COMMVAULT SYSTEMS INC

Previous wording

Incorporated in Delaware in 1996, Commvault Systems, Inc. provides its customers with a scalable platform that enhances customers' cyber resiliency by protecting their data in a world of increasing threats. We provide these products and services for their data across many types of environments, including on-premises, hybrid and multi-cloud. Our offerings are delivered via self-managed software, software-as-a-service ("SaaS"), integrated appliances, or managed by partners. Customers use our Commvault Cloud platform to protect themselves from threats like ransomware and recover their data efficiently.

Current wording

Commvault Systems, Inc. aims to provide its customers cyber resiliency by protecting and recovering their data and cloud-native applications in a world of increasing cyber threats and attacks, including ransomware. We provide products and services across many types of environments, including on-premises, hybrid and multi-cloud. Our offerings are delivered via self-managed software, software-as-a-service ("SaaS"), integrated appliances, or managed by partners.

Previous wording

We generate revenues through subscription arrangements, perpetual software licenses, customer support contracts and other services. A significant portion of our total revenues comes from subscription arrangements, which include both sales of term-based licenses and SaaS offerings. We are focused on these types of recurring revenue arrangements.

Current wording

We generate revenues through subscription arrangements, which includes both term-based software licenses and SaaS, perpetual software licenses, customer support contracts and other services. A significant portion of our total revenues comes from subscription arrangements, whether deployed on-premises (term-based license) or delivered via hosted cloud SaaS solutions. These arrangements are economically and contractually similar, as customers receive access to our software for a specified term under binding agreements. We are focused on these types of recurring revenue arrangements.

Previous wording

We expect our subscription arrangements will continue to generate revenues from the renewals of term-based licenses and SaaS offerings sold in prior years. Any of our pricing models (capacity, instance based, etc.) can be sold via a subscription arrangement, either through term-based licensing or hosted services. In term-based license arrangements, the customer has the right to use the software over a designated period of time. The capacity of the license is fixed and the customer has made an unconditional commitment to pay. Software revenue in these arrangements is generally recognized when the software is delivered. In SaaS offerings, customers use hosted software over the contract period without taking possession of the software. Revenue related to SaaS is recognized ratably over the contract period.

Current wording

We expect our subscription arrangements will continue to generate revenues from the renewals of term-based licenses and SaaS offerings sold in prior years. Any of our pricing models (capacity, instance based, etc.) can be sold either through term-based licensing or via hosted cloud SaaS solutions. In term-based license arrangements, software revenue is generally recognized when the software is delivered. Revenue related to SaaS is recognized ratably over the contract period.

Previous wording

We sell to end-user customers both directly through our sales force and indirectly through our global network of value-added reseller partners, systems integrators, corporate resellers, original equipment manufacturers, and marketplaces. Subscription revenue generated through indirect distribution channels accounted for approximately 90% of total subscription revenue in both the nine months ended December 31, 2024 and 2023. Subscription revenue generated through direct distribution channels accounted for approximately 10% of total subscription revenue in both the nine months ended December 31, 2024 and 2023. Deals initiated by our direct sales force are sometimes transacted through indirect channels based on end-user customer requirements, which are not always in our control and can cause this overall percentage split to vary from period-to-period. As such, there may be fluctuations in the dollars and percentage of subscription revenue generated through our direct distribution channels from time-to-time. We believe that the growth of our subscription revenue, derived from both our indirect channel partners and direct sales force, are key attributes to our long-term growth strategy. We intend to continue to invest in both our channel relationships and direct sales force in the future, but we continue to expect more revenue to be generated through indirect distribution channels over the long term. The failure of our indirect distribution channels or our direct sales force to effectively sell our products and services could have a material adverse effect on our revenues and results of operations.

