HEALTHSTREAM INC

Previous wording

In evaluating any forward-looking statement, you should specifically consider the information regarding forward-looking statements set forth above and the risks set forth under the caption Part I, Item 1A. Risk Factors in our 2024 Form 10-K and other disclosures in our 2024 Form 10-K, earnings releases, and other filings with the SEC from time to time, as well as other cautionary statements contained elsewhere in this Form 10-Q, including our critical accounting policies and estimates as discussed in this Form 10-Q and our 2024 Form 10-K. We undertake no obligation to update or revise any forward-looking statements. You should read this Form 10-Q and the documents that we reference in this Form 10-Q and have filed as exhibits to this Form 10-Q completely and with the understanding that our actual future results may be materially different from what we currently expect.

Current wording

In evaluating any forward-looking statement, you should specifically consider the information regarding forward-looking statements set forth above and the risks set forth under the caption Part I, Item 1A. Risk Factors in our 2024 Form 10-K and other disclosures in our 2024 Form 10-K and other filings with the SEC from time to time, as well as other cautionary statements contained elsewhere in this Form 10-Q, including our critical accounting policies and estimates as discussed in this Form 10-Q and our 2024 Form 10-K. We undertake no obligation to update or revise any forward-looking statements. You should read this Form 10-Q with the understanding that our actual future results may be materially different from what we currently expect.

Previous wording

Significant financial metrics for the second quarter of 2025 are set forth in the bullets below.

Current wording

Significant financial metrics for the third quarter of 2025 are set forth in the bullets below.

Previous wording

During the first quarter of 2025, we entered into an agreement to sublease a portion of our office space in the Capitol View building in Nashville, Tennessee to optimize our workforce performance to deliver positive results for customers, employees, and shareholders. HealthStream’s corporate headquarters remains in Nashville in the Capitol View building, while we continue to hire new employees both locally and nationally to support our growth. The sublease commenced in April 2025 and will expire in October 2031. We recorded sublease income, net of initial direct cost amortization, of $0.7 million during the three months ended June 30, 2025. In addition, we expect to record sublease income, net, of approximately $1.6 million during the last six months of 2025 and $3.2 million annually thereafter for the remaining term of the sublease under the caption General and Administrative.

Current wording

During the first quarter of 2025, we entered into an agreement to sublease a portion of our office space in the Capitol View building in Nashville, Tennessee to optimize our workforce performance to deliver positive results for customers, employees, and shareholders. HealthStream’s corporate headquarters remains in Nashville in the Capitol View building, while we continue to hire new employees both locally and nationally to support our growth. The sublease commenced in April 2025 and will expire in October 2031. We recorded sublease income, net of initial direct cost amortization, of $0.8 million and $1.5 million during the three and nine months ended September 30, 2025, respectively. In addition, we expect to record sublease income, net, of approximately $0.8 million during the last three months of 2025 and $3.2 million annually thereafter for the remaining term of the sublease under the caption General and Administrative.

Previous wording

Macroeconomic and other conditions in the U.S. that directly or indirectly impact the healthcare industry are challenging in certain respects and may become more challenging based on recent and contemplated changes to various policies and regulations. While healthcare costs continue to grow, government cuts or reimbursement rate reductions to funding for programs and organizations such as Federally Qualified Health Centers and academic medical institutions, the impact of tariffs on goods and services utilized by healthcare provider organizations, as well as uncertainty surrounding potential policy, regulatory, and economic shifts continue to be challenging for our healthcare customers. In particular, the federal reconciliation legislation enacted on July 4, 2025 includes significant policy changes that may adversely impact healthcare provider organizations, including changes that are expected to decrease access to health insurance and result in significant cuts to federal healthcare spending, particularly within the Medicaid program. We believe that these challenges and uncertainties, particularly among healthcare provider organizations with patient populations more dependent on government-funded reimbursement, have caused, and may in the future cause, some delays in purchasing and non-renewals of existing products and services, particularly in relation to elective or non-mandatory products and services.

