Selling and marketing expenses increased $7.9 million, or 8.2%, to $104.5 million for the six months ended June 30, 2026 compared to $96.6 million for the same period in 2025. This increase was primarily driven by a $6.3 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 $1.6 million in advertising and promotional spending related to expanded brand awareness efforts.

Previous wording

Income tax benefit was $7.1 million and $5.1 million for the three months ended March 31, 2026 and 2025, respectively. The period-over-period change was primarily driven by increased tax benefits from fluctuations in valuation allowances on net deferred tax assets established for U.S. and certain foreign jurisdictions, as well the impact from the estimated annual effective tax rate applied to pre-tax loss for the three months ended March 31, 2026. These income tax benefit increases were offset partially by a decreased tax benefit on exercises and vesting of stock awards recognized, net of limitations on deductions of certain employees’ compensation, fluctuations in nondeductible contingent consideration liabilities as well as fluctuations in tax credits.

Current wording

Income tax benefit was $(20.3) million and $(6.8) million for the six months ended June 30, 2026 and 2025, respectively. The year-over-year change was primarily driven by increased tax benefits from fluctuations in valuation allowances on net deferred tax assets established for U.S. and certain foreign jurisdictions, as well as the impact from the estimated annual effective tax rate applied to pre-tax loss for the six months ended June 30, 2026. These income tax benefit increases were offset partially by increased tax expense on exercises and vesting of stock awards, net of limitations on deductions of certain employees’ compensation as well as fluctuations in tax credits and non-deductible contingent consideration liabilities.

Previous wording

As of March 31, 2026, we had unrestricted cash and cash equivalents of $252.5 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.

Current wording

As of June 30, 2026, we had unrestricted cash and cash equivalents of $230.5 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 $38.0 million for the three months ended March 31, 2026 consisted of net loss of $(2.5) million, adjusted for non-cash charges of $46.1 million, and cash outflows of $(5.6) 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 accrued expenses, 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

Current wording

Operating Activities. Net cash provided by operating activities of $68.9 million for the six months ended June 30, 2026 consisted of net income of $6.5 million, adjusted for non-cash charges of $95.3 million, and cash outflows of $(32.9) million related to changes in operating assets and liabilities. The change in operating assets and liabilities was primarily

Previous wording

Net cash provided by operating activities of $14.8 million for the three months ended March 31, 2025 consisted of net income of $11.1 million, adjusted for non-cash charges of $30.3 million, which were partly offset by cash outflows of $(26.7) 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 an increase in deferred revenue and a decrease in accounts receivable, primarily due to customer growth and the timing of cash collections during the period.

Current wording

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 partially 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.

Previous wording

Investing Activities. Net cash used in investing activities of $52.3 million for the three months ended March 31, 2026 consisted of investments in property and equipment, and capitalized software of $24.7 million and $5.7 million, respectively, related to investments in infrastructure, new products, and enhancements to existing products. Additionally, we paid $22.0 million for our acquisition of Brinta. For further information on the Acquisition, refer to Note 3, “Acquisitions” 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 $80.4 million for the six months ended June 30, 2026 consisted of investments in property and equipment, and capitalized software of $47.8 million and $10.6 million, respectively, related to investments in infrastructure, new products, and enhancements to existing products. Additionally, we paid $22.0 million for our acquisition of Brinta. For further information on the Acquisition, refer to Note 3, “Acquisitions” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Previous wording

Net cash used in investing activities of $17.8 million for the three months ended March 31, 2025 consisted of investments in property and equipment, and capitalized software of $21.4 million and $5.7 million, respectively, related to investments in infrastructure, new products, and enhancements to existing products. 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.

