HUBSPOT INC

Previous wording

We provide a customer platform that helps businesses connect and grow better. We deliver seamless connection for customer-facing teams with a unified platform that includes three layers: AI-powered engagement hubs, a Smart CRM, and a connected ecosystem that extends the customer platform with app marketplace integrations, a community network, and an academy of educational content.

Current wording

We provide an agentic customer platform that helps marketing, sales, and customer service teams drive business growth. We deliver seamless connection for customer-facing teams with a unified platform that includes three layers: Artificial Intelligence (“AI”)-powered agents and engagement Hubs, a Smart customer relationship management product (“CRM”), and a connected ecosystem supporting the customer platform with a marketplace of integrations, templates, expert partners, a community network, and an academy of educational content.

Previous wording

Our AI-powered engagement hubs include Marketing, Sales, Service, Data, Content, and Commerce, as well as other tools and integrations that enable companies to attract, engage, and delight customers throughout the customer lifecycle. Our customer platform features a central database of lead and customer interactions and integrated applications designed to help businesses attract visitors to their websites, convert visitors into leads, close leads into customers, transact with those customers, and delight them so they become promoters of those businesses.

Current wording

Breeze is our AI that powers the customer platform, including our Smart CRM, engagement Hubs, and the connected ecosystem. Our engagement Hubs that enable companies to attract, engage, and delight customers throughout the customer lifecycle include Marketing, Sales, Service, Operations, Content and Commerce. The Smart CRM is the foundational context layer that combines customer data with AI to power the entire customer platform with unified customer profiles and tools to manage and govern your team and business processes. Our customer platform features a central database of lead and customer interactions and integrated applications designed to help businesses build their presence online, attract prospects across channels, convert prospects into leads, close leads into customers, transact with those customers, and delight them so they become promoters of those businesses.

Previous wording

We designed and built our customer platform to serve a broad range of customers globally. Our customer platform starts completely free and grows with our customers to meet their needs at different stages in their life-cycles. It supports multiple languages and currencies and offers an array of sophisticated features, including content partitioning at the enterprise level for companies operating in or serving multiple countries.

Current wording

We designed and built our customer platform to serve a broad range of customers globally. It was built to easily and seamlessly integrate third party applications to further customize to an individual company’s industry or needs. Our customer platform starts completely free and grows with our customers to meet their needs at different stages in their life-cycles. It supports multiple languages and currencies and offers an array of sophisticated features, including content partitioning at the enterprise level for companies operating in or serving multiple countries.

Previous wording

We focus on selling to mid-market business-to-business, or B2B, companies, which we define as companies that have between two and 2,000 employees. While our customer platform was built to grow with any company, we focus on selling to mid-market businesses because we believe we have significant competitive advantages attracting and serving this market segment. These mid-market businesses seek an integrated, easy-to-implement and easy-to-use solution to reach customers and compete with organizations that have larger marketing, sales, and customer service budgets. We efficiently reach these businesses at scale through our traditional and AI-enhanced engagement strategies, our Solutions Partners, and our “freemium” model. A Solutions Partner is a service provider that helps businesses with strategy, execution, and implementation of go-to-market activities and technology solutions. Our freemium model attracts customers who begin using our customer platform through our free products and then upgrade to our paid products. As of September 30, 2025, we had 8,824 full-time employees and 278,880 Customers of varying sizes in more than 135 countries, representing many industries.

Current wording

We focus on selling to mid-market business-to-business, or B2B, companies, which we define as companies that have between 2 and 2,000 employees. While our customer platform was built to grow with any company, we focus on selling to mid-market businesses because we believe we have significant competitive advantages attracting and serving this market segment. These mid-market businesses seek an integrated, easy-to-implement and easy-to-use solution to reach customers and compete with organizations that have larger marketing, sales, and customer service budgets. We efficiently reach these businesses at scale through our traditional and AI-enhanced engagement strategies, our Solutions Partners, and our “freemium” model. AI-enhanced engagement strategies leverage AI to personalize, automate, and optimize how businesses attract, engage, and retain customers across channels and throughout the customer lifecycle. A Solutions Partner is a service provider that helps businesses with strategy, execution, and implementation of go-to-market activities and technology solutions. Our freemium model attracts customers who begin using our customer platform through our free products and then upgrade to our paid products. As of March 31, 2026, we had 9,021 full-time employees and 299,458 Customers of varying sizes in more than 135 countries, representing many industries.

