Freshworks Inc

Previous wording

We generate revenue primarily from the sale of subscriptions for accessing our cloud-based software products over the contract term. We generally enter into subscription agreements with our customers on monthly, annual, or multi-year terms and invoice customers in advance in either monthly or annual installments. We also sell professional services that include product configuration, data migration, systems integration, and training. Professional services revenue is recognized as services are performed.

Current wording

We generate revenue primarily from the sale of subscriptions for accessing our cloud-based software products over the contract term. We generally enter into subscription agreements with our customers on monthly, annual, or multi-year terms and invoice customers in advance in either monthly or annual installments. We also sell professional services that include product configuration, data migration, systems integration, and training. With the acquisition of Device42 in the quarter ended June 30, 2024, we also sell software licenses with associated maintenance.

Previous wording

Our customer base and operations have scaled over time. Our total revenue was $165.1 million and $137.7 million in the three months ended March 31, 2024 and 2023, respectively, representing year-over-year growth of 20%. We incurred operating losses of $32.2 million and $48.1 million for three months ended March 31, 2024 and 2023, respectively.

Current wording

Our customer base and operations have scaled over time. Our total revenue was $174.1 million and $145.1 million in the three months ended June 30, 2024 and 2023, respectively, representing year-over-year growth of 20%; and $339.3 million and $282.8 million in the six months ended June 30, 2024 and 2023, respectively, representing year-over-year growth of 20%. We incurred operating losses of $43.8 million and $43.3 million for three months ended June 30, 2024 and 2023, respectively; and $76.0 million and $91.4 million for the six months ended June 30, 2024 and 2023, respectively.

Previous wording

Current macroeconomic uncertainties, including inflationary pressures, significant volatility in global markets, and geopolitical developments have impacted and may continue to impact business spending and the overall economy, and in turn our business. These macroeconomic events could adversely affect demand for our products and services. Additionally, foreign currency exchange rate fluctuations negatively impacted our revenue growth historically and volatility in the foreign currency market may still exist. Compared to the first quarter of 2023, the United States Dollar weakened against the Euro and British Pound which contributed to positive impacts in our results of operations during the current quarter. For the quarters ended March 31, 2024, December 31, 2023 and March 31, 2023, we had approximately 28%, 27% and 26%, respectively, of revenue exposure related to the Euro and British Pound. If adverse conditions arise, they could have a material adverse impact on our results and our ability to accurately predict our future results and earnings.

Current wording

Current macroeconomic uncertainties, including inflationary pressures, significant volatility in global markets, and geopolitical developments have impacted and may continue to impact business spending and the overall economy, and in turn our business. These macroeconomic events could adversely affect demand for our products and services. For example, during the quarter ended June 30, 2024, our net dollar retention rate was adversely impacted by lower expansion within existing customers driven by macroeconomic pressures and we expect these pressures to persist for the foreseeable future. Additionally, foreign currency exchange rate fluctuations negatively impacted our revenue growth historically and volatility in the foreign currency market may still exist. For the quarters ended June 30, 2024, March 31, 2024 and June 30, 2023, we had approximately 27%, 28% and 27%, respectively, of revenue exposure related to the Euro and British Pound. If adverse conditions arise, they could have a material adverse impact on our results and our ability to accurately predict our future results and earnings.

Previous wording

Given our subscription-based business model, the effects of the macroeconomic conditions may not be fully reflected in our revenue until future periods. The ultimate impact on our business and operations remains highly uncertain, and it is not possible for us to predict the duration and extent to which this will affect our business, productivity of our employees, future results of operations, and financial condition.

Current wording

Given our business model is primarily subscription-based, the effects of the macroeconomic conditions may not be fully reflected in our revenue until future periods. The ultimate impact on our business and operations remains highly uncertain, and it is not possible for us to predict the duration and extent to which this will affect our business, productivity of our employees, future results of operations, and financial condition.