Current wording

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 4, “Financial Instruments and Fair Value Measurements” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Previous wording

Financing Activities. Net cash used in financing activities of $53.3 million for the three months ended March 31, 2026 consisted of $20.0 million in payments for the repurchases of our Class A common stock under our Repurchase Program, $19.6 million in payments related to our ecosio Cash Earn-out, $7.1 million in payments for taxes related to the net share settlement of stock-based awards, and a $6.6 million decrease in customer funds obligations, primarily due to timing differences between receipt of funds from customers and taxing jurisdiction withdrawals of these funds. For further information on the Cash Earn-outs, 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

Financing Activities. Net cash used in financing activities of $69.1 million for the six months ended June 30, 2026 consisted of $46.6 million in payments for the repurchases of our Class A common stock under our Repurchase Program, $19.6 million in payments related to our ecosio Cash Earn-out, and $7.9 million in payments for taxes related to the net share settlement of stock-based awards. These uses of cash were partially offset by a $2.8 million increase in customer funds obligations, primarily due to timing differences between receipt of funds from customers and taxing jurisdiction withdrawals of these funds, $1.8 million in proceeds from the purchase of stock under our employee stock purchase plan (“ESPP”) and $0.4 million in proceeds from the exercise of stock options. For further information on the Cash Earn-outs, 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

Net cash used in financing activities of $20.7 million for the three months ended March 31, 2025 consisted of $25.0 million in payments for taxes related to the net share settlement of stock-based awards, which were partially offset by a $3.2 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 $1.2 million in proceeds from the exercise of stock options.

Current wording

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, partially 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 ESPP.

Previous wording

Repurchase Program. On October 30, 2025, the Board authorized a stock repurchase program for up to $150.0 million of our outstanding shares of Class A common stock (the “Repurchase Program”). During the first three months ended March 31, 2026, we repurchased 1,370,948 shares of our Class A common stock for an aggregate amount of $20.0 million and have $119.9 million remaining for purchases under our authorization.

Current wording

Repurchase Program. On October 30, 2025, the Board authorized a stock repurchase program for up to $150.0 million of our outstanding shares of Class A common stock (the “Repurchase Program”). During the six months ended June 30,

Previous wording

The timing and actual number of shares repurchased under the Repurchase Program depend on a variety of factors, including price, general business and market conditions, and other investment opportunities. Shares may be repurchased through open market purchases or privately negotiated transactions, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Exchange Act. Our Repurchase Program has no termination date and may be suspended, delayed, discontinued, or accelerated at any time. Any repurchased shares will be available for use in connection with our stock plans and for other corporate purposes. For further information on our Repurchase Program,

Current wording

The timing and actual number of shares repurchased under the Repurchase Program depend on a variety of factors, including price, general business and market conditions, and other investment opportunities. Shares may be repurchased through open market purchases or privately negotiated transactions, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Exchange Act. Our Repurchase Program has no termination date and may be suspended, delayed, discontinued, or accelerated at any time. Any repurchased shares will be available for use in connection with our stock plans and for other corporate purposes. For further information on our Repurchase Program, refer to Note 9, “Stockholders’ Equity” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Previous wording

We derive the vast majority of our revenue from recurring software subscriptions. We believe ARR provides us with visibility to our projected software subscription revenue in order to evaluate the health of our business. Because we recognize subscription revenue ratably, we believe investors can use ARR to measure our expansion of existing customer revenues, new customer activity, and as an indicator of future software subscription revenues. ARR is based on monthly recurring revenue (“MRR”) from software subscriptions for the most recent month at period end, multiplied by twelve. MRR is calculated by dividing the software subscription price, inclusive of discounts, by the number of subscription covered months. MRR only includes customers with MRR at the end of the last month of the measurement period.

Current wording

We derive the vast majority of our revenue from recurring software subscriptions. We believe ARR provides us with visibility to our projected software subscription revenue in order to evaluate the health of our business. Because we recognize subscription revenue ratably, we believe investors can use ARR to measure our expansion of existing customer revenues, new customer activity, and as an indicator of future software subscription revenues. ARR is based on monthly recurring revenue (“MRR”) from software subscriptions for the most recent month at period end, multiplied by twelve. MRR is calculated by dividing the software subscription price, inclusive of discounts, by the number of subscription covered months. MRR only includes direct customers with MRR at the end of the last month of the measurement period.

