Freshworks Inc.

(UNAUDITED)

1. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying condensed consolidated financial statements of Freshworks Inc. and its subsidiaries have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP). All intercompany balances and transactions have been eliminated in consolidation.

The accompanying condensed consolidated balance sheet as of March 31, 2026, the condensed consolidated statements of operations, of comprehensive loss, of cash flows, and of stockholders’ equity for the three months ended March 31, 2026 and 2025, and the related notes to such condensed consolidated financial statements are unaudited. These unaudited condensed consolidated financial statements are presented in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (SEC) and do not include all disclosures normally required in annual consolidated financial statements prepared in accordance with GAAP. In management’s opinion, the unaudited condensed consolidated financial statements have been prepared on a basis consistent with the annual consolidated financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of our financial position as of March 31, 2026 and our results of operations and cash flows for the three months ended March 31, 2026 and 2025. The results of operations for the three months ended March 31, 2026 are not necessarily indicative of the results to be expected for the full year or any other future interim or annual period.

The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2025 which was filed with the SEC on February 26, 2026.

In January 2026, we acquired all outstanding shares of FireHydrant, Inc., an incident management software company, for $88.7 million. See Note 5 - Business Combinations.

Use of Estimates

The preparation of the condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expense during the reporting periods. Significant items subject to such estimates and assumptions include, but are not limited to, the following:

•determination of standalone selling price (SSP) for each distinct performance obligation included in customer contracts with multiple performance obligations;

•allowance for doubtful accounts;

•benefit period of deferred contract acquisition costs;

•capitalization of internal-use software development costs;

•fair value of goodwill;

•useful lives of long-lived assets, including intangible assets;

•valuation of deferred tax assets;

•valuation of employee defined benefit plan and other compensation liabilities;

•fair value of share-based awards; and

•incremental borrowing rate used for operating leases.

Concentrations of Risk

Financial instruments that potentially expose us to significant concentration of credit risk consist primarily of cash, cash equivalents, marketable securities, and accounts receivable. Our cash, cash equivalents and marketable securities are generally held with large financial institutions and are in excess of the federally insured limits provided on such deposits. In addition, we have cash and cash equivalents held in international bank accounts, which are denominated primarily in euros, British pounds, and Indian rupees.

There were no customers that individually exceeded 10% of our revenue for the three months ended March 31, 2026 and 2025 or that represented 10% or more of our consolidated accounts receivable balance as of March 31, 2026.

We primarily rely upon our third-party cloud infrastructure partner, Amazon Web Services, to serve customers and operate certain aspects of its services. Any disruption of this cloud infrastructure partner would impact our operations and our business could be adversely impacted.

Significant Accounting Policies

Our significant accounting policies are described in the Annual Report on Form 10-K for the year ended December 31, 2025. Except for the updated policy regarding credit losses described below, there have been no significant changes to these policies that have had a material impact on the condensed consolidated financial statements and the related notes for the three months ended March 31, 2026.

Accounts Receivable and Contract Assets

Effective January 1, 2026, we elected to apply the practical expedient provided by ASU 2025-05 to measure expected credit losses for qualifying current accounts receivable and contract assets and assume that current conditions as of the balance sheet date do not change for the remaining life of the asset. See "Recent Adopted Accounting Pronouncements" below for further details.

Recent Adopted Accounting Pronouncements

In July 2025, the FASB issued ASU 2025-05, Financial Instruments-Credit Losses: Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient to measure credit losses on current accounts receivable and current contract assets under Accounting Standards Codification 606, Revenue from Contracts with Customers. The practical expedient assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. Effective January 1, 2026, we adopted this guidance. The adoption of this standard did not have a material impact on our condensed consolidated financial statements and related disclosures.

Recent Accounting Pronouncements Not Yet Adopted

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies that the interim reporting requirements in Topic 270 apply to all entities that issue interim financial statements prepared in accordance with U.S. GAAP and consolidates such requirements within Topic 270. The amendments provide a comprehensive list within Topic 270 of required interim disclosures, establish a principle requiring disclosure of events or changes occurring after the end of the most recent annual reporting period that have a material impact on interim results. and clarifies the form and content requirements applicable to interim financial statements. ASU 2025-11 will be effective for our interim periods starting January 1, 2028, with early adoption permitted. This guidance is only related to disclosure and is not expected to have a significant impact on our consolidated financial statements.

