PROCORE TECHNOLOGIES, INC.

Previous wording

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and notes thereto and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our 2023 Form 10-K. You should review the disclosure under the section titled“Special Note Regarding Forward-Looking Statements” included elsewhere in this Quarterly Report on Form 10-Q and Part I, Item 1A,“Risk Factors” in our 2023 Form 10-K for a discussion of forward-looking statements and important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. These statements, like all statements in this report, speak only as of their date (unless another date is indicated), and we undertake no obligation to update or revise these statements in light of future developments, except as required by law.

Current wording

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and notes thereto and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our 2024 Form 10-K. You should review the disclosures under the section titled“Special Note Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q and under Part I, Item 1A,“Risk Factors” in our 2024 Form 10-K for a discussion of forward-looking statements and important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. These statements, like all statements in this report, speak only as of their date (unless another date is indicated), and we undertake no obligation to update or revise these statements in light of future developments, except as required by law.

Previous wording

We are the leading global provider of cloud-based construction management software, and are helping transform one of the oldest, largest, and least digitized industries in the world. We focus exclusively on connecting and empowering the construction industry’s key stakeholders, such as owners, general contractors, specialty contractors, architects, and engineers, to collaborate and access our capabilities from any location, on any internet-connected device. Our platform is modernizing and digitizing construction management by enabling real-time access to critical project information, simplifying complex workflows, and facilitating seamless communication among key stakeholders, all of which we believe positions us to serve as the system of record for the construction industry. We are also continuing to develop other programs and services to address related challenges faced by the construction industry’s key stakeholders. Adoption of our products, services, and platform helps our customers increase productivity and efficiency, reduce rework and costly delays, improve safety and compliance, and enhance financial transparency and accountability.

Current wording

We are the leading global provider of cloud-based construction management software, and are helping transform one of the oldest, largest, and least digitized industries in the world. We focus exclusively on connecting and empowering the construction industry’s key stakeholders, such as owners, general contractors, and specialty contractors, to collaborate and access our capabilities from any location, on any internet-connected device. Our platform is modernizing and digitizing construction management by enabling timely access to critical project information, simplifying complex workflows, and facilitating seamless communication among relevant stakeholders, all of which we believe positions us to serve as the system of record for the construction industry. We are also continuing to develop other programs and services to address related challenges faced by the construction industry’s key stakeholders. Adoption of our products, services, and platform helps our customers increase productivity and efficiency, reduce rework and costly delays, improve safety and compliance, and enhance financial transparency and accountability.

Previous wording

We serve customers ranging from small businesses managing a few million dollars of annual construction volume to global enterprises managing billions of dollars of annual construction volume. Our core customers are owners, general contractors, and specialty contractors operating across the commercial, residential, industrial, and infrastructure segments of the construction industry. We primarily sell subscriptions to access our products through our direct sales team, which is specialized by stakeholder, region, size, and type.

Current wording

Our customers range from small businesses managing a few million dollars of annual construction volume to global enterprises managing billions of dollars of annual construction volume. Our core customers are owners, general contractors, and specialty contractors operating across the residential, and non-residential segments of the construction industry. We primarily sell subscriptions to access our products through our direct sales team, which is specialized by geography, followed by size and type of stakeholder.

Previous wording

We generate substantially all of our revenue from subscriptions to access our products and have an unlimited user model that is designed to facilitate adoption and maximize usage of our platform by all project stakeholders. We primarily sell our products on a subscription basis for a fixed fee with pricing generally based on the number and mix of products to which a customer subscribes and the fixed aggregate dollar volume of construction work contracted to run on our platform annually, which we refer to as annual construction volume. As our customers subscribe to additional products or increase the annual construction volume contracted to run on our platform, we generate more revenue. We do not provide refunds for unused construction volume, or charge customers based on consumption or on a per-project basis. Subscriptions to access our products include customer support and allow for unlimited users as we do not charge a per-seat or per-user fee. Customers can invite all project participants to engage with our platform as part of a project team, including customers’ employees and collaborators, who are other project participants who engage with our platform but do not pay us for such use. Further, multiple stakeholders can be customers on the same project and retain access to project information for the duration of their subscription.

Current wording

We generate substantially all of our revenue from subscriptions to access our products. We primarily sell our products on a subscription basis for a fixed fee with pricing generally based on the number and mix of products a customer subscribes to and the fixed aggregate dollar volume of construction work contracted to run on our platform annually, which we refer to as annual construction volume. As our customers subscribe to additional products or increase the annual construction volume contracted to run on our platform, we generate more revenue. We do not provide refunds for unused construction volume, or charge customers based on consumption or on a per-project basis. Our business model is designed to encourage rapid, widespread adoption of our products by generally allowing for unlimited users, meaning we generally do not charge a per-seat or per-user fee. Customers can, and often do, invite all project participants, including owners, general contractors, specialty contractors, architects, and engineers, to engage with our platform as part of a project team without incurring additional fees. These collaborators engage with our platform for the duration of their involvement in a project, but do not pay us for such use. However, multiple participants can be customers on the same project, which allows each of them to retain access to project information for the duration of their subscription and allows us to receive revenue from multiple customers on the same project.

