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, 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. Currently, over 72,000 companies choose Freshworks' uncomplicated solutions to increase efficiency and loyalty.

Current wording

We provide people-first AI service software that organizations use to deliver exceptional employee and customer experiences. Our employee experience (EX) products include Freshservice, Freshservice for Business Teams, Device42 and FireHydrant. Our customer experience (CX) products include our Freshdesk suite of products. Our AI offerings, which include Freddy AI Agent, Freddy AI Copilot and Freddy AI Insights, further enhance the employee and customer and employee experience and are designed to boost productivity.

Previous wording

In June 2024, we acquired all outstanding shares of D42 Parent, Inc., an IT asset management company for approximately $238.1 million, which primarily consisted of $225.3 million in cash, and approximately $12.9 million of common stock and stock options. Our consolidated financial statements and key business metrics as of and for the year ended December 31, 2024 include D42 Parent, Inc. since the acquisition date.

Current wording

In June 2024, we acquired all outstanding shares of D42 Parent, Inc., an IT asset management company for approximately $238.1 million, which primarily consisted of $225.3 million in cash, and approximately $12.9 million of common stock and stock options. Our consolidated financial statements and key business metrics include D42 Parent, Inc. since the acquisition date.

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

Previous wording

Our customer base and operations have scaled over time. Our total revenue was $720.4 million, $596.4 million and $498.0 million in the years ended December 31, 2024, 2023 and 2022, respectively, representing year-over-year growth rates of 21% and 20%, respectively. We incurred operating losses of $138.6 million, $170.2 million and $233.4 million in the years ended December 31, 2024, 2023 and 2022, respectively, and our net losses were $95.4 million, $137.4 million and $232.1 million in the years ended December 31, 2024, 2023 and 2022, respectively.

Current wording

Our customer base and operations have scaled over time. Our total revenue was $838.8 million, $720.4 million and $596.4 million in the years ended December 31, 2025, 2024 and 2023, respectively, representing year-over-year growth rates of 16% and 21%, respectively. We generated operating income of $13.2 million and incurred operating losses of $138.6 million and $170.2 million in the years ended December 31, 2025, 2024 and 2023, respectively, and recognized net income of $183.7 million and incurred net losses of $95.4 million and $137.4 million in the years ended December 31, 2025, 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. For example, during fiscal 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 each of the years ended December 31, 2024, 2023, and 2022 we had approximately 27%, 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 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 years ended December 31, 2025, 2024, and 2023 we had approximately 28%, 27%, 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

We will continue to invest in acquiring new customers across all of our products. We believe that our focus on offering products that delight our users facilitates our go-to-market strategy, which is designed to be product-led and self-service in nature, reducing the friction new customers have to overcome to adopt our products within their organization. Our approach to acquiring new customers allows us to benefit from user-driven, organic adoption of our products across organizations of all sizes, as well as enable our customers to standardize on our products across the organization. As of December 31, 2024 and 2023, we had more than 72,200 and 67,100 paying customers, respectively.

Current wording

We will continue to invest in acquiring new customers across all of our products. We believe that our focus on offering products that delight our users facilitates our go-to-market strategy, which is designed to be product-led and self-service in nature, reducing the friction new customers have to overcome to adopt our products within their organization. Our approach to acquiring new customers allows us to benefit from user-driven, organic adoption of our products across organizations of all sizes, as well as enable our customers to standardize on our products across the organization. As of December 31, 2025 and 2024, we had nearly 75,000 and over 72,200 paying customers, respectively.

Previous wording

We have made and continue to make significant investments in strengthening our outbound sales motion to enable adoption of department-specific and organization-wide use cases for mid-market and enterprise customers. We believe that larger businesses can benefit from implementing multiple Freshworks products, as once they are a customer they are able to expand their use of these products. We define annual recurring revenue (ARR) as the sum total of the 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. As of December 31, 2024 and 2023, 22,558 and 20,261 of our customers contributed more than $5,000 in ARR, respectively, demonstrating the broad appeal of our products to customers of all sizes and geographies, and as of December 31, 2024 and 2023, customers contributing more than $5,000 in ARR represented 90% and 89% of total ARR, respectively. We believe that the number of customers that contribute more than $5,000 in ARR is an indicator of our success in expanding upmarket to larger businesses.

