PDF SOLUTIONS INC

Previous wording

The following discussion of our financial condition and results of operations contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact may be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “could,” “projected,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “target” or “continue,” the negative effect of terms like these or other similar expressions.*These statements include, but are not limited to, statements related to: the Company’s business strategy and objectives; the Company’s intellectual property and proprietary software, information and technology; the Company’s sales and marketing strategy, expectations regarding strategic alliances and relationships; investments in research and development; industry trends;macroeconomic factors, inventories, and demand;changing export controls and sanctions; U.S. administrative initiatives; investments in semiconductor manufacturing; geopolitical tensions and conflicts; fluctuations in the Company’s quarterly results; and other statements identified by words such as “could,” “expects,” “intends,” “may,” “plans,” “potential,” “should,” “will,” “would,” or similar expressions and the negatives of those terms, that are subject to future events and circumstances, and uncertainties that could cause results to differ materially include risks associated with: the effectiveness of the Company’s business and technology strategies; current semiconductor industry trends and competition; rates of adoption of the Company’s solutions by new and existing customers; project milestones or delays and performance criteria achieved; cost and schedule of new product development and investments in research and development; the continuing impact of macroeconomic conditions, including inflation, changing interest rates and tariffs, the evolving trade regulatory environment and geopolitical tensions, and other trends impacting the semiconductor industry, the Company’s customers, operations, and supply and demand for its products; supply chain disruptions; the success of the Company’s strategic growth opportunities and partnerships; recent and future acquisitions, strategic alliances and relationships and the Company’s ability to successfully integrate acquired businesses and technologies; whether the Company can successfully convert backlog into revenue; customers’ production volumes under contracts that provide Gainshare; the sufficiency of the Company’s cash resources and anticipated funds from operations; the Company’s ability to obtain additional financing if needed; the Company’s ability to use support and updates for certain open-source software; and other risks and uncertainties discussed in theCompany’s filings with the Securities and Exchange Commission (“S…

Excerpt shortened here; the source contains the full paragraph.

Current wording

The following discussion of our financial condition and results of operations contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact may be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “could,” “projected,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “target” or “continue,” the negative effect of terms like these or other similar expressions.These statements include, but are not limited to, statements related to: the Company’s business strategy and objectives; the Company’s intellectual property and proprietary software, information and technology; the Company’s sales and marketing strategy, expectations regarding strategic alliances and relationships; investments in research and development; industry trends; macroeconomic factors, inventories, and demand; changing export controls and sanctions; U.S. administrative initiatives; investments in semiconductor manufacturing; geopolitical tensions and conflicts; fluctuations in the Company’s quarterly results; and other statements identified by words such as“could,”* “expects,” “intends,” “may,” “plans,” “potential,” “should,” “will,” “would,” or similar expressions and the negatives of those terms, that are subject to future events and circumstances, and uncertainties that could cause results to differ materially include risks associated with: the effectiveness of the Company*’s business and technology strategies; current semiconductor industry trends and competition; rates of adoption of the Company’s solutions by new and existing customers; project milestones or delays and performance criteria achieved; cost and schedule of new product development and investments in research and development; the continuing impact of macroeconomic conditions, including inflation, changing interest rates and tariffs, the evolving trade regulatory environment and geopolitical tensions, and other trends impacting the semiconductor industry, the Company’s customers, operations, and supply and demand for its products; supply chain disruptions; changes in laws and regulations, including recent tax and data privacy laws and regulations, or the interpretation or enforcement thereof; the success of the Company’s strategic growth opportunities and partnerships; recent and future acquisitions, strategic alliances and relationships and the Company’s ability to successfully integrate acquired businesses and technologies; whether the Company can successfully convert backlog into revenue; customers’* production volumes under contracts that provide Gainshare; the sufficiency of the Company*’s cash resources and anticipated funds from operations; the Company’s ability to obtain additional financing if needed; the Company’s ability to use support and updates for ce…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

On March 7, 2025, we completed the acquisition of SecureWise LLC (“SecureWise”), a Delaware limited liability company (see Note 14,Business Combinations, in the notes to condensed consolidated financial statements (unaudited) in Part I, Item 1 of this Quarterly Report on Form 10-Q), and added the widely-used, secure, remote secureWISE connectivity solution to our products and services portfolio. We expect this acquisition to also accelerate equipment makers’ ability to derive value from equipment data by enabling them to leverage our Exensio analytics software and to expand the capability of our secure data exchange (“DEX”) outsourced semiconductor assembly and test (“OSAT”) network by allowing equipment makers, fab operators, and fabless companies to collaborate to optimize chip manufacturing and test.

