APPIAN CORP

Previous wording

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These statements are often identified by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “will,” “would,” or the negative or plural of these words or similar expressions or variations, including statements regarding our expectations regarding customer renewals and our future financial and operating performance, anticipated expansion of the usage of partners to perform professional services, the increase of our subscriptions revenue as a percentage of total revenue, the fluctuation of gross margin on a quarterly basis, our future capital requirements, and our ability to meet our financial covenants under our Credit Agreement. Such forward-looking statements are subject to a number of risks, uncertainties, assumptions, and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified herein and those discussed in the section titled “Risk Factors,” set forth in Part I, Item 1A of our Annual Report on Form 10-K filed with the SEC on February 19, 2025 and in our other filings with the SEC. Forward-looking statements should not be relied on as predictions of future events. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

Current wording

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These statements are often identified by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “will,” “would,” or the negative or plural of these words or similar expressions or variations, including statements regarding our expectations regarding customer renewals and our future financial and operating performance, expansion of the usage of partners to perform professional services, the increase of our subscriptions revenue as a percentage of total revenue, the fluctuation of gross margin on a quarterly basis, our future capital requirements, and our ability to meet our financial covenants under our Credit Agreement. Such forward-looking statements are subject to a number of risks, uncertainties, assumptions, and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified herein and those discussed in the section titled “Risk Factors,” set forth in Part I, Item 1A of our Annual Report on Form 10-K filed with the SEC on February 19, 2025 and in our other filings with the SEC. Forward-looking statements should not be relied on as predictions of future events. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

Previous wording

Our customers primarily include financial services, government, life sciences, insurance, manufacturing, energy, healthcare, telecommunications, and transportation organizations. Generally, our sales team targets its efforts at organizations with over 2,000 employees and $2 billion in annual revenue. For the three and six months ended June 30, 2025, revenue generated from government agencies represented 34.1% and 33.8%, respectively, of total revenue, of which revenue from U.S. federal government agencies was 25.9% and 24.9% of total revenue in each period. For the three and six months ended June 30, 2024, revenue generated from government agencies represented 31.4% and 30.4%, respectively, of total revenue, of which revenue from U.S. federal government agencies was 22.6% and 22.1% of total revenue, respectively.

Current wording

Our customers primarily include financial services, government, life sciences, insurance, manufacturing, energy, healthcare, telecommunications, and transportation organizations. Generally, our sales team targets its efforts at organizations with over 2,000 employees and $2 billion in annual revenue. For the three and nine months ended September 30, 2025, revenue generated from government agencies represented 32.4% and 33.3%, respectively, of total revenue, of which revenue from U.S. federal government agencies was 25.0% and 24.9% of total revenue, respectively. For the three and nine months ended September 30, 2024, revenue generated from government agencies represented 31.0% and 30.6%, respectively, of total revenue, of which revenue from U.S. federal government agencies was 23.2% and 22.5% of total revenue, respectively.

Previous wording

We offer our platform globally. Our platform supports multiple languages to facilitate collaboration and address challenges in multinational organizations. In the three and six months ended June 30, 2025, 38.4% and 37.3%, respectively, of our total revenue was generated from customers outside of the United States as compared to 38.2% and 37.7% in the three and six months ended June 30, 2024, respectively. As of June 30, 2025, we operated in 16 countries. We believe we have a significant opportunity to continue to grow our international footprint, and we are investing in new geographies, including through investment in direct and indirect sales channels, professional services, and customer support and implementation partners.

Current wording

We offer our platform globally. Our platform supports multiple languages to facilitate collaboration and address challenges in multinational organizations. In the three and nine months ended September 30, 2025, 39.7% and 38.2%, respectively, of our total revenue was generated from customers outside of the United States as compared to 36.3% and 37.2% in the three and nine months ended September 30, 2024, respectively. As of September 30, 2025, we operated in 16 countries. We believe we have a significant opportunity to continue to grow our international footprint, and we are investing in new geographies, including through investment in direct and indirect sales channels, professional services, and customer support and implementation partners.

