Hinge Health, Inc.

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report. This discussion contains forward-looking statements that involve risks and uncertainties and our actual results, events or circumstances could differ materially from those described in forward-looking statements. Factors that could cause or contribute to such differences include those identified below and those discussed in the section titled “Risk Factors” and other parts of this Quarterly Report. Our historical results are not necessarily indicative of the results that may be expected for any period in the future. Unless the context otherwise requires, all references in this Quarterly Report to “we,” “us,” “our,” “our company,” and “Hinge Health” refer to Hinge Health, Inc. and its consolidated subsidiaries, and references to our “common stock” include our Class A common stock and Class B common stock .Our fiscal year ends on December 31.

Current wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report. This discussion contains forward-looking statements that involve risks and uncertainties and our actual results, events or circumstances could differ materially from those described in forward-looking statements. Factors that could cause or contribute to such differences include those identified below and those discussed in the section titled “Risk Factors” and other parts of this Quarterly Report. Our historical results are not necessarily indicative of the results that may be expected for any period in the future. Unless the context otherwise requires, all references in this Quarterly Report to “we,” “us,” “our,” “our company,” and “Hinge Health” refer to Hinge Health, Inc. and its consolidated subsidiaries, and references to our “common stock” include our Class A common stock and Class B common stock. Our fiscal year ends on December 31.

Previous wording

Hinge Health leverages software, including AI, to largely automate care for joint and muscle health, delivering an outstanding member experience, improved member outcomes, and cost reductions for our clients. We have designed our platform to address a broad spectrum of MSK care—from acute injury, to chronic pain, to post-surgical rehabilitation. Members receive personalized and largely automated MSK care through our AI-powered motion tracking technology and a proprietary electrical nerve stimulation wearable device, all designed and monitored by our AI-supported care team of licensed physical therapists, physicians, and board-certified health coaches. Our platform can help to ease members’ pain, improve their function, and reduce their need for surgeries, all while driving health equity by allowing members to engage in their exercise therapy sessions from anywhere and embrace movement as a way of life.

Current wording

Hinge Health leverages software, including AI, to automate care for joint and muscle health, delivering an outstanding member experience, improved member outcomes, and cost reductions for our clients. We have designed our platform to address a broad spectrum of MSK care—from acute injury, to chronic pain, to post-surgical rehabilitation. Members receive personalized and automated MSK care through our AI-powered motion tracking technology and a proprietary electrical nerve stimulation wearable device, all designed and monitored by our AI-supported care team of licensed physical therapists, physicians, and board-certified health coaches. Our platform can help to ease members’ pain, improve their function, and reduce their need for surgeries, all while driving health equity by allowing members to engage in their exercise therapy sessions from anywhere and embrace movement as a way of life.

Previous wording

We have developed an efficient go-to-market model by working directly with our partners and clients. We seek to be the best solution on the market, the most validated solution on the market, and the easiest to buy. Our clients are primarily self-insured employers and include many of the nation’s leading enterprises across a broad range of industries and sizes. Within this segment, we also serve many public sector self-insured employers, such as state and local city governments and labor unions. In most instances, we partner with clients’ health plans, TPAs, PBMs, or other ecosystem entities to reduce the friction of contracting, procurement, security and IT reviews, onboarding, and billing. We also serve health plans’ fully-insured and Medicare Advantage populations and federal insurance plans.

Current wording

We have developed an efficient go-to-market model by working directly with our partners and clients. We seek to be the most validated and the easiest to buy solution on the market. Our clients are primarily self-insured employers and include many of the nation’s leading enterprises across a broad range of industries and sizes. Within this segment, we also serve many public sector self-insured employers, such as state and local city governments and labor unions. In most instances, for our self-insured clients, we partner with clients’ health plans, TPAs, PBMs, or other ecosystem entities to reduce the friction of contracting, procurement, security and IT reviews, onboarding, and billing. We also serve health plans’ fully-insured and Medicare Advantage populations and federal insurance plans.

Previous wording

We believe that we grow efficiently because of our scalable, repeatable go-to-market model. We sell through our direct sales force and our partners. Once we contract with a client, we are most often the sole digital MSK care provider offered to their contracted lives for an average contract term of three years. For the term of each contract, we are able to enroll, engage, and re-engage the client’s eligible lives, driving a recurring, repeatable revenue model. As of September 30, 2025, we had over 50 partners. Our partners include the five largest national health plans by self-insured lives, and the top three PBMs by market share.