Current wording

Macroeconomic and other conditions in the U.S. that directly or indirectly impact the healthcare industry are challenging in certain respects and may become more challenging based on recent and contemplated changes to various policies and regulations. While healthcare costs continue to grow, government cuts or reimbursement rate reductions to funding for healthcare organizations, the impact of tariffs on goods and services utilized by healthcare provider organizations, as well as uncertainty surrounding potential policy, regulatory, and economic shifts continue to be challenging for our healthcare customers. In particular, the federal budget reconciliation legislation enacted on July 4, 2025 includes significant policy changes that may adversely impact healthcare provider organizations, including changes that are expected to decrease access to health insurance and result in significant cuts to federal healthcare spending, particularly within the Medicaid program. In addition, the federal government entered into a partial shutdown effective October 1, 2025. Although Medicare and Medicaid reimbursement generally remains available throughout a shutdown, our healthcare customers may experience delays in payment for services rendered and other effects related to government agencies operating at reduced capacity and lack of congressional action on significant issues. We believe that these challenges and uncertainties, particularly among healthcare provider organizations with patient populations more dependent on government-funded reimbursement, have caused, and may in the future cause, some delays in purchasing and non-renewals of existing products and services, particularly in relation to elective or non-mandatory products and services.

Previous wording

Additionally, challenges persist in terms of inflationary pressures, ongoing elevated interest rate levels, lower consumer sentiment levels compared to recent periods, and heightened geopolitical tensions, including various ongoing and threatened conflicts abroad and strained global trade relations. We have experienced in certain recent periods, and believe that many of our customers have experienced, increased labor, supply chain, capital, and other expenditures and budgetary pressures associated with such conditions and challenges. These conditions and challenges impacting the U.S. economy and our customers in the healthcare industry have adversely affected, and may continue to adversely impact, our business and results of operations. Additionally, given our focus on customers in the healthcare industry, adverse developments impacting the healthcare industry, including as a result of the developments described above, may adversely impact our business and financial results, although we are unable to fully assess the impact to which we may be impacted by any such developments.

Current wording

Challenges also persist in terms of inflationary pressures, ongoing elevated interest rate levels, lower consumer sentiment levels compared to recent periods, and geopolitical tensions, including various ongoing and threatened conflicts abroad and strained global trade relations. We have experienced in certain recent periods, and believe that many of our customers have experienced, increased labor, supply chain, capital, and other expenditures and budgetary pressures associated with such conditions and challenges. These conditions and challenges impacting the U.S. economy and our customers in the healthcare industry have adversely affected, and may continue to adversely impact, our business and results of operations. Additionally, given our focus on customers in the healthcare industry, adverse developments impacting the healthcare industry, including as a result of the developments described above, may adversely impact our business and financial results, although we are unable to fully assess the extent to which our future results may be impacted by any such developments.

Previous wording

*Revenues, net.*Revenues increased $2.8 million, or 4%, to $74.4 million for the three months ended June 30, 2025 from $71.6 million for the three months ended June 30, 2024. Subscription revenues increased $2.9 million, or 4%, and professional services revenues decreased by $0.1 million, or 3%, compared to the second quarter of 2024.

Current wording

*Revenues, net.*Revenues increased $3.4 million, or 5%, to $76.5 million for the three months ended September 30, 2025 from $73.1 million for the three months ended September 30, 2024. Subscription revenues increased $4.0 million, or 6%, and professional services revenues decreased by $0.6 million, or 19%, compared to the third quarter of 2024.

Previous wording

*Cost of Revenues (excluding Depreciation and Amortization).*Cost of revenues increased $2.7 million, or 11%, to $26.4 million for the three months ended June 30, 2025, from $23.7 million for the three months ended June 30, 2024. Cost of revenues as a percentage of revenues were 35% and 33% for the three months ended June 30, 2025 and 2024, respectively. The increase in amount is primarily associated with investments in several areas of our business, primarily in our platform and SaaS applications, resulting in higher costs for third-party software and cloud hosting as well as an increase in labor costs and royalties.