Current wording

On March 7, 2025, we completed the acquisition of SecureWise LLC (“SecureWise”), a Delaware limited liability company (see Note 14,Business Combinations, in the notes to the condensed consolidated financial statements (unaudited) in Part I, Item 1 of this Quarterly Report on Form 10-Q), and added the widely-used, secure, remote secureWISE connectivity solution to our products and services portfolio. We expect this acquisition to also accelerate equipment makers’ ability to derive value from equipment data by enabling them to leverage our Exensio analytics software and to expand the capability of our secure data exchange (“DEX”) outsourced semiconductor assembly and test (“OSAT”) network by allowing equipment makers, fab operators, and fabless companies to collaborate to optimize chip manufacturing and test.

Previous wording

Certain trends may affect our Analytics revenue specifically. In particular, the confluence of Industry 4.0 (i.e. the fourth industrial revolution, or the automation and data exchange in manufacturing technologies and processes) and cloud computing (i.e. the on-demand availability of computing resources and data storage without direct active management by the user) is driving increased innovation in semiconductor and electronics manufacturing and analytics, as well as in the organization of information technology (“IT”) networks and computing at semiconductor and electronics companies across the ecosystem. First, the ubiquity of wireless connectivity and sensor technology enables any manufacturing company to augment its factories and visualize its entire production line. In parallel, the cost per terabyte of data storage has generally decreased over time. The combination of these two trends means that more data is collected and stored than ever before. Further, semiconductor companies are striving to analyze these very large data sets in real-time to make rapid decisions that measurably improve manufacturing efficiency and quality. In parallel, the traditional practice of on-site data storage, even for highly sensitive data, is changing. The ability to cost-effectively and securely store, analyze, and retrieve massive quantities of data from the cloud versus on-premise enables data to be utilized across a much broader population of users, frequently resulting in greater demands on analytics programs. The combination of these latter two trends means that cloud-based, analytics programs that effectively manage identity management, physical security, anddata protection are increasingly in demand for insights and efficiencies across the organizations of these companies. We believe that all these trends will continue for the next few years, and the challenges involved in adopting Industry 4.0 and secure cloud computing will create opportunities for our combination of advanced analytics capabilities, proven and established supporting infrastructure, and professional services to configure our products to meet customers’ specialized needs.

Current wording

Certain trends may affect our Analytics revenue specifically. In particular, the confluence of Industry 4.0 (i.e. the fourth industrial revolution, or the automation and data exchange in manufacturing technologies and processes) and cloud computing (i.e. the on-demand availability of computing resources and data storage without direct active management by the user) is driving increased innovation in semiconductor and electronics manufacturing and analytics, as well as in the organization of information technology (“IT”) networks and computing at semiconductor and electronics companies across the ecosystem. First, the ubiquity of wireless connectivity and sensor technology enables any manufacturing company to augment its factories and visualize its entire production line. In parallel, the cost per terabyte of data storage has generally decreased over time. The combination of these two trends means that more data is collected and stored than ever before. Further, semiconductor companies are striving to analyze these very large data sets in real-time to make rapid decisions that measurably improve manufacturing efficiency and quality. In parallel, the traditional practice of on-site data storage, even for highly sensitive data, is changing. The ability to cost-effectively and securely store, analyze, and retrieve massive quantities of data from the cloud versus on-premise enables data to be utilized across a much broader population of users, frequently resulting in greater demands on analytics programs. The combination of these latter two trends means that cloud-based, analytics programs that effectively manage identity management, physical security, and data protection are increasingly in demand for insights and efficiencies across the organizations of these companies. We believe that all these trends will continue for the next few years, and the challenges involved in adopting Industry 4.0 and secure cloud computing will create opportunities for our combination of advanced analytics capabilities, proven and established supporting infrastructure, and professional services to configure our products to meet customers’ specialized needs.