Current wording

We believe that we grow efficiently because of our scalable, repeatable go-to-market model. We sell through our direct sales force and our partners. Once we contract with a client, we are most often the sole digital MSK care provider offered to their contracted lives for an average contract term of three years. For the term of each contract, we are able to enroll, engage, and re-engage the client’s eligible lives, driving a recurring, repeatable revenue model. As of March 31, 2026, we had over 60 partners. Our partners include the five largest national health plans by self-insured lives, and the top three PBMs by market share.

Previous wording

Our software-led, AI-powered delivery model not only aims to provide a better experience for our members and a less expensive alternative for our clients, but also allows us to innovate and continuously improve our platform. Our AI-powered motion tracking technology, TrueMotion, allows us to deliver highly scalable care remotely and reduce the human hours associated with traditional physical therapy.

Current wording

Our software-led, AI-powered delivery model not only aims to provide a better experience for our members and a less expensive alternative for our clients, but also allows us to innovate and continuously improve our platform. Our AI-powered motion tracking technology, TrueMotion, allows us to deliver highly scalable care remotely and reduce the human hours associated with traditional physical therapy. According to our estimates based on data from 2025, our platform reduced the number of human care team hours associated with traditional physical therapy by approximately 97%. We have done this while improving our high member satisfaction over time. We are a research-led organization and routinely expand our platform with new programs, capabilities, and features. Over the last four years, we launched new programs to address six additional affected areas; launched Enso to deliver a non-addictive, non-invasive alternative for pain relief; developed HingeConnect for real-time targeted care support and external provider coordination; and integrated TrueMotion, our proprietary AI-powered motion tracking technology, to replace wearable sensors for our members. In 2022, we launched women’s pelvic health, a specialized care program within our chronic program, and, in 2023, we launched a fall prevention program for eligible lives in our Medicare Advantage population. In 2025, we launched our high-performance in-person provider network for MSK care, HingeSelect, which allows us to now provide members with end-to-end MSK care while further reducing costs for members, employers, and health plans.

Previous wording

We have rapidly grown our client base, expanding to approximately 2,560 clients as of September 30, 2025 compared to 2,047 clients as of September 30, 2024 and 2,250 clients as of December 31, 2024 compared to 1,650 clients as of December 31, 2023. This expansion has given us access to an increased number of contracted lives, which grew to approximately 20 million as of December 31, 2024 from 16 million as of December 31, 2023. There are two ways we increase our contracted lives: through new client additions and through accessing additional contracted lives within a current client.

Current wording

We have rapidly grown our client base, expanding to 2,849 clients as of March 31, 2026 compared to 2,311 clients as of March 31, 2025. This expansion has given us access to an increased number of contracted lives, which was 25 million as of December 31, 2025. There are two ways we increase our contracted lives: through new client additions and through accessing additional contracted lives within a current client.

Previous wording

Depending on a client’s needs, we have the ability to contract directly or through one of our many partners. Similarly, we are able to invoice a client directly or submit via claims through a client’s health plan. If a client chooses to pay via claims through a health plan, the cost typically comes directly out of their medical budget for the year and is embedded in their medical costs, rather than a separate discretionary budget. Allocation of the spend on Hinge Health to the client’s existing healthcare budget enables faster implementation as it avoids a potentially lengthy approval process. Our agreements with partners help us simplify contracting and implementation with clients. In 2025 so far, the vast majority of our contracts were completed via our partners, negating the need for many clients to contract directly with us since many clients can leverage existing contracts through our partners. This is a significant strategic advantage for us as it enables implementation and launch of our platform as quickly as a few weeks after entering into a contract. As a result, most implementations are completed in a 40–100 day period.

Current wording

Depending on a client’s needs, we have the ability to contract directly or through one of our many partners. Similarly, we are able to invoice a client directly or submit via claims through a client’s health plan. If a client chooses to pay via claims through a health plan, the cost typically comes directly out of their medical budget for the year and is embedded in their medical costs, rather than a separate discretionary budget. Allocation of the spend on Hinge Health to the client’s existing healthcare budget enables faster implementation as it avoids a potentially lengthy approval process. Our agreements with partners help us simplify contracting and implementation with clients. In the first quarter of 2026 and in 2025, the vast majority of our contracts were completed via our partners, negating the need for many clients to contract directly with us since many clients can leverage existing contracts through our partners. This is a significant strategic advantage for us as it enables implementation and launch of our platform as quickly as a few weeks after entering into a contract. As a result, most implementations are completed in a 40-100 day period.