Previous wording

We derive most of our revenue from subscriptions to our cloud-based customer platform and related professional services, which consist of customer on-boarding, training and consulting services. Subscription revenue accounted for 98% of our total revenue for the three and nine months ended September 30, 2025 and 2024. We sell multiple product plans at different base prices on a subscription basis, each of which includes our Smart CRM and integrated applications to meet the needs of the various customers we serve. We also generate revenue through usage and consumption-based models. Customers pay additional fees if the number of contacts stored and tracked in the customer’s database exceeds specified thresholds. We also generate additional revenue based on the purchase of additional subscriptions, products and seats, and the number of account users. Most of our Customers’ subscriptions are one year or less in duration.

Current wording

We derive most of our revenue from subscriptions to our cloud-based customer platform and related professional services, which consist of customer on-boarding, training and consulting services. Subscription revenue accounted for 98% of our total revenue for the three months ended March 31, 2026 and 2025. We sell multiple product plans at different base prices on a subscription basis, each of which includes our Smart CRM and integrated applications to meet the needs of the various customers we serve. We also generate revenue through usage and consumption-based models. Customers pay additional fees if the number of contacts stored and tracked in the customer’s database exceeds specified thresholds. We also generate revenue based on the purchase of additional subscriptions, products and seats. Most of our Customers’ subscriptions are one year or less in duration.

Previous wording

Many of our customers purchase on-boarding, training, and consulting services, which are designed to help customers enhance their ability to attract, engage and delight their customers using our customer platform. We also generate revenue from Commerce Hub and a number of revenue-share agreements with other companies. Professional services and other revenue accounted for 2% of total revenue for the three and nine months ended September 30, 2025 and 2024.

Current wording

Many of our customers purchase on-boarding, training, and consulting services, which are designed to help customers enhance their ability to attract, engage and delight their customers using our customer platform. Professional services and other revenue accounted for 2% of total revenue for the three months ended March 31, 2026 and 2025.

Previous wording

We believe that the growth of our business is dependent on many factors, including our ability to expand our customer base, increase adoption of our customer platform within existing customers, develop new products and applications to extend the functionality of our customer platform and provide a high level of customer service. We have invested and intend to continue investing for long-term growth. We intend to continue to invest in sales and marketing to support our growth. We plan to continue to invest in research and development as we continue to introduce new products and applications to extend the functionality of our customer platform. We intend to continue maintaining a high level of customer service and support which we consider critical for our continued success. We also plan to continue investing in our data center infrastructure and services capabilities in order to support continued future customer growth. We also expect to continue to incur additional general and administrative expenses as a result of both our growth and the infrastructure required to be a public company. Included in these investments are AI-enabled tools for guided selling and content generation to drive efficiencies and improve conversion rates, as well as machine learning capabilities to accelerate innovation, increase productivity, and support automated ticket resolution. We expect to use our cash flow from operations to fund these growth strategies and support our business and may break-even from a profitability perspective in the next 12 months.

Current wording

We believe that the growth of our business is dependent on many factors, including our ability to expand our customer base, increase adoption of our customer platform within existing customers, develop new products and applications to extend the functionality of our customer platform and provide a high level of customer service. We have invested and intend to continue investing for long-term growth. We intend to continue to invest in sales and marketing to support our growth, including investments in AI-enabled tools for guided selling and content generation designed to drive efficiencies and improve conversion rates. We plan to continue to invest in research and development as we continue to introduce new products and applications to extend the functionality of our customer platform, including machine learning capabilities intended to accelerate innovation and increase productivity. We intend to continue maintaining a high level of customer service and support which we consider critical for our continued success, and investing in AI to support automated ticket resolution. We also plan to continue investing in our data center infrastructure and services capabilities in order to support continued future customer growth. We also expect to continue to incur additional general and administrative expenses as a result of our growth and the infrastructure required to operate as a public company, including continued efforts to automate and streamline processes using AI-enabled tools. We expect to use our cash flow from operations to fund these growth strategies and support our business.

Previous wording

We derive our revenue from two major sources, revenue from subscriptions to our customer platform and professional services and other revenue consisting mainly of on-boarding, training, consulting services fees, and Commerce Hub.

Current wording

We derive our revenue from two major sources, revenue from subscriptions to our customer platform and professional services and other revenue consisting mainly of on-boarding, training, consulting services fees, and Payments.