Previous wording

At the same time, we believe the costs we incur to retain customers and drive additional purchases of software are lower than our customer acquisition costs on a relative basis. Over time, we expect a large portion of our customers to renew their subscriptions and purchase additional subscriptions as they continue to build more applications and add more users to our platform. Over the last three completed fiscal years, we had an average cloud subscriptions gross renewal rate of 99%. We calculate our cloud subscriptions gross renewal rate by dividing (i) the cloud subscriptions revenue from renewing cloud customers in the current 12-month period that were cloud customers during the entirety of the prior 12-month period, by (ii) our cloud subscriptions revenue from all cloud customers in the corresponding prior 12-month period that were cloud customers during the entirety of such prior 12-month period. The calculation includes the impact of customers that churned during the current 12-month period but excludes the impact of price changes, additional users, upsells, and downsells during the same period.

Current wording

At the same time, we believe the costs we incur to retain customers and drive additional purchases of software are lower than our customer acquisition costs on a relative basis. Over time, we expect a large portion of our customers to renew their subscriptions and purchase additional subscriptions as they continue to build more applications and add more users to our platform. Over the last three years, we had a quarterly average cloud subscriptions gross renewal rate of 98%. We calculate our cloud subscriptions gross renewal rate by dividing (i) the cloud subscriptions revenue from renewing cloud customers in the current 12-month period that were cloud customers during the entirety of the prior 12-month period, by (ii) our cloud subscriptions revenue from all cloud customers in the corresponding prior 12-month period that were cloud customers during the entirety of such prior 12-month period. The calculation includes the impact of customers that churned during the current 12-month period but excludes the impact of price changes, additional users, upsells, and downsells during the same period.

Previous wording

Gross profit and gross margin (defined as gross profit as a percentage of total revenue), have been, and will continue to be, affected by various factors, including the mix of cloud subscriptions and term license subscriptions, the mix of total subscriptions revenue and professional services revenue, subscription pricing, the costs associated with third-party hosting providers, and the extent to which we expand or reduce our professional services to support future changes in our growth. Our gross margin may fluctuate from period to period based on the above factors.

Current wording

Gross profit and gross margin (defined as gross profit as a percentage of total revenue), have been, and will continue to be, affected by various factors, including the mix of cloud subscriptions and term license subscriptions, the mix of total subscriptions revenue and professional services revenue, subscription pricing, the costs associated with third-party hosting providers, and the extent to which we expand or reduce our professional services to support future changes in our growth. Our gross margin may fluctuate from period to period based on the aforementioned factors.

Previous wording

Other (income) expense, net consists primarily of gains and losses related to changes in foreign currency exchange rates, interest income on our cash and cash equivalents and investments, and other sources of income or expense not related to our core business operations.

Current wording

Other income, net consists primarily of gains and losses related to changes in foreign currency exchange rates, interest income on our cash and cash equivalents and investments, and other sources of income or expense not related to our core business operations.

Previous wording

Total revenue increased $24.2 million, or 17%, in the three months ended June 30, 2025 compared to the same period in 2024 due to an increase in our subscriptions revenue of $19.7 million coupled with an increase in our professional services revenue of $4.5 million. The increase in subscriptions revenue was driven by an $18.5 million increase in cloud subscriptions revenue, a $0.5 million increase in term license subscriptions revenue, and a $0.7 million increase in maintenance and support revenue. With respect to new versus existing customers, there was an $11.3 million increase in subscriptions revenue from sales to new customers, while the remaining $8.4 million of the increase was attributable to expanded deployments, price increases on renewals, and corresponding sales of additional subscriptions to existing customers. The increase in professional services revenue was due primarily to a $6.1 million increase in revenue from sales to new customers customers, which was partially offset by a $1.6 million decrease in sales to existing customers.

Current wording

Total revenue increased $33.0 million, or 21%, in the three months ended September 30, 2025 compared to the same period in 2024 due to an increase in our subscriptions revenue of $24.1 million coupled with an increase in our professional services revenue of $8.9 million. The increase in subscriptions revenue was driven by a $19.5 million increase in cloud subscriptions revenue, a $3.5 million increase in term license subscriptions revenue, and a $1.0 million increase in maintenance and support revenue. With respect to new versus existing customers, there was a $6.3 million increase in subscriptions revenue from sales to new customers, while the remaining $17.8 million of the increase was attributable to expanded deployments, price increases on renewals, and corresponding sales of additional subscriptions to existing customers. The increase in professional services revenue was due primarily to a $6.5 million increase in revenue from sales to new customers along with a $2.4 million increase in sales to existing customers.