Current wording

We sell to end-user customers both directly through our sales force and indirectly through our global network of value-added reseller partners, systems integrators, corporate resellers, original equipment manufacturers, and marketplaces. Revenue generated through indirect distribution channels accounted for approximately 90% of total revenues in both the three months ended June 30, 2025 and 2024. Revenue generated through direct distribution channels accounted for approximately 10% of total revenues in both the three months ended June 30, 2025 and 2024. Deals initiated by our direct sales force are sometimes transacted through indirect channels based on end-user customer requirements, which are not always in our control and can cause this overall percentage split to vary from period-to-period. As such, there may be fluctuations in the dollars and percentage of revenue generated through our distribution channels from time-to-time. We believe that the growth of our revenue, derived from both our indirect channel partners and direct sales force, are key attributes to our long-term growth strategy. We intend to continue to invest in both our channel relationships and direct sales force in the future, but we continue to expect more revenue to be generated through indirect distribution channels over the long term. The failure of our indirect distribution channels or our direct sales force to effectively sell our products and services could have a material adverse effect on our revenues and results of operations.

Previous wording

We have a non-exclusive distribution agreement with Arrow pursuant to which Arrow's primary role is to enable a more efficient and effective distribution channel for our solutions by managing our resellers and leveraging their own industry experience. We generated 35% and 36% of our total revenues through Arrow for the nine months ended December 31, 2024 and 2023, respectively. If Arrow were to discontinue or reduce the sales of our solutions or if our agreement with Arrow were terminated, and if we were unable to take back the management of our reseller channel or find another distributor to replace Arrow, there could be a material adverse effect on our future business.

Current wording

We have non-exclusive distribution agreements with certain partners who enable a more efficient and effective distribution channel for our solutions by managing our resellers and leveraging their own industry experience. For the three months ended June 30, 2025 and 2024, Partner A accounted for approximately 33% and 34% of our total revenues, respectively. Separately, Partner B accounted for approximately 11% of our total revenues for the three months ended June 30, 2025. Total revenues for the three months ended June 30, 2024 for Partner B were not material. If these partners discontinue or reduce the sales of our solutions or if our agreements with them were terminated, and if we were unable to take back the management of our reseller channel or find another distributor to replace them, there could be a material adverse effect on our future business.

Previous wording

Our customer support revenue includes support contracts tied to our software products. Customer support includes software updates on a when-and-if-available basis, telephone support, integrated web-based support, and other premium support offerings, for both term-based software license and perpetual software license arrangements. We sell our customer support contracts as a percentage of net software. Customer support revenue is recognized ratably over the term of the customer support agreement, which is typically one year on our perpetual licenses. The term of our subscription arrangements is typically one to three years but can range between one and five years.

Current wording

Our customer support revenue includes support contracts tied to our software products. Customer support includes software updates on a when-and-if-available basis, telephone support, integrated web-based support, and other premium support offerings, for both term-based software license and perpetual software license arrangements. We sell our customer support contracts as a percentage of net software purchases. Customer support revenue is recognized ratably over the term of the customer support agreement, which is typically one year on our perpetual licenses and over the term on our term-based licenses, which typically range from one to three years.

Previous wording

Sales outside the United States were 47% of our total revenues for both the nine months ended December 31, 2024 and 2023. The income statements of our non-U.S. operations are translated into U.S. dollars at the average exchange rates for each applicable month in a period. To the extent the U.S. dollar weakens against foreign currencies, the translation of these foreign currency denominated transactions generally results in increased revenues, operating expenses and income from operations for our non-U.S. operations. Similarly, our revenues, operating expenses and net income will generally decrease for our non-U.S. operations if the U.S. dollar strengthens against foreign currencies.

Current wording

Sales outside the United States were 44% and 48% of our total revenues for the three months ended June 30, 2025 and 2024, respectively. The income statements of our non-U.S. operations are translated into U.S. dollars at the average exchange rates for each applicable month in a period. To the extent the U.S. dollar weakens against foreign currencies, the translation of these foreign currency denominated transactions generally results in increased revenues, operating expenses and income from operations for our non-U.S. operations. Similarly, our revenues, operating expenses and income from operations will generally decrease for our non-U.S. operations if the U.S. dollar strengthens against foreign currencies.

