VARONIS SYSTEMS INC

Previous wording

In the second half of 2021, we launched our first SaaS offering, introducing new products and support for several cloud applications and infrastructure. On October 31, 2022 we announced the availability of our flagship Varonis Data Security Platform as a SaaS, which was previously only sold as a self-hosted solution. The benefits of SaaS delivery are widely established for both customers and providers, and we believe this evolution of a SaaS delivery option for the Varonis Data Security Platform will be transformational. The advantages include: quicker and easier deployment and maintenance of solutions with reduced infrastructure and personnel requirements; a lower total cost of ownership; faster deployment of risk assessments, which is the core of our sales motion; enhanced threat detection; continual threat model updates; increased automation for securing data in place; and the ability to deliver additional features and functionality to customers more efficiently. In addition, our SaaS solution allows us to offer Managed Data Detection and Response (MDDR) services providing customers with 24x7x365 monitoring with a service level agreement (SLA) that ensures a Varonis expert will respond to alerts within a specified time frame.

Current wording

In the second half of 2021, we launched our first SaaS offering, introducing new products and support for cloud infrastructure and applications. On October 31, 2022 we announced the availability of our flagship Varonis Data Security Platform as a SaaS, which was previously only sold as a self-hosted solution. The benefits of SaaS delivery are widely established for both customers and providers, and we believe this evolution of a SaaS delivery option for the Varonis Data Security Platform will be transformational. The advantages include: quicker and easier deployment and maintenance of solutions with reduced infrastructure and personnel requirements; a lower total cost of ownership; faster deployment of risk assessments, which is the core of our sales motion; enhanced threat detection; continual threat model updates; increased automation for securing data in place; and the ability to deliver additional features and functionality to customers more efficiently. In addition, our Managed Data Detection and Response offering further reduces both the likelihood of a breach and its potential impact by enabling automated 24x7x365 monitoring with a service level agreement (SLA) that ensures Varonis will respond to alerts within a specified time frame. Our MDDR offering is only available for our SaaS customers because of the automation and visibility that’s built into our SaaS platform.

Previous wording

We sell substantially all of our products and services to channel partners, including distributors and resellers, which sell to end-user customers, which we refer to in this report as our customers. We believe that our sales model, which combines the leverage of a channel sales model with our highly trained and professional sales force, has and will continue to play a major role in our ability to grow and to successfully deliver our unique value proposition for enterprise data. While our products serve customers of all sizes, across industries and across geographies, the marketing focus and majority of our sales focus is on targeting organizations with 1,000 users or more who can make larger initial purchases with us and, over time, have a greater potential lifetime value. Our customers span leading firms in the financial services, public, healthcare, industrial, insurance, technology, energy and utilities, consumer and retail, education and construction and engineering sectors. We believe our existing customer base serves as a strong source of incremental future revenues given our broad platform of products, their growing volumes and complexity of enterprise data and related security concerns. We will continue our focus on targeting organizations with 1,000 users or more who can make larger purchases with us initially and over time. We are also focused on maintaining a high renewal rate by investing in the quality and reliability of our customer service and support teams to ensure our customers receive value from our products and providing software upgrades and enhancements when and if they are available. Our product offering currently contains coverage for more than 40 of the most critical on-premises and cloud data stores and applications and our renewal rate continued to be over 90% for the three months ended March 31, 2024.

Current wording

We sell substantially all of our products and services to channel partners, including distributors and resellers, which sell to end-user customers, which we refer to in this report as our customers. We believe that our sales model, which combines the leverage of a channel sales model with our highly trained and professional sales force, has and will continue to play a major role in our ability to grow and to successfully deliver our unique value proposition for enterprise data. While our products serve customers of all sizes, across industries and across geographies, the marketing focus and majority of our sales focus is on targeting organizations with 1,000 users or more who can make larger initial purchases with us and, over time, have a greater potential lifetime value. Our customers span leading firms in the financial services, public, healthcare, industrial, insurance, technology, energy and utilities, consumer and retail, education and construction and engineering sectors. We believe our existing customer base serves as a strong source of incremental future revenues given our broad platform of products, their growing volumes and complexity of enterprise data and related security concerns. We will continue our focus on targeting organizations with 1,000 users or more who can make larger purchases with us initially and over time. We are also focused on maintaining a high renewal rate by investing in the quality and reliability of our customer service and support teams to ensure our customers receive value from our products and providing software upgrades and enhancements when and if they are available. Our product offering currently contains coverage for more than 40 of the most critical on-premises and cloud data stores and applications and our renewal rate continued to be over 90% for the six months ended June 30, 2024.