Previous wording

Once our platform is launched, clients only pay for the members that engage with our programs. We typically provide various performance guarantees to our clients that may include engagement thresholds, member reported outcomes, and return on investment, where we put a portion of our fees at risk. We have historically paid an immaterial amount related to these performance guarantees. Upon onboarding, a member’s paid subscription is for one year. To increase awareness within our clients’ employee bases, we have a growth marketing team that engages with our partners and our clients’ human resources benefits team in targeted marketing campaigns to encourage eligible lives who would benefit from our platform to enroll.

Current wording

Once our platform is launched, clients only pay for the members that engage with our programs. We typically provide various performance guarantees to our clients that may include engagement thresholds, member reported outcomes, and return on investment, where we put a portion of our fees at risk. We have historically paid an immaterial amount related to these performance guarantees. Upon onboarding, a member’s paid subscription is for one year. To increase awareness within our clients’ employee bases, we have an enrollment marketing team that engages with our partners and our clients’ human resources benefits team in targeted marketing campaigns to encourage eligible lives who would benefit from our platform to enroll.

Previous wording

The majority of new clients enter into contracts with us in the second half of each calendar year, which aligns with the typical employee benefit enrollment period. We launch our platform for most of these clients in the first half of the following calendar year. We have seen varying levels of intra-year launches since our inception. While some clients choose to sign and launch within the same year, these are generally a much smaller percentage of our business. Due to these patterns and our annual subscription-based model, the timing of our revenue has historically been predictable. Our calculated billings, however, show seasonality with fluctuations based on the timing of new client launches and number of intra-year launches. Historically, our calculated billings are highest in the second quarter of the year, as this is when we are able to bill the majority of clients who entered into contracts in the preceding year. Consequently, our free cash flow is typically highest in the second or third quarter and is usually lowest in the first quarter due to increased new client onboarding expenses preceding cash inflows in the first quarter, and slowing billings associated with the holidays in the prior fourth quarter. We anticipate that this seasonality will continue, though may fluctuate year to year, and therefore focus on LTM calculated billings as a result. Given the annual subscription model and ratable revenue recognition, however, our quarterly revenue stream has historically been highly predictable and has not displayed the same seasonality trends.

Current wording

The majority of new clients enter into contracts with us in the second half of each calendar year, which aligns with the typical employee benefit enrollment period. We launch our platform for most of these clients in the first half of the following calendar year. We have seen varying levels of intra-year launches since our inception. While some clients choose to sign and launch within the same year, these are generally a much smaller percentage of our business. Due to these patterns and our annual subscription-based model, the timing of our revenue has generally been predictable. Our calculated billings, however, show seasonality with fluctuations based on the timing of new client launches and number of intra-year launches. Historically, our calculated billings are highest in the second quarter of the year, as this is when we are able to bill the majority of clients who entered into contracts in the preceding year. Consequently, our free cash flow is typically highest in the second or third quarter and is usually lowest in the first quarter due to increased new client onboarding expenses preceding cash inflows in the first quarter, and slowing billings associated with the holidays in the prior fourth quarter. We anticipate that this seasonality will continue, though may fluctuate year to year, and therefore focus on LTM calculated billings as a result. Given the annual subscription model and ratable revenue recognition, however, our quarterly revenue stream has historically been highly predictable and has not displayed the same seasonality trends.

Previous wording

Retaining our existing clients is also integral to our success. Our software-led, AI-powered delivery model aims to provide a better experience for our members and a less expensive alternative for our clients. Once we contract with a client, we are typically the sole digital MSK care provider to their contracted lives for an average contract term of three years. Our 12-month client retention rate was 98% as of December 31, 2024.

Current wording

Retaining our existing clients is also integral to our success. Our software-led, AI-powered delivery model aims to provide a better experience for our members and a less expensive alternative for our clients. Once we contract with a client, we are typically the sole digital MSK care provider to their contracted lives for an average contract term of three years. Our 12-month client retention rate was 97% as of December 31, 2025.

Previous wording

These innovations include TrueMotion, our proprietary AI-powered motion tracking technology, Enso, our FDA-cleared, wearable device for lasting pain relief, and HingeConnect, our proprietary AI-driven database for real-time care interventions and external provider coordination. We also launched specialized care for women’s pelvic health and a fall prevention program to help adults aged 65 and older improve their physical abilities.