Current wording

We have made and continue to make significant investments in strengthening our outbound sales motion to enable adoption of department-specific and organization-wide use cases for mid-market and enterprise customers. We believe that larger businesses can benefit from implementing multiple Freshworks products, as once they are a customer they are able to expand their use of these products. We define annual recurring revenue (ARR) as the sum total of the 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 subscription and maintenance contracts and upon delivery for software licenses. 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. As of December 31, 2025 and 2024, 24,762 and 22,558 of our customers contributed more than $5,000 in ARR, respectively, demonstrating the broad appeal of our products to customers of all sizes and geographies, and as of December 31, 2025 and 2024, customers contributing more than $5,000 in ARR represented 91% and 90% of total ARR, respectively. We believe that the number of customers that contribute more than $5,000 in ARR is an indicator of our success in expanding upmarket to larger businesses.

Previous wording

We measure the rate of expansion within our customer base using net dollar retention rate (as defined under Key Business Metrics), and we believe that our net dollar retention rate demonstrates our rate of expansion within our existing customer base. Our net dollar retention rate was 103% and 108% as of December 31, 2024 and December 31, 2023, respectively. On constant currency basis, our net dollar retention rate was 105% which was a decrease from prior year 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. These macroeconomic events could adversely affect demand for our products and services and we expect these pressures to persist for the foreseeable future

Current wording

We measure the rate of expansion within our customer base using net dollar retention rate (as defined under Key Business Metrics), and we believe that our net dollar retention rate demonstrates our rate of expansion within our existing customer base. Our net dollar retention rate was 108% and 103% as of December 31, 2025 and December 31, 2024, respectively. On constant currency basis, our net dollar retention rate was 104% which was an increase from prior year primarily due to an improvement in our overall churn rate.

Previous wording

We have a significant opportunity to expand within our existing customer base and substantially increase the number of customers that purchase multiple Freshworks products. As of December 31, 2024, approximately 36% of our customers purchased two or more Freshworks products, which includes customers on our Freshdesk Omni and Freshsales Suite subscription plans counting as customers who purchased multiple products. These customers represented 46% of total ARR as of December 31, 2024, illustrating the large opportunity we have to sell additional products to our current customer base and drive growth.

Current wording

We have a significant opportunity to expand within our existing customer base and substantially increase the number of customers that purchase multiple Freshworks products. As of December 31, 2025, approximately 31% of our customers purchased two or more Freshworks products. These customers represented 45% of total ARR as of December 31, 2025, illustrating the large opportunity we have to sell additional products to our current customer base and drive growth.

Previous wording

We continue to increase the number of customers that have entered into larger subscriptions with us. We had approximately 3,053 customers each contributing $50,000 or more in ARR as of December 31, 2024, representing an increase of 22% compared to 2,497 customers as of December 31, 2023. As of December 31, 2024 and December 31, 2023, customers contributing more than $50,000 in ARR represented approximately 50% and 48% of total ARR, respectively. We believe that the number of customers contributing $50,000 or more in ARR indicates the strategic importance of our products for our customers and our ability to both initially land significant accounts or grow customers into significant accounts over time. No single customer accounted for more than 1% of ARR and our top 10 customers represented less than 5% of ARR as of December 31, 2024, and we have no significant concentration in a specific industry vertical.

Current wording

We continue to increase the number of customers that have entered into larger subscriptions with us. We had approximately 3,760 customers each contributing $50,000 or more in ARR as of December 31, 2025, representing an increase of 23% compared to 3,053 customers as of December 31, 2024. As of December 31, 2025 and December 31, 2024, customers contributing more than $50,000 in ARR represented approximately 54% and 50% of total ARR, respectively. We believe that the number of customers contributing $50,000 or more in ARR indicates the strategic importance of our products for our customers and our ability to both initially land significant accounts or grow customers into significant accounts over time. No single customer accounted for more than 1% of ARR and our top 10 customers represented less than 5% of ARR as of December 31, 2025, and we have no significant concentration in a specific industry vertical.

Previous wording

We believe that we are early in addressing our large market opportunity and we intend to continue to make investments to support the growth and expansion of our business. We have a track record of bringing new products to market and scaling these new products over time. As of December 31, 2024, we have two primary products with over $100 million in ARR, Freshdesk and Freshservice. We intend to invest in growing our research and development team to extend the functionality of our solutions and continue to bring new solutions to market. Our investments in our Neo platform have helped us accelerate the pace of innovation.

Current wording

We believe that we are early in addressing our large market opportunity and we intend to continue to make investments to support the growth and expansion of our business. We have a track record of bringing new products to market and scaling these new products over time. As of December 31, 2025, we have two primary products with over $100 million in ARR, Freshservice and Freshdesk. We intend to invest in growing our research and development team to extend the functionality of our solutions and continue to bring new solutions to market. Our investments in our Neo platform have helped us accelerate the pace of innovation.

Previous wording

We believe that our market remains largely underserved. We intend to invest aggressively in our direct and indirect sales and marketing capabilities, including investments in our outbound sales motion. We have been global from our earliest product sales and our global footprint continues to expand, with customers in approximately 170 countries. During the year ended December 31, 2024, 46%, 38%, and 16% of our revenue was derived from customers in North America; Europe, Middle East and Africa; and the rest of the world, respectively. We have a significant opportunity to further expand globally. We plan to support more languages, recruit partners, hire sales and customer service personnel in additional countries as needed, and expand our presence in countries where we already operate. A critical part of our go-to-market strategy has been our broad and diverse set of partners that enrich our offerings, scale our geographic coverage, and help us reach a broader audience than we would be able to reach on our own, thus amplifying our go-to-market investments. We plan to continue to invest in growing our partner ecosystem to fuel additional customer acquisition and expand use cases within our existing customer base.

Current wording

We believe that our market remains largely underserved. We intend to invest aggressively in our direct and indirect sales and marketing capabilities, including investments in our outbound sales motion. We have been global from our earliest product sales and our global footprint continues to expand, with customers in over 170 countries. During the year ended December 31, 2025, 46%, 39%, and 15% of our revenue was derived from customers in North America; Europe, Middle East and Africa; and the rest of the world, respectively. We have a significant opportunity to further expand globally. We plan to support more languages, recruit partners, hire sales and customer service personnel in additional countries as needed, and expand our presence in countries where we already operate. A critical part of our go-to-market strategy has been our broad and diverse set of partners that enrich our offerings, scale our geographic coverage, and help us reach a broader audience than we would be able to reach on our own, thus amplifying our go-to-market investments. We plan to continue to invest in growing our partner ecosystem to fuel additional customer acquisition and expand use cases within our existing customer base.

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 14%, 17%, and 20% of ARR as of December 31, 2024, 2023 and 2022, 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 subscription and maintenance contracts and upon delivery for software licenses. 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 13%, 14%, and 17% of ARR as of December 31, 2025, 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 103% and 108% as of December 31, 2024 and 2023, respectively. Net dollar retention rate decreased from prior year primarily due to lower expansion within existing customers driven by macroeconomic pressures and an unfavorable foreign currency impact, 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.

Current wording

Our net dollar retention rate was 108% and 103% as of December 31, 2025 and 2024, respectively. Net dollar retention rate increased from prior year primarily due to a favorable foreign currency impact and an improvement in our 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

Software license revenue is generally sold as bundled arrangements that include the rights to a software license and maintenance and cloud-based software in some cases. Software license revenue consists of term licenses and is recognized upfront, upon making the software available to the customer. The associated software maintenance revenue is generally recognized ratably over the contract term as support and updates are provided to the customers over the term of the arrangement.

Current wording

Software license revenue is generally sold as bundled arrangements that include the rights to a software license and maintenance and cloud-based software in some cases. Software license revenue consists of term licenses and is recognized upfront, upon making the software available to the customer. The associated software maintenance revenue is generally recognized ratably over the contract term as support is provided to the customers over the term of the arrangement.

Previous wording

•Income tax effect and adjustments. We exclude the income tax effect of the above adjustments and income tax effect associated with acquisitions from our non-GAAP financial measures. We exclude these costs because we do not believe these expenses have a direct correlation to the operating performance of our business.

Current wording

•Income tax effect and adjustments. We exclude the income tax effect of the above adjustments, income tax effect associated with acquisitions and tax charges or benefits that are a result of a change in valuation allowance on deferred tax assets and its related impacts, from our non-GAAP financial measures. We exclude these costs because we do not believe these expenses have a direct correlation to the operating performance of our business.

Previous wording

Non-GAAP Income (Loss) From Operations and Non-GAAP Net Income (Loss)

Current wording

Non-GAAP Income From Operations and Non-GAAP Net Income

Previous wording

We define non-GAAP income (loss) 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.

Current wording

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

Previous wording

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

Current wording

We define non-GAAP net income as GAAP net income (loss), excluding stock-based compensation expense, employer payroll taxes on employee stock transactions, amortization of acquired intangibles, restructuring charges, gain on sale of non-marketable equity investments, acquisition expenses and income tax adjustments.

Previous wording

The following tables present a reconciliation of our GAAP loss from operations to our non-GAAP income (loss) from operations and our GAAP net loss to our non-GAAP net income (loss) for each of the periods presented (in thousands):

Current wording

The following tables present a reconciliation of our GAAP income (loss) from operations to our non-GAAP income from operations and our GAAP net income (loss) to our non-GAAP net income for each of the periods presented (in thousands):

Previous wording

We define free cash flow as net cash provided by (used in) operating activities, less purchases of property and equipment, and capitalized internal-use software costs. We believe that free cash flow is a useful indicator of liquidity as it measures our ability to generate cash from our core operations after purchases of property and equipment. Free cash flow is a measure to determine, among other things, cash available for strategic initiatives, including further investments in our business and potential acquisitions of businesses.

Current wording

We define free cash flow as net cash provided by operating activities, less purchases of property and equipment, and capitalized internal-use software costs. We believe that free cash flow is a useful indicator of liquidity as it measures our ability to generate cash from our core operations after purchases of property and equipment. Free cash flow is a measure to determine, among other things, cash available for strategic initiatives, including further investments in our business and potential acquisitions of businesses.

Previous wording

(1)Free cash flow includes $7.3 million of restructuring costs paid during the year ended December 31, 2024.

Current wording

(1)Free cash flow includes $2.2 million and $7.3 million of restructuring costs paid during the years ended December 31, 2025 and 2024.

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 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.

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 hosting fees, 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 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.

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, amortization of acquired technology intangibles, software license fees, and rental of office premises. Sales and reseller 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

Provision for 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 income taxes could also include 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.

Current wording

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

(3) General and administrative expense includes stock-based compensation expense associated with RSUs and PRSUs primarily granted to the Executive Chairman of $50.4 million, $55.9 million and $55.9 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Current wording

(2) General and administrative expense includes stock-based compensation expense associated with RSUs and PRSUs primarily granted to the Executive Chairman of $(5.1) million, $50.4 million and $55.9 million for the years ended December 31, 2025, 2024 and 2023, respectively, with 2025 including$38.7 million in forfeitures due to the departure of the Executive Chairman.

Previous wording

The following table sets forth our consolidated statements of operations for the periods presented, as a percentage of revenue:

Current wording

The following table sets forth our consolidated statements of operations data for the periods presented, as a percentage of revenue:

Previous wording

Revenue increased by $124.0 million, or 21%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. Of the total increase in revenue, approximately $74.3 million was attributable to revenue from existing customers as of December 31, 2023, net of contraction and churn, and approximately $49.7 million was attributable to revenue from new customers acquired during the year ended December 31, 2024, net of contraction and churn, as well as all revenue from D42 Parent, Inc. during the year. Our net dollar retention rate of 103% for the year ended December 31, 2024 reflects the expansion within existing customers and the sale of additional products to these customers.

Current wording

Revenue increased by $118.4 million, or 16%, for the year ended December 31, 2025 compared to the year ended December 31, 2024. Of the total increase in revenue, approximately $80.0 million was attributable to revenue from existing customers as of December 31, 2024, net of contraction and churn, and approximately $38.4 million was attributable to revenue from new customers acquired during the year ended December 31, 2025, net of contraction and churn, as well as all revenue from D42 Parent, Inc. during the year. Our net dollar retention rate of 108% for the year ended December 31, 2025 reflects the expansion within existing customers and the sale of additional products to these customers.

Previous wording

Cost of revenue increased by $10.0 million, or 10%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. This increase was primarily due to increases of $2.8 million in amortization of developed technology, $1.8 million in software license fees, $1.6 million in third-party hosting costs, $1.3 million in professional service fees, and $1.2 million in personnel-related costs. Our gross margin increased to 84% from 83% as we increased revenue and realized benefits from economies of scale primarily related to our third-party hosting costs.

Current wording

Cost of revenue increased by $12.8 million, or 11%, for the year ended December 31, 2025 compared to the year ended December 31, 2024. This increase was primarily due to increases of $3.4 million in third-party hosting costs as we expand capacity to support our growing customer base, $2.7 million in employee related costs driven by annual compensation adjustments, higher variable incentive compensation and changes in retirement benefit obligations for employees in India, partially offset by lower headcount, $2.6 million in software license fees attributable to higher usage and renewal costs, $2.2 million in amortization of developed technology, and $1.8 million in amortization of internally capitalized software. Our gross margin increased to 85% from 84% as we increased revenue and realized benefits from economies of scale primarily related to our third-party hosting costs.

Previous wording

Restructuring charges of $9.7 million for the year ended December 31, 2024, consisted of employee severance and termination benefits related to a restructuring plan that we initiated in November 2024.

Current wording

Restructuring charges of $0.4 million and $9.7 million for the years ended December 31, 2025 and 2024, respectively, consisted of employee severance and termination benefits related to a restructuring plan that we initiated in November 2024. The restructuring plan is complete, with no remaining liability as of December 31, 2025.

Previous wording

Other income (expense), net changed by $4.4 million, primarily due to an unfavorable impact from changes in British pound against the U.S. dollar.

Current wording

Other income (expense), net changed by $5.8 million, primarily due to a $4.4 million favorable impact from changes in British pound and euro against the U.S. dollar, and a $1.8 million gain on sale of non-marketable equity investments.

Previous wording

We are subject to federal and state income taxes in the United States and taxes in foreign jurisdictions. For the years ended December 31, 2024 and 2023, we recorded a provision for income taxes of $4.5 million, and $13.7 million, respectively, on loss before taxes of $90.8 million and $123.8 million, respectively. The effective tax rates for the years ended December 31, 2024 and 2023 were (5.0)% and (11.0)% respectively. The effective tax rates differ from the statutory rate of 21% primarily due to nondeductible compensation and change in the valuation allowance. The $9.1 million decrease in tax expense was primarily related to the tax benefit of $14.3 million from D42 Parent, Inc. acquisition, partially offset by higher tax expenses due to higher pre-tax earnings from foreign subsidiaries.

Current wording

For the years ended December 31, 2025 and 2024, we recorded income tax provision (benefit) of $(130.4) million and $4.5 million, respectively, on income (loss) before taxes of $53.3 million and $(90.8) million, respectively. The effective tax rates for the years ended December 31, 2025 and 2024 were (244.8)% and (5.0)% respectively. The effective tax rates differ from the statutory rate of 21% primarily due to the release of the U.S. federal and state valuation allowance, profits from foreign jurisdictions, and nondeductible compensation. The $135.0 million decrease in tax expense was primarily related to the tax benefit of $151.7 million related to U.S. federal and state valuation allowance release, partially offset by higher expenses due to higher pre-tax earnings from foreign subsidiaries and nondeductible compensation.

Previous wording

As of December 31, 2024 our principal sources of liquidity were cash and cash equivalents of $620.3 million and marketable securities of $449.8 million, which were primarily held for working capital resources. As of December 31, 2024, we had an accumulated deficit of $3.7 billion. Our operating activities resulted in cash inflows of $160.6 million for the year ended December 31, 2024.

Current wording

As of December 31, 2025 our principal sources of liquidity were cash and cash equivalents of $569.8 million and marketable securities of $211.6 million, which were primarily held for working capital resources. As of December 31, 2025, we had an accumulated deficit of $3.6 billion. Our operating activities resulted in cash inflows of $242.4 million for the year ended December 31, 2025.

Previous wording

Our material cash requirements from known contractual obligations consists of our obligations under operating leases for office space and contractual obligations for third-party cloud infrastructure. See Item 8 of Part I, "Financial Statements and Supplementary Data — Note 8—Leases and Note 9—Commitments and Contingencies" for additional discussion of our principal contractual commitments.

Current wording

Our material cash requirements from known contractual obligations primarily consist of our obligations under operating leases for office space and contractual obligations for third-party cloud infrastructure. See Item 8 of Part I, Financial Statements and Supplementary Data — Note 8—Leases and Note 9—Commitments and Contingencies for additional discussion of our principal contractual commitments and Note 16—Subsequent Events for details on transactions that occurred after December 31, 2025.

Previous wording

Net cash provided by operating activities of $86.2 million for the year ended December 31, 2023 reflects our net loss of $137.4 million, adjusted for non-cash items such as stock-based compensation of $210.7 million, depreciation and amortization of $12.1 million, amortization of deferred contract acquisition costs of $24.0 million, non-cash lease expense of $7.7 million, premium amortization on marketable securities of $15.7 million, and net cash outflows of $14.1 million from changes in operating assets and liabilities. The net cash outflows from changes in operating assets and liabilities were due to increases of operating assets of $27.0 million in deferred contract acquisition costs, $27.0 million in accounts receivable, $7.4 million in prepaid expenses and other assets and decreases of $12.9 million in operating lease liabilities and $2.4 million in accounts payable; partially offset by increases in operating liabilities of $60.8 million in deferred revenue and $1.8 million in accrued and other liabilities.

Current wording

Net cash provided by operating activities of $242.4 million for the year ended December 31, 2025 reflects our net income of $183.7 million, adjusted for non-cash items such as stock-based compensation of $146.8 million, amortization of deferred contract acquisition costs of $31.7 million, depreciation and amortization of $25.9 million, non-cash lease expense of $9.7 million, offset by $6.6 million from discount amortization on marketable securities and $1.8 million in gain on sale of non-marketable equity investments. Additionally, net cash inflows from changes in operating assets and liabilities were $1.3 million. The net cash inflows from changes in operating assets and liabilities were due to increases of operating liabilities of $61.2 million in deferred revenue, $19.1 million in accrued and other liabilities and $9.6 million in accounts payable; partially offset by increases in operating assets of $40.1 million in deferred contract acquisition costs, $28.1 million in accounts receivable, $11.9 million in prepaid expenses and other assets and decreases of operating liabilities of $8.5 million in operating lease liabilities.

Previous wording

Net cash provided by investing activities of $158.5 million for the year ended December 31, 2023 consisted of $166.7 million in proceeds from maturities and sales, net of purchases of marketable securities; partially offset by $2.0 million in purchases, net of proceeds from sale of property and equipment, and $6.3 million related to the capitalization of internal-use software.

Current wording

Net cash provided by investing activities of $206.1 million for the year ended December 31, 2025 consisted of $243.9 million in proceeds from maturities and sales, net of purchases of marketable securities and $2.0 million in proceeds from sale of non-marketable securities; partially offset by $18.4 million advances paid for the business combination, $15.8 million related to the capitalization of internal-use software, and $5.6 million in purchases, net of proceeds from sale, of property and equipment.

Previous wording

Net cash used in financing activities of $60.6 million for the year ended December 31, 2023 consisted primarily of $68.0 million in payment of withholding taxes on net share settlement of equity awards, partially offset by $7.3 million in proceeds from issuance of common stock under our employee stock purchase plan, net.

Current wording

Net cash used in financing activities of $436.7 million for the year ended December 31, 2025 consisted primarily of $386.3 million cash paid to repurchase shares of our common stock and $56.7 million in payment of withholding taxes on net share settlement of equity awards; partially offset by $6.2 million in net proceeds from issuance of common stock under our employee stock purchase plan.

Previous wording

Net cash used in financing activities of $67.3 million for the year ended December 31, 2024 consisted primarily of $60.3 million in payment of withholding taxes on net share settlement of equity awards, $13.7 million cash paid to repurchase shares of our common stock; partially offset by $6.6 million in proceeds from issuance of common stock under our employee stock purchase plan, net.

Current wording

Net cash used in financing activities of $67.3 million for the year ended December 31, 2024 consisted primarily of $60.3 million in payment of withholding taxes on net share settlement of equity awards, $13.7 million cash paid to repurchase shares of our common stock; partially offset by $6.6 million in net proceeds from issuance of common stock under our employee stock purchase plan.