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 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.

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 61% and 56% of software subscription revenue from cloud-based subscriptions during the three months ended September 30, 2026 and 2025, respectively, and 59% and 55% for the nine months ended September 30, 2026 and 2025, respectively. While our on-premise software subscription revenue comprised 39% and 44% of our software subscription revenue during the three months ended September 30, 2026 and 2025, respectively, and 41% and 45% during the nine months ended September 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 $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”).

Current wording

We believe that global commerce and the compliance environment provides durable and accelerating growth opportunities for our business. We generated revenue of $213.3 million and $192.1 million for the three months ended September 30, 2026 and 2025, respectively, and $613.9 million and $553.7 million for the nine months ended September 30, 2026 and 2025, respectively. We had net income (loss) of $(46.6) million and $4.0 million for the three months ended September 30, 2026 and 2025, respectively, and $(40.1) million and $14.2 million for the nine months ended September 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 $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.

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 and other business transformation costs. Adjusted EBITDA was $64.8 million and $43.5 million for the three months ended September 30, 2026 and 2025, respectively, and $159.8 million and $119.1 million for the nine months ended September 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 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

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 initially included a reduction in force of approximately 170 employees along with a significant reduction of third party spend across the Company, and is expected to continue to evolve as we evaluate additional actions to further align our cost structure and operations with our long-term strategic priorities. In connection with the Plan, we recognized pre-tax charges of $3.3 million and $11.2 million in the three and nine months ended September 30, 2026, respectively. These charges consist primarily of cash expenditures related to employee severance, notice pay, statutory termination indemnities, and other employee separation benefits. The majority of the 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. For further information, refer to Note 15, “Restructuring” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Previous wording

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 services on a per-transaction or time and materials basis, and we recognize revenue from deliverable-based professional services as services are performed.

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 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 services on a per-transaction or time and materials basis, and we recognize revenue from deliverable-based professional services as services are performed.

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

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.

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 nine months ended September 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 nine months ended September 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

The change in fair value of acquisition contingent earn-outs consists of fair value adjustments to our Cash Earn-outs (as defined below) and Stock Earn-outs (as defined below) (collectively with the Cash Earn-outs, the “Earn-outs”) related to our 2024 acquisition of ecosio GmbH (“ecosio”). The Earn-outs will be revalued and adjusted quarterly until the end of the Earn-out periods.

Current wording

The change in fair value of acquisition contingent earn-outs consists of fair value adjustments to our Cash Earn-outs (as defined in Note 4 to the condensed consolidated financial statements) and Stock Earn-outs (as defined in Note 4 to the condensed consolidated financial statements) (collectively with the Cash Earn-outs, the “Earn-outs”) related to our 2024 acquisition of ecosio GmbH (“ecosio”). The Earn-outs will be revalued and adjusted quarterly until the end of the Earn-out periods.

Previous wording

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 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. Interest income also includes interest earned from our Note Receivable (as defined in 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

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.

Current wording

Revenues increased $21.2 million, or 11.0%, to $213.3 million for the three months ended September 30, 2026 compared to $192.1 million for the same period in 2025. The increase in software subscriptions revenues of $16.9 million, or 10.2%, 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 6.3% and 5.9% of total software subscriptions revenues in the three months ended September 30, 2026 and 2025, respectively.

Previous 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.

Current wording

The $4.3 million increase in services revenues was primarily driven by a $2.1 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 $2.3 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 $14.6 million, or 16.5%, to $103.3 million for the six months ended June 30, 2026 compared to $88.7 million for the same period in 2025. The increase was primarily driven by a $9.4 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 $5.2 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.

Current wording

Cost of software subscriptions revenues increased $2.4 million, or 4.8%, to $52.4 million for the three months ended September 30, 2026 compared to $50.0 million for the same period in 2025. The increase was primarily driven by a $5.0 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. This increase was partially offset by a $2.6 million decrease in costs of personnel due to our Value Creation Plan.

Previous 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.

Current wording

Research and development expenses increased $4.8 million, or 23.8%, to $24.7 million for the three months ended September 30, 2026 compared to $19.9 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.

Previous wording

Selling and marketing expenses increased $3.4 million, or 7.1%, to $51.9 million for the three months ended June 30, 2026 compared to $48.5 million for the same period in 2025. This increase was primarily driven by a $3.4 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. Advertising and promotional spending related to expanded brand awareness efforts was flat as compared to prior year.

Current wording

Selling and marketing expenses increased $2.3 million, or 4.8%, to $49.7 million for the three months ended September 30, 2026 compared to $47.4 million for the same period in 2025. This increase was primarily driven by a $1.6 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. Advertising and promotional spending related to expanded brand awareness efforts increased by $0.6 million as compared to prior year.