Previous wording

To support these efforts, in July 2024 we began to evolve our GTM operating model by, among other things, transitioning to a general manager model, with general managers for our North America, Europe, Asia-Pacific, and Middle East regions and our public sector business, each of whom will be empowered to assess and deploy the appropriate strategies and tactics for customers within their respective regions. As another example, we are also adding new product and technical specialists to our GTM teams, who we believe can add value for our customers by matching the evolving needs of our customers’ diverse buyer personas with our products and services, and helping our customers understand and implement the full potential of our platform. Evolving our GTM operating model involves new investment, particularly as we increase our sales headcount, ramp and invest in additional enablement for our sales teams, and add the new specialists to our teams. We believe that these investments will allow us to build stronger and deeper customer relationships and improve our operating efficiency over time which, in turn, will result in better customer experiences and provide additional value to our customers, some of whom continue to face macroeconomic and other pressures that have negatively impacted their spending decisions. We anticipate some disruptions and adverse impacts to our financial and operating results in the near-term as we invest in and implement the evolved GTM operating model. Over the longer term, if we fail to successfully implement, or realize the benefits of, our evolved GTM operating model, or otherwise fail to acquire new customers, retain existing customers, or expand existing customers’ use of our products, services, and platform, our business, financial condition, and operating results will be adversely impacted, potentially materially. Notwithstanding these risks, we believe that implementing the evolved GTM model will improve our long-term operating efficiency, best position us for sustainable long-term growth, and enhance our ability to capture our large market opportunity.

Current wording

To support these efforts, in July 2024 we began to evolve our GTM operating model by, among other things, transitioning to a general manager model, with general managers for our North America, Europe, Asia-Pacific, and Middle East regions and our public sector business, each of whom is empowered to assess and deploy the appropriate strategies and tactics for customers within their respective regions. We have also added new product and technical specialists to our GTM teams, who we believe can add value for our customers by matching the evolving needs of our customers’ diverse buyer personas with our products and services, and helping our customers understand and implement the full potential of our platform. Evolving our GTM operating model involves new investment, particularly as we increase our sales headcount, ramp and invest in additional enablement for our sales teams, and add the new specialists to our teams. We believe that these investments will allow us to build stronger and deeper customer relationships and improve our operating efficiency over time which, in turn, will result in better customer experiences and provide additional value to our customers, some of whom continue to face macroeconomic and other pressures that have negatively impacted their spending decisions. We have seen and anticipate continuing to see some disruptions and adverse impacts to our financial and operating results in the near-term as we invest in and implement the evolved GTM operating model. Over the longer term, if we fail to successfully implement, or realize the benefits of, our evolved GTM operating model, or otherwise fail to acquire new customers, retain existing customers, or expand existing customers’ use of our products, services, and platform, our business, financial condition, results of operations, and prospects will be adversely affected, potentially materially. Notwithstanding these risks, we believe that implementing the evolved GTM operating model will improve our long-term operating efficiency, best position us for sustainable long-term growth, and enhance our ability to capture our large market opportunity.

Previous wording

Despite macroeconomic challenges, we have seen an increase in the number of customers that contributed more than $100,000 of annual recurring revenue ("ARR"), which increased from 1,921 as of September 30, 2023 to 2,261 as of September 30, 2024, reflecting a year-over-year growth rate of 18%. The number of customers on our platform has increased from 16,067 as of September 30, 2023 to 16,975 as of September 30, 2024, reflecting a year-over-year growth rate of 6%. All aforementioned customer counts exclude customers acquired from business combinations that do not have standard Procore annual contracts.

Current wording

Despite macroeconomic challenges, we have seen an increase in the number of customers that contributed more than $100,000 of annual recurring revenue ("ARR"), which increased from 2,119 as of March 31, 2024 to 2,418 as of March 31, 2025, reflecting a year-over-year growth rate of 14%. The number of customers on our platform has increased from 16,598 as of March 31, 2024 to 17,306 as of March 31, 2025, reflecting a year-over-year growth rate of 4%. All aforementioned customer counts exclude customers acquired from business combinations that do not have standard Procore annual contracts.

Previous wording

In addition, our gross retention rate (“GRR”) was 94% and 95% as of September 30, 2024 and September 30, 2023, respectively. Our GRR reflects only customer losses and does not reflect customer expansion or contraction. We believe our high GRR demonstrates that we serve a vital role in our customers’ operations, as the vast majority of our customers continue to use our products and platform and to renew their subscriptions. We believe that GRR is a key metric to understand our ability to retain our customer base, to evaluate whether our products and platform are addressing our customers’ needs throughout the year.