Previous wording

Other trends may continue to affect our Characterization services business and Integrated Yield Ramp revenue specifically. For example, semiconductor manufacturers may experience lower wafer shipments due to weakness in the global economy, which would negatively impact the gainshare component of our Integrated Yield Ramp revenue. The logic foundry market at the leading-edge nodes, such as 7nm, 5nm, and smaller, underwent significant change over the past few years. The leading foundry continues to dominate market share. This trend will likely continue to impact our Characterization services business on these nodes. We expect most logic foundries to invest in derivatives of older process nodes, such as 14nm, to extract additional value as many of their customers will not move to advanced nodes due to either technological barriers or restrictive economics. Foundries that participate at leading edge nodes are expected to continue to invest in new technologies such as memory,2.5D and 3Dpackaging, extreme ultraviolet lithography, and 3D architectures such as backside power and gate-all-around transistors, as well as new innovations in process control and variability management. We expect China’s investment in semiconductors to continue. Compliance with changing U.S. export restrictions limit our possible business with Chinese semiconductor manufacturers on advanced nodes. As a result of these market developments, we have chosen to focus our resources and investments in products (including differentiated data), services, and solutions for analytics.

Current wording

Other trends may continue to affect our Characterization services business and Integrated Yield Ramp revenue specifically. For example, semiconductor manufacturers may experience lower wafer shipments due to weakness in the global economy, which would negatively impact the gainshare component of our Integrated Yield Ramp revenue. The logic foundry market at the leading-edge nodes, such as 5nm and smaller, underwent significant change over the past few years. The leading foundry continues to dominate market share. This trend will likely continue to impact our Characterization services business on these nodes. We expect most logic foundries to invest in derivatives of older process nodes, such as 14nm, to extract additional value as many of their customers will not move to advanced nodes due to either technological barriers or restrictive economics. Foundries that participate at leading edge nodes are expected to continue to invest in new technologies such as memory, 2.5D and 3D packaging, extreme ultraviolet lithography, and 3D architectures such as backside power and gate-all-around transistors, as well as new innovations in process control and variability management. We expect China’s investment in semiconductors to continue. Compliance with changing U.S. export restrictions limit our possible business with Chinese semiconductor manufacturers on advanced nodes. As a result of these market developments, we have chosen to focus our resources and investments in products (including differentiated data), services, and solutions for analytics.

Previous wording

For additional information about our critical accounting policies, see Note 1,Basis of Presentation and Summary of Significant Accounting Policies, and Note 2,Revenue from Contracts with Customers to our unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q and Part II Item 7**,** *Management’s Discussion and Analysis of Financial Condition and Results of Operation, under the heading of “Critical Accounting Estimates”*in our Annual Report. There were no material changes during the three months ended March 31, 2025, to the items that we disclosed as our critical accounting policies and estimates in Part II, Item 7 of the Annual Report.

Current wording

For additional information about our critical accounting policies, see Note 1,Basis of Presentation and Summary of Significant Accounting Policies, and Note 2,Revenue from Contracts with Customers to our unaudited condensed consolidated financial statements in this Quarterly Report on Form 10‑Q and Part II Item 7**,** *** **Management’s Discussion and Analysis of Financial Condition and Results of Operation, under the heading of“Critical Accounting Estimates” *in our Annual Report. There were no material changes during the three and six months ended June 30, 2025, to the items that we disclosed as our critical accounting policies and estimates in Part II, Item 7 of the Annual Report.

Previous wording

Discussion of Financial Data for the Three months ended March 31, 2025 and 2024

Current wording

Discussion of Financial Data for the Three and Six Months ended June 30, 2025 and 2024

Previous wording

Analytics revenue increased $4.0 million for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The increase in Analytics revenue was driven by increases in revenues from Exensio and Cimetrix software licenses, the addition of revenues related to SecureWise products and services, and CV systems, partially offset by a decrease in revenues from DFI systems.