Previous wording

Subscription-based revenue is derived from customers using our customer platform for their marketing, sales, service, data, and content management needs. Our customer platform includes a system of engagement for efficiently engaging customers through SEO, web content, social, blogging, email, marketing automation, messaging, support ticketing, knowledge base, commerce, conversation routing, video hosting, and data enrichment. Over 2,000 integrations and applications are available for our users, across a wide range of categories, including integrations with leading social media, email, sales, video, analytics, content and webinar tools. All subscription fees that are billed in advance of service are recorded in deferred revenue. Subscription based revenue is recognized net of consideration paid to Solutions Partners when those Solutions Partners purchase a subscription to our customer platform.

Current wording

Subscription-based revenue is derived from customers using our customer platform for their marketing, sales, service, data, and content management needs. Our customer platform includes a system of record for maintaining a unified view of the customer experience, a system of engagement for efficiently engaging customers through AI agents, SEO, AEO, AI-powered content creation, web content, social, blogging, email, marketing automation, messaging, support ticketing, knowledge base, conversation routing, video hosting, deal progression, prospecting, and data enrichment. Over 2,000 integrations and applications are available for our users, across a wide range of categories, including integrations with leading social media, email, sales, video, analytics, content and webinar tools. All subscription fees that are billed in advance of service are recorded in deferred revenue. Subscription based revenue is recognized net of consideration paid to Solutions Partners when those Solutions Partners purchase the subscription to our customer platform.

Previous wording

Professional services and other revenue are derived primarily from customer on-boarding, training, consulting services, and Commerce Hub. Depending on which Hubs and services a customer purchases, they receive on-boarding guidance or one-on-one training from one of our on-boarding, inbound consultants, or technical consultants via web meetings. Training is generally sold in connection with a customer’s initial subscription and is billed in advance. The training is also available to be purchased separately following a customer’s purchase of its initial subscription and our Solutions Partners routinely provide the same training to customers. We also derive revenue from a number of revenue-share agreements with other companies.

Current wording

Professional services and other revenue are derived primarily from customer on-boarding, training, consulting services, and Payments. Depending on which Hubs and services a customer purchases, they receive on-boarding guidance or training from technical consultants via web meetings.

Previous wording

Cost of subscription revenue consists primarily of managed hosting providers and other third-party service providers, employee-related costs including payroll, benefits and stock-based compensation expense for our customer support team, amortization of capitalized software development costs and acquired technology, and allocated overhead costs, which we define as facilities, depreciation of fixed assets, and costs related to information technology.

Current wording

Cost of subscription revenue consists primarily of managed hosting providers and other third-party service providers, employee-related costs including payroll, benefits and stock-based compensation expense for our customer support team, amortization of capitalized software development costs and acquired technology, and allocated overhead costs, which include facilities costs, depreciation of fixed assets, and costs related to information technology.

Previous wording

Cost of professional services and other revenue consists primarily of personnel costs of our professional services organization, including salaries, benefits, bonuses and stock-based compensation, amortization of capitalized software development costs associated with our internally built software platform, as well as professional fees and allocated overhead costs, which we define as facilities, depreciation of fixed assets, and costs related to information technology. It also consists of costs associated with our other service offerings, including Commerce Hub.

Current wording

Cost of professional services and other revenue consists primarily of personnel costs of our professional services organization, including salaries, benefits, bonuses and stock-based compensation, amortization of capitalized software development costs associated with Payments, as well as professional fees and allocated overhead costs, which we define as facilities, depreciation of fixed assets, and costs related to information technology. It also consists of costs associated with Payments and our other service offerings.

Previous wording

We expect that the cost of subscription and professional services and other revenue will increase in absolute dollars as we continue to invest in growing our business. Over time, we expect to gain benefits of scale associated with our costs of hosting our customer platform relative to subscription revenues, resulting in improved subscription gross margin, exclusive of stock-based compensation. We expect professional services and other margins to break-even in the next 12 months, exclusive of stock-based compensation.

Current wording

We expect that the cost of subscription and professional services and other revenue will increase in absolute dollars as we continue to invest in data center infrastructure and capitalize software development costs for new offerings to grow our business and scale with AI capabilities. As a result of these investments, over time, we expect gross margins to decline slightly, exclusive of stock-based compensation.