Current wording

In addition, our gross retention rate (“GRR”) was 95% as of both March 31, 2025 and March 31, 2024. Our GRR reflects only customer losses and does not reflect customer expansion or contraction. We believe our high GRR demonstrates that we serve a vital role in our customers’ operations, as the vast majority of our customers continue to use our products and platform and to renew their subscriptions. We believe that GRR is a key metric to understand our ability to retain our customer base, to evaluate whether our products and platform are addressing our customers’ needs throughout the year.

Previous wording

We believe that cRPO is a key metric to track our ability to win fixed revenue commitments from new customers and to expand and retain existing customers. As of September 30, 2024, cRPO increased by $103.9 million, or 16%, year-over-year. Approximately 5% of the increase was attributable to existing customers and 95% was attributable to new customers acquired during the twelve months ended September 30, 2024. We expect RPO to change from period to period primarily due to the size, timing, and duration of new customer contracts and customer renewals.

Current wording

We believe that cRPO is a key metric to track our ability to win fixed revenue commitments from new customers and to expand and retain existing customers. As of March 31, 2025, cRPO increased by $137.9 million, or 20%, year-over-year. Approximately 33% of the increase was attributable to existing customers and 67% was attributable to new customers acquired during the twelve months ended March 31, 2025. We expect RPO to change from period to period primarily due to the size, timing, and duration of new customer contracts and customer renewals.

Previous wording

We intend to continue to invest in building additional products, offerings, features, and functionality that expand our capabilities and facilitate the extension of our platform. For example, in May 2024, we acquired Intelliwave Technologies Inc., a construction materials management company that enhances our Workforce Management solution; in September 2023, we acquired Unearth Technologies Inc., a geographic information systems asset management platform that helps general contractors and infrastructure providers connect assets, data, and field teams; and in September 2023, we launched Procore Pay, a payments solution that handles all aspects of the payment processes between general contractors and subcontractors. We also intend to continue to evaluate strategic acquisitions and investments in businesses and technologies to drive product and market expansion. While the impact of these developments, including Procore Pay, are not yet material to our business, our future success is dependent on our ability to successfully develop or acquire, market, and sell existing and new products and services to both new and existing customers.

Current wording

We intend to continue to invest in building additional products, services, offerings, features, and functionality that expand our capabilities and facilitate the extension of our platform. For example, in January 2025, we acquired Novorender AS, a 3D viewer and building information modeling platform; in May 2024, we acquired Intelliwave Technologies Inc., a construction materials management company that enhances our Resource Management solution; and in September 2023, we launched Procore Pay, a payment solution that handles all aspects of the payment processes between general contractors and subcontractors. We also intend to continue to evaluate strategic acquisitions and investments in businesses and technologies to drive product and market expansion. While the impact of these developments, including Procore Pay, are not yet material to our business, our future success is dependent on our ability to successfully develop or acquire, market, and sell existing and new products and services to both new and existing customers.

Previous wording

We see international expansion as a major, and largely greenfield, opportunity for growth as we look to capture a larger part of the worldwide construction market. We have an international sales and marketing presence with offices in Sydney, Australia; Toronto, Canada; London, England; Paris, France; Dublin, Ireland; and Dubai, United Arab Emirates (“UAE”). We have also developed focused sales and marketing efforts in Germany, where we do not maintain an office location. As a result of our international efforts, we support multiple languages and currencies. Non-U.S. revenue as a percentage of our total revenue was 15% and 14% for the nine months ended September 30, 2024 and 2023, respectively. We determine the percentage of non-U.S. revenue based on the billing location of each customer. Fluctuations in foreign currencies may positively or negatively impact the amount of revenue that we report for our foreign subsidiaries upon the translation of these amounts into U.S. Dollars.

Current wording

We see international expansion as a major, and largely greenfield, opportunity for growth as we look to capture a larger part of the worldwide construction market. We have an international sales and marketing presence with offices in Sydney, Australia; Toronto, Canada; London, England; Dublin, Ireland; and Dubai, United Arab Emirates (“UAE”). As a result of our international efforts, we support multiple languages and currencies. Non-U.S. revenue as a percentage of our total revenue was 15% and 14% for the three months ended March 31, 2025 and 2024, respectively. We determine the percentage of non-U.S. revenue based on the billing location of each customer. Fluctuations in foreign currencies may positively or negatively impact the amount of revenue that we report for our foreign subsidiaries upon the translation of these amounts into U.S. Dollars.

Previous wording

Macroeconomic and geopolitical factors, such as trends within the commercial construction industry, elevated inflation, higher interest rates than we’ve seen in recent history, volatility in capital markets, bank failures, fluctuations in foreign exchange rates, global pandemics (such as the COVID-19 pandemic), and wars and other conflicts (such as the Russia-Ukraine war) may impact our customers’ spending, as well as our operating expenses and cash flows. We believe that macroeconomic factors have resulted in cautious customer spending, contributing to the decline in our cRPO annual growth rate. However, as such factors evolve, we continue to monitor the ways in which they may directly or indirectly impact our business, results of operations, and financial condition. See the section titled “Risk Factors” in Part I, Item 1A, of our 2023 Form 10-K for further discussion.