Current wording

These innovations include TrueMotion, our proprietary AI-powered motion tracking technology, Enso, our FDA-cleared, wearable device for lasting pain relief, and HingeConnect, our proprietary AI-driven database for real-time care interventions and external provider coordination. We also launched specialized care for women’s pelvic health and a fall prevention program to help adults aged 65 and older improve their physical abilities. In 2025, we launched HingeSelect, our high performance in-person provider network for MSK care. All of our programs are available for use from a single application, with members having the ability to treat multiple indications at once.

Previous wording

We see opportunities to expand beyond our current markets of self-insured and fully-insured employers, Medicare Advantage plans, and federal insurance plans. We currently primarily cover eligible lives within the United States and we are in the early stages of our global expansion. We offer our global program in multiple international countries, focused on clients that are United States-based multinational corporations. As we expanded internationally, we have incurred and expect to incur additional costs to develop our global program and address international regulations, including research and development expenses and expenses for third-party professional services. We are also looking to expand into additional government agencies and government healthcare programs such as Medicare and Medicaid.

Current wording

We see opportunities to expand beyond our current markets of self-insured and fully-insured employers, Medicare Advantage plans, and federal insurance plans. We currently primarily cover eligible lives within the United States and we are in the early stages of our global expansion. We offer our global program in multiple international countries, focused on clients that are United States-based multinational corporations. We are also looking to expand into additional government agencies and government healthcare programs such as Medicare and Medicaid.

Previous wording

We believe our business is resilient even in difficult macroeconomic conditions given our focus on delivering positive outcomes for our members and ROI for our clients. In tougher economic periods, our business continued to see substantial growth as cost management became an even higher priority for clients. Our cost base is mostly variable, and we maintain strong operational focus with efficiency improvement targets for every function within the company.

Current wording

We believe our business is resilient even in difficult macroeconomic conditions given our focus on delivering positive outcomes for our members and ROI for our clients. In tougher economic periods, our business continued to see substantial growth as cost management became an even higher priority for clients. While we are monitoring the impact of evolving macroeconomic conditions, including tariffs and trade policy developments, on our business and our clients, we believe our value proposition as a cost-reducing healthcare solution remains strong. Our cost base is mostly variable, and we maintain strong operational focus with efficiency improvement targets for every function within the company.

Previous wording

We monitor the following key metrics to help us evaluate our business, identify trends affecting our business, formulate business plans and make strategic decisions. We believe the following metrics are useful in evaluating our business. We present clients and LTM calculated billings on a quarterly basis. We present members and LTM average eligible lives on an annual basis as these metrics may create an inaccurate picture of our business on a quarterly basis primarily due to timing of launches and member enrollments in a given period.

Current wording

We monitor the following key metrics to help us evaluate our business, identify trends affecting our business, formulate business plans and make strategic decisions. We believe the following metrics are useful in evaluating our business. We present members and LTM average eligible lives on an annual basis as these metrics may create an inaccurate picture of our business on a quarterly basis primarily due to timing of launches and member enrollments in a given period. We present clients and LTM calculated billings on a quarterly basis.

Previous wording

Number of Clients: We view this number as an important metric to assess the performance of our business as an increased number of clients drives growth, increases brand awareness, and helps provide scale to our business. Clients are defined as businesses or organizations, which we call entities, that have at least one active agreement with us at the end of a particular period. Entities that procure our platform through our partners are counted as individual clients. We do not count our partners as clients, unless they also separately have at least one active client agreement with us. When a partner has an agreement with us for their fully-insured population, that partner is deemed to be one client, despite there being multiple fully-insured employers within that entity that have access to our platform.

Current wording

Clients: We view this number as an important metric to assess the performance of our business as an increased number of clients drives growth, increases brand awareness, and helps provide scale to our business. Clients are defined as businesses or organizations, which we call entities, that have at least one active agreement with us at the end of a particular period. Entities that procure our platform through our partners are counted as individual clients. We do not count our partners as clients, unless they also separately have at least one active client agreement with us. When a partner has an agreement with us for their fully-insured population, that partner is deemed to be one client, despite there being multiple fully-insured employers within that entity that have access to our platform.

Previous wording

LTM Average Eligible Lives: This represents the population to whom we can begin meaningful marketing and promotion. As eligible lives can fluctuate throughout the year given changes in our clients’ populations, we take the average of the clients who are live in the first quarter to those who are live at the end of the last quarter in a given 12-month period to best determine the number of lives we had access to convert into members. Our management uses LTM average eligible lives to model the business and measure the enrollment we are able to achieve within our client base. LTM average eligible lives are defined as the average number of eligible lives calculated as the sum of eligible lives as of the first quarter to the end of the last quarter in a given annual period, divided by two.