Previous wording

Using the average foreign currency exchange rates from the three months ended December 31, 2023, our total revenues would have been higher by $1.6 million, our cost of revenues would have been higher by $0.2 million and our operating expenses would have been higher by $0.6 million from non-U.S. operations for the three months ended December 31, 2024. Using the average foreign currency exchange rates from the nine months ended December 31, 2023, our total revenues would have been higher by $1.0 million, our cost of revenues would have been higher by $0.2 million and our operating expenses would have been lower by less than $0.1 million from non-U.S. operations for the nine months ended December 31, 2024.

Current wording

Using the average foreign currency exchange rates from the three months ended June 30, 2024, our total revenues would have been lower by $5.0 million, our cost of revenues would have been lower by $0.2 million and our operating expenses would have been lower by $1.5 million from non-U.S. operations for the three months ended June 30, 2025.

Previous wording

In addition, we are exposed to risks of foreign currency fluctuation primarily from cash balances, accounts receivables and intercompany accounts denominated in foreign currencies and are subject to the resulting transaction gains and losses, which are recorded as a component of general and administrative expenses. We recognized net foreign currency transaction gains of approximately $0.3 million and insignificant losses for the three and nine months ended December 31, 2024, respectively. We recognized net foreign currency transaction losses of approximately $1.6 million and $1.8 million for the three and nine months ended December 31, 2023, respectively.

Current wording

In addition, we are exposed to risks of foreign currency fluctuation primarily from cash balances, accounts receivables and intercompany accounts denominated in foreign currencies and are subject to the resulting transaction gains and losses, which are recorded as a component of general and administrative expenses. We recognized net foreign currency transaction losses of approximately $1.2 million and insignificant losses for the three months ended June 30, 2025 and 2024, respectively.

Previous wording

Other than the addition of purchased intangible assets, there have been no significant changes in our critical accounting policies during the nine months ended December 31, 2024 as compared to the critical accounting policies and estimates disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies” included in our Annual Report on Form 10-K for the year ended March 31, 2024.

Current wording

There have been no significant changes in our critical accounting policies during the three months ended June 30, 2025 as compared to the critical accounting policies and estimates disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies” included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2025.

Previous wording

–Total revenues increased $104.6 million, or 17% year over year, driven prim arily by an increase in subscription revenue, offset by decreases in perpetual license and other services revenues. We remain focused on selling subscription arrangements through both term-based software licenses and SaaS offerings.

Current wording

–Total revenues increased $57.3 million, or 26% year over year, driven prim arily by an increase in both term-based license revenue and SaaS revenue, partially offset by a decrease in perpetual license revenue. We remain focused on selling subscription arrangements through both term-based software licenses and SaaS offerings.

Previous wording

–Perpetual license revenue decreased $1.7 million, or 4% year over year. Our preferred route to market is led by the sale of term-based licenses. Perpetual licenses are generally only sold in certain verticals and geographies. Perpetual license revenue accounted for 6% of total revenues for the nine months ended December 31, 2024 compared to 7% for the nine months ended December 31, 2023.

Current wording

–Perpetual license revenue decreased $6.4 million, or 47% year over year. Our preferred route to market for software is led by the sale of term-based licenses. Perpetual licenses are generally only sold in certain verticals and geographies.

Previous wording

–Customer support revenue was flat compared to the same period of the prior year, driven by a $6.6 million increase in customer support revenue related to term-based license arrangements, partially offset by a $6.3 million decrease in support attached to perpetual license support renewals.

Current wording

–Customer support revenue increased $2.7 million, or 4% year over year, driven by a $7.9 million increase in customer support revenue related to term-based license arrangements, partially offset by a $5.2 million decrease in customer support revenue attached to perpetual license support renewals.

Previous wording

–Other services revenue decreased $0.1 million, or 1% year over year. Changes in other services revenue can vary period over period, primarily due to the timing professional services are delivered.

Current wording

–Other services revenue increased $3.3 million, or 31% year over year. Changes in other services revenue can vary period over period, primarily due to the timing professional services are delivered.