Current wording

Analytics revenue increased $10.7 million for the three months ended June 30, 2025, compared to the same period in 2024. The increase in Analytics revenue was primarily driven by an increase in revenues from CV systems, the addition of revenues related to secureWISE products and services, and an increase in revenues from DFI systems, partially offset by a decrease in revenues from Exensio software licenses.

Previous wording

Integrated Yield Ramp revenue increased $2.5 million for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to higher Gainshare from increased customer wafer shipments at non-leading-edge nodes, partially offset by a decrease in hours worked on fixed-fees engagements.

Current wording

Integrated Yield Ramp revenue increased $1.8 million for the six months ended June 30, 2025, compared to the same period in 2024, primarily due to higher Gainshare from increased customer wafer shipments at non-leading-edge nodes, partially offset by a decrease in hours worked on fixed-fees engagements.

Previous wording

Costs of revenues consist primarily of costs incurred to provide and support our services, costs recognized in connection with licensing our software, IT and facilities-related costs and amortization of acquired technology. Service costs include material costs, hardware costs (including cost of leased assets under sales-type lease), personnel-related costs (including compensation, employee benefits, bonus and stock-based compensation expense), subcontractor costs, overhead costs, travel expenses, and allocated facilities-related costs. Software license costs consist of costs associated with third-party cloud-

Current wording

Costs of revenues consist primarily of costs incurred to provide and support our services, costs recognized in connection with licensing our software, IT and facilities-related costs, and amortization of acquired technology. Service costs include material costs, hardware costs (including cost of leased assets under sales-type lease), personnel-related costs (including compensation, employee benefits, bonus and stock-based compensation expense), subcontractor costs, overhead costs, travel expenses, and allocated facilities-related costs. Software license costs consist of costs associated with third-party cloud-delivery related expenses and licensing third-party software used by us in providing services to our customers in solution engagements or sold in conjunction with our software products.

Previous wording

The decrease in costs of revenues of $0.6 million for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, was primarily due to (i) a $1.5 million decrease in hardware costs and (ii) a $0.3 million decrease in facilities and IT-related costs including depreciation and amortization expense. These decreases were partially offset by (a) a $0.6 million increase in personnel-related costs due to higher wages, (b) a $0.4 million increase in subcontractor costs, and (c) a $0.1 million increase in third-party cloud-delivery costs.

Current wording

The increase in costs of revenues of $2.1 million for the six months ended June 30, 2025, compared to the same period in 2024, was primarily due to (i) a $1.3 million increase in subcontractor costs, (ii) a $0.8 million increase in personnel-related costs due to higher wages, and (iii) a $0.3 million increase in facilities and IT-related costs including depreciation and amortization expense, partially offset by a $0.4 million decrease in hardware costs.

Previous wording

Gross margin increased 6 percentage points for the three months ended March 31, 2025, to 73%, compared to 67% for the three months ended March 31, 2024. The higher gross margin during the three months ended March 31, 2025, was primarily due to higher Analytics and Gainshare revenues and lower costs of revenues for the three months ended March 31, 2025.

Current wording

Gross margin increased three percentage points for the six months ended June 30, 2025, to 72%, compared to 69% for the same period in 2024. The higher gross margin during the six months ended June 30, 2025, was primarily due to higher contribution to revenue from Gainshare for the six months ended June 30, 2025.

Previous wording

Research and development expenses increased $1.6 million for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to (i) a $0.8 million increase in subcontractor fees primarily related to Cimetrix software, (ii) a $0.3 million increase in facilities and IT-related costs, (iii) a $0.3 million increase in personnel-related costs due to increased headcount, worldwide salary increases, and stock-based compensation expense, and (iv) a $0.2 million increase in third-party cloud-delivery costs.