Current wording

*Cost of Revenues (excluding Depreciation and Amortization).*Cost of revenues increased $2.0 million, or 8%, to $26.5 million for the three months ended September 30, 2025, from $24.5 million for the three months ended September 30, 2024. Cost of revenues as a percentage of revenues were 35% and 33% for the three months ended September 30, 2025 and 2024, respectively. The increase in amount is primarily associated with investments in several areas of our business, primarily in our platform and SaaS applications, resulting in higher cloud hosting, labor costs, third-party software costs, and royalties.

Previous wording

Product Development. Product development expenses was $12.1 million for both the three months ended June 30, 2025 and 2024. Product development expenses as a percentage of revenues were 16% and 17% for the three months ended June 30, 2025 and 2024, respectively.

Current wording

Product Development. Product development expenses were $12.1 million for both the three months ended September 30, 2025 and 2024. Product development expenses as a percentage of revenues were 16% and 17% for the three months ended September 30, 2025 and 2024, respectively.

Previous wording

Sales and Marketing. Sales and marketing expenses, including personnel costs, increased $0.4 million, or 4%, to $11.8 million for the three months ended June 30, 2025, from $11.4 million for the three months ended June 30, 2024. Sales and marketing expenses were 16% of revenues for both the three months ended June 30, 2025 and 2024. The increase in amount is primarily due to higher labor costs and increased staffing levels.

Current wording

Sales and Marketing. Sales and marketing expenses, including personnel costs, increased $0.6 million, or 6%, to $12.1 million for the three months ended September 30, 2025, from $11.5 million for the three months ended September 30, 2024. Sales and marketing expenses were 16% of revenues for both the three months ended September 30, 2025 and 2024. The increase in amount is primarily due to increased commissions and higher labor costs, partially offset by a decrease in marketing expenses.

Previous wording

General and Administrative. General and administrative expenses decreased $2.2 million, or 23%, to $7.4 million for the three months ended June 30, 2025, from $9.6 million for the three months ended June 30, 2024. General and administrative expenses were 10% and 13% of revenues for the three months ended June 30, 2025 and 2024, respectively. The decrease in amount is primarily due to a decrease in bad debt expense associated with a customer bankruptcy that occurred during the three months ended June 30, 2024, coupled with sublease income associated with the sublease that commenced during the second quarter of 2025 as noted above.

Current wording

General and Administrative. General and administrative expenses decreased $1.2 million, or 13%, to $7.3 million for the three months ended September 30, 2025, from $8.5 million for the three months ended September 30, 2024. General and administrative expenses were 10% and 12% of revenues for the three months ended September 30, 2025 and 2024, respectively. The decrease in amount is primarily due to sublease income associated with the office sublease that commenced during the second quarter of 2025 as noted above and a reduction in stock-based compensation expense.

Previous wording

*Depreciation and Amortization.*Depreciation and amortization expense increased $0.5 million, or 5%, to $10.9 million for the three months ended June 30, 2025, from $10.4 million for the three months ended June 30, 2024. This increase in amount is primarily a result of an increase in amortization associated with capitalized software.

Current wording

*Depreciation and Amortization.*Depreciation and amortization expense increased $0.7 million, or 7%, to $10.8 million for the three months ended September 30, 2025, from $10.1 million for the three months ended September 30, 2024. This increase in amount is primarily a result of amortization associated with capitalized software.

Previous wording

Interest Income. Interest income was $1.0 million and $0.9 million for the three months ended June 30, 2025 and 2024, respectively. This increase is a result of an increase in cash and investment balances.

Current wording

Interest Income. Interest income was $0.8 million and $1.0 million for the three months ended September 30, 2025 and 2024, respectively. This decrease is a result of lower interest rates on invested funds.