In September 2025, the Financial Accounting Standards Board (FASB) issued ASU 2025-06, Intangibles-Goodwill and Other-Internal-Use Software: Targeted Improvements to the Accounting for Internal-Use Software. ASU 2025‑06 updates guidance on accounting for software costs by aligning capitalization with when management commits to funding a project and completion is probable. Additionally, the ASU introduces new disclosure requirements, including significant judgments made in applying the guidance and the nature and amount of capitalized software costs. This guidance is effective for us starting in our annual and interim disclosures for periods starting January 1, 2028. Early adoption is permitted. We are currently assessing the impact of this update on our condensed consolidated financial statements, including which transition method to apply.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures. Additionally, in January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. The standard provides guidance to expand disclosures related to the disaggregation of income statement expenses, which requires more detailed information about specified categories of expenses included in certain expense captions presented on the face of the income statement. This authoritative guidance is effective for us starting in our annual disclosures for 2027 and interim periods starting 2028. Early adoption is permitted. The amendments may be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the financial statements. This guidance is only related to disclosure and is not expected to have a significant impact on our condensed consolidated financial statements.

2. Cash Equivalents and Investments

Cash equivalents and available-for-sale debt securities consisted of the following as of the periods presented below (in thousands):

The following table presents gross unrealized losses and fair values for the securities that were in a continuous unrealized loss position as of the periods presented below (in thousands):

The amortized cost and fair value of the available-for-sale debt securities based on contractual maturities are as follows (in thousands):

Accrued interest receivable of $1.1 million and $1.5 million was classified in prepaid expenses and other current assets in the condensed consolidated balance sheet as of March 31, 2026 and December 31, 2025, respectively.

3. Fair Value Measurements

We measure our financial assets at fair value each reporting period using a fair value hierarchy that prioritizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

Level 1—Inputs are observable and reflect quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date.

Level 2—Inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly.

Level 3—Inputs that are unobservable.

Money market funds and U.S. treasury securities are classified within Level 1 because they are valued using quoted market prices or alternative pricing sources and models utilizing market observable inputs. Other debt securities and investments are classified within Level 2 if the investments are valued using model driven valuations which use observable inputs such as quoted market prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency. Available-for-sale debt securities are held by custodians who obtain investment prices from a third-party pricing provider that incorporates standard inputs in various asset price models.

We didnot have any assets or liabilities subject to fair value remeasurement on a nonrecurring basis as of March 31, 2026 and December 31, 2025.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table represents the fair value hierarchy for our financial assets measured at fair value on a recurring basis as of the periods presented below (in thousands):

The fair value of derivative assets and liabilities as of March 31, 2026, and all related unrealized and realized gains and losses during the three months ended March 31, 2026, were not material. As of March 31, 2026 and December 31, 2025, the total notional amount of outstanding designated foreign currency forward contracts was $84.0 million and $86.7 million, respectively.

4. Balance Sheet Components

Property and Equipment, net

The following table summarizes property and equipment, net as of the periods presented below (in thousands):

The following table summarizes depreciation expense and internal-use software capitalization and amortization during the periods presented below (in thousands):

As of March 31, 2026 and December 31, 2025, the net carrying value of capitalized internal-use software was $27.6 million and $26.1 million, respectively.

Accrued Liabilities

The following table summarizes accrued liabilities as of the periods presented below (in thousands):

Noncurrent liabilities include $19.5 million and $21.1 million of long term accrued compensation as of March 31, 2026 and December 31, 2025, respectively.

5. Business Combinations

On January 1, 2026, we acquired all outstanding shares of FireHydrant, Inc., an incident management software company, for $88.7 million in cash, including $4.3 million of cash acquired, to expand its IT service and operations portfolio. As of March 31, 2026, $9.0 million in unpaid indemnity and purchase price adjustment holdbacks were recorded within accrued liabilities in our condensed consolidated balance sheets. The purchase price is subject to customary post-closing adjustments and conditions.

All existing FireHydrant stock options were canceled, and we issued new time-based and performance-based RSUs to certain continuing employees under our 2021 Equity Incentive Plan. These awards were excluded from the purchase consideration and will be recognized as post-combination compensation expense over their requisite service periods. Refer to Note 11—Stockholders' Equity and Stock-Based Compensation.