Current wording

Research and development expenses increased $3.9 million for the six months ended June 30, 2025, compared to the same period in 2024, primarily due to (i) a $1.7 million increase in personnel-related costs due to increased headcount, worldwide salary increases, bonus and stock-based compensation expense, (ii) a $1.1 million increase in subcontractor fees primarily related to Cimetrix software, (iii) a $0.8 million increase in facilities and IT-related costs, and (iv) a $0.3 million increase in travel expenses.

Previous wording

Selling, general, and administrative expenses increased $6.9 million for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to (i) $4.3 million in non-recurring legal, finance, integration, and other costs related to the acquisition of SecureWise, (ii) a $1.9 million increase in personnel-related costs

Current wording

Selling, general, and administrative expenses increased $3.5 million for the three months ended June 30, 2025, compared to the same period in 2024, primarily due to (i) a $3.1 million increase in personnel-related costs mainly resulting from increased headcount, worldwide salary increases, bonus expense, and stock-based compensation expense, (ii) a $0.5 million increase in subcontractor fees, (iii) $0.2 million in non-recurring legal, finance, integration, and other costs related to the acquisition of SecureWise, and (iv) a $0.2 million travel expense, partially offset by a $0.6 million decrease in general legal and professional fees.

Previous wording

mainly resulting from increased headcount, worldwide salary increases, bonus expense, and stock-based compensation expense, (iii) a $0.7 million increase in facilities and IT-related costs including shipping costs and depreciation expense, and (iv) a $0.5 million increase in subcontractor fees, partially offset by a $0.8 million decrease in general legal expenses.

Current wording

Selling, general, and administrative expenses increased $10.4 million for the six months ended June 30, 2025, compared to the same period in 2024, primarily due to (i) a $5.3 million increase in personnel-related costs mainly resulting from increased headcount, worldwide salary increases, bonus expense, and stock-based compensation expense, (ii) a $0.4 million increase in subcontractor fees, (iii) a $1.2 million increase in facilities and IT-related costs including shipping costs and depreciation expense, (iv) $4.5 million in non-recurring legal, finance, integration, and other costs related to the acquisition of SecureWise, and (v) $0.3 million of travel expense, partially offset by a $1.3 million decrease in general legal and professional fees.

Previous wording

Amortization of acquired intangible assets primarily consists of amortization of intangibles acquired as a result of certain business combinations.

Current wording

Amortization of acquired intangible assets primarily consists of amortization of intangibles acquired from prior business combinations.

Previous wording

Other income (expense), net, primarily consists of interest income and foreign currency transaction exchange gains and losses. Other income (expense), net decreased $0.8 million for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to (i) a $0.6 million decrease in interest income from cash, cash equivalents and short-term investments, and (ii) $0.2 million net unfavorable fluctuations in foreign currency exchange rates.

Current wording

Interest income and other, net, primarily consists of interest income and foreign currency transaction exchange gains and losses. Interest income and other, net decreased $1.3 million for the three months ended June 30, 2025, compared to the same period in 2024, primarily due to (i) $1.3 million decrease in interest income from cash, cash equivalents and short-term investments, and (ii) $0.8 million net unfavorable fluctuations in foreign currency exchange rates, partially offset by a $0.6 million recovery from previously written-off property and equipment.

Previous wording

Income tax expense decreased for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to changes in the foreign, federal and state taxes and year-to-date recognition of worldwide pre-tax income in relation to their forecasted amounts for full years.

Current wording

Income tax expense decreased for the three and six months ended June 30, 2025, compared to the same period in 2024, primarily due to changes in the foreign, federal and state taxes and year-to-date recognition of worldwide pre-tax income in relation to their forecasted amounts for full years.

Previous wording

we are subject to tax jurisdictions, the geographic composition of our pre-tax income, the amount of our pre-tax income as business activities fluctuate, our ability to use tax attributes such as research and development tax credits and net operation losses, the tax effects of employee stock activity, audit examinations with adverse outcomes, changes in accounting principles generally accepted in the United States of America and the effectiveness of our tax planning strategies.