Previous wording

Cost of revenue increased $5.4 million, or 7%, in the six months ended June 30, 2025 compared to the same period in 2024, primarily due to a $5.8 million increase in hosting costs coupled with a $2.4 million increase in contractor costs. These increases were partially offset by a $2.5 million decrease in professional services and product support personnel costs. Hosting costs increased due to an increase in sales of our cloud offering during the six months ended June 30, 2025, while contractor costs increased due to an increase in the usage of subcontractors for professional services engagements. Professional services and product support personnel costs decreased due to a decrease in cost of sales headcount of 8% from June 30, 2024 to June 30, 2025.

Current wording

Cost of revenue increased $8.2 million, or 22%, in the three months ended September 30, 2025 compared to the same period in 2024, primarily due to a $3.1 million increase in hosting costs coupled with a $2.5 million increase in contractor costs and a $2.2 million increase in professional services and product support personnel costs. Hosting costs increased due to an increase in sales of our cloud offering during the three months ended September 30, 2025, while contractor costs increased due to an increase in the usage of subcontractors for professional services engagements. Professional services and product support personnel costs increased due to an increase in headcount from September 30, 2024 to September 30, 2025.

Previous wording

Research and development expense increased $0.9 million, or 2%, in the three months ended June 30, 2025 compared to the same period in 2024. This change is primarily attributable to a $1.0 million increase in research and development personnel costs, which was partially offset by a $0.3 million decline in contractor costs. Although research and development headcount remained consistent period over period, overall personnel costs increased due to higher bonus expense and a $0.4 million increase in stock compensation expense. Contractor costs decreased due to lower third-party consulting fees.

Current wording

Research and development expense increased $1.7 million, or 4%, in the three months ended September 30, 2025 compared to the same period in 2024. This change is primarily attributable to a $1.0 million increase in research and development personnel costs and a $0.5 million increase in information technology costs. Although research and development headcount remained relatively consistent period over period, overall personnel costs increased due to higher bonus expense, while information technology costs increased primarily due to a $0.4 million increase in cloud computing services spend.

Previous wording

Other income, net was $17.6 million in the three months ended June 30, 2025 compared to other income, net of $1.5 million in the three months ended June 30, 2024. This change was primarily due to $15.6 million in foreign exchange gains in the three months ended June 30, 2025 as compared to $0.2 million in foreign exchange losses in the three months ended June 30, 2024.

Current wording

Other income, net was $1.4 million in the three months ended September 30, 2025 compared to other income, net of $12.5 million in the three months ended September 30, 2024. This change was primarily due to $0.3 million in foreign exchange losses in the three months ended September 30, 2025 as compared to $9.2 million in foreign exchange gains in the three months ended September 30, 2024, in addition to a $1.8 million decrease in other income attributable to short-swing profit disgorgement payments to us from a public stockholder of our Class A common stock during the three months ended September 30, 2024.

Previous wording

Interest expense decreased by $0.8 million in the three months ended June 30, 2025 as compared to the corresponding period in 2024 primarily due to a lower effective interest rate and lower outstanding principal compared to the prior year period.

Current wording

Interest expense decreased by $0.9 million in the three months ended September 30, 2025 as compared to the corresponding period in 2024 primarily due to a lower effective interest rate and lower outstanding principal compared to the prior year period.

Previous wording

Income tax expense increased by $2.9 million in the six months ended June 30, 2025 as compared to the corresponding period in 2024. This change was primarily driven by increased pre-tax book income in certain international subsidiaries for the six months ended June 30, 2025. The change in pre-tax book income was primarily attributable to increases in unrealized foreign exchange gains.

Current wording

Income tax expense increased by $0.1 million in the three months ended September 30, 2025 as compared to the corresponding period in 2024. This change was primarily driven by increased pre-tax book income in certain international subsidiaries for the three months ended September 30, 2025.

Previous wording

Total revenue increased $40.8 million, or 14%, in the six months ended June 30, 2025 compared to the same period in 2024 due to an increase in our subscriptions revenue of $36.3 million as well as an increase in our professional services revenue of $4.4 million. The increase in subscriptions revenue was driven by a $31.7 million increase in cloud subscriptions revenue, a $3.6 million increase in term license subscriptions revenue, and a $1.0 million increase in maintenance and support revenue. With respect to new versus existing customers, there was an $18.5 million increase in subscriptions revenue from sales to new customers, while the remaining $17.8 million of the increase was attributable to expanded deployments, price increases on renewals, and corresponding sales of additional subscriptions to existing customers. The increase in professional services revenue was due primarily to a $10.7 million increase in revenue from sales to new customers, which was partially offset by a $6.3 million decrease in sales to existing customers.