Previous wording

Our net dollar retention rate measures our ability to increase revenue across our existing customer base through expansion of users and products associated with a customer as offset by our churn and contraction in the number of users and products associated with a customer. To calculate net dollar retention rate as of a particular date, we first determine "Entering ARR," which is ARR from the population of our customers as of 12 months prior to the end of the reporting period. We then calculate the "Ending ARR," which is ARR from the same set of customers as of the end of the reporting period. We then divide the Ending ARR by the Entering ARR to arrive at our net dollar retention rate. Ending ARR includes upsells, cross-sells, and renewals during the measurement period and is net of any contraction or attrition over this period.

Current wording

Our net dollar retention rate measures our ability to increase revenue across our existing customer base through expansion of users and products associated with a customer as offset by our churn and contraction in the number of users and products associated with a customer. To calculate net dollar retention rate as of a particular date, we first determine “Entering ARR,” which is ARR from the population of our customers as of 12 months prior to the end of the reporting period. We then calculate the “Ending ARR,” which is ARR from the same set of customers as of the end of the reporting period. We then divide the Ending ARR by the Entering ARR to arrive at our net dollar retention rate. Ending ARR includes upsells, cross-sells, renewals and expansion as a result of acquisitions during the measurement period and is net of any contraction or attrition over this period.

Previous wording

We define ARR as the sum total of subscription revenue we would contractually expect to recognize over the next 12 months from all customers at a point in time, assuming no increases, reductions, or cancellations in their subscriptions. For monthly subscriptions, we take the recurring revenue run-rate of such subscriptions for the last month of the period and multiply it by 12 to get to ARR. While monthly subscribers as a group have historically maintained or increased their subscriptions over time, there is no guarantee that any particular customer on a monthly subscription will renew its subscription in any given month, and therefore the calculation of ARR for these monthly subscriptions may not accurately reflect revenue to be received over a 12-month period from such customers, and net dollar retention rate may reflect a higher rate than the actual rate if customers on monthly subscriptions choose not to renew during the course of the 12 months. Monthly subscriptions represented 16% and 19% of ARR as of March 31, 2024 and 2023, respectively. The net dollar retention rate for customers on monthly contracts has generally been lower than our overall net dollar retention rate. In addition, as part of our regular review of customer data that includes reviewing customers purchasing our products via resellers so we can properly attribute them as end customers, we may make adjustments that could impact the calculation of net dollar retention rate.

Current wording

We define ARR as the sum total of subscription, software license, and maintenance revenue we would contractually expect to recognize over the next 12 months from all customers at a point in time, assuming no increases, reductions, or cancellations in their subscriptions, and assuming that revenues are recognized ratably over the term of the contract. For monthly subscriptions, we take the recurring revenue run-rate of such subscriptions for the last month of the period and multiply it by 12 to get to ARR. While monthly subscribers as a group have historically maintained or increased their subscriptions over time, there is no guarantee that any particular customer on a monthly subscription will renew its subscription in any given month, and therefore the calculation of ARR for these monthly subscriptions may not accurately reflect revenue to be received over a 12-month period from such customers, and net dollar retention rate may reflect a higher rate than the actual rate if customers on monthly subscriptions choose not to renew during the course of the 12 months. Monthly subscriptions represented 15% and 19% of ARR as of June 30, 2024 and 2023, respectively. The net dollar retention rate for customers on monthly contracts has generally been lower than our overall net dollar retention rate. In addition, as part of our regular review of customer data that includes reviewing customers purchasing our products via resellers so we can properly attribute them as end customers, we may make adjustments that could impact the calculation of net dollar retention rate.

Previous wording

Our net dollar retention rate was 106% as of March 31, 2024, which was a decrease from 107% as of March 31, 2023 primarily due to lower expansion within existing customers driven by macroeconomic pressures. We expect our net dollar retention rate could fluctuate in future periods due to a number of factors, including, but not limited to, difficult macroeconomic conditions, our expected growth, the level of penetration within our customer base, our ability to upsell and cross-sell products to existing customers, and our ability to retain our customers.