Previous 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.

Current wording

General and administrative expenses increased $7.1 million, or 15.8%, to $51.7 million for the three months ended September 30, 2026 compared to $44.6 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, $3.3 million of severance expense and $5.6 million of execution costs related to our Value Creation Plan were recorded in the three months ended September 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 September 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 $0.5 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.

Current wording

Depreciation and amortization expenses increased $1.1 million, or 17.4%, to $7.5 million for the three months ended September 30, 2026 compared to $6.4 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 $(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.

Current wording

Change in fair value of acquisition contingent earn-outs was $2.8 million for the three months ended September 30, 2026 due to adjustments to the fair values of our ecosio acquisition contingent Cash Earn-outs and Stock Earn-outs of $2.5 million and $0.3 million, respectively. Change in fair value of acquisition contingent earn-outs was $(4.0) million for the three months ended September 30, 2025 due 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

Other operating expense, net was $4.5 million for the six months ended June 30, 2026 compared to $7.4 million for the same period in 2025. Legal costs associated with a pending legal claim were $3.8 million and $5.3 million for the six 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 (gains) losses were $(0.03) million and $1.6 million for the six months ended June 30, 2026 and 2025, respectively.

Current wording

Other operating expense, net was $3.6 million for the three months ended September 30, 2026 compared to $2.7 million for the same period in 2025. Legal costs associated with a legal claim were $2.6 million and $2.8 million for the three months ended September 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, $0.9 million of costs associated with strategic transaction activities were recognized during the three months ended September 30, 2026. Foreign currency transaction losses were $0.1 million for the three months ended September 30, 2026, compared to gains of $0.1 million for the three months ended September 30, 2025.

Previous 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.

Current wording

Interest income, net was $0.3 million for the three months ended September 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

Income tax benefit was $(13.1) million and $(1.7) million for the three months ended June 30, 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 as the impact from the estimated annual effective tax rate applied to pre-tax loss for the three months ended June 30, 2026. These income tax benefit increases were partially offset by fluctuations in tax credits, reserves, and non-deductible contingent consideration liabilities.

Current wording

Income tax expense was $47.3 million and $1.5 million for the three months ended September 30, 2026 and 2025, respectively. The period-over-period change was primarily driven by increased tax expense from fluctuations in forecasted pre-tax income and losses impacting the estimated annual effective tax rate applied to the pre-tax income for each period, valuation allowances on net deferred tax assets established for U.S. and certain foreign jurisdictions, reserves, andlimitations on deductions of certain employees’ compensation under Internal Revenue Code Section 162(m), partially offset by fluctuations in tax credits.

Previous wording

Revenues increased $39.0 million, or 10.8%, to $400.6 million for the six months ended June 30, 2026 compared to $361.6 million for the same period in 2025. The increase in software subscriptions revenues of $33.3 million, or 10.8%, 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 8.3% of total software subscriptions revenues in the six months ended June 30, 2026 and 2025, respectively.

Current wording

Revenues increased $60.2 million, or 10.9%, to $613.9 million for the nine months ended September 30, 2026 compared to $553.7 million for the same period in 2025. The increase in software subscriptions revenues of $50.1 million, or 10.6%, 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 6.1% and 7.4% of total software subscriptions revenues in the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

The $5.7 million increase in services revenues was primarily driven by a $3.3 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 $2.4 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 $10.0 million increase in services revenues was primarily driven by a $5.4 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 $4.7 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 $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.

Current wording

Cost of software subscriptions revenues increased $17.0 million, or 12.3%, to $155.8 million for the nine months ended September 30, 2026 compared to $138.7 million for the same period in 2025. The increase was primarily driven by a $14.4 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 $2.6 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 $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.

Current wording

Cost of services revenues increased $2.3 million, or 3.8%, to $61.7 million for the nine months ended September 30, 2026, compared to $59.5 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 $7.9 million, or 19.0%, to $49.4 million for the six months ended June 30, 2026 compared to $41.5 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 $12.6 million, or 20.6%, to $74.0 million for the nine months ended September 30, 2026 compared to $61.4 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

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.

Current wording

Selling and marketing expenses increased $10.2 million, or 7.1%, to $154.2 million for the nine months ended September 30, 2026 compared to $144.0 million for the same period in 2025. This increase was primarily driven by an $8.0 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 $2.2 million in advertising and promotional spending related to expanded brand awareness efforts.

Previous wording

General and administrative expenses increased $17.1 million, or 19.3%, to $105.5 million for the six months ended June 30, 2026 compared to $88.4 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, $7.9 million of severance expense and $8.8 million of execution costs related to our Value Creation Plan were recorded in the six 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 six months ended June 30, 2026 period also includes $1.7 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.