Current wording

Total revenue increased $73.7 million, or 16%, in the nine months ended September 30, 2025 compared to the same period in 2024 due to an increase in our subscriptions revenue of $60.4 million as well as an increase in our professional services revenue of $13.3 million. The increase in subscriptions revenue was driven by a $51.2 million increase in cloud subscriptions revenue, a $7.2 million increase in term license subscriptions revenue, and a $2.0 million increase in maintenance and support revenue. With respect to new versus existing customers, there was a $15.1 million increase in subscriptions revenue from sales to new customers, while the remaining $45.3 million of the increase was attributable to expanded deployments, price increases on renewals, and corresponding sales of additional subscriptions to existing customers. The increase in professional services revenue was due primarily to a $15.3 million increase in revenue from sales to new customers, which was partially offset by a $2.0 million decrease in sales to existing customers.

Previous wording

Cost of revenue increased $4.5 million, or 11%, in the three months ended June 30, 2025 compared to the same period in 2024, primarily due to a $3.4 million increase in hosting costs coupled with a $2.0 million increase in contractor costs. These increases were partially offset by a $0.9 million decrease in professional services and product support personnel costs. Hosting costs increased due to an increase in sales of our cloud offering during the three months ended June 30, 2025, while contractor costs increased due to an increase in the usage of subcontractors for professional services engagements. Professional services and product support personnel costs decreased due to a decrease headcount of 8% from June 30, 2024 to June 30, 2025.

Current wording

Cost of revenue increased $13.6 million, or 12%, in the nine months ended September 30, 2025 compared to the same period in 2024, primarily due to a $8.8 million increase in hosting costs coupled with a $4.9 million increase in contractor costs. These increases were partially offset by a $0.3 million decrease in professional services and product support personnel costs. Hosting costs increased due to an increase in sales of our cloud offering during the nine months ended September 30, 2025, while contractor costs increased due to an increase in the usage of subcontractors for professional services engagements. Although professional services and product support headcount increased from September 30, 2024 to September 30, 2025, overall personnel costs decreased due to a $1.4 million decrease in severance expense as compared to the prior year.

Previous wording

Sales and marketing expense decreased $9.7 million, or 8%, in the six months ended June 30, 2025 compared to the same period in 2024, primarily due to a $7.3 million decrease in sales and marketing personnel costs, a $1.6 million decrease in allocated costs such as rent and employee medical costs, and a $0.7 million decrease in marketing expenses. These decreases were partially offset by a $0.7 million increase in travel and entertainment costs and a $0.6 million increase in contractor costs. Sales and marketing personnel costs decreased due to a decrease in sales and marketing headcount of 25% from June 30, 2024 to June 30, 2025. Travel and entertainment expense increased due to a higher number of in-person events and engagements relative to the prior year, while the increase in contractor costs was attributable to an increase in third-party consulting fees.

Current wording

Sales and marketing expense decreased $8.7 million, or 5%, in the nine months ended September 30, 2025 compared to the same period in 2024, primarily due to a $6.1 million decrease in sales and marketing personnel costs, and a $1.5 million decrease in information technology spend. These decreases were partially offset by a $1.3 million increase in travel and entertainment costs. Sales and marketing personnel costs decreased due to a decrease in sales and marketing headcount from September 30, 2024 to September 30, 2025. Information technology costs declined largely due to lower cloud computing expense. Travel and entertainment expense increased due to a higher number of in-person events and engagements relative to the prior year.

Previous wording

Research and development expense increased $0.6 million, or 1%, in the six months ended June 30, 2025 compared to the same period in 2024. This change is primarily attributable to a $0.6 million increase in research and development personnel costs. Although research and development headcount remained consistent period over period, overall personnel costs increased due to higher stock compensation and severance expense, offset by a reduction in salaries expense.

Current wording

Research and development expense increased $2.3 million, or 2%, in the nine months ended September 30, 2025 compared to the same period in 2024. This change is primarily attributable to a $1.6 million increase in research and development personnel costs and a $1.5 million increase in information technology costs. Although research and development headcount remained consistent period over period, overall personnel costs increased due to higher bonus expense and stock compensation, partially offset by a reduction in salaries expense. Information technology costs increased primarily due to higher spend on cloud computing services and computer software.