Current wording

Our net dollar retention rate was 106% as of June 30, 2024, which was a decrease from 108% as of June 30, 2023 primarily due to lower expansion within existing customers driven by macroeconomic pressures, partially offset by the addition of Device42. We expect our net dollar retention rate could fluctuate in future periods due to a number of factors, including, but not limited to, difficult macroeconomic conditions, our expected growth, the level of penetration within our customer base, our ability to upsell and cross-sell products to existing customers, and our ability to retain our customers.

Previous wording

We exclude the following items from one or more of our non-GAAP financial measures, including the related income tax effect of these adjustments:

Current wording

We exclude the following items from one or more of our non-GAAP financial measures:

Previous wording

•Amortization of acquired intangibles. We exclude amortization of acquired intangibles, which is a non-cash expense, from certain of our non-GAAP financial measures. Our expenses for amortization of acquired intangibles are inconsistent in amount and frequency because they are significantly affected by the timing, size of acquisitions, and the allocation of purchase price. We exclude these amortization expenses because we do not believe these expenses have a direct correlation to the operation of our business.

Current wording

•Amortization of acquired intangibles. We exclude amortization of acquired intangibles, which is a non-cash expense, from certain of our non-GAAP financial measures. Our expenses for amortization of acquired intangibles are inconsistent in amount and frequency because they are significantly affected by the timing, size of acquisitions, and the allocation of purchase price. We exclude these amortization expenses because we do not believe these expenses have a direct correlation to the operating performance of our business.

Previous wording

Substantially all of our revenue is derived from subscriptions, which is comprised of fees paid by customers for accessing our cloud-based software products during the term of the subscription. Subscription revenue is recognized ratably over the contract term beginning on the commencement date of each subscription, which is the date that the cloud-based software is made available to customers.

Current wording

Substantially all of our revenue is derived from subscriptions, which is comprised of fees paid by customers for accessing our cloud-based software products during the term of the subscription. Subscription revenue is recognized ratably over the contract term beginning on the commencement date of each subscription, which is the date that the cloud-based software is made available to customers. The Company also sells software licenses with associated maintenance and professional services based on product offerings introduced upon the acquisition of Device42 in the quarter ended June 30, 2024. Software license revenue is recognized upon making the software available to the customer and maintenance revenue is recognized as support and updates are provided, which is generally ratably over the contract term.

Previous wording

We generally enter into subscription agreements with our customers on monthly, annual, or multi-year terms and invoice customers in advance in either monthly or annual installments. Our payment terms generally require the customers to pay the invoiced amount in advance or within 30 days from the invoice date. Our professional services are generally billed in advance along with the related subscription arrangements.

Current wording

We generally enter into subscription and software license agreements with our customers on monthly, annual, or multi-year terms and invoice customers in advance in either monthly or annual installments. Our payment terms generally require the customers to pay the invoiced amount in advance or within 30 days from the invoice date. Our maintenance and professional services are generally billed in advance along with the related subscription and software license arrangements.

Previous wording

Research and Development. Research and development expense consists primarily of personnel-related costs, including salaries, related benefits, and stock-based compensation expense for engineering and product development employees, software license fees, rental of office premises, third-party product development services and consulting expenses, and depreciation expense for equipment used in research and development activities. We capitalize a portion of our research and development expenses that meet the criteria for capitalization of internal-use software. All other research and development costs are expensed as incurred.

Current wording

Research and Development. Research and development expense consists primarily of personnel-related costs, including salaries, related benefits, and stock-based compensation expense for engineering and product development employees and certain executives, software license fees, rental of office premises, third-party product development services and consulting expenses, and depreciation expense for equipment used in research and development activities. We capitalize a portion of our research and development expenses that meet the criteria for capitalization of internal-use software. All other research and development costs are expensed as incurred.

Previous wording

Sales and Marketing. Sales and marketing expense consists primarily of personnel-related costs, including salaries, related benefits, and stock-based compensation expense for our sales personnel, sales commissions for our sales force and reseller commissions for our channel sales partners, as well as costs associated with marketing activities, travel and entertainment costs, software license fees, and rental of office premises. Sales commissions that are considered incremental costs incurred to obtain contracts with customers are deferred and amortized over the expected benefit period of three years. Marketing activities include online lead generation, advertising, and promotional events.

