BLACKBAUD INC

Previous wording

We are the leading software provider exclusively dedicated to powering social impact. Serving the nonprofit and education sectors, companies committed to social responsibility and individual change makers, our essential software is built to accelerate impact in fundraising, nonprofit financial management, digital giving, grantmaking, corporate social responsibility and education management. A remote-first company, we have operations in the United States, Australia, Canada, Costa Rica, India and the United Kingdom, supporting users in 100+ countries.

Current wording

We are the world's leading provider of AI-powered solutions for social impact. Serving nonprofits, educational institutions, companies committed to corporate social responsibility and individual change makers, we propel impact at scale with the sector’s most intelligent solutions for fundraising and engagement, education solutions, financial management and CSR and grantmaking. We have operations in the United States, Australia, Canada, Costa Rica, India and the United Kingdom, supporting users in 100+ countries.

Previous wording

In February 2025, we announced our intention to repurchase between 3% and 5% of our outstanding common stock as of December 31, 2024, during the course of 2025 under our stock repurchase program. During the three months ended September 30, 2025, we repurchased 459,528 shares for $30.1 million. During the nine months ended September 30, 2025, we repurchased an aggregate of 1,972,550 shares for $130.2 million. Including net share settlement of employee stock compensation, these repurchases represent approximately 5.2% of our outstanding common stock as of December 31, 2024. As of September 30, 2025, $514.4 million remained available under our stock repurchase program. We expect to remain active in the market during the fourth quarter of 2025 and into 2026. Based on our current plans, we expect total repurchases during 2025 to represent between 5.2% and 7.0% of our outstanding common stock as of December 31, 2024. We preliminarily expect our share repurchase activity in 2026 to be similar to 2025.

Current wording

In February 2026, we announced our intention to repurchase between 5% and 10% of our outstanding common stock as of December 31, 2025 during the course of 2026 under our stock repurchase program. During the three months ended March 31, 2026, we repurchased an aggregate of 1,601,057 shares for $82.1 million. Including net share settlement of employee stock compensation, these repurchases represent approximately 4.5% of our outstanding common stock as of December 31, 2025. As of March 31, 2026, $878.5 million remained available under our stock repurchase program. Over the long term, we expect stock repurchases to remain an important component of our capital allocation strategy, subject to market conditions, business performance, leverage considerations, and other factors. We anticipate utilizing at least 50% of our free cash flow from 2026 to 2030 for stock repurchases. See discussion of our Non‑GAAP Financial Measures below.

Previous wording

Revenue decreased by $5.5 million and $19.4 million, during the three and nine months ended September 30, 2025, respectively, when compared to the same periods in 2024, driven largely by the following:

Current wording

Revenue increased by $11.2 million, during the three months ended March 31, 2026, when compared to the same period in 2025, driven largely by the following:

Previous wording

Income from operations increased by $13.4 million and $35.7 million, during the three and nine months ended September 30, 2025, respectively, when compared to the same periods in 2024, driven largely by the following:

Current wording

Income from operations increased by $31.7 million, during the three months ended March 31, 2026, when compared to the same period in 2025, driven largely by the following:

Previous wording

Our recurring subscription contracts are typically for a term of three years at contract inception. A key factor to our overall success is the renewal and expansion of our existing subscription agreements with our customers. Management uses gross dollar retention in analyzing our success at delighting our customers with innovative and cloud solutions. Gross dollar retention is defined as contracted annual recurring revenue ("CARR") divided by beginning CARR with a measurement period of twelve months. For the twelve months ended September 30, 2025, our gross dollar retention was approximately 92%. This gross dollar retention rate increased over our rate for the twelve months ended December 31, 2024 primarily due to our sale of EVERFI. We are continually investing in innovation, which we believe will generate strong gross dollar retention over the long-term.

Current wording

Our recurring subscription contracts are typically for a term of three years at contract inception with standard three-year renewals thereafter. A key factor to our overall success is the renewal and expansion of our existing subscription agreements with our customers. Management uses gross dollar retention in analyzing our success at delighting our customers with innovative and cloud solutions. Gross dollar retention is defined as contracted annual recurring revenue ("CARR") divided by beginning CARR with a measurement period of twelve months. For the twelve months ended March 31, 2026, our gross dollar retention was approximately 92%. This gross dollar retention rate is relatively unchanged from our rate for the twelve months ended December 31, 2025. Changes in the amount of contractual annual recurring revenue up for renewal in a given period may impact absolute churn dollars even when customer renewal rates remain relatively consistent from year-to-year. We are continually investing in innovation, which we believe will support gross dollar retention over the long-term.