Previous wording

Other Income (Expense), Net. Other income (expense), net was income of $23,000 and expense of $55,000 for the three months ended June 30, 2025 and 2024, respectively. The change is primarily a result of foreign currency gains.

Current wording

Other Expense, Net. Other expense, net was $0.1 million and $26,000 for the three months ended September 30, 2025 and 2024, respectively. The change is primarily a result of foreign currency losses.

Previous wording

*Income Tax Provision.*The Company recorded a provision for income taxes of $1.5 million for the three months ended June 30, 2025, compared to $1.1 million for the three months ended June 30, 2024. The Company’s effective tax rate was 22% for the three months ended June 30, 2025, compared to 21% for the three months ended June 30, 2024. The Company’s effective tax rate primarily reflects the statutory corporate income tax rate, the net effect of state taxes, foreign income taxes, the effect of various permanent tax differences, and recognition of discrete tax items.

Current wording

*Income Tax Provision.*The Company recorded a provision for income taxes of $2.2 million for the three months ended September 30, 2025, compared to $1.8 million for the three months ended September 30, 2024. The Company’s effective tax rate was 26% for the three months ended September 30, 2025, compared to 23% for the three months ended September 30, 2024. The Company’s effective tax rate primarily reflects the statutory corporate income tax rate, the net effect of state taxes, foreign income taxes, the effect of various permanent tax differences, and recognition of discrete tax items.

Previous wording

*Net Income.*Net income was $5.4 million and $4.2 million for the three months ended June 30, 2025 and 2024, respectively. EPS was $0.18 per share (diluted) and $0.14 per share (diluted) for the three months ended June 30, 2025 and 2024, respectively.

Current wording

*Net Income.*Net income was $6.1 million and $5.7 million for the three months ended September 30, 2025 and 2024, respectively. EPS was $0.20 per share (diluted) and $0.19 per share (diluted) for the three months ended September 30, 2025 and 2024, respectively.

Previous wording

Adjusted EBITDA was $17.6 million for the three months ended June 30, 2025, compared to $15.8 million for the three months ended June 30, 2024. See “Reconciliation of Non-GAAP Financial Measures” below for our reconciliation of adjusted EBITDA to the most directly comparable measure under US GAAP and disclosure regarding why we believe adjusted EBITDA provides useful information to investors.

Current wording

Adjusted EBITDA was $19.1 million for the three months ended September 30, 2025, compared to $17.7 million for the three months ended September 30, 2024. See “Reconciliation of Non-GAAP Financial Measures” below for our reconciliation of adjusted EBITDA to the most directly comparable measure under US GAAP and disclosure regarding why we believe adjusted EBITDA provides useful information to investors.

Previous wording

*Revenues, net.*Revenues increased $3.6 million, or 2%, to $147.9 million for the six months ended June 30, 2025 from $144.3 million for the six months ended June 30, 2024. Subscription revenues increased $3.5 million, or 3%, compared to the six months ended June 30, 2024. Compared to the six months ended June 30, 2024, revenues for the six months ended June 30, 2025 were negatively impacted by several factors, including a $3.5 million reduction from attrition in legacy applications, a $1.1 million reduction from customer bankruptcies, and a $0.9 million reduction in perpetual license sales. These reductions to revenue were more than offset by $9.1 million of revenue growth across our portfolio of solutions.

Current wording

*Revenues, net.*Revenues increased $6.9 million, or 3%, to $224.4 million for the nine months ended September 30, 2025 from $217.4 million for the nine months ended September 30, 2024. Subscription revenues increased $7.5 million, or 4%, compared to the nine months ended September 30, 2024. Compared to the nine months ended September 30, 2024, revenues for the nine months ended September 30, 2025 grew by approximately $14.7 million across our portfolio of solutions, partially offset by several factors, including a $5.8 million reduction from attrition in legacy applications, a $1.6 million reduction from customer bankruptcies, and a $0.4 million reduction in perpetual license sales.