Current wording

Sales and Marketing. Sales and marketing expense consists primarily of personnel-related costs, including salaries, related benefits, and stock-based compensation expense for our sales personnel and certain executives, sales commissions for our sales force and reseller commissions for our channel sales partners, as well as costs associated with marketing activities, travel and entertainment costs, software license fees, and rental of office premises. Sales commissions that are considered incremental costs incurred to obtain contracts with customers are deferred and amortized over the expected benefit period of three years. Marketing activities include online lead generation, advertising, and promotional events.

Previous wording

Provision for income tax consists primarily of income taxes related to U.S. states and foreign jurisdictions in which we conduct business. We maintain a full valuation allowance on our U.S. federal and state net deferred tax assets as we have concluded that it is not more likely than not that the deferred tax assets will be realized. Our effective tax rate is affected by tax rates in foreign jurisdictions and the relative amounts of income we earn in those jurisdictions, as well as non-deductible expenses, such as stock-based compensation, and changes in our valuation allowance.

Current wording

Provision for (benefit from) income taxes consists primarily of income taxes related to U.S. states and foreign jurisdictions in which we conduct business. We maintain a full valuation allowance on our U.S. federal and state net deferred tax assets as we have concluded that it is not more likely than not that the deferred tax assets will be realized. Provision for (benefit from) income taxes could also includes changes in valuation allowance. Our effective tax rate is affected by tax rates in foreign jurisdictions and the relative amounts of income we earn in those jurisdictions, as well as non-deductible expenses, such as stock-based compensation, and changes in our valuation allowance.

Previous wording

(2) General and administrative expense includes $13.5 million and $13.8 million of stock-based compensation expense for the three months ended March 31, 2024 and 2023, respectively, associated with RSUs and PRSUs granted to our CEO.

Current wording

(2) General and administrative expense includes stock-based compensation associated with RSUs and PRSUs granted to our Executive Chairman of $12.7 million and $13.9 million for the three months ended June 30, 2024 and 2023, respectively, and $26.2 million and $27.7 million for the six months ended June 30, 2024 and 2023, respectively.

Previous wording

Revenue increased by $27.5 million, or 20%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. Of the total increase in revenue, approximately $12.5 million was attributable to revenue from existing customers as of March 31, 2023, net of contraction and churn, and approximately $15.0 million was attributable to revenue from new customers acquired during the twelve months ended March 31, 2024, net of contraction and churn. Our net dollar retention rate of 106% as of March 31, 2024 reflects the expansion within existing customers and the sale of additional products to these customers. Our net dollar retention rate decreased from 107% as of March 31, 2023 primarily due to relatively lower expansion within existing customers driven by macroeconomic pressures. The majority of our revenue continues to be generated from subscription services.

Current wording

Revenue increased by $29.1 million, or 20%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. Of the total increase in revenue, approximately $10.9 million was attributable to revenue from existing customers as of June 30, 2023, net of contraction and churn, and approximately $18.2 million was attributable to revenue from new customers acquired during the twelve months ended June 30, 2024 (including revenue from Device42 since the date of the acquisition), net of contraction and churn. Our net dollar retention rate of 106% as of June 30, 2024 reflects the expansion within existing customers and the sale of additional products to these customers. Our net dollar retention rate decreased from 108% as of June 30, 2023 primarily due to relatively lower expansion within existing customers driven by macroeconomic pressures, partially offset by the addition of Device42. The majority of our revenue continues to be generated from subscription services.

Previous wording

Cost of revenue increased by $0.7 million, or 3%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. This was primarily due to increases of $0.9 million in software license fees, $0.6 million in third-party hosting costs, partially offset by a decrease of $0.9 million in personnel-related costs. Our gross margin increased to 84% for the three months ended March 31, 2024 from 82% in the same period of the prior year, as we increased our revenue and continue to realize benefits from economies of scale primarily related to our third-party hosting costs.