Current wording

Macroeconomic factors and geopolitical events that impact the construction industry, such as elevated inflationary pressures and responses by governments to address it, tariffs and trade wars, higher interest rates than we've seen in recent history, elevated recession risk, volatility in capital markets, bank failures, fluctuations in foreign exchange rates, global pandemics, evolving and potentially conflicting regulatory requirements, and wars and other conflicts may impact our customers’ spending, as well as our operating expenses and cash flows. We believe that macroeconomic factors and uncertainty have resulted in cautious customer spending and increased customer pricing sensitivity, contributing to the decline in our cRPO annual growth rate, among other impacts. However, as these and other factors - including tariff policies - evolve, we continue to monitor the ways in which they may directly or indirectly impact our business, results of operations, and financial condition. See the section titled “Risk Factors” in Part I, Item 1A, of our 2024 Form 10-K for further discussion.

Previous wording

Cost of revenue primarily consists of personnel-related compensation expenses for our customer support team, including salaries, benefits, stock-based compensation, payroll taxes, commissions, and bonuses. Additionally, cost of revenue includes non-personnel-related expenses, such as third-party hosting costs, amortization of capitalized software development costs related to our platform, amortization of acquired technology intangible assets, software license fees, and allocated overhead. Cost of revenue also includes severance costs incurred related to the restructuring event in January 2024, which is described in Note 14 of our condensed consolidated financial statements. We expect our cost of revenue to increase on an absolute dollar basis as our revenue and acquisition activities increase. We intend to continue to invest additional resources in platform hosting, customer support, and software development as we grow our business, evolve our GTM operating model, and ensure that our customers are realizing the full benefit of our products. The level and timing of investment in these areas could affect our cost of revenue in the future.

Current wording

Cost of revenue primarily consists of personnel-related compensation expenses for our customer support team, including salaries, benefits, stock-based compensation, payroll taxes, commissions, and bonuses. Additionally, cost of revenue includes non-personnel-related expenses, such as third-party hosting costs, amortization of capitalized software development costs related to our platform, amortization of acquired technology intangible assets, software license fees, and allocated overhead. We expect our cost of revenue to increase on an absolute dollar basis as our revenue and acquisition activities increase. We intend to continue to invest additional resources in platform hosting, customer support, and software development as we grow our business, evolve our GTM operating model, and ensure that our customers are realizing the full benefit of our products. The level and timing of investment in these areas could affect our cost of revenue in the future.

Previous wording

Our operating expenses consist of sales and marketing, research and development, and general and administrative expenses. For each of these categories of expense, personnel-related compensation expenses are the most significant component, which include salaries, stock-based compensation, commissions, benefits, payroll taxes, bonuses, and severance expenses as a result of the restructuring event in January 2024, which is described in Note 14 of our condensed consolidated financial statements.

Current wording

Our operating expenses consist of sales and marketing, research and development, and general and administrative expenses. For each of these categories of expense, personnel-related compensation expenses are the most significant component, which include salaries, stock-based compensation, commissions, benefits, payroll taxes, and bonuses.

Previous wording

Research and development expenses primarily consist of personnel-related compensation expenses for our engineering, product, and design teams. Additionally, research and development expenses include non-personnel-related expenses, such as contractor costs to supplement our staff levels; computer software expenses; consulting services; amortization of certain acquired intangible assets used in research and development activities; and allocated overhead. We expect research and development expenses to increase on an absolute dollar basis and vary from period to period as a percentage of revenue for the foreseeable future as we continue to build, enhance, maintain, and scale our products, services, and platform.

Current wording

Research and development expenses primarily consist of personnel-related compensation expenses for our engineering, product, and design teams, net of capitalized software development costs. Additionally, research and development expenses include non-personnel-related expenses, such as contractor costs to supplement our staff levels; computer software expenses; consulting services; amortization of certain acquired intangible assets used in research and development activities; and allocated overhead. We expect research and development expenses to increase on an absolute dollar basis and vary from period to period as a percentage of revenue for the foreseeable future as we continue to build, enhance, maintain, and scale our products, services, and platform.

Previous wording

General and administrative expenses primarily consist of personnel-related compensation expenses for our information technology, human resources, finance, legal, executive, and other administrative functions. Additionally, general and administrative expenses include non-personnel-related expenses, such as professional fees for audit, legal, tax, and other external consulting services; computer software expenses; costs associated with operating as a public company, including insurance costs, professional services, investor relations, and other compliance costs; property and use taxes; licenses; travel and entertainment costs; and allocated overhead. We expect general and administrative expenses to increase on an absolute dollar basis and vary from period to period as a percentage of revenue as our business continues to grow, including in relation to our international expansion.