The following table summarizes the preliminary fair value of assets acquired and liabilities assumed as of the date of acquisition:

The assets acquired and liabilities assumed were recognized at their estimated acquisition-date fair values, with goodwill representing the excess of the purchase price over the fair value of the net identifiable assets acquired. Goodwill includes the fair value of assets that were not identifiable and as such, not separately recognizable. Goodwill recognized from the transaction is not deductible for U.S. income tax purposes and primarily reflects expected synergies from FireHydrant’s customer base and technology.

The Company expects to finalize the purchase price allocation within the measurement period, but not later than one year from the acquisition date. The fair values assigned to assets acquired and liabilities assumed are based on management’s best estimates and assumptions as of the acquisition date and are considered preliminary pending finalization of the valuation pertaining to intangible assets acquired, deferred tax assets and liabilities assumed.

Customer relationships and developed technology were valued using the income approach and will be amortized on a straight-line basis over their estimated lives of 7 years.

FireHydrant's operating results are included in our condensed consolidated financial statements from the acquisition date and are not material to our financial results, as well as any transaction costs associated with the acquisition.

6. Goodwill and Intangible Assets, Net

The change in the carrying amounts of goodwill during the three months ended March 31, 2026 is presented below (in thousands):

Acquired intangible assets consist of developed technology, customer relationships and trademarks and are amortized on a straight-line basis over their estimated useful lives. The following tables summarize acquired intangible assets as of the periods presented below:

Amortization of acquired intangible assets is as follows (in thousands):

As of March 31, 2026, expected future amortization expense related to acquired intangible assets is as follows (in thousands):

7. Leases

We have operating leases primarily for office space. The leases have remaining lease terms ofone tosix years, some of which include options to extend the lease for up to an additionalsix years. Our leases do not contain any residual value guarantee.

The following table presents various components of the lease costs (in thousands):

The weighted-average remaining term of our operating leases and the weighted-average discount rate used to measure the present value of the operating lease liabilities are as follows:

The following table presents supplemental information arising from lease transactions. Cash payments related to short-term leases are not included in the measurement of the operating lease liabilities, and as such, are excluded from the amounts below (in thousands):

As of March 31, 2026, maturities of the operating lease liabilities are as follows (in thousands):

As of March 31, 2026, there were $6.4 million future payments related to signed leases that have not yet commenced.

8. Commitments and Contingencies

Other Contractual Commitments

Our other contractual commitments primarily consist of third-party cloud infrastructure agreements, service subscription purchase arrangements used to support operations at the enterprise level, and sponsorship arrangement to promote our brand and services. As of March 31, 2026, other contractual commitments totaling $217.9 million remain outstanding under these agreements through 2029.

Litigation and Loss Contingencies

On November 1, 2022, a purported Company stockholder filed a securities class action complaint in the U.S. District Court for the Northern District of California against us, certain of our current officers and directors, and underwriters of our initial public offering (IPO). On February 8, 2023, the court-appointed lead plaintiff and lead counsel. On April 14, 2023, lead plaintiff filed an amended complaint. The amended complaint alleges that defendants violated Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 by making material misstatements or omissions in offering documents filed in connection with our IPO. The amended complaint seeks unspecified damages, interest, fees, costs, and rescission on behalf of purchasers and/or acquirers of common stock issued in our IPO. On September 28, 2023, the court issued an order granting in part and denying in part defendants' motion to dismiss. On January 16, 2025, we filed a motion for summary judgment, which the court granted and entered judgment in our and the other defendants’ favor on April 10, 2025. Plaintiff has appealed the judgment, and we continue to vigorously defend against the claims in this action.

On March 20, 2023, a purported stockholder derivative complaint was filed in the U.S. District Court for the Northern District of California. The complaint names as defendants our current directors, as well as Freshworks, as nominal defendant, and asserts state and federal claims based on some of the same alleged misstatements as the securities class action complaint. The derivative complaint seeks unspecified damages, attorneys’ fees, and other costs. On June 21, 2023, the court stayed the case in light of the pending securities class action. On October 16, 2023, the court extended the stay of the case in light of the pending securities class action. We and the other defendants continue to vigorously defend against the claims in this action.