Previous wording

Research and development expenses consist primarily of personnel costs of our development team, including payroll, benefits and stock-based compensation expense, professional and contractor fees and allocated overhead costs. We capitalize certain software development costs that are attributable to developing new products and adding incremental functionality to our customer platform and amortize such costs as costs of subscription and cost of professional services and other revenue over the estimated life of the new product or incremental functionality, which is generally two years. We also capitalize certain development costs that are attributable to developing our internally developed software platforms and amortize such costs throughout the consolidated statement of operations over the estimated life of our internally developed software platforms, which is generally five years. We focus our research and development efforts on improving our products and developing new ones, delivering new functionality and enhancing the customer experience. We believe delivering new functionality for our customers is an integral part of our solution and provides our customers with access to a broad array of options and information critical to their marketing, sales, and customer service efforts. We expect to continue to make investments in and expand our offerings to enhance our customers’ experience and satisfaction and attract new customers. Over time, we expect research and development expenses to increase in absolute dollars as we continue to increase the functionality of our customer platform and remain consistent as a percentage of total revenue, exclusive of stock-based compensation expense.

Current wording

Research and development expenses consist primarily of personnel costs of our development team, including payroll, benefits and stock-based compensation expense, professional and contractor fees and allocated overhead costs. We capitalize certain software development costs that are attributable to developing new products and adding incremental functionality to our customer platform and amortize such costs as costs of subscription and cost of professional services and other revenue over the estimated life of the new product or incremental functionality, which is generally two years. We also capitalize certain development costs that are attributable to developing our internally developed software platforms and amortize such costs throughout the consolidated statement of operations over the estimated life of our internally developed software platforms, which is generally five years. We focus our research and development efforts on improving our products and developing new ones, delivering new functionality and enhancing the customer experience. We believe delivering new functionality for our customers is an integral part of our solution and provides our customers with access to a broad array of options and information critical to their marketing, sales, and customer service efforts. We expect to continue to make investments in and expand our offerings to enhance our customers’ experience and satisfaction and attract new customers. Over time, we expect research and development expenses to increase in absolute dollars as we continue to increase the functionality of our customer platform and decline as a percentage of total revenue, exclusive of stock-based compensation expense.

Previous wording

Sales and marketing expenses consist primarily of personnel costs of our sales and marketing employees, including sales commissions and incentives, benefits and stock-based compensation expense, marketing programs, including lead generation, costs of our annual INBOUND conference, other brand building expenses, amortization of intangible assets, professional and contractor fees and allocated overhead costs. Sales and marketing expenses also include commissions paid to our Solutions Partners in instances where the end customer purchases and pays for a subscription to our customer platform. We defer certain sales and Solutions Partner commissions related to acquiring new contracts and amortize them ratably over a period of benefit that we have determined to be approximately two to four years.

Current wording

Sales and marketing expenses consist primarily of personnel costs of our sales and marketing employees, including sales commissions and incentives, benefits and stock-based compensation expense, marketing programs, including lead generation, costs of our annual UNBOUND (formerly INBOUND) conference, other brand building expenses, amortization of intangible assets, professional and contractor fees and allocated overhead costs. Sales and marketing expenses also include commissions paid to our Solutions Partners in instances where the end customer purchases and pays for a subscription to our customer platform. We defer certain sales and Solutions Partner commissions related to acquiring new contracts and amortize them ratably over a period of benefit that we have determined to be approximately two to four years.

Previous wording

Restructuring expenses primarily consist of variable lease costs related to properties vacated under our restructuring plan. On January 25, 2023, the Company's board of directors authorized a restructuring plan (the “Restructuring Plan”) that was designed to reduce operating costs and enable investment in key opportunities for long-term growth while driving continued profitability. The Restructuring Plan included a reduction of the Company’s workforce by approximately 7% and a global lease consolidation to create higher density across our workspaces. Future variable facilities related costs for vacated properties will continue to be recorded to restructuring charges.

Current wording

Restructuring expenses primarily consist of variable lease costs related to properties vacated under our restructuring plan. On January 25, 2023, our board of directors authorized a restructuring plan (the “Restructuring Plan”) that was designed to reduce operating costs and enable investment in key opportunities for long-term growth while driving continued profitability. The Restructuring Plan included a reduction of our workforce by approximately 7% and a global lease consolidation to create higher density across our workspaces. Future variable facilities related costs for vacated properties will continue to be recorded to restructuring charges.