Current wording

General and administrative expenses primarily consist of personnel-related compensation expenses for our information technology, human resources, finance, legal, executive, and other administrative functions. Additionally, general and administrative expenses include non-personnel-related expenses, such as professional fees for audit, legal, tax, and other external consulting services; computer software expenses; costs associated with operating as a public company, including insurance costs, professional services, investor relations, and other compliance costs; property and use taxes; licenses; travel and entertainment costs; acquisition-related transaction expenses; and allocated overhead. We expect general and administrative expenses to increase on an absolute dollar basis and vary from period to period as a percentage of revenue, as our business continues to grow, including in relation to our international expansion.

Previous wording

Interest income consists primarily of interest income earned on our money market funds, cash savings accounts, and marketable securities.

Current wording

Interest income consists primarily of interest income earned on our marketable securities, money market funds, and cash savings accounts.

Previous wording

Other expense, net primarily consists of unrealized gains or losses on equity securities, gains or losses on foreign currency transactions, and miscellaneous other income and expenses.

Current wording

Other expense, net primarily consists of gains or losses on foreign currency transactions, unrealized gains or losses on equity securities, and miscellaneous other income and expenses.

Previous wording

*Includes amortization of capitalized stock-based compensation of $2.3 million and $1.2 million, respectively, for the three months ended September 30, 2024 and 2023; and $5.5 million and $3.1 million, respectively, for the nine months ended September 30, 2024 and 2023; which was initially capitalized as capitalized software and cloud-computing arrangement implementation costs.

Current wording

*Includes amortization of capitalized stock-based compensation of $2.7 million and $1.5 million, respectively, for the three months ended March 31, 2025 and 2024 which was initially capitalized as capitalized software and cloud-computing arrangement implementation costs.

Previous wording

During the three months ended September 30, 2024, our revenue increased by $48.0 million, or 19%, compared to the three months ended September 30, 2023, of which approximately 89% was attributable to revenue from existing customers and approximately 11% was attributable to revenue from new customers acquired during the three months ended September 30, 2024. The increase in revenue from existing customers includes the net benefit of a full quarter of subscription revenue in the third quarter of 2024 from customers that were newly acquired or expanded their subscriptions between the beginning of the third quarter of 2023 and the end of the second quarter of 2024 and continued or expanded their subscriptions, as applicable, in the third quarter of 2024.

Current wording

During the three months ended March 31, 2025, our revenue increased by $41.2 million, or 15%, compared to the three months ended March 31, 2024, of which approximately 83% was attributable to revenue from existing customers and approximately 17% was attributable to revenue from new customers acquired during the three months ended March 31, 2025. The increase in revenue from existing customers includes the net benefit of a full quarter of subscription revenue in the first quarter of 2025 from customers that were newly acquired or expanded their subscriptions between the beginning of the first quarter of 2024 and the end of the fourth quarter of 2024 and continued or expanded their subscriptions, as applicable, in the first quarter of 2025.

Previous wording

The increase in cost of revenue during the three months ended September 30, 2024 was primarily attributable to a $4.9 million increase in amortization of capitalized software development costs. The increase in cost of revenue was also attributable to a $2.6 million increase in third-party cloud hosting and related services as we grow our customer base; a $2.3 million increase in personnel-related expenses, including increases of $2.0 million in salaries and wages and $0.3 million in stock-based compensation expense; and a $1.2 million increase in amortization of developed technology intangible assets. We decreased our cost of revenue headcount by 6% since September 30, 2023, as we continue to focus on improving operating efficiency.

Current wording

The increase in cost of revenue during the three months ended March 31, 2025 was primarily attributable to an increase of $8.1 million in personnel-related expenses, including increases of $7.1 million in salaries and wages and $0.9 million in stock-based compensation expense. The increase in cost of revenue was also attributable to a $5.4 million increase in amortization of capitalized software development costs; a $4.2 million increase in third-party cloud hosting and related services as we grow our customer base; and a $1.7 million increase in amortization of developed technology intangible assets. We increased our cost of revenue headcount by 22% since March 31, 2024, as we continue to invest additional resources in platform hosting, customer support, implementation, and software development to grow our business, evolve our GTM operating model, and ensure that our customers are realizing the full benefit of our products.

Previous wording

The increase in sales and marketing expenses during the three months ended September 30, 2024 was primarily attributable to a $4.4 million increase in professional fees for professional services, including contractors to supplement our staff levels. The increase in sales and marketing expense was also attributable to a $4.1 million increase in marketing events and expenses, a $1.5 million increase in travel costs, and a $1.4 million increase in personnel-related expenses, including an increase of $1.9 million in salaries and wages, partially offset by a decrease of $0.5 million in stock-based compensation expense. We decreased our sales and marketing headcount by 5% since September 30, 2023, as we focused on improving operating efficiency. However, we have started to, and expect that we will continue to, increase our sales and marketing headcount as we continue to invest in the evolution of our GTM operating model.