Previous wording

At September 30, 2025, our cash and cash equivalents were $38.3 million. Under the 2024 Credit Facilities, the carrying amount of our debt was $1.0 billion and our net leverage ratiowas 2.45 to 1.00.

Current wording

At March 31, 2026, our cash and cash equivalents were $34.1 million. Under the 2024 Credit Facilities, the carrying amount of our debt was $1.1 billion and our net leverage ratiowas 2.67 to 1.00.

Previous wording

During the nine months ended September 30, 2025, we generated $207.5 million in cash from operations, had a net decrease in borrowings of $9.9 million, returned $130.2 million to stockholders by way of share repurchases, and had aggregate cash outlays of $45.1 million for purchases of property and equipment and capitalized software development costs.

Current wording

During the three months ended March 31, 2026, we generated $51.5 million in cash from operations, had a net increase in borrowings of $64.9 million, returned $82.1 million to stockholders by way of share repurchases, and had aggregate cash outlays of $14.5 million for purchases of property and equipment and capitalized software development costs.

Previous wording

Comparison of the three and nine months ended September 30, 2025 and 2024

Current wording

Comparison of the three months ended March 31, 2026 and 2025

Previous wording

Our customers continue to prefer cloud subscription offerings with integrated analytics, training and payment services. We intend to continue focusing on innovation, quality and integration of our cloud solutions, which we believe will drive future revenue growth.

Current wording

Our customers continue to prefer cloud subscription offerings with integrated AI, analytics, training and payment services. We intend to continue focusing on innovation, quality and integration of our cloud solutions, which we believe will drive future revenue growth.

Previous wording

Revenue decreased by $5.5 million, or 1.9%, and $19.4 million, or 2.3%, during the three and nine months ended September 30, 2025, respectively, when compared to the same periods in 2024. For a discussion of our changes in revenue, see "Revenue" above starting on page 32 in this report.

Current wording

Revenue increased by $11.2 million, or 4.2%, during the three months ended March 31, 2026, when compared to the same period in 2025. For a discussion of our changes in revenue, see "Revenue" above starting on page 21 in this report.

Previous wording

Cost of revenue decreased by $15.6 million, or 12.1%, and $41.5 million, or 10.8%, during the three and nine months ended September 30, 2025, respectively, when compared to the same periods in 2024, driven primarily by the following:

Current wording

Cost of revenue decreased by $0.2 million, or 0.2%, during the three months ended March 31, 2026, when compared to the same period in 2025, driven primarily by the following:

Previous wording

Gross margin increased by 470 basis points and 390 basis points for the three and nine months ended September 30, 2025, respectively, when compared to the same periods in 2024, primarily due to the decreases in cost of revenue outpacing the decreases in revenue.

Current wording

Gross margin increased by 180 basis points for the three months ended March 31, 2026, when compared to the same period in 2025, due to the increase in revenue combined with the decrease in cost of revenue.

Previous wording

We continue to make investments intended to delight our customers with innovative and secure cloud solutions, including AI technology. Research and development expenses decreased by $0.7 million, or 1.9%, and $11.7 million, or 10.1%, during the three and nine months ended September 30, 2025, respectively, when compared to the same periods in 2024. The decreases were primarily driven by the following:

Current wording

We continue to make investments intended to delight our customers with innovative and secure cloud solutions, including AI technology. Research and development expenses increased by $3.4 million, or 10.0%, during the three months ended March 31, 2026, when compared to the same period in 2025. The increases in dollars and as a percentage of revenue were primarily driven by the following:

Previous wording

Not included in research and development expense for the three months ended September 30, 2025 and 2024 were $12.1 million and $16.0 million, respectively, and for the nine months ended September 30, 2025 and 2024 were $38.9 million and $44.5 million, respectively, of qualifying costs associated with software development activities that are required to be capitalized under GAAP, such as those for our cloud solutions. Qualifying capitalized development costs associated with our cloud solutions are subsequently amortized to costof revenue over the related assets' estimated useful life, which generally range from three to seven years. We expect that the amount of software development costs capitalized will be relatively consistent in the near-term as we continue making investments in innovation, quality, security and the integration of our solutions, which we believe will drive long-term revenue growth.