Previous wording

We believe there is a significant long-term growth opportunity in both domestic and international markets, which could include any organization that relies on data stored in SaaS applications, IaaS environments, NAS devices, file shares, databases and email servers. For the three months ended March 31, 2024, approximately 76% of our revenues were derived from North America, while approximately 21% of our revenues were derived from EMEA and approximately 3% from ROW. Additionally, despite the revenue recognition headwinds from the accounting treatment associated with the positive trend of our increase in SaaS sales and existing customer conversions to SaaS, total revenues still grew approximately 6% for the three months ended March 31, 2024 compared with the three months ended March 31, 2023. We continue to expect expansion in both domestic and international markets to be key components of our long-term growth strategy. Over the last few years, however, our operations around the world were negatively impacted by broader macroeconomic conditions, including a higher inflation and interest rate environment and a general economic slowdown. As a result, we have seen changes in customer buying patterns including, some budgetary tightening and longer renewal cycles, a trend which may continue for the foreseeable future.

Current wording

We believe there is a significant long-term growth opportunity in both domestic and international markets, which could include any organization that relies on data stored in SaaS applications, IaaS environments, NAS devices, file shares, databases and email servers. For the three and six months ended June 30, 2024, approximately 74% of our revenues were derived from North America, while approximately 22% of our revenues were derived from EMEA and approximately 4% from ROW. Additionally, despite the revenue recognition headwinds from the accounting treatment associated with the positive trend of our increase in SaaS sales and existing customer conversions to SaaS, total revenues still grew approximately 10% for the six months ended June 30, 2024 compared with the six months ended June 30, 2023. We continue to expect expansion in both domestic and international markets to be key components of our long-term growth strategy. Over the last few years, however, our operations around the world were negatively impacted by broader macroeconomic conditions, including a higher inflation and interest rate environment and a general economic slowdown. As a result, we have seen changes in customer buying patterns including, some budgetary tightening and longer renewal cycles, a trend which may continue for the foreseeable future.

Previous wording

Since inception, we have continued to scale our business and execute on strategic initiatives which we believe have positioned us for durable long-term growth. For the three months ended March 31, 2024, we have continued to grow our revenues despite revenue recognition accounting treatment headwinds associated with the increase in SaaS sales and existing customer conversions to SaaS. For the three months ended March 31, 2024 and 2023, SaaS revenues were $34.0 million and $2.1 million, respectively. For the three months ended March 31, 2024 and 2023, our total revenues were $114.0 million and $107.3 million, respectively. For the three months ended March 31, 2024 and 2023, we had operating losses of $47.6 million and $43.1 million and net losses of $40.5 million and $38.3 million, respectively.

Current wording

Since inception, we have continued to scale our business and execute on strategic initiatives which we believe have positioned us for durable long-term growth. For the three and six months ended June 30, 2024, we have continued to grow our revenues despite revenue recognition accounting treatment headwinds associated with the increase in SaaS sales and existing customer conversions to SaaS. For the three months ended June 30, 2024 and 2023, SaaS revenues were $44.8 million and $5.7 million, respectively. For the six months ended June 30, 2024 and 2023, SaaS revenues were $78.8 million and $7.7 million, respectively. For the three months ended June 30, 2024 and 2023, our total revenues were $130.3 million and $115.4 million, respectively. For the six months ended June 30, 2024 and 2023, our total revenues were $244.4 million and $222.8 million, respectively. For the three months ended June 30, 2024 and 2023, we had operating losses of $28.8 million and $39.7 million and net losses of $23.9 million and $38.7 million, respectively. For the six months ended June 30, 2024 and 2023, we had operating losses of $76.5 million and $82.8 million and net losses of $64.4 million and $77.0 million, respectively.

Previous wording

As of March 31, 2024 and 2023, ARR were $560.3 million and $478.1 million, respectively, an increase of 17% period over period. The annualized value of contracts is a legal and contractual determination made by assessing the contractual terms with our customers. The annualized value of these contracts are not determined by reference to historical revenues, deferred revenues or any other GAAP financial measure over any period. ARR is not a forecast of future revenues and can be impacted by contract start and end dates and renewal rates. We expect ARR to continue to increase in absolute dollars.