Previous wording

*Cost of Revenues (excluding Depreciation and Amortization).*Cost of revenues increased $3.5 million, or 7%, to $51.9 million for the six months ended June 30, 2025, from $48.4 million for the six months ended June 30, 2024. Cost of revenues as a percentage of revenues were 35% and 34% for the six months ended June 30, 2025 and 2024, respectively. The increase in amount is primarily associated with investments in several areas of our business, primarily in our platform and SaaS applications, resulting in higher costs for cloud hosting and third-party software as well as an increase in labor costs.

Current wording

*Cost of Revenues (excluding Depreciation and Amortization).*Cost of revenues increased $5.6 million, or 8%, to $78.4 million for the nine months ended September 30, 2025, from $72.8 million for the nine months ended September 30, 2024. Cost of revenues as a percentage of revenues were 35% and 33% for the nine months ended September 30, 2025 and 2024, respectively. The increase in amount is primarily associated with investments in several areas of our business, primarily in our platform and SaaS applications, resulting in higher cloud hosting, third-party software, labor costs, and royalties.

Previous wording

Product Development. Product development expenses was $24.1 million for both the six months ended June 30, 2025 and 2024. Product development expenses as a percentage of revenues were 16% and 17% for the six months ended June 30, 2025 and 2024, respectively.

Current wording

Product Development. Product development expenses were $36.2 million for both the nine months ended September 30, 2025 and 2024. Product development expenses as a percentage of revenues were 16% and 17% for the nine months ended September 30, 2025 and 2024, respectively.

Previous wording

Sales and Marketing. Sales and marketing expenses, including personnel costs, increased $0.8 million, or 3%, to $24.0 million for the six months ended June 30, 2025, from $23.2 million for the six months ended June 30, 2024. Sales and marketing expenses were 16% of revenues for both the six months ended June 30, 2025 and 2024. The increase in amount is primarily due to higher labor costs and sales commissions.

Current wording

Sales and Marketing. Sales and marketing expenses, including personnel costs, increased $1.4 million, or 4%, to $36.1 million for the nine months ended September 30, 2025, from $34.7 million for the nine months ended September 30, 2024. Sales and marketing expenses were 16% of revenues for both the nine months ended September 30, 2025 and 2024. The increase in amount is primarily due to higher labor costs and sales commissions, partially offset by a decrease in marketing expenses.

Previous wording

General and Administrative. General and administrative expenses decreased $1.8 million, or 10%, to $16.1 million for the six months ended June 30, 2025, from $17.9 million for the six months ended June 30, 2024. General and administrative expenses were 11% and 12% of revenues for the six months ended June 30, 2025 and 2024, respectively. The decrease in amount is primarily due to a decrease in bad debt expense associated with a customer bankruptcy that occurred during the six months ended June 30, 2024, coupled with sublease income associated with the sublease that commenced during the second quarter of 2025 as noted above.

Current wording

General and Administrative. General and administrative expenses decreased $2.9 million, or 11%, to $23.4 million for the nine months ended September 30, 2025, from $26.3 million for the nine months ended September 30, 2024. General and administrative expenses were 10% and 12% of revenues for the nine months ended September 30, 2025 and 2024, respectively. The decrease in amount is primarily due to sublease income associated with the office sublease that commenced during the second quarter of 2025 as noted above, coupled with bad debt expense associated with a customer bankruptcy that occurred during the nine months ended September 30, 2024.

Previous wording

*Depreciation and Amortization.*Depreciation and amortization expense increased $0.9 million, or 4%, to $21.6 million for the six months ended June 30, 2025, from $20.7 million for the six months ended June 30, 2024. This increase in amount is primarily a result of an increase in amortization associated with capitalized software.

Current wording

*Depreciation and Amortization.*Depreciation and amortization expense increased $1.6 million, or 5%, to $32.4 million for the nine months ended September 30, 2025, from $30.8 million for the nine months ended September 30, 2024. This increase in amount is primarily a result of amortization associated with capitalized software.

