Neptune Insurance Holdings Inc.

Previous wording

The following is a discussion and analysis of our financial condition and results of operations as of, and for, the periods presented. The following discussion and analysis should be read in conjunction with our consolidated financial statements, the accompanying notes, and other information included elsewhere in this Quarterly Report, in our Annual Report on Form 10-K, and in our other filings with the Commission. This discussion and analysis contains forward-looking statements that are subject to risks, uncertainties, and other factors described under“Risk Factors” in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K that could cause actual results to differ materially from such forward-looking statements. Additionally, our historical results are not necessarily indicative of the results that may be expected for any future period.

Current wording

The following is a discussion and analysis of our financial condition and results of operations as of, and for, the periods presented. The following discussion and analysis should be read in conjunction with our consolidated financial statements, the accompanying notes, and other information included elsewhere in this Quarterly Report, in our Annual Report on Form 10-K, and in our other filings with the Commission. This discussion and analysis contains forward-looking statements that are subject to risks, uncertainties, and other factors described under“Risk Factors” in our Annual Report on Form 10-K, as provided in Part II, Item 1A of this Quarterly Report on Form 10-Q, that could cause actual results to differ materially from such forward-looking statements. Additionally, our historical results are not necessarily indicative of the results that may be expected for any future period.

Previous wording

•Our Distribution: Our distribution strategy is primarily focused on deep partnerships across agencies with tens of thousands of agents who benefit from the ease-of-use of our automated underwriting platform, seamless API integrations, instantaneous bindable quotes, and proprietary Agent Portal. We believe this is a meaningful departure from industry norms and makes our approach to distribution attractive to the agents with whom we work.

Current wording

•Our Distribution: Our distribution strategy is primarily focused on deep partnerships across agencies with tens of thousands of agents who benefit from the ease of use of our automated underwriting platform, seamless API integrations, instantaneous bindable quotes, and our proprietary Agent Portal. We believe this is a meaningful departure from industry norms and makes our approach to distribution attractive to the agents with whom we work.

Previous wording

We operate as an MGA, with a highly attractive, recurring, fee-based revenue model derived from two primary sources: commissions paid by capacity providers, and fees paid by policyholders. Commissions are calculated as a negotiated percentage of premium for each policy. Given our strong retention rates to date, we believe that we have a high degree of visibility into our future revenue streams. For the three and six months ended June 30, 2026, our eligible policy retention rate at renewal was 86.0% and 86.1%, respectively, and our premium retention rate at renewal was 92.1% and

Current wording

We operate as an MGA, with a highly attractive, recurring, fee-based revenue model derived from two primary sources: commissions paid by capacity providers, and fees paid by policyholders. Commissions are calculated as a negotiated percentage of premium for each policy. Given our strong retention rates to date, we believe that we have a high degree of visibility into our future revenue streams. For the three and nine months ended September 30, 2026, our eligible policy retention rate at renewal was 84.1% and 85.2%, respectively, and our premium retention rate at renewal was 91.0% and 91.2%, respectively. The difference between policy and premium retention rates reflects increases to the rates charged to renewing policyholders.

Previous wording

Our financial results and operating performance are influenced by a number of macroeconomic, industry-specific, and company-specific factors, the most significant of which we believe include the following. These factors should be read in conjunction with “Item 1A, Risk Factors” in our Annual Report on Form 10-K:

Current wording

Our financial results and operating performance are influenced by a number of macroeconomic, industry-specific, and company-specific factors, the most significant of which we believe include the following. These factors should be read in conjunction with Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K:

Previous wording

Our growth and success are dependent on property owners and tenants continuing to purchase flood insurance from us, in turn increasing the revenue we generate from commissions and policy fees. High-profile flood events, including Hurricane Ida (2021), Hurricane Ian (2022), Hurricane Helene (2024), and Hurricane Milton (2024), tend to raise consumer awareness and demand for flood insurance, potentially increasing our policy sales and, as a result, our commissions and fees in subsequent periods. Increases in flood risk, or the perception of increases in flood risk, in areas believed to have lower flood risk today (e.g., non-coastal regions that have not historically been considered to be flood-prone) could also increase demand for flood insurance in those areas. Alternatively, significant increases in insured losses due to increasing frequency and intensity of storms could result in additional governmental regulation aimed at mitigating the impact of natural disasters, including stricter building codes or incentives for risk mitigation measures, that could change the dynamics of the housing markets in which we provide flood insurance, could lead to incentives for homeowners to seek private flood insurance coverage, or could cause our capacity providers to exit from, or reduce their exposure to, significant flood events and other natural disasters. In contrast, slower than expected storm seasons can limit demand for new flood insurance policies, potentially decreasing our policy sales and, as a result, our commissions and fees and revenues in subsequent periods. However, slower than expected storm seasons are also likely to result in lower insured losses experienced by our capacity providers, which would allow us to deliver further improved written loss ratios for our capacity providers. See also “Risk Factors - Risks Relating to our Business and Industry - Our business may be harmed if one or more of our relationships with capacity providers are terminated or are reduced, if we fail to maintain good relationships with such capacity providers, if we become dependent upon a limited number of capacity providers, or if we fail to develop new capacity provider relationships”in our Annual Report on Form 10-K.