Previous wording

AARPC represents average annual revenue per customer and is calculated by dividing ARR by the number of software subscription customers at the end of the respective period.

Current wording

AARPC represents average annual revenue per direct customer and is calculated by dividing ARR by the number of software subscription direct customers at the end of the respective period.

Previous wording

ARR increased by $69.1 million, or 11.2%, at March 31, 2026, as compared to March 31, 2025. The increase was primarily driven by $32.9 million of growth in revenues from existing customers through their expanded use of our solutions as well as price increases, and $36.2 million in growth of subscriptions of our solutions to new customers.

Current wording

ARR increased by $66.8 million, or 10.5%, at June 30, 2026, as compared to June 30, 2025. The increase was primarily driven by $36.4 million in growth of subscriptions for our solutions to new customers, and $30.4 million in growth of revenues from existing customers through their expanded use of our solutions, as well as price increases.

Previous wording

We had 4,895 direct customers and AARPC was approximately $140,464 at March 31, 2026. At March 31, 2025, we had 4,888 direct customers and approximately $126,534 of AARPC. The increase in AARPC was primarily due to expansion of usage by existing customers and adding new scaled customers through organic growth.

Current wording

We had 4,919 direct customers and AARPC was approximately $142,997 at June 30, 2026. At June 30, 2025, we had 4,862 direct customers and approximately $130,934 of AARPC. The increase in AARPC was primarily due to expansion of usage by existing customers and adding new scaled customers through organic growth.

Previous wording

NRR decreased by 3.8%, at March 31, 2026, as compared to March 31, 2025. 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 3%, at June 30, 2026, as compared to June 30, 2025. 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.

Previous wording

We believe that Adjusted EBITDA is a measure widely used by securities analysts and investors to evaluate the financial performance of our company and other companies. We believe that Adjusted EBITDA and Adjusted EBITDA margin are useful as supplemental measures to evaluate our overall operating performance as they measure business performance focusing on cash related charges and because they are important metrics to lenders under our Credit Agreement. We define Adjusted EBITDA as net loss or income before interest, 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, acquisition-related retained employee compensation, and transaction costs. Adjusted EBITDA margin represents Adjusted EBITDA divided by total revenues for the same period. For purposes of comparison, our net income (loss) was $(2.5) million and $11.1 million for the three months ended March 31, 2026 and 2025, respectively, while our net income (loss) margin was (1.3)% and 6.3% over the same periods, respectively. We are unable to reconcile forward-looking Adjusted EBITDA to net income (loss), the most directly comparable GAAP financial measure, without unreasonable efforts because we are currently unable to predict with a reasonable degree of certainty the type and extent

Current wording

financial performance of our company and other companies. We believe that Adjusted EBITDA and Adjusted EBITDA margin are useful as supplemental measures to evaluate our overall operating performance as they measure business performance focusing on cash related charges and because they are important metrics to lenders under our Credit Agreement. We define Adjusted EBITDA as net loss or income before interest, 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, acquisition-related retained employee compensation, and transaction costs. Adjusted EBITDA margin represents Adjusted EBITDA divided by total revenues for the same period. For purposes of comparison, our net income (loss) was $9.0 million and $(1.0) million for the three months ended June 30, 2026 and 2025, respectively, while our net income (loss) margin was 4.4% and (0.5)% over the same periods, respectively. Additionally, our net income was $6.5 million and $10.2 million for the six months ended June 30, 2026 and 2025, respectively, while our net income margin was 1.6% and 2.8% over the same periods, respectively.