Current wording

As of June 30, 2024 and 2023, ARR was $584.2 million and $497.0 million, respectively, an increase of 18% period over period. The annualized value of contracts is a legal and contractual determination made by assessing the contractual terms with our customers. The annualized value of these contracts is not determined by reference to historical revenues, deferred revenues or any other GAAP financial measure over any period. ARR is not a forecast of future revenues and can be impacted by contract start and end dates and renewal rates. We expect ARR to continue to increase in absolute dollars.

Previous wording

Over the last two years, we have strategically expanded our offering to include SaaS solutions. Recognizing the established benefits of SaaS for both customers and us, we plan to transition our business to a predominantly SaaS delivery model over the next several years. Due to differences in the revenue recognition accounting treatment, the transition to a SaaS based-business model may produce revenue headwinds which may cause significant variation in the reported revenues for a given period compared to the same period in the previous year. As of March 31, 2024, SaaS as a percentage of total ARR was approximately 30% and we expect this percentage to increase as we continue the transition to a SaaS delivery model.

Current wording

Over the last two years, we have strategically expanded our offering to include SaaS solutions. Recognizing the established benefits of SaaS for both customers and us, we plan to transition our business to a predominantly SaaS delivery model over the next several years. Due to differences in the revenue recognition accounting treatment, the transition to a SaaS based-business model may produce revenue headwinds which may cause significant variation in the reported revenues for a given period compared to the same period in the previous year. As of June 30, 2024, SaaS as a percentage of total ARR was approximately 36% and we expect this percentage to increase as we continue the transition to a SaaS delivery model.

Previous wording

Remaining performance obligations ("RPO") represent contracted revenues that have not yet been recognized, which includes deferred revenues and non-cancelable amounts that will be invoiced in the future. Our RPO were $426.2 million as of March 31, 2024. We expect RPO to continue to increase in absolute dollars as we transition to a predominately SaaS-based company.

Current wording

Remaining performance obligations ("RPO") represent contracted revenues that have not yet been recognized, which includes deferred revenues and non-cancelable amounts that will be invoiced in the future. Our RPO was $514.7 million as of June 30, 2024. We expect RPO to continue to increase in absolute dollars as we transition to a predominately SaaS-based company.

Previous wording

Term License Subscription Revenues. Term license subscription revenues relate to subscription license revenues which are sold on-premises and are recognized at the point in time when the software license has been delivered and the benefit of the asset has transferred. Maintenance associated with subscription licenses is recognized ratably over the term of the agreement.

Current wording

Term License Subscription Revenues. Term license subscription revenues relate to subscription license revenues which are sold on-premises and are recognized at the point in time when the software license has been delivered and the benefit of the asset has transferred. Maintenance associated with subscription licenses is recognized ratably over the term of the agreement. Due to the transition to a predominately SaaS delivery model, we expect term license subscription revenues to continue to decline.

Previous wording

Maintenance and Services Revenues. Maintenance and services revenues consist of revenues from maintenance agreements of past perpetual license sales and, to a lesser extent, professional services. Customers with maintenance agreements are entitled to receive support and unspecified upgrades and enhancements when and if they become available. We recognize the revenues associated with maintenance ratably over the associated contract period. We measure the renewal rate for our customers over a 12-month period, based on a dollar renewal rate for contracts expiring during that time period. Our renewal rate for each of the three months ended March 31, 2024 and 2023 continued to be over 90%. We do not expect perpetual license revenues in the future and, therefore, we expect the associated maintenance and support to continue to decline despite the strong renewal rates. We also offer professional services, generally provided on a time and materials basis, focused on training our customers in the use of our products. We recognize the revenues associated with these professional services as we deliver the services, provide the training or when the service term has expired. Professional services have always been a small percentage of our total revenues and we expect it to continue to be a small percentage as our newer solutions can provide remediation in more automated ways. As such, maintenance and services revenues are expected to continue to decline.