Previous wording

We track total revenues on a geographic basis. Our Americas region includes the United States, Canada, and Latin America. Our International region primarily includes Europe, Middle East, Africa, Australia, India, Southeast Asia and China. Americas and International represented 61% and 39% of total revenues, respectively, for the nine months ended December 31, 2024. Total revenues increased 19% and 13% year over year in the Americas and International, respectively.

Current wording

We track total revenues on a geographic basis. Our Americas region includes the United States, Canada, and Latin America. Our International region primarily includes Europe, Middle East, Africa, Australia, India, Southeast Asia and China. Americas and International represented 61% and 39% of total revenues, respectively, for the three months ended June 30, 2025. Total revenues increased 23% and 29% year over year in the Americas and International, respectively.

Previous wording

▪The increase in Americas total revenues was primarily due to a 44% increase in subscription revenue, partially offset by a 17% decrease in perpetual license revenue, driven by the shift from selling perpetual licenses to subscription arrangements. Customer support revenue decreased 1% year over year. Other services revenue increased 8% year over year due to an increase in the delivery of professional services for the region as compared to the same period of the prior year.

Current wording

▪The increase in Americas total revenues was primarily due to increases of 16% and 82% in term-based license and SaaS revenues, respectively, partially offset by a 37% decrease in perpetual license revenue, driven by the shift from selling perpetual licenses to subscription software arrangements. Customer support revenue increased 1% year over year. Other services revenue increased 45% year over year primarily due to the timing professional services were delivered compared to the same period of the prior year.

Previous wording

▪The increase in International total revenues was primarily due to increases of 30%, 20% and 2% in subscription, perpetual license and customer support revenues, respectively, partially offset by a decrease of 14% in other services revenue, as compared to the same period of the prior year.

Current wording

▪The increase in International total revenues was due to increases of 90%, 42%, 7% and 11% in term-based license, SaaS, customer support and other services revenues, respectively, partially offset by a decrease of 51% in perpetual license revenue, as compared to the same period of the prior year.

Previous wording

–Total cost of revenues increased $18.8 million and represented 18% of our total revenues for both the nine months ended December 31, 2024 and 2023.

Current wording

–Total cost of revenues increased $11.0 million and represented 18% of our total revenues for the three months ended June 30, 2025 and 2024.

Previous wording

–Cost of subscription revenue increased $10.1 million and represented 16% of our total subscription revenue for the three months ended December 31, 2024 compared to 14% for the three months ended December 31, 2023. The year over year increase is primarily the result of incremental hosting costs associated with the Clumio acquisition and an increase in the cost of infrastructure related to growth in our SaaS offerings.

Current wording

–Cost of SaaS revenue increased $10.2 million and represented 36% of our SaaS revenue for the three months ended June 30, 2025 and 2024. The year over year increase is primarily the result of incremental hosting costs associated with acquisitions completed in fiscal 2025 and an increase in the cost of infrastructure related to growth in our SaaS offerings.

Previous wording

–Cost of perpetual license revenue decreased $0.4 million and represented 2% of our total perpetual revenue for the three months ended December 31, 2024 compared to 5% for the three months ended December 31, 2023.

Current wording

–Cost of perpetual license revenue decreased $0.1 million and represented 3% of our perpetual revenue for the three months ended June 30, 2025 compared to 2% for the three months ended June 30, 2024.

Previous wording

–Cost of customer support revenue decreased $0.7 million, representing 19% of our total customer support revenue for the three months ended December 31, 2024 compared to 20% for the three months ended December 31, 2023.

Current wording

–Cost of customer support revenue decreased $0.1 million, representing 18% of our customer support revenue for the three months ended June 30, 2025 compared to 19% for the three months ended June 30, 2024.

Previous wording

–Cost of other services revenue increased $0.6 million, representing 72% of our total other services revenue for the three months ended December 31, 2024 compared to 67% for the three months ended December 31, 2023. The increase in cost of other services revenue was driven by timing of the delivery of certain professional services.