From time to time, we have been and may be in the future subject to other legal proceedings, claims, investigations, and government inquiries (collectively, legal proceedings) in the ordinary course of business. We have received and may receive claims from third parties asserting, among other things, infringement of their intellectual property rights, defamation, labor and employment rights, privacy, and contractual rights. There are no currently pending legal proceedings that we believe will have a material adverse impact on our business or condensed consolidated financial statements.

Indemnifications

In the ordinary course of business, we enter into contractual arrangements under which we agree to provide indemnification of varying scope and terms to customers, business partners, and other parties with respect to certain matters, including losses arising out of intellectual property infringement claims made by third parties, if we have violated applicable laws, if we are negligent or commit acts of willful misconduct, and other liabilities with respect to our products and services and our business. In these circumstances, payment is typically conditional on the other party making a claim pursuant to the procedures specified in the particular contract. We also indemnify certain of our officers, directors and certain key employees while they are serving in good faith in their respective capacities. To date, we have not incurred any material costs as a result of such indemnifications and have not accrued any liabilities related to such obligations in its condensed consolidated financial statements.

9. Revenue From Contracts with Customers

We primarily derive revenue from subscription fees and related professional services, as well as through sale of software licenses with associated maintenance and professional services.

We sell subscriptions and software licenses directly to customers and indirectly through channel partners with arrangements that are non-cancelable and non-refundable. Our subscription arrangements do not provide customers with the right to take possession of the software supporting the solutions and, as a result, are accounted for as service arrangements. Subscription revenue is recognized ratably over the contract term when the cloud-based software is made available to customers.

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. Revenue from the software license is recognized when the software is made available to the customer and maintenance revenue is recognized as support and updates are provided, which is generally ratably over the contract term.

Professional services revenue is comprised of fees charged for services ranging from product configuration, data migration, systems integration, and training. We recognize professional services revenues as services are performed.

We record revenue net of sales or value-added taxes.

Disaggregation of Revenue

The following table summarizes revenue by our product and service offerings during the periods presented (in thousands):

See Note 10 for revenue by geographic location.

Unbilled Receivables, Deferred Revenue and Remaining Performance Obligations

Unbilled receivables primarily represent revenue recognized in excess of billings from non-cancellable multi-year contract arrangements. As of March 31, 2026 and December 31, 2025, we had $8.9 million and $9.8 million of unbilled receivables, respectively. Unbilled receivables are included within accounts receivable, net on the condensed consolidated balance sheets.

Deferred revenue consists of customer billings in excess of revenue being recognized. As of March 31, 2026 and December 31, 2025, non-current deferred revenue of $2.9 million and $3.1 million, respectively, was included in other liabilities on the condensed consolidated balance sheet.

Revenue recognized during the three months ended March 31, 2026 and 2025 from amounts included in deferred revenue at the beginning of these periods was $166.0 million and $144.5 million, respectively.

The aggregate balance of remaining performance obligations as of March 31, 2026 was $665.3 million. We expect to recognize $481.5 million of the balance as revenue in the next 12 months and the remainder thereafter. The aggregate balance of remaining performance obligations represents contracted revenue that has not yet been recognized, which includes unearned revenue and unbilled amounts that will be recognized as revenue in future periods.

Deferred Contract Acquisition Costs

The change in the balance of deferred contract acquisition costs during the periods presented is as follows (in thousands):

10. Segment and Geographic Information

We operate in a single operating segment composed of the condensed consolidated financial results of Freshworks. Our Chief Executive Officer (CEO) is the chief operating decision maker (CODM) of Freshworks and the key measures of segment profit or loss that our CODM uses to allocate resources and assess performance is our revenue and consolidated net loss. Significant segment expenses reviewed by our CODM for our single operating segment comprise of stock-based compensation, amortization of acquired intangible assets, and other segment expenses. Other segment expenses utilize operating expenses recognized as research and development, selling and marketing, and general and administrative expenses within our condensed consolidated statement of operations less stock-based compensation and amortization of acquired intangible assets, and primarily related to personnel-related costs. Refer to Note 11—Stockholders' Equity and Stock-Based Compensation and Note 6—Goodwill and Intangible Assets, Net for information regarding amounts pertaining to stock-based compensation and amortization of acquired intangibles.