Previous wording

Interest income primarily consists of interest earned on invested cash and cash equivalents balances and investments. Interest expense primarily consists of amortization of issuance costs and contractual interest expense related to our 2025 Notes. Other (expense) income primarily consists of the impact of foreign currency transaction gains and losses associated with monetary assets and liabilities and any gains, losses on, or impairments of our strategic investments.

Current wording

Interest income primarily consists of interest earned on invested cash and cash equivalents balances and investments. Interest expense primarily consists of amortization of issuance costs and contractual interest expense related to our 2025 Notes and Revolving Credit Facility. Other expense, net primarily consists of the impact of foreign currency transaction gains and losses associated with monetary assets and liabilities and any gains, losses on, or impairments of our strategic investments.

Previous wording

Results of Operations for the Three and Nine Months Ended September 30, 2025 and 2024

Current wording

Results of Operations for the Three Months Ended March 31, 2026 and 2025

Previous wording

Three and Nine Months Ended September 30, 2025 Compared to the Three and Nine Months Ended September 30, 2024

Current wording

Three Months Ended March 31, 2026 Compared to the Three Months Ended March 31, 2025

Previous wording

Subscription revenue increased during the nine months ended September 30, 2025 compared to the same period in 2024 primarily due to the increase in Customers, which grew from 238,128 as of September 30, 2024 to 278,880 as of September 30, 2025. Average Subscription Revenue per Customer decreased from $11,324 for the nine months ended September 30, 2024 to $11,307 for the nine months ended September 30, 2025. The growth in Customers was primarily driven by increased demand for our lower-priced Starter products. The decrease in Average Subscription Revenue per Customer was primarily driven by continued purchases of our lower-priced Starter products, offset by increased demand for our Professional and Enterprise products and the impact of foreign currency translation primarily attributable to the decrease in the value of the U.S. Dollar relative to the Euro and British Pound Sterling.

Current wording

Subscription revenue increased during the three months ended March 31, 2026 compared to the same period in 2025 primarily due to the increase in Customers, which grew from 258,258 as of March 31, 2025 to 299,458 as of March 31, 2026. In addition, Average Subscription Revenue per Customer increased from $11,038 for the three months ended March 31, 2025 to $11,722 for the three months ended March 31, 2026. The growth in Customers was primarily driven by increased demand for our lower-priced Starter products. The increase in Average Subscription Revenue per Customer was primarily driven by increased demand for our Professional and Enterprise products and the impact of foreign currency translation primarily attributable to the decrease in the value of the U.S. Dollar relative to the Euro and British Pound Sterling, partially offset by continued purchases of our lower-priced Starter products.

Previous wording

Total cost of revenue for the three and nine months ended September 30, 2025 increased compared to the same period in 2024 primarily due to an increase in subscription and hosting costs, amortization of capitalized software development costs, and amortization of acquired technology, offset by decreases in allocated overhead expenses and employee-related costs. Gross margins remained relatively consistent year-over-year.

Current wording

Total cost of revenue for the three months ended March 31, 2026 increased compared to the same period in 2025 primarily due to an increase in subscription and hosting costs, amortization of capitalized software development costs, amortization of acquired technology, employee-related costs and allocated overhead expenses. Gross margins remained relatively consistent year-over-year.

Previous wording

Subscription and hosting costs increased primarily due to growth in our Customer base from 238,128 as of September 30, 2024 to 278,880 as of September 30, 2025. We also saw higher subscription and hosting costs as we continued to support the growth of our customer base, increased usage of our customer platform, and continued investments to expand AI functionality. Amortization of capitalized software development costs increased due to the increased number of developers working on our software platform as we continued to develop new products and increased functionality. Amortization of acquired technology increased due to the amortization of acquired technology associated with our acquisitions of Frame AI and Dashworks in 2025. Employee-related costs decreased as a result of improved resource alignment and operational efficiencies by leveraging AI to resolve customer inquiries. Allocated overhead expenses decreased primarily due to the decreased proportional allocation of shared company expenses associated with headcount in subscription cost of revenue.