Current wording

Cost of revenue increased by $3.3 million, or 13%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. This was primarily due to increases of $1.1 million in software license fees and third-party hosting costs, $0.7 million in professional service fees, $0.6 million in personnel-related costs and $0.6 million in amortization of developed technologies and internally capitalized software. Our gross margin increased to 84% for the three months ended June 30, 2024 from 83% in the same period of the prior year, as we increased our revenue and continue to realize benefits from economies of scale primarily related to our third-party hosting costs.

Previous wording

The $10.9 million, or 7%, increase in our operating expenses for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, was primarily driven by increases in personnel-related costs due to annual compensation adjustments and stock-based compensation expense, advertisement, branding, travel and event costs, and professional services fees.

Current wording

The $26.2 million, or 16%, increase in our operating expenses for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, was primarily driven by increases in personnel-related costs due to annual compensation adjustments and stock-based compensation expense, advertisement, branding, travel and event costs, and professional services fees.

Previous wording

Sales and marketing expense increased by $7.8 million, or 9%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. This was primarily driven by increases of $3.4 million in advertisement, branding, travel and event costs, $1.5 million in stock-based compensation expense, $0.9 million in professional services fees, $0.9 million in reseller commissions, and $0.6 million in personnel related costs.

Current wording

Sales and marketing expense increased by $16.3 million, or 18%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. This was primarily driven by increases of $6.6 million in personnel related costs, $4.4 million in advertisement, branding, travel and event costs, $1.6 million in reseller commissions, $1.1 million in stock-based compensation expense and $1.0 million in professional services fees.

Previous wording

General and administrative expense increased by $1.2 million, or 3%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. This was primarily driven by increases of $0.7 million in stock-based compensation expense, $0.6 million in local and regulatory taxes, partially offset by a decrease of $0.5 million in directors and officers' insurance.

Current wording

General and administrative expense increased by $3.2 million, or 8%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. This was primarily driven by increases of $2.5 million in personnel related costs and $2.1 million in professional services fees, partially offset by decreases of $1.3 million in local and regulatory taxes, and $0.5 million in directors and officers' insurance.

Previous wording

Interest income increased $4.6 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily due to interest income earned on higher balances maintained in our marketable securities portfolio and increases in average interest rates.

Current wording

Interest income increased $2.5 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, primarily due to interest income earned on higher balances maintained in our marketable securities portfolio and increases in average interest rates.

Previous wording

Other income (expense), net decreased by $1.3 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily due to an unfavorable foreign exchange movement in the U.S. dollar.

Current wording

Other income (expense), net decreased by $0.5 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, primarily due to unfavorable foreign exchange movement in the U.S. dollar.

Previous wording

We are subject to federal and state income taxes in the United States and taxes in foreign jurisdictions. The provision for income taxes was$4.0 million each for the three months ended March 31, 2024 and 2023 as profits before tax for foreign jurisdictions remained relatively flat for the three months ended March 31, 2024 and 2023.

Current wording

We are subject to federal and state income taxes in the United States and taxes in foreign jurisdictions. The benefit from income taxes was$10.4 million and the income tax expense was $3.6 million for the three months ended June 30, 2024 and 2023, respectively. The net increase in tax benefit of$13.9 million was primarily related to a tax benefit of$14.3 million from the Device42 acquisition, partially offset by $0.4 million of higher tax expenses due to higher foreign profits before tax.

Previous wording

As of March 31, 2024, we had cash and cash equivalents of $468.0 million and marketable securities of $739.3 million. Our marketable securities consist primarily of U.S. treasury securities, U.S. government agency securities, corporate debt securities, and certificates of deposit.

Current wording

As of June 30, 2024, we had cash and cash equivalents of $310.3 million and marketable securities of $708.8 million. Our marketable securities consist primarily of U.S. treasury securities, U.S. government agency securities, corporate debt securities, and certificates of deposit.

Previous wording

Since inception, we have funded our operations primarily with financing through the issuance of redeemable convertible preferred and common stock to investors and through our IPO in September 2021. As of March 31, 2024, we had an accumulated deficit of $3.7 billion. Our operating activities resulted in cash inflows of $40.6 million for the three months ended March 31, 2024.