Previous wording

Interest Income. Interest income was $1.9 million and $1.8 million for the six months ended June 30, 2025 and 2024, respectively. This increase is a result of an increase in cash and investment balances.

Current wording

Interest Income. Interest income was $2.7 million and $2.9 million for the nine months ended September 30, 2025 and 2024, respectively. This decrease is a result of lower interest rates on invested funds.

Previous wording

*Income Tax Provision.*The Company recorded a provision for income taxes of $2.4 million for both the six months ended June 30, 2025 and June 30, 2024. The Company’s effective tax rate was 20% for the six months ended June 30, 2025, compared to 21% for the six months ended June 30, 2024. The Company’s effective tax rate primarily reflects the statutory corporate income tax rate, the net effect of state taxes, foreign income taxes, the effect of various permanent tax differences, and recognition of discrete tax items.

Current wording

*Income Tax Provision.*The Company recorded a provision for income taxes of $4.6 million and $4.2 million for the nine months ended September 30, 2025 and 2024, respectively. The Company’s effective tax rate was 22% for both the nine months ended September 30, 2025 and 2024. The Company’s effective tax rate primarily reflects the statutory corporate income tax rate, the net effect of state taxes, foreign income taxes, the effect of various permanent tax differences, and recognition of discrete tax items.

Previous wording

*Net Income.*Net income was $9.7 million and $9.4 million for the six months ended June 30, 2025 and 2024, respectively. EPS was $0.32 per share (diluted) and $0.31 per share (diluted) for the six months ended June 30, 2025 and 2024, respectively.

Current wording

*Net Income.*Net income was $15.8 million and $15.1 million for the nine months ended September 30, 2025 and 2024, respectively. EPS was $0.52 per share (diluted) and $0.50 per share (diluted) for the nine months ended September 30, 2025 and 2024, respectively.

Previous wording

Adjusted EBITDA was $33.8 million for the six months ended June 30, 2025, compared to $32.9 million for the six months ended June 30, 2024. See “Reconciliation of Non-GAAP Financial Measures” below for our reconciliation of adjusted EBITDA to the most directly comparable measure under US GAAP and disclosure regarding why we believe adjusted EBITDA provides useful information to investors.

Current wording

Adjusted EBITDA was $52.9 million for the nine months ended September 30, 2025, compared to $50.6 million for the nine months ended September 30, 2024. See “Reconciliation of Non-GAAP Financial Measures” below for our reconciliation of adjusted EBITDA to the most directly comparable measure under US GAAP and disclosure regarding why we believe adjusted EBITDA provides useful information to investors.

Previous wording

Net cash provided by operating activities increased by $4.7 million to $32.1 million during the six months ended June 30, 2025, from $27.4 million during the six months ended June 30, 2024. The increase in net cash provided by operating activities is primarily due to higher cash receipts from customers during the period, resulting in a reduction to our days sales outstanding ("DSO"). Our DSO was 35 days for the second quarter of 2025 compared to 45 days for the second quarter of 2024. The Company calculates DSO by dividing the average accounts receivable balance for the quarter by average daily revenues for the quarter. The Company’s primary sources of cash were receipts generated from the sales of our products and services. The primary uses of cash to fund operations included personnel expenses, sales commissions, royalty payments, payments for contract labor and other direct expenses associated with delivery of our products and services, income tax payments, general corporate expenses, and initial direct costs related to the sublease.

Current wording

Net cash provided by operating activities increased by $3.6 million to $50.1 million during the nine months ended September 30, 2025, from $46.5 million during the nine months ended September 30, 2024. The increase in net cash provided by operating activities is primarily due to higher cash receipts from customers during the period, resulting in a reduction to our days sales outstanding ("DSO"). Our DSO was 33 days for the third quarter of 2025 compared to 37 days for the third quarter of 2024. The Company calculates DSO by dividing the average accounts receivable balance for the quarter by average daily revenues for the quarter. The Company’s primary sources of cash were receipts generated from the sales of our products and services. The primary uses of cash to fund operations included personnel expenses, sales commissions, royalty payments, payments for contract labor and other direct expenses associated with delivery of our products and services, income tax payments, general corporate expenses, and initial direct costs related to the sublease discussed above.