Current wording

Not included in research and development expense for the three months ended March 31, 2026 and 2025 were $12.2 million and $12.4 million, respectively, of qualifying costs associated with software development activities that are required to be capitalized under GAAP, such as those for our cloud solutions. Qualifying capitalized development costs associated with our cloud solutions are subsequently amortized to costof revenue over the related assets' estimated useful life, which generally range from two to seven years. We expect that the amount of software development costs capitalized will be relatively consistent in the near-term as we continue making investments in innovation, quality, security and the integration of our solutions, which we believe will drive long-term revenue growth.

Previous wording

Sales, marketing and customer success expense decreased by $5.7 million, or 11.4%, and $14.6 million, or 9.9%, during the three and nine months ended September 30, 2025, respectively, when compared to the same periods in 2024. The decreases in dollars and as a percentage of revenue were primarily driven by the following:

Current wording

General and administrative expense decreased by $26.4 million, or 46.6%, during the three months ended March 31, 2026, when compared to the same period in 2025. The decreases in dollars and as a percentage of revenue were primarily driven by the following:

Previous wording

The increases in interest expense in dollars and as a percentage of total revenue during the three and nine months ended September 30, 2025, when compared to the same periods in 2024, were primarily due to our incremental borrowings to fund stock repurchases during 2024 and 2025 and the expiration of favorable interest rate swaps in October 2024. We currently expect interest expense for the full year 2025 to be approximately $66 million to $70 million. Our interest expense in connection with the variable rate portion of our outstanding debt could increase in a rising interest rate environment. See Note 7 to our unaudited, condensed consolidated financial statements in this report for more information regarding our derivative instruments, which we use to manage our variable interest rate risk, and Item 3. Quantitative and Qualitative Disclosures about Market Risk: Interest Rate Risk (below) for more information about our variable interest rate exposure and related risk.

Current wording

The decrease in interest expense in dollars and as a percentage of total revenue during the three months ended March 31, 2026, when compared to the same period in 2025, was primarily due to a decrease in portfolio effective interest rate on relatively flat average daily borrowing. We currently expect interest expense for the full year 2026 to be approximately $62 million to $66 million. Our interest expense in connection with the variable rate portion of our outstanding debt could increase in a rising interest rate environment. See Note 7 to our unaudited, condensed consolidated financial statements in this report for more information regarding our derivative instruments, which we use to manage our variable interest rate risk, and Item 3. Quantitative and Qualitative Disclosures about Market Risk: Interest Rate Risk (below) for more information about our variable interest rate exposure and related risk.

Previous wording

During the three months ended September 30, 2025, other income, net was relatively consistent with the same period in 2024. The decrease in other income, net in dollars and as a percentage of total revenue during the nine months ended September 30, 2025, when compared to the same period in 2024, was primarily due to a decrease in interest income largely driven by lower year-over-year U.S. federal interest rates and, to a lesser extent, by an increase in the current year currency revaluation loss compared to the prior year loss. See Note 5 to our unaudited, condensed consolidated financial statements in this report for more information regarding our other income.

Current wording

Other income, net in dollars and as a percentage of total revenue during the three months ended March 31, 2026, was relatively consistent with the same period in 2025. See Note 5 to our unaudited, condensed consolidated financial statements in this report for more information regarding our other income.

Previous wording

To the extent that our customers are billed for our solutions and services in advance of delivery, we record such amounts in deferred revenue. Our recurring revenue contracts are generally for a term of three years at contract inception with three-year renewals thereafter, billed annually in advance and non-cancelable. We generally invoice our customers with recurring revenue contracts in annual cycles 30 days prior to the end of each one-year period.