Current wording

–Cost of other services revenue increased $0.5 million, representing 58% of our other services revenue for the three months ended June 30, 2025 compared to 72% for the three months ended June 30, 2024.

Previous wording

–Sales and marketing expenses increased $24.4 million, or 27%, driven by an $18.8 million increase in employee compensation and sales commissions associated with increased revenues relative to the same period in the prior year, including an increase of $3.7 million in stock-based compensation.

Current wording

–Sales and marketing expenses increased $26.5 million, or 28%, primarily driven by a $13.3 million increase in employee compensation and sales commissions associated with increases in headcount and revenues relative to the same period in the prior year, including an increase of $3.1 million in stock-based compensation. In addition, there was an increase year over year of $9.0 million due to higher spending on marketing initiatives, which included in-person events and travel.

Previous wording

–Research and development expenses increased $5.6 million, or 16%, driven by increases in employee compensation and related expenses, including an increase of $1.6 million in stock-based compensation. The increase in employee compensation and related expenses is primarily driven by additional headcount, including the headcount related to the Appranix and Clumio acquisitions completed in April 2024 and October 2024, respectively. Investing in research and development remains a priority for Commvault and we anticipate continued responsible spending related to the development of our software applications and hosted services.

Current wording

–Research and development expenses increased $7.0 million, or 21%, driven by an increase of $5.4 million in employee compensation and related expenses, including an increase of $1.9 million in stock-based compensation. The increase in employee compensation and related expenses is primarily driven by additional headcount, including headcount related to acquisitions completed in fiscal 2025. Investing in research and development remains a priority for Commvault and we anticipate continued responsible spending related to the development of our software applications and hosted services.

Previous wording

–Depreciation and amortization expense increased $1.2 million, driven by the acquisition of intangible assets in fiscal 2025.

Current wording

–Depreciation and amortization expense increased $0.7 million, driven by the acquisition of intangible assets in fiscal 2025.

Previous wording

–Restructuring: Our restructuring plan, initiated in the fourth quarter of fiscal 2024, is intended to enhance customer satisfaction through the reorganization and redesign of our customer success functions. The realignment of the customer success structure aims to optimize operational efficiency and improve continuity for our customers through the pre-sales and post-sales experience. Restructuring expenses were $4.0 million for the three months ended December 31, 2024. These charges relate primarily to severance and related costs associated with headcount reductions. These expenses included $0.3 million of stock-based compensation related to modifications of existing awards granted to certain employees impacted by the plan. We anticipate the restructuring plan will be completed by the end of fiscal 2025. There were no restructuring expenses in the three months ended December 31, 2023.

Current wording

–Restructuring: Our restructuring plan, initiated in the first quarter of fiscal 2026, is intended to optimize our Business Technology organization. Restructuring expenses were $0.2 million for the three months ended June 30, 2025. These charges relate primarily to severance and related costs associated with headcount reductions and include $0.1 million of stock-based compensation related to modifications of existing awards granted to certain employees impacted by the plan. We anticipate the restructuring plan will be completed in fiscal 2026. Restructuring expenses were $4.7 million for the three months ended June 30, 2024 related to a prior restructuring plan that was completed in fiscal 2025.

Previous wording

–Change in contingent consideration: During the three months ended December 31, 2024, we recorded an expense of $2.5 million related to changes in the estimated fair value of our contingent consideration arrangement. The arrangement is contingent upon meeting certain financial metrics by June 30, 2025 and can range up to $4.0 million.

Current wording

–Change in contingent consideration: During the three months ended June 30, 2025, we recorded a reduction to expense of $0.5 million related to the final achievement under our contingent consideration arrangement related to the acquisition of Appranix, Inc. The arrangement, with final aggregate consideration of $1.9 million, was contingent upon meeting certain financial metrics by June 30, 2025 and could have ranged up to $4.0 million.

