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| | Part I - Financial Information | |
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| Item 1. | Financial Statements | |
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| | Condensed Consolidated Balance Sheets as of September 30, 2026 (unaudited) and December 31, 2025 | 6 |
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| | Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2026 and 2025 (unaudited) | 7 |
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| | Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, 2026 and 2025 (unaudited) | 8 |
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| | Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2026 and 2025 (unaudited) | 10 |
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| | Notes to Condensed Consolidated Financial Statements (unaudited) | 11 |
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| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 38 |
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| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 62 |
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| Item 4. | Controls and Procedures | 64 |
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| Part II - Other Information | 65 |
| Item 1. | Legal Proceedings | 65 |
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| Item 1A. | Risk Factors | 65 |
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| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 65 |
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| Item 3. | Defaults Upon Senior Securities | 65 |
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| Item 4. | Mine Safety Disclosures | 66 |
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| Item 5. | Other Information | 66 |
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| Item 6. | Exhibits | 66 |
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| Signatures | 67 |
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS** **
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements made in this Quarterly Report on Form 10-Q that are not statements of historical fact, including statements about our beliefs and expectations and regarding future events or our future results of operations, financial condition, business, strategies, financial needs, the plans and objectives of management, and our stock repurchase program are forward-looking statements and should be evaluated as such. These statements often include words such as “anticipate,” “believe,” “expect,” “suggests,” “plans,” “intend,” “estimates,” “targets,” “projects,” “should,” “could,” “would,” “may,” “will,” “forecast,” and other similar expressions or the negatives of those terms. We base these forward-looking statements on our current expectations, plans, and assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances at such time. As you read and consider this Quarterly Report on Form 10-Q, you should understand that these statements are not guarantees of future performance or results. The forward-looking statements are subject to and involve risks, uncertainties and assumptions, and you should not place undue reliance on these forward-looking statements. Although we believe that these forward-looking statements are based on reasonable assumptions at the time they are made, you should be aware that many factors could affect our actual results or results of operations and could cause actual results to differ materially from those expressed in the forward-looking statements. Important factors that may materially affect such forward-looking statements include, but are not limited to:
| ● | our ability to maintain and grow revenue from existing customers and new customers, and expand their usage of our solutions; |
| ● | our ability to maintain and expand our strategic relationships with third parties; |
| ● | our ability to adapt to technological change and successfully introduce new solutions or provide updates to existing solutions; |
| ● | risks related to failures in information technology or infrastructure; |
| ● | risks related to our reliance on government infrastructure to support our e-invoicing services; |
| ● | challenges in using and managing use of Artificial Intelligence (“AI”) in our business; |
| ● | incorrect or improper implementation, integration or use of our solutions; |
| ● | failure to attract and retain qualified technical and tax-content personnel; |
| ● | competitive pressures from other tax software and service providers and challenges of convincing businesses using native enterprise resource planning functions to switch to our software; |
| ● | our ability to accurately forecast our revenue and other future results of operations based on recent success; |
| ● | our ability to offer specific software deployment methods based on changes to customers’ and partners’ software systems; |
| ● | our ability to continue making significant investments in software development and equipment; |
| ● | our ability to sustain and expand revenues, maintain profitability, and to effectively manage our anticipated growth; |
| ● | our ability to successfully diversify our solutions by developing or introducing new solutions or acquiring and integrating additional businesses, products, services, or content; |
| ● | our ability to successfully integrate acquired businesses and to realize the anticipated benefits of such acquisitions; |
| ● | risks related to the fluctuations in our results of operations; |
| ● | risks related to our expanding international operations; |
| ● | our exposure to liability from errors, delays, fraud or system failures, which may not be covered by insurance; |
| ● | our ability to adapt to organizational changes and effectively implement strategic initiatives; |
| ● | risks related to our determinations of customers’ transaction tax and tax payments; |
| ● | risks related to changes in tax laws and regulations or their interpretation or enforcement; |
| ● | our ability to manage cybersecurity and data privacy risks; |
| ● | our involvement in material legal proceedings and audits; |
| ● | risks related to undetected errors, bugs or defects in our software; |
| ● | risks related to utilization of open-source software, business processes and information systems; |
| ● | our ability to effectively protect, maintain, and enhance our brand; |
| ● | changes in application, scope, interpretation or enforcement of laws and regulations; |
| ● | global economic weakness and uncertainties, including the economic uncertainty created by the changing legal, regulatory, or taxation landscape in the United States, and disruption in the capital and credit markets; |
| ● | business disruptions related to natural disasters, epidemic outbreaks, including a global endemic or pandemic, terrorist acts, political events, or other events outside of our control; |
| ● | our ability to comply with anti-corruption, anti-bribery, and similar laws; |
| ● | our ability to protect our intellectual property; |
| ● | changes in interest rates, security ratings and market perceptions of the industry in which we operate, or our ability to obtain capital on commercially reasonable terms or at all; |
| ● | our ability to maintain an effective system of disclosure controls and internal control over financial reporting, or ability to remediate any material weakness in our internal controls; |
| ● | risks related to our Class A common stock and controlled company status; |
| ● | risks related to our Repurchase Program (as defined in the notes to the financial statements); |
| ● | risks related to our indebtedness and adherence to the covenants under our debt instruments; |
| ● | the effects of the Capped Call Transactions (as defined in the notes to the financial statements) and the actions of the Option Counterparties (as defined in the notes to the financial statements) and/or their respective affiliates; |
| ● | risks related to our Value Creation Plan; |
| ● | any statements of belief and any statements of assumptions underlying any of the foregoing; and |
| ● | other factors beyond our control. |
The risks included here are not exhaustive, and additional factors could adversely affect our business and financial performance, including factors and risks included in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission (the “SEC”) on February 24, 2026 (the “2025 Annual Report”). Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for us to identify all such risk factors, nor can we assess the impact of all such risk factors on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, you should not place undue reliance on our forward-looking statements, and you should not rely on forward-looking statements as predictions of future events. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements. The forward-looking statements made in this Quarterly Report on Form 10-Q speak only as of the date of this report. We undertake no obligation to update any forward-looking statements made in this report to reflect events or circumstances after the date of this report or to reflect new information or the occurrence of unanticipated events, except as required by law. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