Current wording

To the extent that our customers are billed for our solutions and services in advance of delivery, we record such amounts in deferred revenue. Our recurring revenue contracts are generally for a term of three years at contract inception with three-year renewals thereafter, billed annually in advance and non-cancelable. In recent periods, we have experienced an increase in longer‑term customer contracts, with more than 20% of new and renewing contracts having initial terms of four years or longer. We generally invoice our customers with recurring revenue contracts in annual cycles 30 days prior to the end of each one-year period.

Previous wording

The increase in deferred revenue during the nine months ended September 30, 2025 was primarily due toa seasonal increase in customer contract billings. Historically, due to the timing of customer budget cycles, we have an increase in billings and customer contract renewals at or near the beginning of our third quarter. Generally, our lowest balance of deferred revenue during the year is at the end of our first quarter.

Current wording

The decrease in deferred revenue during the three months ended March 31, 2026 was primarily due toa seasonal decrease in customer contract billings. Historically, due to the timing of customer budget cycles, we have an increase in billings and customer contract renewals at or near the beginning of our third quarter. Generally, our lowest balance of deferred revenue during the year is at the end of our first quarter.

Previous wording

The decreases in our effective income tax rate for the three and nine months ended September 30, 2025 when compared to the same periods in 2024 were primarily due to the favorable impact of a valuation allowance reduction recorded against our net U.S. deferred tax assets.

Current wording

The increase in our effective income tax rate for the three months ended March 31, 2026 when compared to the same period in 2025 was primarily due to an increase in pre-tax book income.

Previous wording

(1)The individual amounts for each year may not sum to subtotal, non-GAAP gross profit, non-GAAP income from operations, non-GAAP income before provision for income taxes or non-GAAP net income due to rounding.

Current wording

(2)The individual amounts for each year may not sum to subtotal, non-GAAP gross profit, non-GAAP income from operations, non-GAAP income before provision for income taxes or non-GAAP net income due to rounding.

Previous wording

(2)Includes charges of $24.3 million incurred during the nine months ended September 30, 2025 related to the release from our lease for office space in Washington, DC (which was acquired as part of our acquisition of EVERFI in December 2021).

Current wording

(3)Includes charges of $24.3 million incurred during the three months ended March 31, 2025 related to the release from our lease for office space in Washington, DC.

Previous wording

(4)We apply a non-GAAP effective tax rate of 24.5% when calculating non-GAAP net income and non-GAAP diluted earnings per share.

Current wording

(4)We use a non-GAAP effective tax rate of 24.5% when calculating non-GAAP net income and non-GAAP diluted earnings per share. We base this rate on our estimated annual GAAP income tax rate, adjusted for items excluded from GAAP income when calculating non-GAAP income and for significant nonrecurring tax adjustments. We review this non-GAAP tax rate annually to determine whether it remains appropriate for evaluating our financial performance. In conducting this review, we consider our GAAP annual effective tax rate, changes in tax legislation, non-GAAP adjustments, and shifts in the geographic mix of revenues and expenses. We also evaluate other factors that we deem significant. Because the tax treatment of non-GAAP adjustments differs from GAAP and because of our methodology for estimating the annual tax rate, the non-GAAP tax rate may differ from the GAAP tax rate and from our actual tax liabilities.

Previous wording

In addition, we use non-GAAP organic revenue growth, non-GAAP organic revenue growth on a constant currency basis, non-GAAP organic recurring revenue growth and non-GAAP organic recurring revenue growth on a constant currency basis in analyzing our operating performance. We believe that these non-GAAP measures are useful to investors, as a supplement to GAAP measures, for evaluating the periodic growth of our business on a consistent basis. Each of these measures of non-GAAP organic revenue growth excludes incremental acquisition-related revenue attributable to companies, if any, acquired in the current fiscal year. For companies, if any, acquired in the immediately preceding fiscal year, each of these non-GAAP organic revenue growth measures reflects presentation of full year incremental non-GAAP revenue derived from such companies as if they were combined throughout the prior period. In addition, each of these non-GAAP organic revenue growth measures excludes prior period revenue associated with divested businesses. The exclusion of the prior period revenue is to present the results of the divested businesses within the results of the combined company for the same period of time in both the prior and current periods. We believe this presentation provides a more comparable representation of our current business’ organic revenue growth and revenue run-rate.