Current wording

Our growth and success are dependent on property owners and tenants continuing to purchase flood insurance from us, in turn increasing the revenue we generate from commissions and policy fees. High-profile flood events, including Hurricane Ida (2021), Hurricane Ian (2022), Hurricane Helene (2024), and Hurricane Milton (2024), tend to raise consumer awareness and demand for flood insurance, potentially increasing our policy sales and, as a result, our commissions and fees in subsequent periods. Increases in flood risk, or the perception of increases in flood risk, in areas believed to have lower flood risk today (e.g., non-coastal regions that have not historically been considered to be flood-prone) could also increase demand for flood insurance in those areas. Alternatively, significant increases in insured losses due to increasing frequency and intensity of storms could result in additional governmental regulation aimed at mitigating the impact of natural disasters, including stricter building codes or incentives for risk mitigation measures, that could change the dynamics of the housing markets in which we provide flood insurance. Such regulation could lead to incentives for homeowners to seek private flood insurance coverage, or could cause our capacity providers to exit from, or reduce their exposure to, significant flood events and other natural disasters. In contrast, slower-than-expected storm seasons can limit demand for new flood insurance policies, potentially decreasing our policy sales and, as a result, our commissions and fees and revenues in subsequent periods. However, slower-than-expected storm seasons are also likely to result in lower insured losses experienced by our capacity providers, which would allow us to deliver further improved written loss ratios for our capacity providers. See also “Risk Factors — Risks Relating to our Business and Industry — Our business may be harmed if one or more of our relationships with capacity providers are terminated or are reduced, if we fail to maintain good relationships with such capacity providers, if we become dependent upon a limited number of capacity providers, or if we fail to develop new capacity provider relationships”in our Annual Report on Form 10-K.

Previous wording

Macroeconomic conditions that affect the housing market influence our policy sales. Many flood insurance purchases are driven by mortgage requirements (e.g., homeowners with a government backed mortgage in FEMA designated Special Flood Hazard Areas (“SFHAs”) are required to obtain flood insurance coverage). As a result, a high volume of home sales or new housing starts in coastal and flood-prone areas can lead to more policies written by Neptune. If rising interest rates, economic downturns, or a persistent inflationary environment slow home purchase or construction activity, particularly in areas where flood coverage is required, the growth of our new policy sales could slow. Conversely, lower home sales may lead to fewer mid-term cancellations as policy holders stay in their current home longer and could result in a positive impact to renewal rates. We also monitor property value inflation and construction cost trends, as these can increase insured values and premiums (and, thereby, our commission income) on existing policies at renewal. Alternatively, if homeowners experience higher prices generally, whether due to inflationary pressure, tariffs, or other macroeconomic factors, it may lead to a decrease in our renewal acceptance rates as homeowners seek lower cost alternatives or elect not to maintain flood insurance in areas where it is not federally required. See “Risk Factors - Risks Relating to our Business and Industry - An overall decline in the housing market or general economic conditions could have a material adverse effect on the financial condition and results of operations of our business” in our Annual Report on Form 10-K.

Current wording

Macroeconomic conditions that affect the housing market influence our policy sales. Many flood insurance purchases are driven by mortgage requirements (e.g., homeowners with a government-backed mortgage in FEMA-designated Special Flood Hazard Areas (“SFHAs”) are required to obtain flood insurance coverage). As a result, a high volume of home sales or new housing starts in coastal and flood-prone areas can lead to more policies written by Neptune. If rising interest rates, economic downturns, or a persistent inflationary environment slow home purchase or construction activity, particularly in areas where flood coverage is required, the growth of our new policy sales could slow. Conversely, lower home sales may lead to fewer mid-term cancellations as policyholders stay in their current homes longer and could result in a positive impact to renewal rates. We also monitor property value inflation and construction cost trends, as these can increase insured values and premiums (and, thereby, our commission income) on existing policies at renewal. Alternatively, if homeowners experience higher prices generally, whether due to inflationary pressure, tariffs, or other macroeconomic factors, it may lead to a decrease in our renewal acceptance rates as homeowners seek lower-cost alternatives or elect not to maintain flood insurance in areas where it is not federally required. See “Risk Factors — Risks Relating to our Business and Industry — An overall decline in the housing market or general economic conditions could have a material adverse effect on the financial condition and results of operations of our business” in our Annual Report on Form 10-K.