Revenue by geographic location is determined based on the customers' billing address. The following table summarizes revenue by geographic region (in thousands):

Revenue from North America consists primarily of revenue from the United States. For the three months ended March 31, 2026 and 2025, revenue generated from the United States was approximately $96.5 million and $82.4 million, or approximately 42% and 42% of total consolidated revenue, respectively.

The United Kingdom, included within Europe, Middle East and Africa in the table above, contributed $30.2 million and $27.2 million, or approximately 13% and 14% of total consolidated revenue for the three months ended March 31, 2026 and 2025, respectively.

Long-lived assets consist primarily of property, plant and equipment and ROU assets. The following table summarizes long-lived assets by geographic information (in thousands):

Long-lived assets in North America are primarily located in the United States, and long-lived assets in Asia Pacific are primarily located in India.

11. Stockholders' Equity and Stock-Based Compensation

Share Repurchase

In November 2024, our board of directors (the Board) approved a share repurchase program ("2024 Share Repurchase Program"), which authorized the repurchase of up to $400 million of our outstanding Class A common stock. During the three months ended March 31, 2025 we repurchased a total of 6,732,390 shares of Class A common stock under the 2024 Share Repurchase Program in open market transactions for an aggregate purchase price of $111.8 million, resulting in an average price of $16.60 per share. The 2024 Share Repurchase Program was completed during the year ended December 31, 2025.

In February 2026, the Board approved another share repurchase program ("2026 Share Repurchase Program"), which authorized the repurchase of up to $400 million of our outstanding Class A common stock. During the three months ended March 31, 2026 we repurchased a total of 5,697,636 shares of Class A common stock under the 2026 Share Repurchase Program in open market transactions for an aggregate purchase price of $45.4 million, resulting in an average price of $7.97 per share. As of March 31, 2026, $354.6 million remained available for future repurchases under the 2026 Share Repurchase Program.

Under both repurchase programs, all shares of Class A common stock subsequently repurchased were retired. Upon retirement, the par value of the common stock repurchased was deducted from common stock and any excess of repurchase price over par value was recorded entirely to additional-paid-in capital, or in the absence of additional-paid-in capital, to accumulated deficit, in the condensed consolidated balance sheets.

Equity Compensation Plans

Pursuant to the 2021 Equity Incentive Plan (the 2021 Plan), the Board may grant incentive stock options to purchase shares of our common stock, non-statutory stock options to purchase shares of our common stock, stock appreciation rights, restricted stock, restricted stock units (RSUs), performance restricted stock units (PRSUs) and other awards. The 2021 Employee Stock Purchase Plan (ESPP) enables eligible employees to purchase shares of our Class A common stock. Both the 2021 Plan and ESPP include an automatic increase to their shares reserve on January 1 of each year as set forth in the respective plan documents.

Additionally, pursuant to the 2022 Inducement Plan (the Inducement Plan) in accordance with Listing Rule 5635(c)(4) of the Nasdaq Stock Market, nonstatutory stock options, stock appreciation rights, restricted stock, RSUs, PRSUs and other awards may be granted as an inducement material to an eligible person's entering into employment with us.

Shares of common stock reserved for future issuance were as follows (in thousands):

(1)Outstanding shares include the 2026 Executive PRSUs as discussed below, based on 100% achievement of target performance.

2021 Employee Stock Purchase Plan

Under the ESPP, the price at which common stock is purchased is equal to 85% of the fair market value of a share of our common stock on the first day of the offering period or the applicable purchase date, whichever is lower. The fair market value of common stock will generally be the closing sales price on the determination date. The ESPP provides an offering period of 24 months, with four purchase periods that are generallysix months long and end on May 15 and November 15 of each year.

The ESPP also includes a reset provision for the purchase price if the fair market value of a share of our common stock on the first day of any purchase period is less than or equal to the fair market value of a share of our common stock on the first day of an ongoing offering. If the reset provision is triggered, a new 24-month offering period begins. Each triggering of the reset provision was considered a modification in accordance with ASC 718, Stock Based Compensation, with the modification charge recognized on a straight-line basis over the new offering period. Historically, the reset provision has been triggered by stock price declines, and the resulting modification have not been material on our stock-based compensation expense.

Stock-based compensation expense related to the ESPP was $1.0 million and $0.9 million for the three months ended March 31, 2026 and 2025, respectively.