Current wording

Since inception, we have funded our operations primarily with financing through the issuance of redeemable convertible preferred and common stock to investors and through our IPO in September 2021. As of June 30, 2024, we had an accumulated deficit of $3.7 billion. Our operating activities resulted in cash inflows of $77.0 million for the six months ended June 30, 2024.

Previous wording

Our other material cash requirements are related to the settlement of future contractual obligations associated with operating leases and other service subscription agreements (as described in Contractual Obligations and Commitments below). On April 30, 2024, we also entered into a definitive agreement to acquire all outstanding shares of Device42, an IT asset management company, for $230 million. See Note 12—Subsequent Event to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information.

Current wording

Our other material cash requirements are related to the settlement of future contractual obligations associated with operating leases and other service subscription agreements (as described in Contractual Obligations and Commitments below).

Previous wording

Net cash provided by operating activities of $40.6 million for the three months ended March 31, 2024 reflects our net loss of $23.3 million, adjusted for non-cash items such as stock-based compensation of $52.4 million, amortization of deferred contract acquisition costs of $6.7 million, net cash inflows of $4.1 million from changes in operating assets and liabilities, depreciation and amortization of $3.0 million, and non-cash lease expense of $2.0 million; offset by $4.6 million from discount amortization of marketable securities. The net cash inflows from changes in operating assets and liabilities were due to a decrease in operating assets of $12.9 million in accounts receivable; offset by increases in operating assets of $7.1 million in deferred contract acquisition costs and $6.6 million in prepaid expenses and other assets; and an increase in operating liabilities of $9.5 million in deferred revenue; offset by decreases in operating lease liabilities of $2.8 million and $2.0 million in accounts payable.

Current wording

Net cash provided by operating activities of $77.0 million for the six months ended June 30, 2024 reflects our net loss of $43.5 million, adjusted for non-cash items such as stock-based compensation of $107.6 million, amortization of deferred contract acquisition costs of $13.5 million, depreciation and amortization of $6.7 million, and non-cash lease expense of $4.4 million; offset by 13.8 million from changes in deferred income taxes and $8.7 million from discount amortization of marketable securities. Additionally, net cash inflows from changes in operating assets and liabilities were $11.0 million. The net cash inflows from changes in operating assets and liabilities were due to a decrease of $4.9 million in accounts receivable and increases in operating liabilities of $17.2 million in deferred revenue, $8.9 million in accrued and other liabilities and $6.0 million in accounts payable; offset by increases in operating assets of $16.9 million in deferred contract acquisition costs and $7.2 million in prepaid expenses and other assets; and a decrease of $2.0 million in operating lease liabilities.

Previous wording

Net cash used in operating activities of $11.5 million for the three months ended March 31, 2023 reflects our net loss of $42.7 million, adjusted for non-cash items such as stock-based compensation of $50.7 million, amortization of deferred contract acquisition costs of $5.6 million, depreciation and amortization of $3.1 million, non-cash lease expense of $1.9 million; offset by $3.5 million from discount amortization of marketable securities and net cash outflows of $3.8 million from changes in operating assets and liabilities. The net cash outflows from changes in operating assets and liabilities were due to increases in operating assets of $5.6 million in deferred contract acquisition costs, $7.2 million in prepaid expenses and other assets, $2.5 million in accounts receivable, and a decrease in operating liabilities of lease liabilities of $1.5 million; $1.5 million in accounts payable and $0.4 million in accrued and other liabilities; offset by increases in operating liabilities of $14.9 million in deferred revenue.

Current wording

Net cash provided by operating activities of $31.4 million for the six months ended June 30, 2023 reflects our net loss of $78.3 million, adjusted for non-cash items such as stock-based compensation of $104.9 million, amortization of deferred contract acquisition costs of $11.5 million, depreciation and amortization of $6.1 million, non-cash lease expense of $3.7 million; offset by $7.8 million from discount amortization of marketable securities and net cash outflows of $8.8 million from changes in operating assets and liabilities. The net cash outflows from changes in operating assets and liabilities were due to increases in operating assets of $12.8 million in deferred contract acquisition costs, $6.6 million in prepaid expenses and other assets, $3.6 million in accounts receivable, and a decrease in operating liabilities of $5.5 million in accrued and other liabilities, $4.9 million in lease liabilities, and $4.2 million in accounts payable; offset by an increase in operating liabilities of $28.7 million in deferred revenue.