Previous wording

Net cash used in investing activities was $18.4 million for the six months ended June 30, 2025, compared to $19.0 million for the six months ended June 30, 2024. During the six months ended June 30, 2025, the Company invested in marketable securities of $26.1 million, made payments for capitalized software development of $14.5 million, purchased property and equipment of $3.4 million, and purchased an investment of $0.5 million. These uses of cash were partially offset by $26.1 million in maturities of marketable securities. During the six months ended June 30, 2024, the Company invested in marketable securities of $34.5 million, made payments for capitalized software development of $13.6 million, and purchased property and equipment of $0.9 million. These uses of cash were partially offset by $29.2 million in maturities of marketable securities and $0.8 million received upon the settlement and release of escrowed proceeds related to a prior sale of a non-marketable equity investment.

Current wording

Net cash used in investing activities was $27.0 million for the nine months ended September 30, 2025, compared to $25.9 million for the nine months ended September 30, 2024. During the nine months ended September 30, 2025, the Company invested in marketable securities of $41.4 million, made payments for capitalized software development of $21.9 million, purchased property and equipment of $3.5 million, and purchased strategic investments of $1.5 million. These uses of cash were partially offset by $41.3 million in maturities of marketable securities. During the nine months ended September 30, 2024, the Company invested in marketable securities of $51.5 million, made payments for capitalized software development of $20.1 million, and purchased property and equipment of $1.2 million. These uses of cash were partially offset by $46.2 million in maturities of marketable securities and $0.8 million received upon the settlement and release of escrowed proceeds related to a prior sale of a non-marketable equity investment.

Previous wording

Net cash used in financing activities was $21.1 million for the six months ended June 30, 2025, compared to $2.6 million for the six months ended June 30, 2024. The uses of cash for the six months ended June 30, 2025 included $18.1 million for repurchases of common stock, $1.9 million for the payment of cash dividends, and $1.1 million for the payment of employee payroll taxes in relation to the vesting of restricted share units. The uses of cash for the six months ended June 30, 2024 included $1.7 million for the payment of cash dividends and $0.9 million for the payment of employee payroll taxes in relation to the vesting of RSUs.

Current wording

Net cash used in financing activities was $29.0 million for the nine months ended September 30, 2025, compared to $3.5 million for the nine months ended September 30, 2024. The uses of cash for the nine months ended September 30, 2025 included $25.0 million for repurchases of common stock, $2.8 million for the payment of cash dividends, and $1.2 million for the payment of employee payroll taxes in relation to the vesting of restricted share units. The uses of cash for the nine months ended September 30, 2024 included $2.6 million for the payment of cash dividends and $0.9 million for the payment of employee payroll taxes in relation to the vesting of restricted share units.

Previous wording

Our balance sheet reflects working capital of $29.0 million at June 30, 2025, compared to $37.4 million at December 31, 2024. The decrease in working capital is primarily a result of a decrease in cash and cash equivalents to fund share repurchases. The Company’s primary source of liquidity as of June 30, 2025 was $52.1 million of cash and cash equivalents and $38.5 million of marketable securities.

Current wording

Our balance sheet reflects working capital of $35.1 million at September 30, 2025, compared to $37.4 million at December 31, 2024. The decrease in working capital is primarily a result of a decrease in cash and cash equivalents to fund share repurchases. The Company’s primary source of liquidity as of September 30, 2025 was $53.5 million of cash and cash equivalents and $39.0 million of marketable securities.