Current wording

Maintenance and Services Revenues. Maintenance and services revenues consist of revenues from maintenance agreements of past perpetual license sales and, to a lesser extent, professional services. Customers with maintenance agreements are entitled to receive support and unspecified upgrades and enhancements when and if they become available. We recognize the revenues associated with maintenance ratably over the associated contract period. We measure the renewal rate for our customers over a 12-month period, based on a dollar renewal rate for contracts expiring during that time period. Our renewal rate for each of the six months ended June 30, 2024 and 2023 continued to be over 90%. We do not expect perpetual license revenues in the future and, therefore, we expect the associated maintenance and support to continue to decline despite the strong renewal rates. We also offer professional services, generally provided on a time and materials basis, focused on training our customers in the use of our products. We recognize the revenues associated with these professional services as we deliver the services, provide the training or when the service term has expired. Professional services have always been a small percentage of our total revenues and we expect it to continue to be a small percentage. As such, maintenance and services revenues are expected to continue to decline.

Previous wording

Our products are used by a wide range of enterprises, including Fortune 500 corporations and small and medium-sized businesses. Our customers span a broad array of industries and are located in over 90 countries.

Current wording

Our products are used by a wide range of enterprises, including Fortune 500 corporations and small and medium-sized businesses. Our customers span a broad array of industries and are located in 95 countries.

Previous wording

Cost of revenues consist primarily of salaries (including payroll tax expense related to stock-based compensation), employee benefits (including commissions and bonuses) and stock-based compensation for our customer support, customer success and services employees; third-party hosting fees; amortization of acquired intangible assets; travel expenses; and allocated overhead costs for facilities, IT and depreciation. We recognize expenses related to these costs as they are incurred and expect that these costs will increase in absolute dollars as we continue to invest in our customer success and support teams, move to a SaaS delivery model and support the underlying programs that play a critical role in maintaining our high renewal rate.

Current wording

Cost of revenues consist primarily of salaries (including payroll tax expense related to stock-based compensation), employee benefits (including commissions and bonuses) and stock-based compensation for our customer support, customer success and services employees; third-party hosting fees; amortization of acquired intangible assets; travel expenses; and allocated overhead costs for facilities, IT and depreciation. We recognize expenses related to these costs as they are incurred and expect that these costs will increase in absolute dollars as we continue to invest in our customer success, support and MDDR teams, move to a SaaS delivery model and support the underlying programs that play a critical role in maintaining our high renewal rate.

Previous wording

Financial income (expenses), net consists primarily of interest income, foreign exchange gains or losses, amortization of debt discount and issuance costs and interest expense. Interest income represents interest received on our cash, cash equivalents, marketable securities, deposits and amortization of premiums and accretion of discounts related to our investment in available for sale marketable securities. Foreign exchange gains or losses relate to our business activities in foreign countries with different operational reporting currencies. As a result of our business activities in foreign countries, we expect that foreign exchange gains or losses will continue to occur due to fluctuations in exchange rates in the countries where we do business. Amortization of debt discount and issuance costs relate to the 2025 Notes we issued in May 2020. Interest expense consists of the contractual interest expenses associated with the 2025 Notes.

Current wording

Financial income (expenses), net consists primarily of interest income, foreign exchange gains or losses, amortization of debt issuance costs and interest expense. Interest income represents interest received on our cash, cash equivalents, marketable securities, deposits and amortization of premiums and accretion of discounts related to our investment in available for sale marketable securities. Foreign exchange gains or losses relate to our business activities in foreign countries with different operational reporting currencies. As a result of our business activities in foreign countries, we expect that foreign exchange gains or losses will continue to occur due to fluctuations in exchange rates in the countries where we do business. Amortization of debt issuance costs relate to the 2025 Notes we issued in May 2020. Interest expense consists of the contractual interest expenses associated with the 2025 Notes.

Previous wording

For the three months ended March 31, 2024, our revenues increased 6% compared to the three months ended March 31, 2023 despite the positive trend of increased SaaS sales and existing customer conversions to SaaS which cause headwinds due to accounting treatment differences in revenue recognition. SaaS revenues increased 1,543% from $2.1 million for the three months ended March 31, 2023 to $34.0 million for the three months ended March 31, 2024 as we progress through our transition to a predominantly SaaS delivery model. The increase in SaaS revenues was driven by new customer acquisitions, existing customers conversions and our high renewal rate. Consequently, there was an expected decrease to term license subscriptions given the aforementioned transition and customer conversions, a trend we expect to continue in the future. ARR were $560.3 million and $478.1 million as of March 31, 2024 and 2023, respectively, representing an increase of 17%. The anticipated decrease in maintenance and services revenues was due to churn and the conversion of existing customers to SaaS despite our renewal rate continuing to be over 90% for each of the three months ended March 31, 2024 and 2023, as well as newer solutions providing remediation in more automated ways, requiring less professional services time. As a result, we expected, and continue to expect less associated maintenance and services revenues in the future.