Current wording

General and administrative expenses increased $24.1 million, or 18.1%, to $157.1 million for the nine months ended September 30, 2026 compared to $133.0 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, $11.2 million of severance expense and $14.4 million of execution costs related to our Value Creation Plan were recorded in the nine months ended September 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 nine months ended September 30, 2026 period also includes $2.9 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 $1.1 million, or 9.1%, to $13.2 million for the six months ended June 30, 2026 compared to $12.1 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 $2.2 million, or 11.9%, to $20.6 million for the nine months ended September 30, 2026 compared to $18.4 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 $(5.8) million for the six months ended June 30, 2026 due to adjustments to the fair value of our ecosio acquisition contingent Stock Earn-outs of $(5.8) million. Change in fair value of acquisition contingent earn-outs was $(12.4) million for the six 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 $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 $(3.0) million for the nine months ended September 30, 2026 due to adjustments to the fair value of our ecosio acquisition contingent Cash Earn-outs and Stock Earn-outs of $2.5 million and $(5.5) million, respectively. Change in fair value of acquisition contingent earn-outs was $(16.4) million for the nine months ended September 30, 2025 due 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, 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.

Current wording

Other operating expense, net was $8.1 million for the nine months ended September 30, 2026 compared to $10.1 million for the same period in 2025. Legal costs associated with a legal claim were $6.4 million and $8.1 million for the nine months ended September 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, $1.6 million of costs associated with strategic transaction activities were recognized during the nine months ended September 30, 2026. Foreign currency transaction losses were $0.1 million and $1.5 million for the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

Interest income, net was $(1.3) million for the six months ended June 30, 2026 compared to $(2.8) million for the same period in 2025. This change was mainly due to a $1.6 million decrease in interest income driven by lower dollars invested and lower interest rates during the period, partially offset by a $0.1 million decrease in interest expense.

Current wording

Interest income, net was $1.6 million for the nine months ended September 30, 2026 compared to $4.0 million for the same period in 2025. This change was mainly due to a $2.4 million decrease in interest income driven by lower dollars invested and lower interest rates during the period, partially offset by a $0.1 million decrease in interest expense.

Previous 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.

Current wording

Income tax expense (benefit) was $27.0 million and $(5.3) million for the nine months ended September 30, 2026 and 2025, respectively. The year-over-year change was primarily driven by increased tax expense from the impact of fluctuations in forecasted pre-tax income and losses on the estimated annual effective tax rate applied to pre-tax loss for the nine months ended September 30, 2026 compared to pre-tax income for the nine months ended September 30, 2025. This change was also due to stock-based awards exercised or vested net oflimitations on deductions of certain employees’ compensation under Internal Revenue Code Section 162(m), and fluctuations in valuation allowances on net deferred tax assets established for U.S. and certain foreign jurisdictions.

Previous 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.

Current wording

As of September 30, 2026, we had unrestricted cash and cash equivalents of $217.8 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 $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

Current wording

Operating Activities. Net cash provided by operating activities of $122.2 million for the nine months ended September 30, 2026 consisted of net loss of $40.1 million, adjusted for non-cash charges of $129.2 million, and cash inflows of $33.0

Previous wording

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 in accounts receivable due to the timing of cash collections during the period.

Current wording

million related to changes in operating assets and liabilities. The change in operating assets and liabilities was primarily driven by an increase in prepaid expenses and other current assets, accrued and deferred compensation, and accrued expenses, and decreases in accounts payable and in deferred revenue, due to the timing of cash payments and billings 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

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.

Current wording

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

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.

Current wording

Investing Activities. Net cash used in investing activities of $118.6 million for the nine months ended September 30, 2026 consisted of investments in property and equipment, and capitalized software of $70.6 million and $16.0 million, respectively, related to investments in infrastructure, new products, and enhancements to existing products. During the nine months ended September 30, 2026, we paid $22.1 million for our acquisition of Brinta, and we issued a $10.0 million Note Receivable to Kintsugi. For further information on the acquisition, refer to Note 3, “Acquisitions”, and for further information on the Note Receivable, refer to Note 4, “Financial Instruments and Fair Value Measurements” to the condensed consolidated financial statements.

Previous 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.

Current wording

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 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 $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.

Current wording

Financing Activities. Net cash used in financing activities of $90.1 million for the nine months ended September 30, 2026 consisted of $73.7 million (including commissions) 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 $8.3 million in payments for taxes related to the net share settlement of stock-based awards. These uses of cash were partially offset by a $9.2 million increase in customer funds obligations, primarily due to timing differences between receipt of funds from customers and taxing jurisdiction withdrawals of these funds, $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.