Previous wording

On February 20, 2023, we announced that our Board approved a quarterly dividend policy, under which we have paid dividends on a quarterly basis since our adoption of this policy. On February 24, 2025, the Board approved a quarterly cash dividend under this policy of $0.031 per share, which was paid on March 21, 2025 to holders of record of our common stock on March 10, 2025. On May 5, 2025, the Board approved a quarterly cash dividend under this policy of $0.031 per share, which was paid on May 30, 2025 to holders of record of our common stock on May 19, 2025. In addition, on August 4, 2025, the Board approved a quarterly cash dividend under this policy of $0.031 per share, which will be payable on August 29, 2025 to holders of record of our common stock on August 18, 2025.

Current wording

On February 20, 2023, we announced that our Board approved a quarterly dividend policy, under which we have paid dividends on a quarterly basis since our adoption of this policy. On February 24, 2025, the Board approved a quarterly cash dividend under this policy of $0.031 per share, which was paid on March 21, 2025 to holders of record of our common stock on March 10, 2025. On May 5, 2025, the Board approved a quarterly cash dividend under this policy of $0.031 per share, which was paid on May 30, 2025 to holders of record of our common stock on May 19, 2025. On August 4, 2025, the Board approved a quarterly cash dividend under this policy of $0.031 per share, which was paid on August 29, 2025 to holders of record of our common stock on August 18, 2025. In addition, on November 3, 2025, the Board approved a quarterly cash dividend under this policy of $0.031 per share, which will be payable on November 28, 2025 to holders of record of our common stock on November 17, 2025.

Previous wording

On May 8, 2025, the Company’s Board of Directors approved a new share repurchase program for the Company’s common stock, under which the Company may repurchase up to $25.0 million of outstanding shares of common stock. Pursuant to the authorization, repurchases may be made from time to time in the open market, including under a Rule 10b5-1 plan, through privately negotiated transactions, or otherwise. In addition, any repurchases under the authorization will be subject to prevailing market conditions, liquidity and cash flow considerations, applicable securities laws requirements (including under Rule 10b-18 and Rule 10b5-1 of the Securities Exchange Act of 1934, as applicable), and other factors. Under this program, during the three months ended June 30, 2025, the Company repurchased and subsequently retired 649,953 shares of common stock at an aggregate fair value of $18.1 million, reflecting an average price per share of $27.86 (excluding the cost of broker commissions), and the Company continued to repurchase shares pursuant to this authorization during the third quarter, completing the program in July by repurchasing and retiring 255,833 shares valued at $6.9 million, reflecting an average price per share of $26.94 (excluding the cost of broker commissions). The share repurchase program terminated in July when the maximum dollar amount was expended.

Current wording

On May 8, 2025, the Company’s Board of Directors approved a new share repurchase program for the Company’s common stock, under which the Company was authorized to repurchase up to $25.0 million of outstanding shares of common stock. Pursuant to this authorization, the Company was authorized to make repurchases in the open market, including under a Rule 10b5-1 plan, through privately negotiated transactions, or otherwise. Under this program, during the three and nine months ended September 30, 2025, the Company repurchased 255,833 shares and 905,786 shares of common stock at an aggregate fair value of $6.9 million and $25.0 million, respectively, reflecting an average price per share of $26.94 and $27.60 (excluding the cost of broker commissions), respectively. This share repurchase program is no longer in effect as the maximum dollar amount under this program was expended during the three months ended September 30, 2025 as referenced above.

Previous wording

We believe that our existing cash, cash equivalents, marketable securities, cash generated from operations, and available borrowings under our revolving credit facility will be sufficient to meet anticipated working capital needs, new product development, pay our quarterly dividends, effect share repurchases we made under our share repurchase program as described above and any future program, and fund capital expenditures for at least the next 12 months and for the foreseeable future thereafter.

Current wording

We believe that our existing cash, cash equivalents, marketable securities, cash generated from operations, and available borrowings under our revolving credit facility will be sufficient to meet anticipated working capital needs, new product development, pay our quarterly dividends, any share repurchases we may elect to make under any future share repurchase program, and fund capital expenditures for at least the next 12 months and for the foreseeable future thereafter.