Current wording

For the three months ended June 30, 2024, our revenues increased 13% compared to the three months ended June 30, 2023 despite the positive trend of increased SaaS sales and existing customer conversions to SaaS which cause headwinds due to accounting treatment differences in revenue recognition. SaaS revenues increased 692% from $5.7 million for the three months ended June 30, 2023 to $44.8 million for the three months ended June 30, 2024 as we progress through our transition to a predominantly SaaS delivery model. The increase in SaaS revenues was driven by new customer acquisitions, existing customers conversions and our high renewal rate. Consequently, there was an expected decrease to term license subscriptions given the aforementioned transition and customer conversions, a trend we expect to continue in the future. ARR was $584.2 million and $497.0 million as of June 30, 2024 and 2023, respectively, representing an increase of 18%. The anticipated decrease in maintenance and services revenues was due to churn and the conversion of existing customers to SaaS despite our renewal rate continuing to be over 90% for each of the three months ended June 30, 2024 and 2023. We continue to expect less associated maintenance and services revenues in the future.

Previous wording

The increase in research and development expenses was primarily related to a $2.0 million increase in salaries and benefits and stock-based compensation expense for our employees as part of our focus on enhancing and developing our existing and new products. The increase is also due to a $0.6 million increase in facilities and allocated overhead costs and a $0.4 million increase in third-party hosting costs associated with our transition to a SaaS delivery model.

Current wording

The decrease in research and development expenses was primarily related to a $2.0 million decrease in salaries and benefits and stock-based compensation expense. This is partially offset by a $0.4 million increase in third-party hosting costs associated with our transition to a SaaS delivery model and an increase of $0.2 million in facilities and allocated overhead costs.

Previous wording

The increase in sales and marketing expenses was primarily related to a $2.3 million increase related to general sales and marketing expenses, including increased travel and marketing events. The increase is also due to a $1.1 million increase in salaries and benefits and stock-based compensation expense for our sales force and commissions on customer orders. This is partially offset by a decrease of $0.5 million in facilities and allocated overhead costs.

Current wording

The decrease in sales and marketing expenses was primarily related to a $3.5 million decrease in salaries and benefits and stock-based compensation expense and a decrease of $0.3 million in facilities and allocated overhead costs. This is partially offset by an increase of $3.5 million in general sales and marketing expenses, including increased travel, marketing events and third-party hosting costs associated with our transition to a SaaS delivery model.

Previous wording

The increase in general and administrative expenses was primarily related to an increase of $1.6 million in salaries and benefits and stock-based compensation expense primarily due to increased headcount to support the overall growth of our business.

Current wording

The increase in general and administrative expenses was primarily related to an increase of $0.3 million in salaries and benefits and stock-based compensation expense primarily due to increased headcount to support the overall growth of our business.

Previous wording

The increase in cost of revenues was primarily related to a $1.8 million increase in salaries and benefits and stock-based compensation expense due to increased headcount for customer success personnel to assist with the transition to a SaaS delivery model, ensure high customer satisfaction and maintain our strong renewal rates. The increase is also due to a $1.6 million increase in third-party hosting costs associated with our transition to a SaaS delivery model and an increase of $0.2 million in facilities and allocated overhead costs.

Current wording

The increase in cost of revenues was primarily related to an increase of $4.9 million in salaries and benefits and stock-based compensation expense due to increased headcount for customer success personnel to assist with the transition to a SaaS delivery model, including our recently introduced MDDR offering, ensure high customer satisfaction and maintain our strong renewal rates. The increase is also due to a $3.5 million increase in third-party hosting costs associated with our transition to a SaaS delivery model.