Current wording

The increase in sales and marketing expenses during the three months ended March 31, 2025 was primarily attributable to an increase of $10.6 million in personnel-related expenses, including increases of $8.8 million in salaries and wages and $1.9 million in stock-based compensation expense. The increase in sales and marketing expenses was also attributable to a $3.9 million increase in professional fees, including increases of $2.2 million for professional service fees and $1.5 million for contractors to supplement our staff levels; a $2.8 million increase in travel-related costs; and a $1.4 million increase in marketing events and expenses. We increased our sales and marketing headcount by 10% since March 31, 2024 to support our GTM operating model.

Previous wording

The increase in research and development expenses during the three months ended September 30, 2024 was primarily attributable to a $3.9 million increase in professional service fees, including contractors to supplement our staff levels. The increase in research and development expenses was also attributable to a $2.6 million increase in personnel-related expenses, including increases of $2.0 million in stock-based compensation expense and $0.7 million in salaries and wages driven by an increase in headcount; and a $0.7 million increase in computer software expenses. We increased our research and development headcount by 20% since September 30, 2023 in order to continue to build, enhance, maintain, and scale our products, services, and platform.

Current wording

The increase in research and development expenses during the three months ended March 31, 2025 was primarily attributable to an increase of $12.8 million in personnel-related expenses, including increases of $8.1 million in salaries and wages and $4.6 million in stock-based compensation expense. The increase in research and development expenses was also attributable to a $2.8 million increase in professional fees for contractors to supplement our staff levels, and a $1.2 million increase in computer software expenses. We increased our research and development headcount by 55% since March 31, 2024 in order to continue to build, enhance, maintain, and scale our products, services, and platform as part of our global workforce strategy.

Previous wording

Interest Income, Interest Expense, Accretion Income, Net, Other Expense, Net, and Provision for Income Taxes

Current wording

Interest Income, Interest Expense, Accretion Income, Net, Other Income (Expense), Net, and Provision for Income Taxes

Previous wording

During the three months ended September 30, 2024, accretion income, net increased by $0.9 million due to an increase both in our purchases of marketable securities and the balance of our marketable securities portfolio year over year.

Current wording

During the three months ended March 31, 2025, accretion income, net increased by $0.6 million due to an increase both in our purchases of marketable securities and the balance of our marketable securities portfolio year over year.

Previous wording

Stock-based compensation expense includes the net effects of capitalization and amortization of stock-based compensation expense related to capitalized software and cloud-computing arrangement implementation costs. Stock-based compensation expense has been, and will continue to be for the foreseeable future, a significant recurring expense in our business and an important part of the compensation provided to our employees. Because of varying available valuation methodologies, subjective assumptions, and the variety of equity instruments that can impact a company’s non-cash expenses, we believe that providing non-GAAP financial measures that exclude stock-based compensation expense allows for meaningful comparisons between our operating results from period to period. The expense related to amortization of acquired intangible assets is dependent upon estimates and assumptions, which can vary significantly and are unique to each asset acquired; therefore, we believe that non-GAAP measures that adjust for the amortization of acquired intangible assets provide investors a consistent basis for comparison across accounting periods. The amount of employer payroll tax-related items on employee stock transactions is dependent on restricted stock unit settlements, option exercises, related stock price, and other factors that are beyond our control and that do not correlate to the operation of our business. When evaluating the performance of our business and making operating plans, we do not consider these items (for example, when considering the impact of equity award grants, we place a greater emphasis on overall stockholder dilution than the accounting charges associated with such grants). Since the amount of employer payroll tax-related items on employee stock transactions is highly variable due to factors outside our control, and unrelated to our core operations, operating results, revenue-generating activities, business strategy, industry, or regulatory environment, management does not consider employer payroll tax on employee stock transactions in the evaluation of the business or in making operating plans. Accordingly, we believe this adjustment in arriving at our non-GAAP measures provides investors with a better understanding of the performance of our core business in a manner that is consistent with management’s view of the business. Acquisition-related expenses include external and incremental transaction costs, such as legal and due diligence costs, and retention payments. These expenses are unpredictable and generally would not have otherwise been incurred in the periods presented as part of our continuing operations. In addition, the size and complexity of an acquisition, which often drives the magnitude of acquisition-related expenses, may not be indicative of such future costs. We believe excluding acquisition-related expenses facilitates the comparison of our financial results to our historical operating results and to other companies in ou…

Excerpt shortened here; the source contains the full paragraph.

