Freshworks Inc.

Previous wording

We provide people-first, AI service software that organizations use to deliver exceptional customer and employee experiences. We provide our solutions in two product families: Customer Experience (CX) and Employee Experience (EX). CX products include Freshdesk, Freshchat, Freshsales, and Freshmarketer. EX products include Freshservice, Freshservice for Business Teams and Device42. Our latest generative AI solutions, Freddy AI Agent and Freddy AI Copilot, further enhance the customer and employee experience.

Current wording

We provide people-first, AI service software that organizations use to deliver exceptional customer and employee experiences. We provide our solutions in two product families: Customer Experience (CX) and Employee Experience (EX). CX products include Freshdesk, Freshdesk Omni, Freshchat, Freshsales, and Freshmarketer. EX products include Freshservice, Freshservice for Business Teams and Device42. Our latest generative AI solutions, Freddy AI Agent and Freddy AI Copilot, further enhance the customer and employee experience. Freddy AI Agent offers always-on, autonomous, personalized resolutions to customer and employee queries. Freddy AI Copilot provides always-on contextual assistance for customer support, employee support, marketing and sales use cases to boost productivity.

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. With the acquisition of Device42 in the quarter ended June 30, 2024, we also sell software licenses with associated maintenance.

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 D42 Parent, Inc. in 2024, we also sell software licenses with associated maintenance.

Previous wording

Our customer base and operations have scaled over time. Our total revenue was $186.6 million and $153.6 million in the three months ended September 30, 2024 and 2023, respectively, representing year-over-year growth of 22%; and $525.8 million and $436.3 million in the nine months ended September 30, 2024 and 2023, respectively, representing year-over-year growth of 21%. We incurred operating losses of $38.9 million and $38.7 million for three months ended September 30, 2024 and 2023, respectively; and $114.8 million and $130.1 million for the nine months ended September 30, 2024 and 2023, respectively.

Current wording

Our customer base and operations have scaled over time. Our total revenue was $196.3 million and $165.1 million in the three months ended March 31, 2025 and 2024, respectively, representing year-over-year growth of 19%. We incurred operating losses of $10.4 million and $32.2 million for three months ended March 31, 2025 and 2024, 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. For example, during the recent quarters, 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 each of the quarters ended September 30, 2024, June 30, 2024 and September 30, 2023, we had approximately 27% 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, tariffs, the threat of new or increased tariffs, escalating trade tensions, 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 recent quarters, 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 still exist. For each of the quarters ended March 31, 2025, December 31, 2024 and March 31, 2024, we had approximately 27%, 27% and 28%, 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 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.

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, future results of operations, and financial condition.

Previous 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 18% of ARR as of September 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.

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 14% and 16% of ARR as of March 31, 2025 and 2024, 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 107% as of September 30, 2024, which was a decrease from 108% as of September 30, 2023 primarily due to lower expansion within existing customers driven by macroeconomic pressures, offset by a favorable foreign currency impact, the addition of Device42 and a slight improvement in our overall churn rate. 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 105% as of March 31, 2025, which was a decrease from 106% as of March 31, 2024 primarily due to lower expansion within existing customers driven by macroeconomic pressures, offset by the addition of Device42 and a slight improvement in our overall churn rate. 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 define non-GAAP income from operations as GAAP loss from operations, excluding stock-based compensation expense, employer payroll taxes on employee stock transactions, and amortization of acquired intangibles.

Current wording

We define non-GAAP income from operations as GAAP loss from operations, excluding stock-based compensation expense, employer payroll taxes on employee stock transactions, amortization of acquired intangibles, and restructuring charges.

Previous wording

We define non-GAAP net income as GAAP net loss, excluding stock-based compensation expense, employer payroll taxes on employee stock transactions, and amortization of acquired intangibles, net of their related tax effects.

Current wording

We define non-GAAP net income as GAAP net loss, excluding stock-based compensation expense, employer payroll taxes on employee stock transactions, restructuring charges, and amortization of acquired intangibles, and income tax adjustments.

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. 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.

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. We also sell software licenses with associated maintenance and professional services based on product offerings introduced upon the acquisition of D42 Parent, Inc. in June 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

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.

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 benefit period of three years. Marketing activities include online lead generation, advertising, and promotional events.

Previous wording

General and Administrative. General and administrative expense consists primarily of personnel-related costs, including salaries, related benefits, and stock-based compensation expense for certain executives and other general and administrative personnel, third-party professional services fees, including consulting, legal, audit, and accounting services, travel and entertainment costs, accounting, legal, human resources, and recruiting personnel, costs of director and officer insurance, costs associated with acquisitions of businesses, software license fees, and rental of office premises.