Current wording

In addition, we use non-GAAP organic revenue growth, non-GAAP organic revenue growth on a constant currency basis, non-GAAP organic recurring revenue growth and non-GAAP organic recurring revenue growth on a constant currency basis in analyzing our operating performance. We believe that these non-GAAP measures are useful to investors, as a supplement to GAAP measures, for evaluating the periodic growth of our business on a consistent basis. Each of these measures of non-GAAP organic revenue growth excludes incremental acquisition-related revenue attributable to companies, if any, acquired in the current fiscal year. For companies, if any, acquired in the immediately preceding fiscal year, each of these non-GAAP organic revenue growth measures reflects presentation of full year incremental non-GAAP revenue derived from such companies as if they were combined throughout the prior period. In addition, each of these non-GAAP organic revenue growth measures excludes prior period revenue associated with divested businesses, if any. The exclusion of the prior period revenue is to present the results of the divested businesses within the results of the combined company for the same period of time in both the prior and current periods. We believe this presentation provides a more comparable representation of our current business’ organic revenue growth and revenue run-rate.

Previous wording

(1)Non-GAAP revenue from divested businesses excludes revenue associated with divested businesses. The exclusion of the prior period revenue is to present the results of the divested business with the results of the combined company for the same period of time in both the prior and current periods.

Current wording

(1)Non-GAAP revenue from divested businesses excludes revenue associated with divested businesses in the prior period. The exclusion of the prior period revenue is to present the results of the divested business with the results of the combined company for the same period of time in both the prior and current periods.

Previous wording

We define Rule of 40 as non-GAAP organic revenue growth plus non-GAAP adjusted EBITDA margin. Non-GAAP adjusted EBITDA is defined as GAAP net income plus interest, net; income tax provision (benefit); depreciation; amortization of intangible assets from business combinations; amortization of software development costs; stock-based compensation; employee severance; acquisition and disposition-related costs; Security Incident-related costs; and impairment and disposition charges.

Current wording

We define Rule of 40 as non-GAAP organic revenue growth plus non-GAAP adjusted EBITDA margin. Non-GAAP adjusted EBITDA is defined as GAAP net income plus interest, net; income tax provision (benefit); depreciation; amortization of intangible assets from business combinations; amortization of software development costs; stock-based compensation; employee severance; GCC workforce transition costs; acquisition and disposition-related costs; Security Incident-related costs; and impairment and disposition charges.

Previous wording

Non-GAAP free cash flow is defined as operating cash flow less capital expenditures, including costs required to be capitalized for software development, and capital expenditures for property and equipment.

Current wording

Non-GAAP free cash flow is defined as operating cash flow less capital expenditures, including costs required to be capitalized for software development, and capital expenditures for property and equipment. We believe non-GAAP free cash flow provides a useful measure of the Company's operating performance.

Previous wording

(1)The individual amounts for each year may not sum to non-GAAP free cash flow or non-GAAP adjusted free cash flow due to rounding.

Current wording

(1)The individual amounts for each year may not sum to non-GAAP free cash flow due to rounding.

Previous wording

Our cash flow from operations normally fluctuates quarterly due to the combination of the timing of customer contract billings and renewals, delivery of professional services and occurrence of customer events, as well as merit-based salary increases, among other factors. Historically, due to lower revenues in our first quarter, combined with the payment of certain annual vendor contracts, our cash flow from operations has been lowest in our first quarter. Due to the timing of customer contract renewals and student enrollments, many of which take place at or near the beginning of our third quarter, our cash flow from operations has generally been lower in our second quarter as compared to our third and fourth quarters. Partially offsetting these favorable drivers of cash flow from operations in our third and fourth quarters are base salary merit increases, which occur in July. In addition, deferred revenues can vary on a seasonal basis due to the timing of customer contract billings and renewals and student enrollments or significant acquisitions. Our cash flow from financing is negatively

Current wording

Our cash flow from operations normally fluctuates quarterly due to the combination of the timing of customer contract billings and renewals, delivery of professional services and occurrence of customer events, as well as merit-based salary increases, among other factors. Historically, due to lower revenues in our first quarter, combined with the payment of certain annual vendor contracts, our cash flow from operations has been lowest in our first quarter. Due to the timing of customer contract renewals and student enrollments, many of which take place at or near the beginning of our third quarter, our cash flow from operations has generally been lower in our second quarter as compared to our third and fourth quarters. Partially offsetting these favorable drivers of cash flow from operations in our third and fourth quarters are base salary merit increases, which occur in July. In addition, deferred revenues can vary on a seasonal basis due to the timing of customer contract billings and renewals and student enrollments or significant acquisitions. Our cash flow from financing is negatively impacted in our first quarter when most of our equity awards vest, as we pay taxes on behalf of our employees related to the settlement or exercise of equity awards.