Current wording

Stock-based compensation expense includes the net effects of capitalization and amortization of stock-based compensation expense related to capitalized software and cloud-computing arrangement implementation costs. Stock-based compensation expense has been, and will continue to be for the foreseeable future, a significant recurring expense in our business and an important part of the compensation provided to our employees. Because of varying available valuation methodologies, subjective assumptions, and the variety of equity instruments that can impact a company’s non-cash expenses, we believe that providing non-GAAP financial measures that exclude stock-based compensation expense allows for meaningful comparisons between our operating results from period to period. The expense related to amortization of acquired intangible assets is a non-cash expense and is dependent upon estimates and assumptions, which can vary significantly and are unique to each asset acquired; therefore, we believe that non-GAAP measures that adjust for the amortization of acquired intangible assets provide investors a consistent basis for comparison across accounting periods. The amount of employer payroll tax-related items on employee stock transactions is dependent on restricted stock unit settlements, option exercises, related stock price, and other factors that are beyond our control and that do not correlate to the operation of our business. When evaluating the performance of our business and making operating plans, we do not consider these items (for example, when considering the impact of equity award grants, we place a greater emphasis on overall stockholder dilution than the accounting charges associated with such grants). Since the amount of employer payroll tax-related items on employee stock transactions is highly variable due to factors outside our control, and unrelated to our core operations, operating results, revenue-generating activities, business strategy, industry, or regulatory environment, management does not consider employer payroll tax on employee stock transactions in the evaluation of the business or in making operating plans. Accordingly, we believe this adjustment in arriving at our non-GAAP measures provides investors with a better understanding of the performance of our core business in a manner that is consistent with management’s view of the business. Acquisition-related expenses include external and incremental transaction costs, such as legal and due diligence costs, and retention or other compensation payments. These expenses are unpredictable and generally would not have otherwise been incurred in the periods presented as part of our continuing operations. In addition, the size and complexity of an acquisition, which often drives the magnitude of acquisition-related expenses, may not be indicative of such future costs. We believe excluding acquisition-related expenses facilitates the comparison of our financial results to our historica…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Reconciliation of loss from operations and operating margin to non-GAAP income (loss) from operations and non-GAAP operating margin:

Current wording

Reconciliation of loss from operations and operating margin to non-GAAP income from operations and non-GAAP operating margin:

Previous wording

As of September 30, 2024, our principal sources of liquidity were cash, cash equivalents, and marketable securities totaling $809.2 million, which were held in money market funds, U.S. treasury securities, corporate notes and obligations, commercial paper, checking accounts, and savings accounts. Our investments in marketable securities are exposed to interest rate risk; however, due to the short-term nature of our investments, we do not anticipate being exposed to material risks due to changes in interest rates.

Current wording

As of March 31, 2025, our principal sources of liquidity were cash, cash equivalents, and marketable securities totaling $698.8 million, which were held in money market funds, U.S. treasury securities, corporate notes and obligations, commercial paper, checking accounts, and savings accounts. Our investments in marketable securities are exposed to interest rate risk; however, due to the short-term nature of our investments, we do not anticipate being exposed to material risks due to changes in interest rates.

Previous wording

As of September 30, 2024, we had outstanding letters of credit, on an unsecured basis, totaling approximately $4.4 million to secure various leased office facilities in the U.S. and Australia.

Current wording

As of March 31, 2025, we had outstanding letters of credit on an unsecured basis totaling approximately $6.0 million to secure various leased office facilities in the U.S. and Australia.

Previous wording

Our cash requirements are primarily for operating expenses, which include personnel-related costs, purchase obligations primarily for hosting and software license and other services, lease obligations, and capital expenditures for our employees and offices. We also fund investments which help drive our strategic business growth through acquisitions and investments in equity securities and limited partnership funds.

Current wording

Our cash requirements are primarily for operating expenses, which include personnel-related costs, purchase obligations primarily for hosting and software license and other services, lease obligations, and capital expenditures for our employees and offices. We also fund investments which help drive our strategic business growth through acquisitions and investments in equity securities and limited partnership funds. In February 2025, we began using cash to fund withholding taxes due upon the vesting of employee RSUs by net share settlement, rather than our previous approach of selling shares of our common stock issued to employees to cover applicable withholding taxes. Starting in March 2025, we also began using our cash to fund repurchases under our stock repurchase program.

Previous wording

During the nine months ended September 30, 2024, operating lease commencements and modifications resulted in increases of $10.7 million in future rent commitments through 2036, relating to the office lease in Austin, Texas, which were modified to extend the lease terms and adjust the rent obligations. There have been no other material changes to our contractual obligations from those discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2023 Form 10-K. We believe our existing cash, cash equivalents, and marketable securities will be sufficient to meet our needs for at least the next 12 months. While we have generated positive cash flows from operations in recent years, we have continued to generate losses from operations, as reflected in our accumulated deficit of $1.2 billion as of September 30, 2024. We may not achieve profitability in the foreseeable future and may require additional capital resources to execute strategic initiatives to grow our business.