Current wording

General and Administrative. General and administrative expense consists primarily of personnel-related costs, including salaries, related benefits, and stock-based compensation expense for certain executives and other general and administrative personnel, third-party professional services fees, costs of director and officer insurance, and costs associated with acquisitions of businesses, software license fees, and rental of office premises.

Previous wording

As a publicly traded company, we expect to increase personnel-related and professional service expenses associated with ongoing compliance and reporting obligations and costs to broaden our IT related infrastructure. Our general and administrative expenses are expected to continue to increase in dollar amount for the foreseeable future, however, we expect it to decline as a percentage of revenue over the longer term. This percentage may fluctuate from period to period depending upon the timing and amount of our general and administrative expenses.

Current wording

We expect to increase personnel-related and professional service expenses associated with ongoing compliance and reporting obligations and costs to broaden our IT related infrastructure. Our general and administrative expenses are expected to continue to increase in dollar amount for the foreseeable future, however, we expect it to decline as a percentage of revenue over the longer term. This percentage may fluctuate from period to period depending upon the timing and amount of our general and administrative expenses.

Previous wording

The following table sets forth our consolidated statements of operations data for the periods presented (in thousands):

Current wording

The following table sets forth our condensed consolidated statements of operations data for the periods presented (in thousands):

Previous wording

(1) Stock-based compensation expense recorded to research and development in the consolidated statements of operations excludes amounts that were capitalized for internal-use software.

Current wording

(1) Stock-based compensation expense recorded to research and development in the condensed consolidated statements of operations excludes amounts that were capitalized for internal-use software.

Previous wording

(2) General and administrative expense includes stock-based compensation associated with RSUs and PRSUs granted to our Executive Chairman of $12.1 million and $14.1 million for the three months ended September 30, 2024 and 2023, respectively, and $38.3 million and $41.8 million for the nine months ended September 30, 2024 and 2023, respectively.

Current wording

(2) General and administrative expense includes stock-based compensation associated with RSUs and PRSUs granted to our Executive Chairman of $11.3 million and $13.5 million for the three months ended March 31, 2025 and 2024, respectively.

Previous wording

Revenue increased by $33.0 million, or 22%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. Of the total increasein revenue, approximately $9.7 million was attributable to revenue from existing customers as of September 30, 2023, net of contraction and churn, and approximately $23.3 million was attributable to revenue from new customers acquired during the twelve months ended September 30, 2024, net of contraction and churn, as well as all revenue from Device42 during the quarter. Our net dollar retention rate of 107% as of September 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 September 30, 2023 primarily due to lower expansion within existing customers driven by macroeconomic pressures, offset by a favorable foreign currency impact, the addition of Device42 and a slight improvement in our overall churn rate. The majority of our revenue continues to be generated from subscription services.

Current wording

Revenue increased by $31.1 million, or 19%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. Of the total increase in revenue, approximately $8.4 million was attributable to revenue from existing customers as of March 31, 2024, net of contraction and churn, and approximately $22.7 million was attributable to revenue from new customers acquired during the twelve months ended March 31, 2025, net of contraction and churn, as well as all revenue from Device42 during the quarter. Our net dollar retention rate of 105% as of March 31, 2025 reflects the expansion within existing customers and the sale of additional products to these customers. Our net dollar retention rate decreased from 106% as of March 31, 2024 primarily due to lower expansion within existing customers driven by macroeconomic pressures, offset by the addition of Device42 and a slight improvement in our overall churn rate. The majority of our revenue continues to be generated from subscription services.

Previous wording

Cost of revenue increased by $3.5 million, or 13%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. This was primarily due to increases of $1.4 million in amortization of acquired developed technologies and internally capitalized software, $0.9 million in personnel-related costs, $0.8 million in third-party hosting costs and $0.5 million in professional and consulting expenses. Our gross margin increased to 84% for the three months ended September 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.

Current wording

Cost of revenue increased by $4.0 million, or 15%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. This was primarily due to increases of $1.2 million in amortization of acquired developed technologies, $1.1 million in personnel-related costs primarily due to annual compensation adjustments and changes in retirement benefit obligations for employees in India, $1.0 million in subscription and third-party hosting fees as we increase our capacity to serve our increasing customer base. Our gross margin increased to 85% for the three months ended March 31, 2025 from 84% 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 $29.6 million, or 18%, increase in our operating expenses for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, was primarily driven by increases in personnel-related costs due to annual compensation adjustments, stock-based compensation expense, amortization of developed technologies, advertisement, marketing and branding costs, and professional services fees.

Current wording

The $5.4 million or 3%, increase in our operating expenses for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was primarily driven by changes in personnel and related stock-based compensation costs, as well as higher amortization of developed technologies, offset by lower advertisement, marketing and branding costs.

Previous wording

Research and development expense increased by $13.0 million, or 37%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily driven by an increase of $7.1 million in personnel-related costs, $3.8 million in stock-based compensation expense, $0.7 million in professional services and subscription costs, and $0.5 million in web-hosting charges.

Current wording

Research and development expense increased by $5.3 million, or 15%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily driven by an increase of $3.8 million in personnel-related costs and $0.5 million in stock-based compensation expense. The increase in personnel-related costs was mainly driven by the acquisition of D42 Parent, Inc., annual compensation adjustments, changes in retirement benefit obligations for employees in India and higher variable incentive compensation, partially offset by higher capitalization of internally developed software costs.

Previous wording

Sales and marketing expense increased by $10.6 million, or 12%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. This was primarily driven by increases of $8.5 million in personnel-related costs, $2.3 million in amortization of acquired intangible assets, $1.2 million in advertisement, marketing and branding costs, $0.6 million in reseller commissions, and $0.5 million in travel expenses, partially offset by a decrease of $3.5 million in stock-based compensation expense.

Current wording

Sales and marketing expense decreased by $5.5 million, or 6%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. This was primarily driven by decreases of $3.9 million in stock-based compensation expense primarily impacted by the restructuring and transition of our President to CEO mid 2024, $2.5 million in advertisement, marketing and branding costs, $1.1 million in personnel-related costs and $0.8 million in travel expenses; partially offset by an increase of $2.1 million in amortization of acquired intangible assets related to the acquisition of D42 Parent, Inc.. The decrease in personnel-related costs was primarily driven by reduced headcount following the restructuring, offset by annual compensation adjustments and changes in retirement benefit obligations for employees in India.

Previous wording

Interest income increased by $7.3 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to an increase in interest rates and increased interest income earned on larger balances maintained in our marketable securities portfolios.

Current wording

Interest income decreased by $2.6 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to lower balances maintained in our marketable securities portfolios.

Previous wording

Other income (expense), net changed by $2.8 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to a favorable impact from changes in foreign exchange rates in British Pound and euro against the U.S. dollar.

Current wording

Other income (expense), net changed by $2.8 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to changes in foreign exchange rates in British Pound, Indian Rupee, and euro against the U.S. dollar.

Previous wording

We are subject to federal and state income taxes in the United States and taxes in foreign jurisdictions. For the three months ended September 30, 2024 and 2023, we recorded a provision for income taxes of $5.0 million and $3.3 million on loss before taxes of $24.9 million and $27.7 million, respectively. The increase in provision for income taxes during the three months ended September 30, 2024, was primarily due to an increase in profit before tax in certain foreign jurisdictions.

Current wording

We are subject to federal and state income taxes in the United States and taxes in foreign jurisdictions. For the three months ended March 31, 2025 and 2024, we recorded a provision for income taxes of $3.9 million and $4.0 million on income (loss) before taxes of $2.6 million and $(19.4) million, respectively.

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 September 30, 2024, we had an accumulated deficit of $3.7 billion. Our operating activities resulted in cash inflows of $119.3 million for the nine months ended September 30, 2024. In November 2024, we committed to a restructuring plan that is expected to incur charges in the fourth quarter of 2024, consisting primarily of cash expenditures for separation-related payments, employee benefits and related costs. See Note 14—Subsequent Events.

Current wording

As of March 31, 2025, we had an accumulated deficit of $3.7 billion. Our operating activities resulted in cash inflows of $58.0 million for the three months ended March 31, 2025.

Previous wording

We believe our existing cash, cash equivalents and marketable securities, will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months. We believe we will meet longer-term expected future cash requirements and obligations through a combination of our existing cash and cash equivalents balances, cash flow from operations, and issuances of equity securities or debt offerings. Our future capital requirements will depend on many factors, including the rate of our revenue growth, the timing and extent of spending on research and development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced product offerings, and other business initiatives and the continuing market adoption of our products. We may in the future enter into arrangements to acquire or invest in complementary businesses, services, and technologies, including intellectual property rights. We may be required to seek additional equity or debt financing in connection with such activities. If we raise additional funds through the incurrence of indebtedness, such indebtedness may have rights that are senior to holders of our equity securities and could contain covenants that restrict our operational flexibility. Any additional equity or convertible debt financing may be dilutive to stockholders. In the event that additional financing is required from outside sources, we may not be able to raise such financing on terms acceptable to us or at all.

Current wording

We believe our existing sources of liquidity will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months. We believe we will meet longer-term expected future cash requirements and obligations through a combination of our existing cash available balances, cash flow from operations, and issuances of equity securities or debt offerings, as needed. Our future capital requirements will depend on many factors, including the rate of our revenue growth, the timing and extent of spending on research and development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced product offerings, and other business initiatives and the continuing market adoption of our products. We may in the future enter into arrangements to acquire or invest in complementary businesses, services, and technologies, including intellectual property rights. We may be required to seek additional equity or debt financing in connection with such activities. If we raise additional funds through the incurrence of indebtedness, such indebtedness may have rights that are senior to holders of our equity securities and could contain covenants that restrict our operational flexibility. Any additional equity or convertible debt financing may be dilutive to stockholders. In the event that additional financing is required from outside sources, we may not be able to raise such financing on terms acceptable to us or at all.

Previous wording

Net cash provided by operating activities of $119.3 million for the nine months ended September 30, 2024 reflects our net loss of $73.5 million, adjusted for non-cash items such as stock-based compensation of $166.3 million, amortization of deferred contract acquisition costs of $20.7 million, depreciation and amortization of $13.1 million, and non-cash lease expense of $6.6 million; offset by 13.8 million from changes in deferred income taxes and $13.0 million from discount amortization of marketable securities. Additionally, net cash inflows from changes in operating assets and liabilities were $12.6 million. The net cash inflows from changes in operating assets and liabilities were due to a decrease of $6.6 million in accounts receivable and increases in operating liabilities of $27.0 million in deferred revenue, $10.2 million in accrued and other liabilities and $3.1 million in accounts payable; offset by increases in operating assets of $24.7 million in deferred contract acquisition costs and $7.7 million in prepaid expenses and other assets; and a decrease of $1.8 million in operating lease liabilities.

Current wording

Net cash provided by operating activities of $58.0 million for the three months ended March 31, 2025 reflects our net loss of $1.3 million, adjusted for non-cash items such as stock-based compensation of $51.7 million, amortization of deferred contract acquisition costs of $7.6 million, depreciation and amortization of $6.4 million, and non-cash lease expense of $2.3 million; offset by $1.9 million from discount amortization of marketable securities and 0.5 million from changes in deferred income taxes. Additionally, net cash outflows from changes in operating assets and liabilities were $6.3 million. The net cash outflows from changes in operating assets and liabilities were due to an increase of $15.3 million in prepaid expenses and other assets, an increase of $8.7 million in deferred contract acquisition costs; offset by a decrease of $10.6 million in accounts receivable and an increase of $7.0 million in deferred revenue.

Previous wording

Net cash provided by operating activities of $55.3 million for the nine months ended September 30, 2023 reflects our net loss of $109.4 million, adjusted for non-cash items such as stock-based compensation of $160.1 million, amortization of deferred contract acquisition costs of $17.6 million, depreciation and amortization of $9.1 million and non-cash lease expense of $5.7 million; offset by $12.1 million from discount amortization of marketable securities and net cash outflows of $15.9 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 $19.1 million in deferred contract acquisition costs, $11.8 million in prepaid expenses and other assets, $10.0 million in accounts receivable; and a decrease in operating liabilities of $9.1 million in lease liabilities, $3.2 million in accrued and other liabilities, and $3.2 million in accounts payable; offset by an increase in operating liabilities of $40.5 million in deferred revenue.

Current 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.

Previous wording

Net cash provided by investing activities of $146.3 million for the nine months ended September 30, 2023 consisted of $152.3 million in proceeds from maturities and sales, net of purchases of marketable securities; offset by $5.1 million in capitalized internal-use software and $1.0 million in purchases of property and equipment.

Current wording

Net cash provided by investing activities of $46.2 million for the three months ended March 31, 2025 consisted of $50.3 million in maturities and redemptions of marketable securities, net of purchases; offset by $2.8 million in capitalized internal-use software and $1.3 million in purchases of property and equipment.

Previous wording

Net cash used in investing activities of $170.3 million for the nine months ended September 30, 2024 consisted of $213.9 million cash paid for the business combination, net of cash acquired, $4.1 million in purchases of property and equipment, $3.6 million in capitalized internal-use software, offset by $51.2 million in maturities and sales of marketable securities, net of purchases.

Current 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 proceeds from maturities and sales, $1.2 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 $46.0 million for the nine months ended September 30, 2024 consisted of $49.6 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.

Current wording

Net cash used in financing activities of $130.3 million for the three months ended March 31, 2025 consisted of $113.6 million cash paid to repurchase shares of our common stock and $16.7 million in payment of withholding taxes on net share settlement of equity awards.

Previous wording

Net cash used in financing activities of $47.4 million for the nine months ended September 30, 2023 consisted of $51.8 million in payment of withholding taxes on net share settlement of equity awards; offset by $4.3 million of proceeds from the issuance of common stock under our employee stock purchase plan, net of taxes withheld.

Current wording

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

Previous wording

There have been no changes to our critical accounting policies and estimates during the three and nine months ended September 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:

Current wording

There have been no changes to our critical accounting policies and estimates during the three months ended March 31, 2025 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 20, 2025.

Previous wording

See Note 1—Business, Basis of Presentation and Summary of Significant Accounting Policies to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information.

Current wording

See Note 1—Basis of Presentation and Summary of Significant Accounting Policies to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information.