Previous wording

Income tax expense was $4.1 million in the three months ended December 31, 2024 compared to expense of $5.2 million in the three months ended December 31, 2023. The decrease in income tax expense compared to the same period in the prior year relates primarily to the recognition of deferred tax assets that were not recognized in prior years due to the Company’s valuation allowance, as well as windfalls from stock compensation.

Current wording

Income tax expense was $3.4 million in the three months ended June 30, 2025 compared to expense of $2.1 million in the three months ended June 30, 2024. The increase in income tax expense compared to the same period in the prior year relates primarily to estimated current federal taxes. We continue to monitor the impact of new global and U.S. legislation on our effective tax rate.

Previous wording

In recent fiscal years, our principal source of liquidity has been cash provided by operations. As of December 31, 2024, our cash and cash equivalents balance was $243.6 million, of which approximately $179.4 million was held outside of the United States by our foreign legal entities. These balances are dispersed across approximately 35 international locations around the world. We believe that such dispersion meets the current and anticipated future liquidity needs of our foreign legal entities. In the event we need to repatriate funds from outside of the United States, such repatriation would likely be subject to restrictions by local laws and/or tax consequences, including foreign withholding taxes.

Current wording

In recent fiscal years, our principal source of liquidity has been cash provided by operations. As of June 30, 2025, our cash and cash equivalents balance was $363.2 million, of which approximately $289.7 million was held outside of the United States by our foreign legal entities. These balances are dispersed across approximately 35 international locations around the world. We believe that such dispersion meets the current and anticipated future liquidity needs of our foreign legal entities. In the event we need to repatriate funds from outside of the United States, such repatriation would likely be subject to restrictions by local laws and/or tax consequences, including foreign withholding taxes.

Previous wording

On December 13, 2021, we entered into a five-year $100 million senior secured revolving credit facility (the “Credit Facility”) with JPMorgan Chase Bank, N.A. The Credit Facility is available for share repurchases, general corporate purposes, and letters of credit. The Credit Facility contains financial maintenance covenants, including a leverage ratio and interest coverage ratio. The Credit Facility also contains certain customary events of default which would permit the lender to, among other things, declare all loans then outstanding to be immediately due and payable if such default is not cured within applicable grace periods. The Credit Facility also limits our ability to incur certain additional indebtedness, create or permit liens on assets, make acquisitions, make investments, engage in loans or advances, sell or transfer assets, pay dividends or distributions, and engage in certain transactions with foreign affiliates. Outstanding borrowings under the Credit Facility accrue interest at an annual rate equal to the Secured Overnight Financing Rate plus 1.25% subject to increases based on our actual leverage. The unused balance on the Credit Facility is also subject to a 0.25% annual interest charge subject to increases based on our actual leverage. As of December 31, 2024, there were no borrowings under the Credit Facility and we were in compliance with all covenants.

Current wording

On April 15, 2025, we refinanced our existing $100 million senior secured revolving credit facility, replacing it with a new five-year $300 million senior secured revolving credit facility (the “Credit Facility”) with JPMorgan Chase Bank, N.A, as administrative agent, and the lenders party thereto. The Credit Facility is available for share repurchases, general corporate purposes, and letters of credit. The Credit Facility contains financial maintenance covenants, including a leverage ratio and interest coverage ratio. The Credit Facility also contains certain customary events of default which would permit the lenders to, among other things, declare all loans then outstanding to be immediately due and payable if such default is not cured within applicable grace periods. The Credit Facility also limits our ability to incur certain additional indebtedness, create or permit liens on assets, make acquisitions or investments, make loans or advances, sell or transfer assets, pay dividends or distributions, and engage in certain transactions with affiliates. Outstanding borrowings under the Credit Facility accrue interest at a per annum rate determined by the Company’s election of either the Secured Overnight Financing Rate plus a margin ranging from 1.50% to 2.00%, or a base rate, which is generally the greater of a prime rate plus a margin ranging from 0.50% to 1.00%. The applicable margin in each case is contingent upon the Company’s leverage ratio. Additionally, the unused balance on the Credit Facility is subject to an unused commitment fee at a rate equal to 0.25% per annum subject to increases based on the Company's leverage ratio. As of June 30, 2025, there were no borrowings under the Credit Facility and we were in compliance with all covenants.