Previous wording

On March 31, 2024, our cash and cash equivalents, short-term marketable securities and short-term deposits of $548.1 million were held for working capital purposes. We believe that our existing cash and cash equivalents, short-term marketable securities, short-term deposits and cash flow from operations will be sufficient to fund our operations and capital expenditures for at least the next 12 months. Our future capital requirements will depend on many factors, including our rate of revenue growth, timing of renewals and renewal rates, the expansion of our sales and marketing activities, the timing and extent of spending to support product development efforts and expansion into new geographic locations, the timing of introductions of new software products and enhancements to existing software products, the continuing market acceptance of our software offerings and our use of cash to pay for acquisitions or share repurchases, if any.

Current wording

On June 30, 2024, our cash and cash equivalents, short-term marketable securities and short-term deposits of $627.3 million were held for working capital purposes. We believe that our existing cash and cash equivalents, short-term marketable securities, short-term deposits and cash flow from operations will be sufficient to fund our operations and capital expenditures for at least the next 12 months. Our future capital requirements will depend on many factors, including our rate of revenue growth, timing of renewals and renewal rates, the expansion of our sales and marketing activities, the timing and extent of spending to support product development efforts and expansion into new geographic locations, the timing of introductions of new software products and enhancements to existing software products, the continuing market acceptance of our software offerings and our use of cash to pay for acquisitions or share repurchases, if any.

Previous wording

For the three months ended March 31, 2024, cash inflows from our operating activities were $56.7 million. We have observed two seasonal patterns that impact our net cash provided by operating activities. First, a majority of our sales are made during the last three weeks of the quarter. Second, the highest dollar amount of sales of our products and services occurs in the fourth quarter. Consequently, we end the fourth quarter with our highest accounts receivable balance of any quarter which in turn generates the greatest amount of collections in the following quarter. In addition, there is negative sequential sales in the first quarter, which results in a relatively lower amount collected during the second quarter. These seasonal trends also impact our operating loss because the majority of our expenses are relatively fixed in the short-term. For the three months ended March 31, 2024, cash inflows were $1.5 million from our net loss excluding non-cash charges. Additional sources of cash inflows were from changes in our working capital, including a $68.7 million decrease in accounts receivable. Our days’ sales outstanding (“DSO”) for the three months ended March 31, 2024 was 78. Other sources of cash inflows were from a $3.6 million increase in deferred revenues, a $2.2 million increase in trade payables and a $0.2 million increase in other long-term liabilities. This was partially offset by a $16.8 million decrease in accrued expenses and other liabilities, a $2.4 million increase in prepaid expenses and other current assets (including deferred commissions) and a $0.1 million increase in other long-term assets.

Current wording

For the six months ended June 30, 2024, cash inflows from our operating activities were $68.4 million. We have observed two seasonal patterns that impact our net cash provided by operating activities. First, a majority of our sales are made during the last three weeks of the quarter. Second, the highest dollar amount of sales of our products and services occurs in the fourth quarter. Consequently, we end the fourth quarter with our highest accounts receivable balance of any quarter which in turn generates the greatest amount of collections in the following quarter. In addition, there is negative sequential sales in the first quarter, which results in a relatively lower amount collected during the second quarter. These seasonal trends also impact our operating loss because the majority of our expenses are relatively fixed in the short-term. For the six months ended June 30, 2024, cash inflows were $15.9 million from our net loss excluding non-cash charges. Additional sources of cash inflows were from changes in our working capital, including a $46.7 million decrease in accounts receivable. Our days’ sales outstanding (“DSO”) for the three and six months ended June 30, 2024 were 72 and 75, respectively. Other sources of cash inflows were from a $27.0 million increase in deferred revenues, a $1.9 million increase in trade payables and a $0.1 million increase in other long-term liabilities. This was partially offset by a $18.7 million increase in prepaid expenses and other current assets (including deferred commissions), a $4.4 million decrease in accrued expenses and other liabilities and a $0.1 million increase in other long-term assets.

Previous wording

For the three months ended March 31, 2023, cash inflows from our operating activities were $36.8 million. For the three months ended March 31, 2023, cash inflows were $5.3 million from our net loss excluding non-cash charges. Additional sources of cash inflows were from changes in our working capital, including a $60.6 million decrease in accounts receivable. Our DSO for the three months ended March 31, 2023 was 64. Other sources of cash inflows were from a $1.2 million increase in other long-term liabilities. This was partially offset by a $15.8 million decrease in accrued expenses and other liabilities, a $10.3 million increase in prepaid expenses and other current assets (including deferred commissions), a $2.3 million decrease in trade payables, a $1.4 million decrease in deferred revenues and a $0.6 million increase in other long-term assets.