Previous wording

At September 30, 2025, our total cash and cash equivalents balance included approximately $17.9 million of cash that was held by operations outside the U.S. While these funds may not be needed to fund our U.S. operations for at least the next twelve months, if we need these funds, we may be required to accrue and pay taxes to repatriate the funds. We currently do not intend nor anticipate a need to repatriate our cash held outside the U.S.

Current wording

At March 31, 2026, our total cash and cash equivalents balance included approximately $14.0 million of cash that was held by operations outside the U.S. While these funds may not be needed to fund our U.S. operations for at least the next twelve months, if we need these funds, we may be required to accrue and pay taxes to repatriate the funds. We currently do not intend nor anticipate a need to repatriate our cash held outside the U.S.

Previous wording

Net cash provided by operating activities decreased by $14.8 million during the nine months ended September 30, 2025, when compared to the same period in 2024, primarily due to a $2.8 million decrease in net income adjusted for non-cash expenses and a $12.1 million decrease in cash flow from operations associated with working capital.

Current wording

Net cash provided by operating activities increased by $50.1 million during the three months ended March 31, 2026, when compared to the same period in 2025, primarily due to a $37.4 million increase in net income adjusted for non-cash expenses and a $12.7 million increase in cash flow from operations associated with working capital.

Previous wording

The decrease in cash flow from operations associated with working capital during the nine months ended September 30, 2025, when compared to the same period in 2024, was primarily due to:

Current wording

The increase in cash flow from operations associated with working capital during the three months ended March 31, 2026, when compared to the same period in 2025, was primarily due to fluctuations in the timing of vendor payments.

Previous wording

Net cash used in investing activities of $57.3 million remained relatively consistent during the nine months ended September 30, 2025, when compared to the same period in 2024.

Current wording

Net cash used in investing activities of $14.5 million decreased by $11.4 million during the three months ended March 31, 2026, when compared to the same period in 2025.

Previous wording

During the nine months ended September 30, 2025, we used cash of $40.3 million for software development costs, which was a decrease of $2.6 million when compared to the same period in 2024. We spent $4.8 million for purchases of property and equipment during the nine months ended September 30, 2025, which was a decrease of $2.4 million when compared to the same period in 2024. During the nine months ended September 30, 2025, we used net cash of $12.2 million for the disposition of a business compared to $1.2 million used during the same period in 2024.

Current wording

During the three months ended March 31, 2025, we used net cash of $12.2 million for the disposition of a business.

Previous wording

During the nine months ended September 30, 2025, we had a net decrease in borrowings of $9.9 million, primarily due to our stock repurchase program and to satisfy tax obligations of employees upon settlement of equity awards (see discussion below).

Current wording

During the three months ended March 31, 2026, we had a net increase in borrowings of $64.9 million, primarily due to our stock repurchase program and to satisfy tax obligations of employees upon settlement of equity awards (see discussion below).

Previous wording

We paid $39.7 million to satisfy tax obligations of employees upon settlement of equity awards during the nine months ended September 30, 2025 compared to $56.0 million during the same period in 2024. The amount of taxes paid by us on behalf of employees related to the settlement of equity awards varies from period to period based upon the timing of grants and vesting, as well as the market price for shares of our common stock at the time of settlement. Most of our equity awards currently vest in our first quarter.

Current wording

We paid $25.1 million to satisfy tax obligations of employees upon settlement of equity awards during the three months ended March 31, 2026 compared to $37.9 million during the same period in 2025. The amount of taxes paid by us on behalf of employees related to the settlement of equity awards varies from period to period based upon the timing of grants and vesting, as well as the market price for shares of our common stock at the time of settlement. Most of our equity awards currently vest in our first quarter.