Current wording

LTM Average Eligible Lives: This represents the population to whom we can market and offer our solutions. As eligible lives can fluctuate throughout the year given changes in our clients’ populations, we take the average of the clients who are live in the first quarter to those who are live at the end of the last quarter in a given 12-month period to best determine the number of lives we had access to convert into members. Our management uses LTM average eligible lives to model the business and measure the enrollment we are able to achieve within our client base.

Previous wording

Other income, net consists primarily of income earned from our cash deposits held in interest-bearing accounts.

Current wording

Other income, net consists primarily of interest income earned from our cash, cash equivalents, and marketable securities held in interest-bearing accounts.

Previous wording

Includes stock-based compensation expense as follows:

Current wording

(1)Includes stock-based compensation expense as follows:

Previous wording

Comparison of the Three and Nine Months Ended September 30, 2025 and 2024

Current wording

Comparison of the Three Months Ended March 31, 2026 and 2025

Previous wording

Revenue for the three months ended September 30, 2025 increased by $53.6 million, or 53%, compared to the three months ended September 30, 2024 and revenue for the nine months ended September 30, 2025 increased by $144.0 million, or 53%, compared to the nine months ended September 30, 2024. The increases in both periods were due to revenue growth from existing clients. Due to the timing of our sales cycle, revenue from new clients contracted in a given year is largely recognized in the following year. As such, our revenue growth in the three months and nine months ended September 30, 2025 came from existing clients that were contracted in 2024 or prior. The increase within existing clients was the result of retaining members within, and adding more members to, our existing client base.

Current wording

Revenue for the three months ended March 31, 2026 increased by $58.5 million, or 47%, compared to the three months ended March 31, 2025. The increase was primarily due to revenue growth from existing clients. Due to the timing of our sales cycle, revenue from new clients contracted in a given year is largely recognized in the following year. As such, the majority of our revenue growth during the three months ended March 31, 2026 came from existing clients that were contracted in 2025 or prior. The increase within existing clients was the result of retaining members within, and adding more members to, our existing client base.

Previous wording

Cost of revenue for the three months ended September 30, 2025 increased by $6.7 million, or 31%, compared to the three months ended September 30, 2024. The increase was primarily due to an increase of $2.8 million in inventory costs, $1.9 million in hosting costs and $1.4 million in stock-based compensation expense related to equity awards which vest post IPO.

Current wording

Cost of revenue for the three months ended March 31, 2026 increased by $4.5 million, or 19%, compared to the three months ended March 31, 2025. The increase was due to an increase of $3.7 million in inventory costs, $1.0 million in hosting costs and $0.8 million in stock-based compensation expense, partially offset by a decrease of $1.4 million in personnel-related costs.

Previous wording

Gross margin for the nine months ended September 30, 2025 increased by 3 percentage points compared to the nine months ended September 30, 2024. The increase was due to an increase in efficiencies related to our care team and supply chain operations, partially offset by an increase in stock-based compensation expense.

Current wording

Gross margin for the three months ended March 31, 2026 increased by four percentage points compared to the three months ended March 31, 2025. The increase was primarily due to an increase in efficiencies related to our care team and supply chain operations.

Previous wording

Sales and marketing expenses for the three months ended September 30, 2025 increased by $19.0 million, or 43%, compared to the three months ended September 30, 2024. The increase was primarily due to an increase of $5.9 million in stock-based compensation expense related to equity awards which vest post IPO, $5.9 million in marketing and promotion costs, $5.2 million in commissions, and $1.1 million in payroll-related costs.

Current wording

Sales and marketing expenses for the three months ended March 31, 2026 increased by $22.1 million, or 47%, compared to the three months ended March 31, 2025. The increase was primarily due to an increase of $6.6 million in commissions, $6.2 million in marketing and promotion costs, and $4.0 million in stock-based compensation expense. In addition, there was an increase of $3.9 million in personnel-related costs, and $0.4 million in employer payroll tax expense related to stock-based compensation expense.

Previous wording

Other income, net for the three months ended September 30, 2025 decreased $0.8 million compared to the three months ended September 30, 2024, and other income, net for the nine months ended September 30, 2025 decreased $1.3 million compared to the nine months ended September 30, 2024. The decrease in both periods were primarily due to lower interest earned from our cash, cash equivalents, and marketable securities held in interest-bearing accounts.