Current wording

During the three months ended March 31, 2025, we had additional contractual commitments primarily related to our modified office leases in Austin, Texas to adjust the rent obligations, expand the leased premises, and extend the lease terms; and a hosting services renewal agreement resulting in a non-cancellable purchase commitment. In the next 12 months, we have a net tenant improvement reimbursement from operating leases of $9.2 million relating to the modified office leases in Austin, and non-cancellable purchase commitments of $30.0 million. Beyond the next 12 months, we have additional net contractual commitments for operating lease obligations of $31.2 million relating to the modified office leases in Austin, and non-cancellable purchase commitments of $64.0 million. In April 2025, the Company further modified its office leases in Austin, Texas to expand the leased premises on favorable terms, which resulted in an additional $17.4 million in future rent commitments, net of tenant improvement reimbursement, from April 2025 through 2038. There have been no other material changes to our contractual obligations from those discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2024 Form 10-K. We believe our existing cash, cash equivalents, and marketable securities will be sufficient to meet our needs for at least the next 12 months. While we have generated positive cash flows from operations in recent years, we have continued to generate losses from operations, as reflected in our accumulated deficit of $1.3 billion as of March 31, 2025. We may not achieve profitability in the foreseeable future and may require additional capital resources to execute strategic initiatives to grow our business.

Previous wording

Net cash provided by operating activities was $167.1 million during the nine months ended September 30, 2024 which resulted from a net loss of $43.7 million, adjusted for non-cash charges of $201.7 million and a net cash inflow of $9.0 million from changes in operating expenses and liabilities. The $9.0 million of net cash inflows provided as a result of changes in our operating assets and liabilities primarily reflected the following:

Current wording

Net cash provided by operating activities was $66.0 million during the three months ended March 31, 2025 which resulted from a net loss of $33.0 million, adjusted for non-cash charges of $75.0 million and a net cash inflow of $24.0 million from changes in operating expenses and liabilities. The $24.0 million of net cash inflows provided as a result of changes in our operating assets and liabilities primarily reflected a $86.3 million decrease in accounts receivable primarily due to timing of billings and cash receipts from customers, which was partially offset by the following:

Previous wording

•a $6.3 million decrease in deferred revenue primarily due to timing of billings and seasonality;

Current wording

•a $26.6 million decrease in deferred revenue primarily due to timing of billings and seasonality;

Previous wording

•a $2.3 million increase in accounts payable primarily due to timing of cash payments to our vendors.

Current wording

•a $11.1 million decrease in accounts payable primarily due to timing of cash payments to our vendors;

Previous wording

•a $8.5 million decrease in accrued expenses and other liabilities primarily due to the size and timing of bonus and commission accruals and payouts, accrued ESPP contributions, payroll, and cash payments to our vendors;

Current wording

•a $9.9 million decrease in accrued expenses and other liabilities primarily due to the size and timing of bonus and commission accruals and payouts, accrued ESPP contributions, payroll, and cash payments to our vendors;

Previous wording

•a $12.1 million increase in prepaid expenses and other assets primarily due to timing of cash payments to our vendors;

Current wording

•a $7.5 million increase in prepaid expenses and other assets primarily due to timing of cash payments to our vendors; and

Previous wording

•a $3.2 million increase in deferred contract cost assets related to commissions as a result of additional customer contracts closed during the period.

Current wording

•a $6.6 million increase in deferred contract cost assets related to commissions as a result of additional customer contracts closed and a higher capitalization rate during the period.

Previous wording

Net cash provided by operating activities was $51.3 million during the nine months ended September 30, 2023, which resulted from a net loss of $160.2 million, adjusted for non-cash charges of $194.1 million and net cash inflows of $17.4 million from changes in operating assets and liabilities. The $17.4 million of net cash inflows provided as a result of changes in our operating assets and liabilities primarily reflected the following:

Current wording

Net cash provided by operating activities was $69.1 million during the three months ended March 31, 2024, which resulted from a net loss of $11.0 million, adjusted for non-cash charges of $60.6 million and net cash inflows of $19.5 million from changes in operating assets and liabilities. The $19.5 million of net cash inflows provided as a result of changes in our operating assets and liabilities primarily reflected the following:

Previous wording

•a $34.3 million decrease in accounts receivable primarily due to timing of billings and cash receipts from customers; and

Current wording

•a $68.0 million decrease in accounts receivable primarily due to timing of billings and cash receipts from customers; and

Previous wording

•a $11.0 million increase in accounts payable primarily due to timing of cash payments to our vendors.

Current wording

•a $3.2 million increase in accounts payable primarily due to timing of cash payments to our vendors.

Previous wording

•a $2.0 million decrease in accrued expenses and other liabilities primarily due to the size and timing of bonus and commission accruals and payouts, accrued ESPP contributions, payroll, and cash payments to our vendors; and

Current wording

•a $34.2 million decrease in accrued expenses and other liabilities primarily due to the size and timing of bonus and commission accruals and payouts, accrued ESPP contributions, payroll, and cash payments to our vendors;