Current wording

Any significant change in our future effective tax rates could adversely impact our consolidated financial position, results of operations and cash flows. Our future tax rates may be adversely affected by a number of factors including increase in expenses not deductible for tax purposes, new or changing tax legislation in the United States and in foreign countries where we are subject to tax jurisdictions, the geographic composition of our pre-tax income, the amount of our pre-tax income as business activities fluctuate, our ability to use tax attributes such as research and development tax credits and net operation losses, the tax effects of employee stock activity, audit examinations with adverse outcomes, changes in accounting principles generally accepted in the United States of America and the effectiveness of our tax planning strategies.

Previous wording

As of March 31, 2025, our working capital, defined as total current assets less total current liabilities, was $76.3 million, compared to $145.4 million as of December 31, 2024. Total cash, cash equivalents, and short-term investments were $54.1 million as of March 31, 2025, compared to cash, cash equivalents, and short-term investments of $114.9 million as of December 31, 2024. As of March 31, 2025, and December 31, 2024, cash and cash equivalents held by our foreign subsidiaries were $15.0 million and $13.3 million, respectively.

Current wording

As of June 30, 2025, our working capital, defined as total current assets less total current liabilities, was $77.8 million, compared to $145.4 million as of December 31, 2024. Total cash, cash equivalents, and short-term investments were $40.4 million as of June 30, 2025, compared to cash, cash equivalents, and short-term investments of $114.9 million as of December 31, 2024. As of June 30, 2025, and December 31, 2024, cash and cash equivalents held by our foreign subsidiaries were $13.1 million and $13.3 million, respectively.

Previous wording

Our material cash requirements include interest payments on our debt, operating lease payments, and purchase obligations to support our operations. Refer to Part I, Item 1, Financial Statements, Note 13,Debt, Note 4,Leases, Note 14,Business Combinationand Note 11,Commitments and Contingencies for details relating to our material cash requirements for debt, leasing arrangements, including future maturities of operating lease liabilities, and purchase obligations, respectively.

Current wording

Our material cash requirements include principal and interest payments on our debt, operating lease payments, and purchase obligations to support our operations. Refer to Part I, Item 1, Financial Statements, Note 13,Debt, Note 4,Leases, Note 14,Business Combinationand Note 11,Commitments and Contingencies for details relating to our material cash requirements for debt, leasing arrangements, including future maturities of operating lease liabilities, and purchase obligations, respectively.

Previous wording

On April 15, 2024, the Board of Directors adopted a stock repurchase program (the “2024 Program”) to repurchase up to $40.0 million of the Company’s common stock both on the open market and in privately negotiated transactions, including through Rule 10b5-1 plans, from time to time, over the next two years from the adoption date. The actual timing and amount of repurchases are subject to business and market conditions, corporate and regulatory requirements, stock price, acquisition opportunities and other factors. The 2024 Program does not obligate the Company to acquire a minimum amount of shares and may be modified, suspended or terminated without prior notice. The Company has not repurchased any shares under the 2024 Program.

Current wording

On April 15, 2024, the Board of Directors adopted a stock repurchase program (the “2024 Program”) to repurchase up to $40.0 million of the Company’s common stock both on the open market and in privately negotiated transactions, including through Rule 10b5-1 plans, from time to time, over the next two years from the adoption date. The actual timing and amount of repurchases are subject to business and market conditions, corporate and regulatory requirements, stock price, acquisition opportunities and other factors. The 2024 Program does not obligate the Company to acquire a minimum amount of shares and may be modified, suspended or terminated without prior notice. The Company has not repurchased any shares under the 2024 Program as of June 30, 2025.

Previous wording

Cash flows provided by operating activities during the three months ended March 31, 2025, consisted of net loss, adjusted for certain non-cash items which primarily consisted of depreciation and amortization, stock-based compensation expense, amortization of acquired intangible expense, amortization of costs capitalized to obtain revenue contracts, net accretion of discounts on short-term investments, accretion of unguaranteed residual assets and net change in operating assets and liabilities.