Previous wording

During the nine months ended September 30, 2025, cash flow from financing activities associated with changes in restricted cash due to customers decreased $323.5 million, compared to a decrease of $263.7 million during the same period in 2024. This line in the statement of cash flows represents the change in the amount of restricted cash held and payable by us to customers from one period to the next. This restricted cash due to customers is not available to us for operational purposes.

Current wording

During the three months ended March 31, 2026, cash flow from financing activities associated with changes in restricted cash due to customers decreased $294.1 million, compared to a decrease of $320.2 million during the same period in 2025. This line in the statement of cash flows represents the change in the amount of restricted cash held and payable by us to customers from one period to the next. This restricted cash due to customers is not available to us for operational purposes.

Previous wording

On July 16, 2024, our Board of Directors reauthorized, expanded and replenished our stock repurchase program by expanding the total capacity under the program to $800.0 million available for repurchases. The program does not have an expiration date. Under the stock repurchase program, we are authorized to repurchase shares from time to time in accordance with applicable laws both on the open market, including under trading plans established pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, and in privately negotiated transactions. The timing and amount of repurchases depends on several factors, including market and business conditions, the trading price of our common stock and the nature of other investment opportunities. The repurchase program may be limited, suspended or discontinued at any time without prior notice.

Current wording

On December 1, 2025, our Board of Directors reauthorized, expanded and replenished our stock repurchase program by expanding the total capacity under the program to $1.0 billion available for repurchases. The program does not have an expiration date. Under the stock repurchase program, we are authorized to repurchase shares from time to time in accordance with applicable laws both on the open market, including under trading plans established pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, and in privately negotiated transactions. The timing and amount of repurchases depends on several factors, including market and business conditions, the trading price of our common stock and the nature of other investment opportunities. The repurchase program may be limited, suspended or discontinued at any time without prior notice.

Previous wording

In February 2025, we announced our intention to repurchase between 3% and 5% of our outstanding common stock as of December 31, 2024, during the course of 2025 under our stock repurchase program. During the three months ended September 30, 2025, we repurchased 459,528 shares for $30.1 million. During the nine months ended September 30, 2025, we repurchased an aggregate of 1,972,550 shares for $130.2 million. Including net share settlement of employee stock compensation, these repurchases represent approximately 5.2% of our outstanding common stock as of December 31, 2024. As of September 30, 2025, $514.4 million remained available under our stock repurchase program. We expect to remain active in the market during the fourth quarter of 2025 and into 2026. Based on our current plans, we expect total repurchases during 2025 to represent between 5.2% and 7.0% of our outstanding common stock as of December 31, 2024. We preliminarily expect our share repurchase activity in 2026 to be similar to 2025.

Current wording

In February 2026, we announced our intention to repurchase between 5% and 10% of our outstanding common stock as of December 31, 2025 during the course of 2026 under our stock repurchase program. During the three months ended March 31, 2026, we repurchased an aggregate of 1,601,057 shares for $82.1 million. Including net share settlement of employee stock compensation, these repurchases represent approximately 4.5% of our outstanding common stock as of December 31, 2025. As of March 31, 2026, $878.5 million remained available under our stock repurchase program. Over the long term, we expect stock repurchases to remain an important component of our capital allocation strategy, subject to market conditions, business performance, leverage considerations, U.S. excise taxes and other factors. We anticipate utilizing at least 50% of our free cash flow from 2026 to 2030 for stock repurchases. See discussion of our Non‑GAAP Financial Measures above.

Previous wording

Historically, we have drawn on our credit facility from time to time to help us meet financial needs, primarily due to the seasonality of our cash flows from operations and financing for business acquisitions. At September 30, 2025, our available borrowing capacity under the 2024 Credit Facilities was $463.5 million. The 2024 Credit Facilities mature in April 2029.

Current wording

Historically, we have drawn on our credit facility from time to time to help us meet financial needs, primarily due to the seasonality of our cash flows from operations and financing for business acquisitions. At March 31, 2026, our available borrowing capacity under the 2024 Credit Facilities was $343.2 million. The 2024 Credit Facilities mature in April 2029.