Current wording

Other income, net for the three months ended March 31, 2026 decreased $1.1 million, compared to the three months ended March 31, 2025. The decrease was primarily due to lower cash, cash equivalents, and marketable securities balances held in interest-bearing accounts, which resulted in less interest income during the period.

Previous wording

In addition to our results prepared in accordance with GAAP, we believe the following non-GAAP financial measures, including non-GAAP gross profit and gross margin, non-GAAP income (loss) from operations and operating margin, and free cash flow and free cash flow margin included in this Quarterly Report, provide users of our financial information with additional useful information in evaluating our performance and liquidity and allows them to more readily compare our results across periods without the effect of non-cash and other items as detailed below. Additionally, our management and board of directors use our non-GAAP financial measures to evaluate our performance and liquidity, identify trends and make strategic decisions.

Current wording

In addition to our results prepared in accordance with GAAP, we believe the following non-GAAP financial measures, including non-GAAP gross profit and gross margin, non-GAAP income from operations and operating margin, and free cash flow and free cash flow margin included in this Quarterly Report, provide users of our financial information with additional useful information in evaluating our performance and liquidity and allows them to more readily compare our results across periods without the effect of non-cash and other items as detailed below. Additionally, our management and board of directors use our non-GAAP financial measures to evaluate our performance and liquidity, identify trends and make strategic decisions.

Previous wording

There are limitations to the use of the non-GAAP financial measures presented in this Quarterly Report. For example, our non-GAAP financial measures may not be comparable to similarly titled measures of other companies. Other companies, including companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes. Our non-GAAP financial measures should not be considered in isolation or as alternatives to gross profit, gross margin, income (loss) from operations, net cash provided by (used in) operating activities or any other measure of financial performance calculated and presented in accordance with GAAP.

Current wording

There are limitations to the use of the non-GAAP financial measures presented in this Quarterly Report. For example, our non-GAAP financial measures may not be comparable to similarly titled measures of other companies. Other companies, including companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes. Our non-GAAP financial measures should not be considered in isolation or as alternatives to gross profit, gross margin, income from operations, net cash provided by (used in) operating activities or any other measure of financial performance calculated and presented in accordance with GAAP.

Previous wording

We define non-GAAP gross profit as gross profit presented in accordance with GAAP, adjusted to exclude non-cash, non-operational and non-recurring items, including excess and obsolete inventory charges related to our AI-powered motion tracking technology transition, stock-based compensation expense, employer payroll tax expense related to stock-based compensation, amortization of intangible assets, and restructuring and other expenses. We define non-GAAP gross margin as non-GAAP gross profit divided by revenue.

Current wording

We define non-GAAP gross profit as gross profit presented in accordance with GAAP, adjusted to exclude non-cash, non-operational and non-recurring items, including stock-based compensation expense, employer payroll tax expense related to stock-based compensation, and amortization of intangible assets. We define non-GAAP gross margin as non-GAAP gross profit divided by revenue.

Previous wording

The principal limitation of non-GAAP gross profit and non-GAAP gross margin is that they exclude significant expenses that are required by GAAP to be recorded in our consolidated financial statements, including non-cash expenses, and the impact of non-recurring charges that we do not consider to be indicative of our ongoing core operations.

Current wording

The principal limitation of non-GAAP gross profit and non-GAAP gross margin is that they exclude significant expenses that are required by GAAP to be recorded in our unaudited condensed consolidated financial statements, including non-cash expenses, and the impact of non-recurring charges that we do not consider to be indicative of our ongoing core operations.

Previous wording

For further stock-based compensation expense details, see the section titled “Non-GAAP Income (Loss) From Operations and Operating Margin” below.

Current wording

(1)For further stock-based compensation expense details, see the section titled “Non-GAAP Income From Operations and Operating Margin” below.

Previous wording

We define non-GAAP income (loss) from operations as income (loss) from operations presented in accordance with GAAP, adjusted to exclude non-cash, non-operational and non-recurring items, including excess and obsolete inventory charges related to our AI-powered motion tracking technology transition, stock-based compensation expense, employer payroll tax expense related to stock-based compensation, amortization of intangible assets, restructuring and other expenses and acquisition-related expenses. We define non-GAAP operating margin as non-GAAP income (loss) from operations divided by revenue.