Current wording

Cash flows provided by operating activities during the six months ended June 30, 2025, consisted of net loss, adjusted for certain non-cash items which primarily consisted of depreciation and amortization, stock-based compensation expense, amortization of acquired intangible expense, amortization of costs capitalized to obtain revenue contracts, net accretion of discounts on short-term investments, accretion of unguaranteed residual assets and net change in operating assets and liabilities.

Previous wording

Net cash flows provided by operating activities was $8.6 million for the three months ended March 31, 2025, compared to net cash used in operating activities of $1.9 million for the three months ended March 31, 2024. The increase in cash provided by operating activities between the periods was driven primarily by higher collections from customers, partially offset by (i) an increase in bonus payments under the Company’s bonus plan, and (ii) an increase in payments of vendor invoices.

Current wording

Net cash flows provided by operating activities was $3.4 million for the six months ended June 30, 2025, compared to net cash used in operating activities of $1.2 million for the six months ended June 30, 2024. The increase in net cash provided by operating activities between the periods was driven primarily by higher collections from customers, partially offset by (i) an increase in bonus payments under the Company’s bonus plan, and (ii) increases in payments of personnel-related costs and vendor invoices.

Previous wording

For the three months ended March 31, 2025, cash used in investing activities primarily related to $129.7 million payments for the acquisition of SecureWise, net of cash acquired, $2.9 million purchases of short-term investments, and $8.2 million purchases and prepayments of property and equipment primarily related to our DFI systems, partially offset by $17.0 million proceeds from maturities and sales of short-term investments.

Current wording

For the six months ended June 30, 2025, net cash used in investing activities primarily related to $129.7 million payments for the acquisition of SecureWise, net of cash acquired and $16.7 million purchases and prepayments of property and equipment primarily related to our DFI systems, partially offset by $21.6 million proceeds from maturities and sales, net of purchases of short-term investments and $0.6 million recovery from previously written-off property and equipment.

Previous wording

For the three months ended March 31, 2024, cash used in investing activities primarily related to $19.6 million purchases of short-term investments, and $2.0 million purchases of property and equipment primarily related to our DFI systems, partially offset by $19.0 million proceeds from maturities and sales of short-term investments.

Current wording

For the six months ended June 30, 2024, net cash provided by investing activities primarily related to proceeds from maturities and sales of short-term investments of $37.0 million, partially offset by purchases of short-term investments of $25.5 million and purchases of property and equipment of $7.3 million primarily related to our DFI systems.

Previous wording

Net cash provided by financing activities was $68.0 million for the three months ended March 31, 2025, compared to cash used in financing activities of $8.8 million for the three months ended March 31, 2024.

Current wording

Net cash provided by financing activities was $66.6 million for the six months ended June 30, 2025, compared to net cash used in financing activities of $9.2 million for the six months ended June 30, 2024.

Previous wording

For the three months ended March 31, 2025, net cash provided by financing activities primarily consisted of $69.2 million proceeds from long-term debt, net of debt financing costs, that was used in financing the acquisition of SecureWise, and $2.1 million proceeds from our employee stock purchase plan, offset by $3.3 million in cash payments for taxes related to net share settlement of equity awards.

Current wording

For the six months ended June 30, 2025, net cash provided by financing activities primarily consisted of $69.6 million proceeds from long-term debt, net of debt discount, that was used in financing the acquisition of SecureWise and $2.2 million proceeds from our employee stock purchase plan, partially offset by (i) $3.5 million in cash payments for taxes related to net share settlement of equity awards, (ii) $0.9 million payments of debt issuance costs, and (iii) $0.6 million repayment of long-term debt.

Previous wording

For the three months ended March 31, 2024, net cash used in financing activities primarily consisted of $6.9 million repurchases of common stock, $3.8 million cash payments for taxes related to net share settlement of equity awards, partially offset by $1.9 million proceeds from our employee stock purchase plan and exercise of stock options.

Current wording

For the six months ended June 30, 2024, net cash used in financing activities primarily consisted of repurchases of common stock of $6.9 million, and $4.3 million in cash payments for taxes related to net share settlement of equity awards, partially offset by $2.0 million of proceeds from our employee stock purchase plan and exercise of stock options.