Previous wording

Our business is seasonal, as hurricanes typically occur during the period from June 1 through November 30 each year. Hurricane season drives sales awareness of the need for flood insurance. This has historically resulted in an increase in total sales in our second and third quarters of each fiscal year, as compared to the first and fourth quarters.

Current wording

Our business is seasonal, as hurricanes typically occur during the period from June 1 through November 30 each year. Hurricane season drives sales awareness of the need for flood insurance. This has historically resulted in an increase in total sales in our second and third quarters of each fiscal year, as compared to the first and fourth quarters, and it also affects the timing of our renewals in subsequent years.

Previous wording

The flood insurance market is dominated by the U.S. government’s NFIP, which historically has provided the vast majority of flood insurance policies for properties in the United States. Changes in NFIP policies or pricing can affect our growth. For instance, the implementation of NFIP’s Risk Rating 2.0, a new pricing methodology that could lead to regular premium increases for NFIP policyholders, may drive price-sensitive policyholders to seek private alternatives like Neptune. Conversely, if the NFIP were to reduce rates or expand coverage limits, it could potentially attract policyholders back to the NFIP program and away from private alternatives like Neptune.

Current wording

The flood insurance market is dominated by the U.S. government’s NFIP, which historically has provided the vast majority of flood insurance policies for properties in the United States. Changes in NFIP policies or pricing can affect our growth. For instance, NFIP’s Risk Rating 2.0, a revised pricing methodology published in 2021 that has caused annual price increases for some NFIP policyholders, may drive price-sensitive policyholders to seek private alternatives like Neptune. Conversely, if the NFIP were to reduce rates or expand coverage limits, it could potentially attract policyholders back to the NFIP program and away from private alternatives like Neptune.

Previous wording

Further, we also face competition from other private insurers and MGAs in the flood market. Increased competition in the private flood insurance market could put pressure on, and require us to increase, the commission rates we pay to agents that distribute our products or require higher marketing spend in order for us to maintain market share.

Current wording

We also face competition from other private insurers and MGAs in the flood market. Increased competition in the private flood insurance market could put pressure on, and require us to increase, the commission rates we pay to agents that distribute our products or require higher marketing spend in order for us to maintain market share.

Previous wording

We rely on our capacity providers to provide insurance capacity and to assume the associated balance sheet insurance risk of the flood insurance policies we sell to policyholders. While higher claims frequency or severity bears no direct risk to our financial results, because we do not bear the insurance risk associated with claims, if incurred losses exceed any capacity partner’s loss tolerance, we face the risk of their reduction or withdrawal as a risk-taking partner to Neptune and as a result may need to seek additional capacity from other capacity providers, or new capacity providers, in order to support our continued growth. See “Risk Factors - Risks Relating to our Business and Industry - Our business may be harmed if one or more of our relationships with capacity providers are terminated or are reduced, if we fail to maintain good relationships with such capacity providers, if we become dependent upon a limited number of capacity providers, or if we fail to develop new capacity provider relationships” in our Annual Report on Form 10-K. Historically, we have been able to produce portfolios that perform exceptionally well for our capacity providers and we believe our investments into our Triton system will help deliver continued outperformance versus our peers. If we continue to outperform through large-scale flood events, this could lead to increased access to insurance capacity or improvement in ceding commissions, which could positively impact our economics and ability to grow.

Current wording

We rely on our capacity providers to provide insurance capacity and to assume the associated balance sheet insurance risk of the flood insurance policies we sell to policyholders. While higher claims frequency or severity bears no direct risk to our financial results, because we do not bear the insurance risk associated with claims, if incurred losses exceed any capacity provider’s loss tolerance, we face the risk of their reduction or withdrawal as a risk-taking partner to Neptune and as a result may need to seek additional capacity from other capacity providers, or new capacity providers, in order to support our continued growth. See “Risk Factors — Risks Relating to our Business and Industry — Our business may be harmed if one or more of our relationships with capacity providers are terminated or are reduced, if we fail to maintain good relationships with such capacity providers, if we become dependent upon a limited number of capacity providers, or if we fail to develop new capacity provider relationships” in our Annual Report on Form 10-K. Historically, we have been able to produce portfolios that perform exceptionally well for our capacity providers, and we believe our investments into our Triton system will help deliver continued outperformance versus our peers. If we continue to outperform through large-scale flood events, this could lead to increased access to insurance capacity or improvement in ceding commissions, which could positively impact our economics and ability to grow.