Previous wording

General and administrative expense decreased $2.5 million, or 3%, in the six months ended June 30, 2025 compared to the same period in 2024 primarily due to a $4.5 million decrease in rent expense. In addition, insurance expense decreased $2.7 million due to lower amortization expense associated with our judgment preservation insurance policy. These decreases were partially offset by increases of $1.8 million in professional fees, $1.2 million in information technology spending, and $0.7 million in general and administrative personnel costs. Rent expense decreased due to $5.5 million of lease impairment charges recorded in the prior year period, with no such charges occurring in the current year. Professional fees increased primarily due to a $2.7 million increase in litigation-related expenses attributable to the Pegasystems legal case. Although general and administrative headcount was down 5% from June 30, 2024 to June 30, 2025, personnel costs increased due to higher bonus expense and a $0.5 million increase in stock compensation expense.

Current wording

General and administrative expense decreased $0.7 million, or 1%, in the nine months ended September 30, 2025 compared to the same period in 2024 primarily due to a $3.5 million decrease in rent expense and a $3.5 million decrease in insurance expense driven by lower amortization expense associated with our judgment preservation insurance policy. Rent expense decreased due to $0.8 million of lease impairment charges in the nine months ended September 30, 2025 as compared to $5.5 million of lease impairment charges recorded in the prior year period. These decreases were partially offset by increases of $2.0 million in general and administrative personnel costs, $1.8 million in professional fees, and $1.7 million in information technology spending. Personnel costs increased due to an increase in headcount from September 30, 2024 to September 30, 2025 coupled with higher bonus expense and a $1.1 million increase in stock compensation expense. Professional fees increased primarily due to a $2.9 million increase in expenses related to litigation with Pegasystems, while information technology spending increased due to higher spend on computer software and cloud computing.

Previous wording

Other income, net was $23.3 million in the six months ended June 30, 2025 compared to other expense, net of $6.7 million in the six months ended June 30, 2024. This change was primarily due to $19.7 million in foreign exchange gains in the six months ended June 30, 2025 as compared to $11.7 million in foreign exchange losses in the six months ended June 30, 2024. In addition, there was a $1.4 million decrease in other income related to a non-recurring local government incentive payment that was received in the prior year.

Current wording

Other income, net was $24.7 million in the nine months ended September 30, 2025 compared to other income, net of $5.9 million in the nine months ended September 30, 2024. This change was primarily due to $19.4 million in foreign exchange gains in the nine months ended September 30, 2025 as compared to $2.5 million in foreign exchange losses in the nine months ended September 30, 2024. In addition, there was a $3.2 million decrease in other income related to a non-recurring local government incentive payment and short-swing profit disgorgement payments to us from a public stockholder of our Class A common stock that were both received in the prior year.

Previous wording

Interest expense decreased by $1.1 million in the six months ended June 30, 2025 as compared to the corresponding period in 2024 primarily due to a lower effective interest rate and lower outstanding principal across the comparable periods.

Current wording

Interest expense decreased by $2.0 million in the nine months ended September 30, 2025 as compared to the corresponding period in 2024 primarily due to a lower effective interest rate and lower outstanding principal across the comparable periods.

Previous wording

Income tax expense increased by $1.7 million in the three months ended June 30, 2025 as compared to the corresponding period in 2024. This change was primarily driven by increased pre-tax book income in certain international subsidiaries for the three months ended June 30, 2025. The change in pre-tax book income was primarily attributable to increases in unrealized foreign exchange gains.

Current wording

Income tax expense increased by $3.0 million in the nine months ended September 30, 2025 as compared to the corresponding period in 2024. This change was primarily driven by increased pre-tax book income in certain international subsidiaries for the nine months ended September 30, 2025. The change in pre-tax book income was primarily attributable to increases in unrealized foreign exchange gains.