Stock Options

Stock options are generally granted with an exercise price equal to the fair market value of a share of common stock on the date of grant, have a 10-year contractual term, and vest over afour-year period.

Stock option activity for the three months ended March 31, 2026 is as follows (in thousands, except per share data):

(1)Aggregate intrinsic value for stock options represents the difference between the exercise price and the per share fair value of our common stock as of the end of the period, multiplied by the number of stock options outstanding, exercisable, or vested.

Restricted Stock Units

RSUs are granted at fair market value as of the date of the grant and typically vest over afour-year period.

RSU activity, which includes PRSUs, during the three months ended March 31, 2026 was as follows:

(1) During the three months ended March 31, 2026, total shares that vested were 2.0 million, of which 0.7 million were withheld for tax purposes.

The total fair value of vested RSUs during the three months ended March 31, 2026 and 2025 was $31.5 million and $55.6 million, respectively.

Performance-Based Awards

Executive PRSUs

Beginning in 2024, certain members of the executive team were granted PRSUs awards (the "Executive PRSUs"). The Executive PRSUs are granted annually in the first quarter, are subject to service and performance-based vesting conditions and vest over three years from the grant date. The PRSUs granted in 2026 have fiscal 2026 revenue and non-GAAP operating income performance targets with 70% and 30% of each award tied to these targets, respectively. The 2026 performance targets can be earned from 0% up to a maximum of 173.6% of target shares for significant outperformance.

The fair value of each PRSU is based on the fair value of our common stock on the date of grant. Stock-based compensation associated with the Executive PRSUs is recognized using the accelerated attribution method over the requisite service period, based on our periodic assessment of the probability that the performance will be achieved.

During the three months ended March 31, 2026 and 2025, we recognized $3.9 million and $1.9 million of stock-based compensation expense related to Executive PRSUs, respectively.

Stock-Based Compensation

Total stock-based compensation expense recorded for the three months ended March 31, 2026 and 2025 was as follows (in thousands):

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

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

As of March 31, 2026, unrecognized stock-based compensation expense related to unvested stock-based awards was as follows (in thousands, except for period data):

12. Income Taxes

The quarterly tax provision and estimates of annual effective tax rate are affected by several factors, including changes in pre-tax income (or loss), the mix of jurisdictions to which such income relates, and discrete items (such as windfalls or shortfalls from stock-based compensation). The provision for (benefit from) income taxes was $(1.8) million and $3.9 million for the three months ended March 31, 2026 and 2025, retrospectively.

The effective tax rate for the three months ended March 31, 2026 and 2025 were 27.5% and 151.1%, respectively. The effective tax rate for the first quarter of 2026 is lower than the first quarter of 2025 because the full valuation allowance on U.S. federal and state deferred tax assets was released in the fourth quarter of 2025.

13. Net Loss Per Share

Basic net loss per share attributable to common stockholders is computed by dividing the net loss by the number of weighted-average outstanding shares of common stock. Diluted net loss per share attributable to common stockholders is determined by giving effect to all potential common equivalents during the reporting period, unless including them yields an antidilutive result. We consider our stock options and RSUs as potential common stock equivalents, but excluded them from the computation of diluted net loss per share attributable to common stockholders for the three months ended March 31, 2026 and 2025, as their effect was antidilutive.

The rights, including the liquidation and dividend rights, of the holders of Class A and Class B common stock are identical, except with respect to voting, conversion, and transfer rights. As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis to each class of common stock and the resulting basic and diluted net loss per share attributable to common stockholders, are the same for both Class A and Class B common stock on both an individual and combined basis.

The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders (in thousands, except per share data):

The following table summarizes the potential common equivalents that were excluded from the computation of diluted net loss per share attributable to Class A and Class B common stockholders for the periods presented (in thousands):

14. Subsequent Events

Restructuring

In May 2026, the Company committed to a restructuring plan (the Plan) to streamline the Company’s organizational efforts and product development process, as well as increase leverage of AI and automation across the business. The Company estimates that this will result in approximately 11% reduction in headcount and approximately $7 million to $9 million in charges in the second quarter of 2026, consisting primarily of cash expenditures for separation-related payments, employee benefits and related costs. The Company expects that the Plan, including related cash payments, will be substantially complete by the end of the second quarter ending June 30, 2026.