Previous wording

Net cash used in investing activities of $37.8 million for the three months ended March 31, 2024 consisted of $35.9 million in purchases of marketable securities, net of maturities and sales, $1.2 million in capitalized internal-use software, and $0.7 million in purchases of property and equipment.

Current wording

Net cash used in investing activities of $220.5 million for the six months ended June 30, 2024 consisted of $213.9 million cash paid for the business combination, net of cash acquired, $1.2 million in purchases of marketable securities, net of maturities and sales, $2.4 million in capitalized internal-use software, and $3.1 million in purchases of property and equipment.

Previous wording

Net cash provided by investing activities of $41.3 million for the three months ended March 31, 2023 consisted of $43.7 million in proceeds from maturities and sales, net of purchases of marketable securities; offset by $0.4 million in purchases of property and equipment, and $2.0 million in capitalized internal-use software.

Current wording

Net cash provided by investing activities of $44.1 million for the six months ended June 30, 2023 consisted of $48.3 million in proceeds from maturities and sales, net of purchases of marketable securities; offset by $3.5 million in capitalized internal-use software and $0.7 million in purchases of property and equipment.

Previous wording

Net cash used in financing activities of $23.0 million and $12.4 million for the three months ended March 31, 2024 and 2023 consisted primarily of payment of withholding taxes on net share settlement of equity awards.

Current wording

Net cash used in financing activities of $34.3 million for the six months ended June 30, 2024 consisted of $38.0 million in payment of withholding taxes on net share settlement of equity awards; offset by $3.6 million of proceeds from the issuance of common stock under our employee stock purchase plan, net of taxes withheld.

Previous wording

We generally enter into subscription agreements with our customers on monthly, annual, or multi-year terms and invoice customers in advance in either monthly or annual installments. A small portion of our annual contracts may have billing terms that are different from their subscription terms, and most of our multi-year contracts are invoiced annually. As of March 31, 2024, remaining performance obligations totaled $435.4 million, which comprised $275.9 million of deferred revenue and $159.5 million of unbilled revenue.

Current wording

We generally enter into subscription and software license agreements with our customers on monthly, annual, or multi-year terms and invoice customers in advance in either monthly or annual installments. A small portion of our annual contracts may have billing terms that are different from their subscription terms and most of our multi-year contracts are invoiced annually. As of June 30, 2024, remaining performance obligations totaled $469.8 million, which comprised $287.6 million of deferred revenue and $182.2 million of unbilled amounts.

Previous wording

As of March 31, 2024, our estimated future contractual obligations totaled $340.2 million, of which $26.3 million and $313.9 million were operating lease commitments and other contractual obligations, respectively. See Note 6—Leases and Note 7—Commitments and Contingencies in the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information.

Current wording

As of June 30, 2024, our estimated future contractual obligations totaled $335.5 million, of which $31.7 million and $303.8 million were operating lease commitments and other contractual obligations, respectively. See Note 8—Leases and Note 9—Commitments and Contingencies in the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information.

Previous wording

There have been no changes to our critical accounting policies and estimates during the three months ended March 31, 2024 as compared to those disclosed in our "Management's Discussion and Analysis of Financial Condition and Results of Operations" set forth in our Annual Report on Form 10-K filed with the SEC on February 16, 2024.

Current wording

There have been no changes to our critical accounting policies and estimates during the three and six months ended June 30, 2024 as compared to those disclosed in our "Management's Discussion and Analysis of Financial Condition and Results of Operations" set forth in our Annual Report on Form 10-K filed with the SEC on February 16, 2024, except for the addition of the following revenue recognition policy for the business acquired in June 2024: