Freshworks Inc.

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes that appear elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes and the discussion under the heading “Management's Discussion and Analysis of Financial Condition and Results of Operations” for the year ended December 31, 2024 included in the Annual Report on Form 10-K. As described in the section titled “Special Note About Forward-Looking Statements,” the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in the section titled “Risk Factors.”

Current wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes that appear elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes and the discussion under the heading “Management's Discussion and Analysis of Financial Condition and Results of Operations” for the year ended December 31, 2025 included in the Annual Report on Form 10-K. As described in the section titled “Special Note Regarding Forward-Looking Statements,” the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in the section titled “Risk Factors.”

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 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 software licenses with associated maintenance for Device42 and professional services that include product configuration, data migration, systems integration, and training.

Previous wording

Our customer base and operations have scaled over time. Our total revenue was $215.1 million and $186.6 million in the three months ended September 30, 2025 and 2024, respectively, representing year-over-year growth of 15%; and $616.1 million and $525.8 million in the nine months ended September 30, 2025 and 2024, respectively, representing year-over-year growth of 17%. We incurred operating losses of $7.5 million and $38.9 million for three months ended September 30, 2025 and 2024, respectively; and $26.5 million and $114.8 million for the nine months ended September 30, 2025 and 2024, respectively.

Current wording

Our customer base and operations have scaled over time. Our total revenue was $228.6 million and $196.3 million in the three months ended March 31, 2026 and 2025, respectively, representing year-over-year growth of 16%. We incurred operating losses of $8.1 million and $10.4 million for three months ended March 31, 2026 and 2025, respectively.

Previous 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 the quarters ended September 30, 2025, June 30, 2025, and September 30, 2024, 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.

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 still exist. For the quarters ended March 31, 2026, December 31, 2025, and March 31, 2025, we had approximately 29%,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 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.

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. See the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 for further discussion of the challenges and risks we have encountered and could encounter related to these macroeconomic events.

Previous wording

We monitor and review a number of metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections, and make strategic decisions. Key business metrics and our financial performance are impacted by various factors discussed below, including fluctuations in the value of foreign currencies relative to the U.S. dollar. We also review customer data used for calculating these key business metrics on an ongoing basis and make necessary modifications resulting from such review. We believe these key business metrics provide meaningful supplemental information for management and investors in assessing our operating performance.

Current wording

We monitor and review a number of metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections, and make strategic decisions. Key business metrics and our financial performance are impacted by various factors discussed below, including fluctuations in value of foreign currencies relative to the U.S. dollar. We also review customer data used for calculating these key business metrics on an ongoing basis and make necessary modifications resulting from such review. We believe these key business metrics provide meaningful supplemental information for management and investors in assessing our operating performance.

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 13% and 15% of ARR as of September 30, 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.

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 12% and 14% of ARR as of March 31, 2026 and 2025, 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 decreased to 105% as of September 30, 2025, compared to 107% as of September 30, 2024, primarily due to lower expansion within existing customers driven by macroeconomic pressures. We expect our net dollar retention rate may 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 increased to 106% as of March 31, 2026, compared to 105% as of March 31, 2025, remained relatively flat. We expect our net dollar retention rate may 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

•Restructuring charges. We exclude restructuring charges, which primarily consist of employee severance and other employee termination benefits associated with the restructuring plan initiated in November 2024, from our non-GAAP financial measures, because we do not believe these expenses have a direct correlation to the operating performance of our business.

Current wording

•Restructuring charges. We exclude restructuring charges, which primarily consist of employee severance and other employee termination benefits associated with the restructuring plan, from our non-GAAP financial measures because we do not believe these expenses have a direct correlation to the operating performance of our business.

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. Starting 2026, we utilize a long-term projected non-GAAP tax rate to compute our non-GAAP income tax provision in order to provide better consistency across interim reporting periods. Our non-GAAP tax rate reflects our estimated long-term effective tax rate based on our anticipated geographic earnings mix and statutory tax regimes. For fiscal year 2026, we determined the projected non-GAAP tax rate to be 24%. The difference between our GAAP income tax provision and our non-GAAP income tax provision is presented as non-GAAP income tax reconciling adjustments. We have not provided a reconciliation of our projected non-GAAP tax rate for fiscal year 2026 to GAAP due to the uncertainty and potential variability of the items we exclude from our GAAP financial measures to calculate our non-GAAP financial measures and the resulting income tax effects of such items. Accordingly, a reconciliation is not available without unreasonable effort and we are unable to address the probable significance of the unavailable information, although it is important to note that these items could be material to our results computed in accordance with GAAP. Prior to 2026, we excluded 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 excluded these costs because we do not believe these expenses have a direct correlation to the operating performance of our business.

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, amortization of acquired intangibles, and restructuring charges.

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, restructuring charges and acquisition expenses.

Previous 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, amortization of acquired intangibles, gain on sale of non-marketable equity investments and income tax adjustments.

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, amortization of acquired intangibles, acquisition expenses and income tax adjustments.

Previous 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.

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 and excluding the impact of non-recurring strategic and restructuring activities. 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 $2.2 million of restructuring costs paid during the nine months ended September 30, 2025.

Current wording

(1) Free cash flow includes $0.7 million of acquisition expenses paid during the three months ended March 31, 2026 and $1.5 million of restructuring costs paid during the three months ended March 31, 2025.

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. 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.

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.

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

Interest and other income (expense), net primarily consists of interest income from our investment portfolios, amortization of premium or discount on marketable securities, gain realized on sale of non-marketable equity investments, and foreign currency gains and losses.

Current wording

Interest and other income (expense), net primarily consists of interest income from our investment portfolios, amortization of premium or discount on marketable securities, and foreign currency gains and losses.

Previous 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 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

We are subject to income taxes in U.S. states and in foreign jurisdictions. 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 stock-based compensation associated with RSUs and PRSUs granted to our Executive Chairman of $10.1 million and $12.1 million for the three months ended September 30, 2025 and 2024, respectively and $31.8 million and $38.3 million for the nine months ended September 30, 2025 and 2024, respectively.

Current wording

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

Previous wording

Revenue increased by $90.2 million, or 17%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. Of the total increase in revenue, approximately $51.5 million was attributable to revenue from existing customers as of September 30, 2024, net of contraction and churn, and approximately $38.7 million was attributable to revenue from new customers acquired during the twelve months ended September 30, 2025, net of contraction and churn. The substantial majority of our revenue continues to be generated from subscription services.

Current wording

Revenue increased by $32.4 million, or 16%, for the three months ended March 31, 2026 compared to thethree months ended March 31, 2025. Of the total increase in revenue, approximately $14.2 million was attributable to revenue from existing customers as of March 31, 2025, net of contraction and churn, and approximately $18.2 million was attributable to revenue from new customers acquired during the three months ended March 31, 2026, net of contraction and churn.

Previous wording

Cost of revenue increased by $3.1 million, or 11%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. The increase was primarily driven by increases of $1.1 million in third-party hosting costs and $1.1 million in cloud software fees attributable to higher usage as we expand capacity to support our growing customer base, and $0.7 million in amortization of internally capitalized software. Our gross margin increased to 85% for the three months ended September 30, 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.

Current wording

Cost of revenue increased by $4.8 million, or 16%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increase was primarily driven by a $2.5 million increase in third-party hosting costs and cloud software fees, which was driven by the increased capacity and volume required to support new customers. Additionally, the increase was driven by $0.9 million in amortization of internally capitalized software and $0.7 million in personnel-related costs, primarily due to annual compensation adjustment. Our gross margin remained flat at 85% for the three months ended March 31, 2026 and 2025.

Previous wording

The $6.0 million or 3%, decrease in our operating expenses for the three months ended September 30, 2025 compared to the three months ended September 30, 2024, was primarily driven by lower headcount following the restructuring, which decreased stock-based compensation expenses and personnel-related costs. This decrease is partially offset by the impact of annual compensation adjustments and higher variable incentive compensation which increased personnel-related costs.

Current wording

The $25.2 million or 14%, increase in our operating expenses for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, was primarily driven by higher personnel related costs due to annual compensation adjustments and marketing sponsorship costs, partially offset by lower stock-based compensation expense from the departure of our former Executive Chairman in December 2025.

Previous wording

Sales and marketing expense decreased by $0.2 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. The slight decrease was primarily driven by lower stock-based compensation expense of $3.5 million from employee terminations and fully vested equity awards and lower personnel-related costs of $2.6 million primarily from lower headcount offset by annual compensation adjustment. These decreases were partially offset by increases of $2.2 million in marketing sponsorship costs, $1.5 million in reseller commission, $1.3 million in software license fees and $0.9 million in professional services.

Current wording

Sales and marketing expense increased by $23.2 million, or 26%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increase was primarily due to increases in personnel-related costs of $12.7 million primarily from higher headcount and annual compensation adjustment, $6.7 million in marketing sponsorship costs, $1.4 million in reseller commissions and $1.1 million in software license fees.

Previous wording

Interest income decreased by $3.6 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024, primarily due to reduction in average balances held in our marketable securities portfolios used for share repurchases.

Current wording

Interest income decreased by $4.3 million, or 38%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, primarily due to reduction in average balances held in our marketable securities portfolios used for share repurchases and decrease in interest rates.

Previous wording

Other income (expense), net changed by $2.9 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024, primarily due to a $4.7 million foreign exchange loss during the period, mostly from unfavorable changes in foreign exchange rates in Indian Rupee against the U.S. dollar, partially offset by a $1.8 million gain on sale of non-marketable equity investments.

Current wording

Other income (expense), net changed by $7.3 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, primarily due to a $7.1 million foreign exchange loss during the period, mostly from unfavorable changes in foreign exchange rates in Indian rupee 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, 2025 and 2024, the income tax provision remained consistent.

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, 2026 and 2025, we recorded a provision for (benefit from) income taxes of $(1.8) million and $3.9 million on income (loss) before taxes of $(6.6) million and $2.6 million, respectively. The decrease in the provision for income taxes for the three months ended March 31, 2026, was largely driven by a pre-tax loss in the current quarter compared to pre-tax income in the corresponding quarter of 2025. In addition, following the release of the valuation allowance on U.S. federal and state deferred tax assets in the fourth quarter of 2025, we are able to recognize tax benefits associated with pre-tax losses incurred in 2026.

Previous wording

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, introducing significant changes to the U.S. tax code, including the immediate expensing of U.S. research and development costs, the immediate expensing of certain capital expenditures, and other tax code changes effective beginning in 2026. Based on our assessment, the effects of the enactment were not material for the three and nine months ended September 30, 2025. While we expect the current year’s impact to be immaterial, we continue to evaluate the broader implications of the legislation on our financial position and future results of operations.

Current wording

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, introducing significant changes to the U.S. tax code, including the immediate expensing of U.S. research and development costs, the immediate expensing of certain capital expenditures, and other tax code changes effective beginning in 2026, which were not material to our tax expense.

Previous wording

As of September 30, 2025, our principal sources of liquidity were cash and cash equivalents of $420.9 million and marketable securities of $392.3 million, which were primarily held for working capital resources.

Current wording

As of March 31, 2026, our principal sources of liquidity were cash and cash equivalents of $548.2 million and marketable securities of $231.1 million, which were primarily held for working capital resources.

Previous wording

As of September 30, 2025, we had an accumulated deficit of $3.7 billion. Our operating activities resulted in cash inflows of $180.0 million for the nine months ended September 30, 2025.

Current wording

As of March 31, 2026, we had an accumulated deficit of $3.6 billion. Our operating activities resulted in cash inflows of $62.4 million for the three months ended March 31, 2026. In May 2026, we committed to a restructuring plan that is expected to incur charges in the second quarter of 2026, consisting primarily of cash expenditures for separation-related payments, employee benefits and related costs. See Note 14—Subsequent Events.

Previous wording

Our material cash requirements from known contractual obligations consist primarily of our obligations under operating leases for office space and contractual obligations for third-party cloud infrastructure, service subscription, and sponsorship arrangement to promote our brand and services. See Note 7 — Leases and Note 8 — Commitments and Contingencies for additional discussion of our principal contractual commitments.

Current wording

Our material cash requirements from known contractual obligations consist primarily of our obligations under operating leases for office space and contractual obligations for third-party cloud infrastructure See Note 7 — Leases and Note 8 — Commitments and Contingencies for additional discussion of our principal contractual commitments.

Previous wording

In November 2024, our board of directors approved the share repurchase program, which authorized the repurchase of up to $400 million of our outstanding Class A common stock. For the nine months ended September 30, 2025, we repurchased a total of 26.9 million shares of Class A common stock under this program in open market transactions for an aggregate purchase price of $384.5 million. As of September 30, 2025, the share repurchase program is complete.

Current wording

In February 2026, our board of directors approved the share repurchase program, which authorized the repurchase of up to $400 million of our outstanding Class A common stock. For the three months ended March 31, 2026, we repurchased a total of 5.7 million shares of Class A common stock under this program in open market transactions for an aggregate purchase price of $45.4 million. As of March 31, 2026, $354.6 million remained available for future share repurchases under the current program.

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 $62.4 million for the three months ended March 31, 2026 reflects our net loss of $4.8 million, adjusted for non-cash items such as stock-based compensation of $43.9 million, amortization of deferred contract acquisition costs of $8.6 million, depreciation and amortization of $7.9 million, non-cash lease expense of $2.9 million and $7.8 million of other items, primarily related to foreign currency gains and losses; offset by $5.9 million change in deferred tax provision and $0.9 million from discount amortization of marketable securities. Additionally, net cash inflows from changes in operating assets and liabilities were $2.9 million. The net cash inflows from changes in operating assets and liabilities were primarily due to a decrease of $24.9 million in accounts receivable and increases of $6.9 million in accounts payable and $1.0 million in deferred revenue; offset by increases of $12.6 million in prepaid expenses and other assets, $10.2 million in deferred contract acquisition costs, and decreases of $3.7 million in operating lease liabilities and $3.4 million in accrued expenses and other liabilities.

Previous wording

Net cash provided by operating activities of $180.0 million for the nine months ended September 30, 2025 reflects our net loss of $7.7 million, adjusted for non-cash items such as stock-based compensation of $149.5 million, amortization of deferred contract acquisition costs of $23.4 million, depreciation and amortization of $19.2 million, and non-cash lease expense of $7.0 million; offset by $5.5 million from discount amortization of marketable securities and $1.8 million gain on sale of non-marketable equity investments. Additionally, net cash outflows from changes in operating assets and liabilities were $4.3 million. The net cash outflows from changes in operating assets and liabilities were primarily due to increases of $29.4 million in deferred contract acquisition costs and $15.4 million in prepaid expenses and other assets, and a decrease of $5.7 million in operating lease liabilities; offset by increases of $24.3 million in deferred revenue, $13.2 million in accrued and other liabilities, $5.6 million in accounts payable and a decrease of $3.0 million in accounts receivable.

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 used in investing activities of $170.3 million for the nine months ended September 30, 2024 consisted of $213.9 million cash paid for business combination, net of cash acquired, $4.1 million in purchases of property and equipment and $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 $82.3 million for the three months ended March 31, 2026 consisted of $56.9 million paid for business combinations, net of cash acquired, $18.1 million in purchases of marketable securities, net of maturities, $3.9 million in purchases of property and equipment, which primarily include construction and improvements at our major offices, and $3.4 million in capitalized internal-use software.

Previous wording

Net cash provided by investing activities of $48.9 million for the nine months ended September 30, 2025 consisted of $62.2 million in maturities and redemptions of marketable securities, net of purchases and $2.0 million in proceeds from sale of non-marketable securities; offset by $11.9 million in capitalized internal-use software and $3.5 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 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 $55.5 million for the three months ended March 31, 2026 consisted of $48.4 million cash paid to repurchase shares of our common stock and $7.2 million in payment of withholding taxes on net share settlement of equity awards.

Previous wording

Net cash used in financing activities of $428.3 million for the nine months ended September 30, 2025 consisted of $386.3 million cash paid to repurchase shares of our common stock, including $1.8 million of unsettled common stock repurchases as of December 31, 2024, and $45.4 million in payment of withholding taxes on net share settlement of equity awards; offset by $3.3 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 $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

Our condensed consolidated financial statements are prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. We base our estimates, assumptions and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances. Different assumptions and judgments would change the estimates used in the preparation of our condensed consolidated financial statements, which, in turn, could change the results from those reported. We evaluate our estimates, assumptions, and judgments on an ongoing basis.

Current wording

Our condensed consolidated financial statements are prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires our management to make estimates, assumptions, and judgments that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenue, costs and expenses, and related disclosures during the applicable periods. We base our estimates, assumptions and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances. Different assumptions and judgments would change the estimates used in the preparation of our condensed consolidated financial statements, which, in turn, could change the results from those reported. We evaluate our estimates, assumptions, and judgments on an ongoing basis.

Previous wording

There have been no changes to our critical accounting policies and estimates during the three and nine months ended September 30, 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.

Current wording

There have been no changes to our critical accounting policies and estimates during the three months ended March 31, 2026 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 26, 2026.