Current wording

Subscription and hosting costs increased primarily due to growth in our Customer base from 258,258 as of March 31, 2025 to 299,458 as of March 31, 2026. We also incurred higher subscription and hosting costs as we continued to support increased usage of our customer platform and continued investments to expand AI functionality. Amortization of capitalized software development costs increased due to the increased number of developers working on our software platform as we continued to develop new products and increased functionality. Employee-related costs increased as a result of increased headcount as we grew our support organization to support our customer growth and improve service levels and offerings. Allocated overhead expenses increased due to an increase in shared company expenses associated with our systems and infrastructure as we continued to grow our business and slight increase in the proportional allocation of shared company expenses associated with headcount in subscriptions cost of revenue.

Previous wording

The increase in professional services and other cost of revenue for three and nine months ended September 30, 2025 compared to the same period in 2024 was primarily due to the following:

Current wording

The increase in professional services and other cost of revenue for three months ended March 31, 2026 compared to the same period in 2025 was primarily due to the following:

Previous wording

Commerce payment processing fees increased due to higher payment volume and merchant activity. Amortization of capitalized software development costs increased as we continued to increase functionality with our internally built software platform. Amortization of acquired technology increased due to the amortization of acquired technology associated with our acquisition of Cacheflow in the fourth quarter of 2024. Employee-related costs decreased and professional fees increased as we continue to leverage our Solutions Partners to deliver on-boarding and other professional services. Allocated overhead expenses decreased primarily due to the decreased proportional allocation of shared company expenses associated with headcount in subscription cost of revenue.

Current wording

Commerce payment processing fees increased due to higher payment volume and merchant activity. Professional fees increased and employee-related costs decreased as we continue to leverage our Solutions Partners to deliver on-boarding and other professional services. Allocated overhead expenses decreased primarily due to the decreased proportional allocation of shared company expenses associated with headcount in services cost of revenue.

Previous wording

The increase in research and development expense for the three and nine months ended September 30, 2025 compared to the same period in 2024 was primarily due to the following:

Current wording

The increase in research and development expense for the three months ended March 31, 2026 compared to the same period in 2025 was primarily due to the following:

Previous wording

Employee-related costs increased as a result of increased headcount as we continued to grow our engineering organization to develop new products, increase functionality and to maintain our existing customer platform. Allocated overhead expenses increased due to an increase in shared company expenses associated with our systems and infrastructure as we continued to grow our business and increased proportional allocation of shared company expenses associated with headcount in research and development. Professional fees increased due to an increase in the use of third party services and contractors as we continued to grow our engineering organization.

Current wording

Software and services expense increased due to an increase in use of AI tools. Employee-related costs increased as a result of increased headcount as we continued to grow our engineering organization to develop new products, increase functionality and to maintain our existing customer platform. Allocated overhead expenses increased due to an increase in shared company expenses associated with our systems and infrastructure as we continued to grow our business and increased proportional allocation of shared company expenses associated with headcount in research and development. Professional fees increased due to an increase in the use of third party services and contractors as we continued to grow our engineering organization.

Previous wording

The increase in sales and marketing expense for the three and nine months ended September 30, 2025 compared to the same period in 2024 was primarily due to the following:

Current wording

The increase in sales and marketing expense for the three months ended March 31, 2026 compared to the same period in 2025 was primarily due to the following:

Previous wording

Employee-related costs increased as a result of increased headcount as we expanded our selling and marketing organizations to grow our customer base. Marketing programs increased due to the timing and size of certain marketing efforts as we made investments in attracting new customers. Professional fees increased due to an increase in the use of third party services and contractors for our marketing efforts. Allocated overhead expenses increased due to an increase in shared company expenses associated with our systems and infrastructure to support our business growth. Solutions Partner commissions decreased as we changed the duration and eligibility of lifetime commissions for certain Solutions Partner to better align with the value delivered to customers. The decrease from the change in duration of commissions was offset by increased revenue generated through our Solutions Partners.

Current wording

Employee-related costs increased as a result of increased headcount as we expanded our selling and marketing organizations to grow our customer base. Marketing programs increased due to the timing and size of certain marketing efforts as we made investments in attracting new customers. Professional fees increased due to an increase in the use of third party services and contractors for our marketing efforts. Allocated overhead expenses increased due to an increase in shared company expenses associated with our systems and infrastructure to support our business growth. Software and services cost increased due to an increase in the use of third party software and AI-enabled tools to improve productivity. Solutions Partner commissions decreased as we changed the duration and eligibility of commissions for certain Solutions Partners to better align with the value delivered to customers. The decrease from the change in duration and eligibility of commissions was partially offset by increased revenue generated through our Solutions Partners.

Previous wording

The increase in general and administrative expense for the three and nine months ended September 30, 2025 compared to the same period in 2024 was primarily due to the following:

Current wording

The increase in general and administrative expense for the three months ended March 31, 2026 compared to the same period in 2025 was primarily due to the following:

Previous wording

Restructuring charges in the three and nine months ended September 30, 2025 and 2024 consisted of variable facilities-related costs on unused space.

Current wording

Restructuring charges in the three months ended March 31, 2026 and 2025 consisted of variable facilities-related costs on unused space.

Previous wording

The decrease during the three and nine months ended September 30, 2025 is primarily due to lower average investment balances driven by cash outlays from our 2025 Notes settlements and 2025 Share Repurchase Program.

Current wording

The decrease during the three months ended March 31, 2026 is primarily due to lower average investment balances driven by cash outlays from our 2025 Notes settlement in the first half of 2025, Share Repurchase Programs and lower yields.

Previous wording

Interest expense decreased due to the early conversion of a portion of our 2025 Notes in the first quarter of 2025 and settlement of the remaining 2025 Notes upon maturity in June 2025.

Current wording

Interest expense decreased primarily due to conversions of our 2025 Notes in the first quarter of 2025.

Previous wording

The change in other (expense) income during the three and nine months ended September 30, 2025 is primarily due to the following:

Current wording

The change in other income (expense) during the three months ended March 31, 2026 is primarily due to the following:

Previous wording

The change in foreign currency gains and losses transactions is primarily attributable to the value of the U.S. Dollar relative to the Euro and British Pound Sterling. The decrease in the impairment of strategic investments is due to an impairment of $4.1 million in the nine months ended September 30, 2024 compared to $3.7 million in the nine months ended September 30, 2025. The decrease in gain on strategic investments is due to gains of $18.6 million from observable price changes in the value of certain strategic investments in the nine months ended September 30, 2024 compared to $2.0 million in the nine months ended September 30, 2025.

Current wording

The decrease in the impairment of strategic investments is due to an impairment of $1.6 million in the first quarter of 2025 compared to $0.9 million in the same period in 2026. The increase in gain on strategic investments is due to gains of $0.7 million from observable price changes in the value of certain strategic investments in the first quarter of 2026 compared to $0.1 million in the same period in 2025. The change in foreign currency gains and losses is primarily attributable to the value of the U.S. Dollar relative to the Euro and British Pound Sterling.

Previous wording

Our principal sources of liquidity to date have been cash and cash equivalents, net accounts receivable, our common stock offerings, and our convertible notes offerings.

Current wording

Our principal sources of liquidity to date have been cash and cash equivalents, net accounts receivable, our common stock offerings, our convertible notes offerings, and our available revolving credit facility.

Previous wording

The following table shows cash and cash equivalents, working capital, net cash and cash equivalents provided by operating activities, net cash and cash equivalents provided by (used in) investing activities, and net cash and cash equivalents (used in) provided by financing activities for the nine months ended September 30, 2025 and 2024.

Current wording

The following table shows cash and cash equivalents, working capital, net cash and cash equivalents provided by operating activities, net cash and cash equivalents provided by investing activities, and net cash and cash equivalents used in financing activities for the three months ended March 31, 2026 and 2025.

Previous wording

Our cash and cash equivalents at September 30, 2025 were held for working capital purposes. At September 30, 2025, $321.9 million of our cash and cash equivalents was held in accounts outside the United States. We do not assert indefinite reinvestment of our foreign earnings because these earnings have been subject to United States Federal tax. While we have concluded that any incremental tax incurred upon ultimate distribution of these earnings to be immaterial, our current plans do not demonstrate a need to repatriate undistributed earnings to fund our U.S. operations.

Current wording

Our cash and cash equivalents at March 31, 2026 were held for working capital purposes. At March 31, 2026, $329.5 million of our cash and cash equivalents was held in accounts outside the United States. We do not assert indefinite reinvestment of our foreign earnings because these earnings have been subject to United States Federal tax. While we have concluded that any incremental tax incurred upon ultimate distribution of these earnings to be immaterial, our current plans do not demonstrate a need to repatriate undistributed earnings to fund our U.S. operations.

Previous wording

Net cash and cash equivalents provided by operating activities during the nine months ended September 30, 2024 primarily reflected our net loss of $0.4 million, $68.4 million of depreciation and amortization, $370.4 million in stock-based compensation, an impairment of strategic investments of $4.1 million, and $1.5 million of amortization of debt discount and issuance costs, offset by non-cash expenses that included $36.7 million accretion of bond discounts, a gain on strategic investments of $18.5 million, $0.6 million benefit from deferred income taxes, and $3.4 million of unrealized currency translation. Working capital sources of cash and cash equivalents primarily included a $41.1 million increase in deferred revenue primarily resulting from the growth in the number of customers invoiced during the period, a $13.9 million decrease in accounts receivable related to increased collection, a $39.3 million increase in accrued expenses and other liabilities, a $26.5 million decrease in right-of-use asset, and a $1.4 million increase in accounts payable related to timing of bill payments. These sources of cash and cash equivalents were offset by a $8.6 million increase in prepaid expenses and other assets, a $32.6 million decrease in operating lease liabilities, and a $61.4 million increase in deferred commissions.

Current wording

Net cash and cash equivalents provided by operating activities during the three months ended March 31, 2026 primarily reflected our net income of $32.6 million, $40.2 million of depreciation and amortization, $115.7 million in stock-based compensation, $2.5 million of unrealized currency translation, impairments of strategic investments of $0.9 million, and $0.1 million of amortization of debt discount and issuance costs, offset by non-cash expenses that included $6.8 million accretion of bond discounts, gains on strategic investments of $0.7 million, and $0.1 million of benefit from deferred income taxes. Working capital sources of cash and cash equivalents primarily included a $58.4 million decrease in accounts receivable related to increased collection, $38.4 million increase in deferred revenue primarily resulting from the growth in the number of customers invoiced during the period,

Previous wording

Net cash and cash equivalents provided by operating activities during the nine months ended September 30, 2025 primarily reflected our net loss of $8.5 million, $97.7 million of depreciation and amortization, $395.8 million in stock-based compensation, impairments of strategic investments of $3.7 million, and $0.6 million of amortization of debt discount and issuance costs, offset by non-cash expenses that included $33.4 million accretion of bond discounts, gains on strategic investments of $2.0 million, and $1.8 million of unrealized currency translation. Working capital sources of cash and cash equivalents primarily included a $35.8 million decrease in accounts receivable related to increased collection, a $19.3 million decrease in right-of-use asset, a $20.1 million increase in accounts payable related to timing of bill payments, a $61.6 million increase in accrued expenses and other liabilities, and a $61.4 million increase in deferred revenue primarily resulting from the growth in the number of customers invoiced during the period. These sources of cash and cash equivalents were offset by a $37.2 million increase in prepaid expenses and other assets, a $73.2 million increase in deferred commissions, and a $26.3 million decrease in operating lease liabilities.

Current wording

Net cash and cash equivalents provided by operating activities during the three months ended March 31, 2025, primarily reflected our net loss of $21.8 million, $28.8 million of depreciation and amortization, $116.7 million in stock-based compensation and an impairment of strategic investments of $1.6 million, $0.5 million of amortization of debt discount and issuance costs, offset by non-cash expenses that included $14.0 million accretion of bond discounts, and $2.7 million of unrealized currency translation. Working capital sources of cash and cash equivalents primarily included a $39.4 million increase in deferred revenue primarily resulting from the growth in the number of customers invoiced during the period, a $45.7 million decrease in accounts receivable related to increased collection, a $18.0 million increase in accounts payable related to timing of bill payments, and a $6.4 million decrease in right-of-use asset. These sources of cash and cash equivalents were offset by a $26.4 million increase in prepaid expenses and other assets, a $7.5 million decrease in operating lease liabilities, a $27.2 million increase in deferred commissions, and $1.2 million decrease in accrued expenses and other liabilities.

Previous wording

Our investing activities have consisted primarily of purchases and maturities of investments, property and equipment purchases, purchases of strategic investments, capitalization of software development costs, and business acquisitions. Capitalized software development costs are related to new products or improvements to our existing software platform that expand the functionality for our customers.

Current wording

Our investing activities have consisted primarily of purchases and maturities of investments, property and equipment purchases, purchases of intangible assets, purchases of strategic investments, capitalization of software development costs, and business acquisitions. Capitalized software development costs are related to new products or improvements to our existing software platform that expand the functionality for our customers.