Current wording

For the six months ended June 30, 2023, cash inflows from our operating activities were $42.6 million. For the six months ended June 30, 2023, cash inflows were $19.3 million from our net loss excluding non-cash charges. Additional sources of cash inflows were from changes in our working capital, including a $32.3 million decrease in accounts receivable. Our DSO for the three and six months ended June 30, 2023 was 69 and 67, respectively. Other sources of cash inflows were from a $19.3 million increase in deferred revenues and a $2.7 million increase in other long-term liabilities. This was partially offset by a $22.5 million increase in prepaid expenses and other current assets (including deferred commissions), a $5.8 million decrease in accrued expenses and other liabilities, a $2.3 million decrease in trade payables and a $0.4 million increase in other long-term assets.

Previous wording

During the three months ended March 31, 2024, net cash used in investing activities of $112.0 million was primarily attributable net investments of $116.4 million in marketable securities and $0.3 million in capital expenditures to support our growth during the period including hardware, software, office equipment and leasehold improvements. This was partially offset by net proceeds of $4.7 million in deposits.

Current wording

During the six months ended June 30, 2024, net cash used in investing activities of $117.0 million was primarily attributable to net investments of $121.0 million in marketable securities and $1.1 million in capital expenditures to support our growth during the period including hardware, software, office equipment and leasehold improvements. This was partially offset by net proceeds of $5.1 million in deposits.

Previous wording

During the three months ended March 31, 2023, net cash used in investing activities of $142.5 million was primarily attributable to net investments of $98.5 million in net deposits, $42.9 million in marketable securities and $1.1 million in capital expenditures to support our growth during the period including hardware, software, office equipment and leasehold improvements mainly in connection with office space.

Current wording

During the six months ended June 30, 2023, net cash provided by investing activities of $9.9 million was primarily attributable to net proceeds of $51.4 million in deposits. This was partially offset by net investments of $38.8 million in marketable securities and $2.6 million in capital expenditures to support our growth during the period including hardware, software, office equipment and leasehold improvements.

Previous wording

For the three months ended March 31, 2024, net cash used in financing activities of $28.4 million was attributable to $34.9 million in taxes paid related to net share settlement of equity awards, partially offset by $6.4 million of proceeds from employee stock plans.

Current wording

For the six months ended June 30, 2024, net cash used in financing activities of $26.8 million was attributable to $36.6 million in taxes paid related to net share settlement of equity awards, partially offset by $9.8 million of proceeds from employee stock plans.

Previous wording

For the three months ended March 31, 2023, net cash used in financing activities of $13.5 million was attributable to $16.9 million in taxes paid related to net share settlement of equity awards and $2.5 million of repurchases of common stock, partially offset by $5.9 million of proceeds from employee stock plans.

Current wording

For the six months ended June 30, 2023, net cash used in financing activities of $21.1 million was attributable to $19.4 million in taxes paid related to net share settlement of equity awards and $7.6 million of repurchases of common stock, partially offset by $5.9 million of proceeds from employee stock plans.

Previous wording

We have obligations related to unrecognized tax benefit liabilities totaling $24.3 million and others related to severance pay, which have been excluded from the table above as we do not believe it is practicable to make reliable estimates of the periods in which payments for these obligations will be made. We also have a contractual minimum purchase commitment with a service provider through August 31, 2025 totaling $3.1 million and an additional $50.7 million contractual minimum purchase commitment with another service provider through December 31, 2026 with no specified annual commitments. We expect to fund these obligations with cash flows from operations and cash on our balance sheet.

Current wording

We have obligations related to unrecognized tax benefit liabilities totaling $25.7 million and others related to severance pay, which have been excluded from the table above as we do not believe it is practicable to make reliable estimates of the periods in which payments for these obligations will be made. We also have a contractual minimum purchase commitment with a service provider through August 31, 2025 totaling $3.1 million and an additional $49.5 million contractual minimum purchase commitment with another service provider through December 31, 2026 with no specified annual commitments. We expect to fund these obligations with cash flows from operations and cash on our balance sheet.