Current wording

We define non-GAAP income from operations as income from operations presented in accordance with GAAP, adjusted to exclude non-cash, non-operational and non-recurring items, including stock-based compensation expense, employer payroll tax expense related to stock-based compensation, amortization of intangible assets and acquisition-related expenses. We define non-GAAP operating margin as non-GAAP income from operations divided by revenue.

Previous wording

The principal limitation of non-GAAP income (loss) from operations and non-GAAP operating margin is that they exclude significant expenses that are required by GAAP to be recorded in our consolidated financial statements, including non-cash expenses, and the impact of non-recurring charges that we do not consider to be indicative of our ongoing core operations.

Current wording

The principal limitation of non-GAAP income from operations and non-GAAP operating margin is that they exclude significant expenses that are required by GAAP to be recorded in our unaudited condensed consolidated financial statements, including non-cash expenses, and the impact of non-recurring charges that we do not consider to be indicative of our ongoing core operations.

Previous wording

The following table provides a reconciliation of non-GAAP income (loss) from operations and operating margin to income (loss) from operations and operating margin, the most directly comparable financial measures presented in accordance with GAAP:

Current wording

The following table provides a reconciliation of non-GAAP income from operations and operating margin to income from operations and operating margin, the most directly comparable financial measures presented in accordance with GAAP:

Previous wording

We define free cash flow as net cash provided by (used in) operating activities plus cash used for employer payroll taxes at IPO related to stock-based compensation and less purchases of property, equipment and software (including capitalized internal-use software). We believe that free cash flow is a helpful indicator of liquidity that provides information to management and investors about the amount of cash generated or used by our operations that, after taking into account the employer payroll taxes paid as part of the vesting of shares at IPO as well as investments in property, equipment and software (including capitalized internal-use software), can be used for strategic initiatives, including investing in our business and strengthening our financial position. The principal limitation of free cash flow is that it does not represent the total increase or decrease in our cash balance for a given period. We define free cash flow margin as free cash flow divided by revenue.

Current wording

We define free cash flow as net cash provided by (used in) operating activities plus cash used for employer payroll taxes at IPO related to stock-based compensation less purchases of property, equipment and software (including capitalized internal-use software). We believe that free cash flow is a helpful indicator of liquidity that provides information to management and investors about the amount of cash generated or used by our operations that, after taking into account the employer payroll taxes paid as part of the vesting of shares at IPO as well as investments in property, equipment and software (including capitalized internal-use software), can be used for strategic initiatives, including investing in our business and strengthening our financial position. The principal limitation of free cash flow is that it does not represent the total increase or decrease in our cash balance for a given period. We define free cash flow margin as free cash flow divided by revenue.

Previous wording

We have historically financed our operations primarily through net proceeds from the sale of our redeemable convertible preferred stock and payments received from our clients. In May 2025 we completed our IPO andreceived aggregate proceeds of $255.7 million, net of underwriting discounts and commissions before deducting offering expenses payable by us. We used substantially all of the proceeds from the IPO to pay employee taxes for the settlement of RSUs and PRSUs.

Current wording

We have historically financed our operations primarily through net proceeds from the sale of our redeemable convertible preferred stock and payments received from our clients.

Previous wording

As of September 30, 2025, our principal sources of liquidity were cash and cash equivalents of $261.3 million, and marketable securities of $233.8 million. Our cash and cash equivalents consist of cash in bank accounts, money market accounts, and other highly liquid investments with original maturities of 90 days or less from the date of purchase. Our marketable securities consist of U.S. treasury securities, investment-grade corporate bonds, government agency securities, and commercial paper. Our primary uses of cash are personnel-related, inventory and selling, marketing and related costs.

Current wording

As of March 31, 2026, our principal sources of liquidity were cash and cash equivalents of $186.7 million, and marketable securities of $219.0 million. Our cash and cash equivalents consist of cash in bank accounts, money market accounts, and other highly liquid investments with original maturities of 90 days or less from the date of purchase. Our marketable securities consist of U.S. treasury securities, investment-grade corporate bonds, government agency securities, and commercial paper. Our primary uses of cash are personnel-related, inventory and selling, marketing and related costs.