Previous wording

Our non-GAAP financial performance measures include the following: non-GAAP subscriptions cost of revenue, non-GAAP professional services cost of revenue, non-GAAP total cost of revenue, non-GAAP total operating expense, non-GAAP operating income (loss), non-GAAP income tax expense (benefit), non-GAAP net income (loss), and non-GAAP net income (loss) per share, basic and diluted. These non-GAAP financial performance measures exclude the effect of stock-based compensation expense, unrealized foreign exchange rate gains and losses, certain non-ordinary litigation-related expenses consisting of legal and other professional fees associated with the Pegasystems cases (net of insurance reimbursements), or Litigation Expense, amortization of the judgment preservation insurance policy, or JPI Amortization, severance costs related to an involuntary reduction in our workforce, or Severance Costs, and lease impairment and lease-related charges associated with actions taken to reduce the footprint of our leased office spaces, or Lease Impairment and Lease-Related Charges. While some of these items may be recurring in nature and should not be disregarded in the evaluation of our earnings performance, it is useful to exclude such items when analyzing current results and trends compared to other periods as these items can vary significantly from period to period depending on specific underlying transactions or events that may occur. Therefore, while we may incur or recognize these types of expenses in the future, we believe removing these items for purposes of calculating our non-GAAP financial measures provides investors with a more focused presentation of our ongoing operating performance.

Current wording

Our non-GAAP financial performance measures include the following: non-GAAP subscriptions cost of revenue, non-GAAP professional services cost of revenue, non-GAAP total cost of revenue, non-GAAP total operating expense, non-GAAP operating income (loss), non-GAAP income tax expense (benefit), non-GAAP net income (loss), and non-GAAP net income (loss) per share, basic and diluted. These non-GAAP financial performance measures exclude the effect of stock-based compensation expense, unrealized foreign exchange rate gains and losses, certain non-ordinary litigation-related expenses consisting of legal and other professional fees associated with the Pegasystems cases (net of insurance reimbursements), or Litigation Expense, amortization of the judgment preservation insurance policy, or JPI Amortization, severance costs related to an involuntary reduction in our workforce, or Severance Costs, lease impairment and lease-related charges associated with actions taken to reduce the footprint of our leased office spaces, or Lease Impairment and Lease-Related Charges, and a short-swing profit disgorgement paid to us by an investor, or Short-Swing Profit Payment. While some of these items may be recurring in nature and should not be disregarded in the evaluation of our earnings performance, it is useful to exclude such items when analyzing current results and trends compared to other periods as these items can vary significantly from period to period depending on specific underlying transactions or events that may occur. Therefore, while we may incur or recognize these types of expenses in the future, we believe removing these items for purposes of calculating our non-GAAP financial measures provides investors with a more focused presentation of our ongoing operating performance.

Previous wording

We also discuss adjusted EBITDA, a non-GAAP financial performance measure we believe offers a useful view of the overall operation of our business. We define adjusted EBITDA as net loss before (1) other (income) expense , net, (2) interest expense, (3) income tax expense (benefit), (4) depreciation expense and amortization of intangible assets, (5) stock-based compensation expense, (6) Litigation Expense, (7) JPI Amortization, (8) Severance Costs, and (9) Lease Impairment and Lease-Related Charges. The most directly comparable GAAP financial measure to adjusted EBITDA is net loss. Users should consider the limitations of using adjusted EBITDA, including the fact that this measure does not provide a complete measure of our operating performance. Adjusted EBITDA is not intended to purport to be an alternative to net loss as a measure of operating performance or to cash flows from operating activities as a measure of liquidity.

Current wording

We also discuss adjusted EBITDA, a non-GAAP financial performance measure we believe offers a useful view of the overall operation of our business. We define adjusted EBITDA as net income (loss) before (1) other income, net, (2) interest expense, (3) income tax expense, (4) depreciation expense and amortization of intangible assets, (5) stock-based compensation expense, (6) Litigation Expense, (7) JPI Amortization, (8) Severance Costs, and (9) Lease Impairment and Lease-Related Charges. The most directly comparable GAAP financial measure to adjusted EBITDA is net income (loss). Users should consider the limitations of using adjusted EBITDA, including the fact this measure does not provide a complete depiction of our operating performance. Adjusted EBITDA is not intended to purport to be an alternative to net income (loss) as a measure of operating performance or to cash flows from operating activities as a measure of liquidity.

Previous wording

The following table reconciles GAAP net loss to adjusted EBITDA for the three and six months ended June 30, 2025 and 2024 (in thousands):

Current wording

The following table reconciles GAAP net income (loss) to adjusted EBITDA for the three and nine months ended September 30, 2025 and 2024 (in thousands):

Previous wording

In 2024, we entered into a Judgment Preservation Insurance policy in connection with our $2.036 billion judgment against Pegasystems. See Note 12 to the consolidated financial statements for additional details. The total cost of the policy was $57.3 million, which we paid with operating cash on hand. In February 2024, our Board of Directors authorized a share repurchase program, under which we repurchased approximately 1.3 million shares of our common stock for approximately $50.0 million during the first quarter of 2024. In addition, in May 2025, our Board of Directors authorized a second program to repurchase up to $10.0 million of our common stock from May 2025 to December 2025. In the second quarter of 2025, we repurchased 0.3 million shares under this program at an average share price of $31.91 and totaling $10.0 million.