Previous wording

The increase in Adjusted EBITDA for the three months ended March 31, 2026 of $6.8 million over the comparable period in 2025 was primarily driven by a $15.6 million increase in non-GAAP gross profit, which was partially offset by increases of $4.9 million in non-GAAP selling and marketing expense, $4.2 million in non-GAAP research and development expense, and $0.4 million in non-GAAP general and administrative expense. Adjusted EBITDA margin increased to 22.4% for the three months ended March 31, 2026 compared to 21.0% for the comparable period in 2025, primarily due to increased operating leverage and realized efficiencies from prior year strategic investments in our global infrastructure and core business processes.

Current wording

The increase in Adjusted EBITDA for the six months ended June 30, 2026 of $19.5 million over the comparable period in 2025 was primarily driven by a $30.7 million increase in non-GAAP gross profit and a $3.0 million decrease in non-GAAP general and administrative expense, which was partially offset by increases of $8.4 million in non-GAAP research and development expense and $7.4 million in non-GAAP selling and marketing expense. Adjusted EBITDA margin increased to 23.7% for the six months ended June 30, 2026 compared to 20.9% for the comparable period in 2025, primarily due to the impact of our Value Creation Plan, as well as increased operating leverage and realized efficiencies from prior year strategic investments in our global infrastructure and core business processes.

Previous wording

We use free cash flow as a critical measure in the evaluation of liquidity in conjunction with related GAAP amounts. We also use this measure when considering available cash, including for decision-making purposes related to dividends and discretionary investments. We consider free cash flow to be an important measure for investors because it measures the amount of cash we generate from our operations after our capital expenditures and capitalization of software development costs. In addition, we base certain of our forward-looking estimates and budgets on free cash flow and free cash flow margin. We define free cash flow as the total of net cash provided by operating activities less purchases of

Current wording

We use free cash flow as a critical measure in the evaluation of liquidity in conjunction with related GAAP amounts. We also use this measure when considering available cash, including for decision-making purposes related to dividends and discretionary investments. We consider free cash flow to be an important measure for investors because it measures the amount of cash we generate from our operations after our capital expenditures and capitalization of software development costs. In addition, we base certain of our forward-looking estimates and budgets on free cash flow and free cash flow margin. We define free cash flow as the total of net cash provided by operating activities less purchases of property and equipment and capitalized software. We define free cash flow margin as free cash flow divided by total revenues for the same period.

Previous wording

Our net cash provided by operating activities was $38.0 million and $14.8 million for the three months ended March 31, 2026 and 2025, respectively, while our operating cash flow margin was 19.3% and 8.4% over the same periods, respectively.

Current wording

Our net cash provided by operating activities was $30.9 million and $46.0 million for the three months ended June 30, 2026 and 2025, respectively, while our operating cash flow margin was 15.1% and 24.9% over the same periods, respectively. Our net cash provided by operating activities was $68.9 million and $60.8 million for the six months ended June 30, 2026 and 2025, respectively, while our operating cash flow margin was 17.2% and 16.8% over the same periods, respectively.

Previous wording

Free cash flow increased by $19.9 million for the three months ended March 31, 2026 as compared to the same period in 2025. This increase was primarily driven by a $23.2 million increase in cash provided by operating activities, resulting from favorable changes in working capital components and the timing of certain operational expenditures. Free cash flow margin increased to 3.9% for the three months ended March 31, 2026 compared to (6.9)% for the same period in 2025.

Current wording

Free cash flow increased by $3.1 million for the six months ended June 30, 2026 as compared to the same period in 2025. This increase was primarily driven by a $8.1 million increase in cash provided by operating activities, resulting from favorable changes in working capital components and the timing of certain operational expenditures. The increase in cash provided by operating activities, was partially offset by $5.0 million in additional investments in property and equipment, and capitalized software related to investments in infrastructure, new products, and enhancements to existing products. Free cash flow margin increased to 2.6% for the six months ended June 30, 2026 compared to 2.0% for the same period in 2025.