Previous wording

Net cash provided by operating activities was $10.7 million for the nine months ended September 30, 2024. This primarily related to our net loss of $39.0 million and net cash inflows of $14.7 million due to changes in operating assets and liabilities, adjusted for non-cash charges of $35.0 million. The change in operating assets and liabilities was driven by an increase in deferred revenue of $69.6 million and a decrease in inventory of $3.8 million, partially offset by an increase in deferred commissions of $27.7 million, an increase in accounts receivable of $17.2 million, a decrease in accounts payable of $8.2 million, a decrease in operating lease liabilities of $3.6 million and an increase in prepaid expenses and other current assets of $2.4 million. The changes were primarily due to the growth of our business, timing of cash receipts from clients, and timing of cash payments to our vendors.

Current wording

Net cash provided by operating activities was $43.1 million for the three months ended March 31, 2026. This primarily related to our net income of $35.1 million adjusted for non-cash charges of $30.1 million and offset by net cash outflows of $22.2 million due to changes in operating assets and liabilities. The change in operating assets and liabilities was driven by an increase in accounts receivable of $48.9 million, an increase in deferred commissions of $20.6 million, an increase in prepaid expense and other current assets of $4.2 million, and a decrease in operating lease liabilities of $1.1 million, partially offset by an increase in deferred revenue of $39.9 million, an increase in accounts payable and accrued liabilities of $11.2 million, and a decrease in inventory of $1.5 million. The changes were primarily due to the growth of our business, timing of cash receipts from clients, and timing of cash payments to our vendors.

Previous wording

Net cash provided by operating activities was $107.5 million for the nine months ended September 30, 2025. This primarily related to our net loss of $560.4 million and net cash outflows of $0.7 million due to changes in operating assets and liabilities, adjusted for non-cash charges of $668.6 million. The change in operating assets and liabilities was driven by an increase in accounts receivable of $47.6 million, an increase in deferred commissions of $38.3 million, an increase in other assets of $8.1 million, an increase in prepaid expenses and other current assets of $8.0 million, and an increase in inventory of $2.9 million, partially offset by an increase in deferred revenue of $82.1 million and an increase in accounts payable and accrued liabilities of $25.0 million. The changes were primarily due to the growth of our business, timing of cash receipts from clients, and timing of cash payments to our vendors.

Current wording

Net cash provided by operating activities was $4.9 million for the three months ended March 31, 2025. This primarily related to our net income of $17.1 million and net cash outflows of $24.5 million due to changes in operating assets and liabilities, adjusted for non-cash charges of $12.3 million. The change in operating assets and liabilities was driven by an increase in accounts receivable of $34.3 million, an increase in deferred commissions of $10.6 million, and an increase in inventory of $1.9 million, partially offset by an increase in accounts payable and accrued liabilities of $15.7 million and a decrease in prepaid expenses of $8.1 million. The changes were primarily due to the growth of our business, timing of cash receipts from clients, and timing of cash payments to our vendors.

Previous wording

Net cash provided by investing activities was $21.4 million for the nine months ended September 30, 2024, driven by net proceeds from maturities of marketable securities of $24.2 million, offset in part by $2.7 million used for purchases of property, equipment and capitalized internal-use software.

Current wording

Net cash provided by investing activities was $48.1 million for the three months ended March 31, 2026, driven by net maturities of marketable securities of $49.6 million, partially offset by $1.5 million used for purchases of property, equipment and capitalized internal-use software.

Previous wording

Net cash used in investing activities was $76.1 million for the nine months ended September 30, 2025, driven by net purchases of marketable securities of $68.4 million, $4.0 million used to purchase a business and $3.7 million used for purchases of property, equipment and capitalized internal-use software.

Current wording

Net cash used in investing activities was $21.3 million for the three months ended March 31, 2025, driven by net purchases from marketable securities of $16.6 million, $4.0 million used to purchase a business and $0.8 million used for purchases of property, equipment and capitalized internal-use software.

Previous wording

Net cash used in financing activities was $70.9 million for the nine months ended September 30, 2025, consisting of $272.3 million used for employee taxes related to the net settlement of RSUs and PRSUs, $50.0 million related to the repurchase of Series E preferred stock and payments of deferred offering costs of $10.1 million, partially offset by proceeds of $255.7 million from the issuance of common stock in connection with the IPO, net of issuance costs and $4.9 million in proceeds related to the repayment of non-recourse loans.

Current wording

Net cash used in financing activities was $112.8 million for the three months ended March 31, 2026, consisting of $105.0 million related to the share repurchase program described below, and $8.2 million used for employee taxes related to the net settlement of RSUs and PRSUs, partially offset by $0.4 million in proceeds from the exercise of employee stock options.