Current wording

In 2023, we entered into a Judgment Preservation Insurance policy in connection with our $2.036 billion judgment against Pegasystems. See Note 12 to the consolidated financial statements for additional details. The total cost of the policy was $57.3 million, which we paid with operating cash on hand.

Previous wording

Outside of the above items and cash used by operations, other uses of cash in 2025 to date have included capital expenditures related to the expansion of the new leased facilities and principal repayments of our term loan debt.

Current wording

Outside of the above items and cash used by operations, other uses of cash in 2025 to date have included capital expenditures related to the expansion of new leased facilities and principal repayments of our term loan debt.

Previous wording

Furthermore, we have a non-cancellable cloud hosting arrangement with AWS that contains provisions for minimum purchase commitments. Specifically, purchase commitments under the agreement total $220.0 million over five years. The agreement, which was originated in July 2021 and amended in October 2024, currently contains minimum annual spending requirements of $44.0 million from November 2024 to October 2029. Spending under this agreement for the three and six months ended June 30, 2025 totaled $12.9 million and $23.3 million, respectively. Spending under this agreement for the three and six months ended June 30, 2024 totaled $10.7 million and $21.0 million, respectively. We expect to meet our minimum annual spending requirement during the term of the arrangement.

Current wording

Furthermore, we have a non-cancellable cloud hosting arrangement with AWS that contains provisions for minimum purchase commitments. Specifically, purchase commitments under the agreement total $220.0 million over five years. The agreement, which was originated in July 2021 and amended in October 2024, currently contains minimum annual spending requirements of $44.0 million from November 2024 to October 2029. Spending under this agreement for the three and nine months ended September 30, 2025 totaled $14.3 million and

Previous wording

Net cash provided by operating activities was $43.0 million for the six months ended June 30, 2025 as compared to $1.3 million provided by operating activities for the six months ended June 30, 2024. The increase in net cash provided by operating activities was primarily driven by increased cash collections stemming from strong contract bookings in the fourth quarter of 2024 and first half of 2025 as well as our continuing cost management activities.

Current wording

Net cash provided by operating activities was $61.7 million for the nine months ended September 30, 2025 as compared to $7.0 million of net cash used by operating activities for the nine months ended September 30, 2024. The increase in net cash provided by operating activities was primarily driven by increased cash collections stemming from strong contract bookings in the fourth quarter of 2024 and the first nine months of 2025, as well as our continuing cost management activities.

Previous wording

Net cash used by investing activities was $33.1 million for the six months ended June 30, 2025 as compared to $21.6 million in net cash used by investing activities for the six months ended June 30, 2024. This change was primarily driven by a $30.9 million increase in purchases of short-term investments. This increase was partially offset by an $18.3 million increase in proceeds from the maturity of investments and a $1.1 million decrease in capital expenditure payments.

Current wording

Net cash used by investing activities was $27.5 million for the nine months ended September 30, 2025 as compared to $34.3 million in net cash used by investing activities for the nine months ended September 30, 2024. This change was primarily driven by a $22.6 million increase in proceeds from the maturity of investments. This increase was partially offset by a $16.6 million increase in purchases of short-term investments.

Previous wording

Net cash used by financing activities was $19.0 million for the six months ended June 30, 2025 as compared to $6.7 million of net cash used by financing activities for the six months ended June 30, 2024. The increase in net cash used by financing activities was primarily due to a $50.0 million decrease in proceeds from borrowings, which was partially offset by a $40.0 million decrease in repurchases of common stock and a $2.5 million increase in debt repayments during the six months ended June 30, 2025.

Current wording

Net cash used by financing activities was $30.1 million for the nine months ended September 30, 2025 as compared to $8.5 million of net cash used by financing activities for the nine months ended September 30, 2024. The increase in net cash used by financing activities was primarily due to a $50.0 million decrease in proceeds from borrowings, which was partially offset by a $30.0 million decrease in repurchases of common stock, a $1.3 million increase in debt repayments, and a $1.0 million increase in payments for employee taxes related to the net share settlement of equity awards during the nine months ended September 30, 2025.