Previous wording

On April 18, 2024, the Board of Directors approved an increase of the existing share repurchase program so that $250.0 million was available. The Board's authorization has no expiration date. For the nine months ended December 31, 2024, we repurchased $135.2 million of our common stock. The remaining amount available under the current authorization as of December 31, 2024 was $121.3 million.

Current wording

On April 17, 2025, the Board of Directors approved an increase of the existing share repurchase program so that $250.0 million was available. The Board's authorization has no expiration date. For the three months ended June 30, 2025, we repurchased $15.1 million of our common stock. The remaining amount available under the current authorization as of June 30, 2025 was $235.0 million.

Previous wording

–Net cash provided by operating activities was impacted by net income adjusted for the impact of non-cash charges and an increase in deferred revenue, partially offset by an increase in accounts receivable.

Current wording

–Net cash provided by operating activities was impacted by net income adjusted for the impact of non-cash charges and a decrease in accrued expenses, partially offset by an increase in deferred revenue.

Previous wording

–Net cash used in financing activities was the result of $135.2 million of repurchases of common shares, partially offset by $11.1 million of proceeds from the exercise of stock options and the Employee Stock Purchase Plan.

Current wording

–Net cash used in financing activities was the result of $15.1 million of repurchases of our common stock and $1.8 million of payment of debt issuance costs.

Previous wording

Working capital decreased $45.2 million from $110.2 million as of March 31, 2024 to $65.0 million as of December 31, 2024. The net decrease in working capital was primarily the result of a decrease in cash and cash equivalents driven by the acquisitions of Appranix and Clumio in fiscal 2025 and an increase in the current portion of deferred revenue, partially offset by an increase in accounts receivable.

Current wording

Working capital increased $51.1 million from $80.0 million as of March 31, 2025 to $131.1 million as of June 30, 2025. The net increase in working capital was primarily the result of an increase in cash and cash equivalents and a decrease in accrued liabilities, partially offset by an increase in the current portion of deferred revenue.

Previous wording

We believe that our existing cash, cash equivalents and our cash from operations will be sufficient to meet our anticipated cash needs for working capital, income taxes, capital expenditures and potential stock repurchases for at least the next twelve months. We may seek additional funding through public or private financings or other arrangements during this period. Adequate funds may not be available when needed or may not be available on terms favorable to us, or at all. If additional funds are raised by issuing equity securities, dilution to existing stockholders will result. If we raise additional funds by obtaining loans from third parties, the terms of those financing arrangements may include negative covenants or other restrictions on our business that could impair our operational flexibility and would also require us to fund additional interest expense. If funding is insufficient at any time in the future, we may be unable to develop or enhance our products or services, take advantage of business opportunities, or respond to competitive pressures, any of which could have a material adverse effect on our business, financial condition and results of operations.

Current wording

We believe that our existing cash, cash equivalents and our cash from operations will be sufficient to meet our anticipated cash needs for working capital, income taxes, capital expenditures and potential stock repurchases for at least the next 12 months. We may seek additional funding through public or private financings or other arrangements during this period. Adequate funds may not be available when needed or may not be available on terms favorable to us, or at all. If additional funds are raised by issuing equity securities, dilution to existing stockholders will result. If we raise additional funds by obtaining loans from third parties, the terms of those financing arrangements may include negative covenants or other restrictions on our business that could impair our operational flexibility and would also require us to fund additional interest expense. If funding is insufficient at any time in the future, we may be unable to develop or enhance our products or services, take advantage of business opportunities, or respond to competitive pressures, any of which could have a material adverse effect on our business, financial condition and results of operations.

Previous wording

See Note 2 of the unaudited consolidated financial statements for a discussion of the impact of recently issued accounting standards.

Current wording

See Note 2 of the Notes to Consolidated Financial Statements included in Part I, Item I of this Quarterly Report on Form 10-Q for a discussion of the impact of recently issued accounting standards.