Previous wording

Our revenue is primarily comprised of commission income and fee income, discussed in more detail below.

Current wording

Our revenue consists primarily of commission income and fee income, discussed in more detail below.

Previous wording

Each policyholder’s insurance contract is for a period of one year and can only be canceled by the policyholder prior to expiration for a limited set of reasons, most often in conjunction with the sale of the underlying insured property. Prior to the expiration of the insurance contract, the risk is re-underwritten using the then-current version of Triton. If the risk still qualifies for an insurance contract, we present the policyholder with a renewal offer. For the three and six months ended June 30, 2026, 90% of the eligible renewal offers presented to policyholders were accepted, and the policyholder began a new one-year insurance contract. Upon the effective date of the renewal policy, commission is recognized. As Neptune receives its commission for the full policy year up front, we estimate a cancellation reserve for commissions for those policies that are expected to cancel during the term.

Current wording

Each policyholder’s insurance contract is for a period of one year and can only be canceled by the policyholder prior to expiration for a limited set of reasons, most often in conjunction with the sale of the underlying insured property. Prior to the expiration of the insurance contract, the risk is re-underwritten using the then-current version of Triton. If the risk still qualifies for an insurance contract, we present the policyholder with a renewal offer. For the three and nine months ended September 30, 2026, 84.1% and 85.2%, respectively, of the eligible renewal offers presented to policyholders were accepted, and those policyholders began new one-year insurance contracts. Upon the effective date of the renewal policy, commission is recognized. As Neptune receives its commission for the full policy year up front, we estimate a cancellation reserve for commissions for those policies that are expected to cancel during the term.

Previous wording

Employee compensation and benefits consist of salaries, benefits, bonuses, and payroll taxes for our employees.

Current wording

Employee compensation and benefits consist of salaries, benefits, bonuses, and payroll taxes for our employees. This category also includes share-based compensation, which we present separately in the tables below. Employer payroll taxes on equity awards are included in employee compensation and benefits for all periods presented.

Previous wording

G&A expenses include all other operating costs — e.g., marketing and advertising, technology infrastructure and cloud services, office lease expenses, professional fees (legal, accounting, consulting), licensing and regulatory fees, travel, and other overhead. This category also includes certain one-time costs, such as transaction-related expenses. While many G&A costs scale with the size of our business (for example, as the number of policyholders increases, customer support and cloud hosting costs may rise), we implement new technology from time to time to improve efficiency.

Current wording

G&A expenses include all other operating costs—e.g., marketing and advertising, technology infrastructure and cloud services, office lease expenses, professional fees (legal, accounting, consulting), licensing and regulatory fees, travel, and other overhead. This category also includes corporate transaction costs, which we present separately in the table below. While many G&A costs scale with the size of our business (for example, as the number of policyholders increases, customer support and cloud hosting costs may rise), we implement new technology from time to time to improve efficiency.

Previous wording

Our amortization expense primarily relates to capitalized software development costs for our proprietary technology platform. We capitalize the direct labor and software costs for developing new features or capabilities of our platform and amortize those costs, typically over a three-year useful life. Amortization expense has increased in recent years as we have continued to invest in our software, with significant additions in 2025, and during the three and six months ended June 30, 2026. These expenses will likely continue to grow modestly as we deploy new technology enhancements.

Current wording

Our amortization expense primarily relates to capitalized software development costs for our proprietary technology platform. We capitalize the direct labor and software costs for developing new features or capabilities of our platform and amortize those costs, typically over a three-year useful life. Amortization expense has increased in recent years as we have continued to invest in our software, with significant additions in 2025, and during the three and nine months ended September 30, 2026. These expenses will likely continue to grow modestly as we deploy new technology enhancements.

Previous wording

Transaction costs include professional fees and other expenses related to the IPO, which was completed in October 2025 and the secondary offering for the Company's Class A common stock which occurred in May 2026.

Current wording

Transaction costs include professional fees and other expenses related to the Company’s initial public offering (the “IPO”), which was completed in October 2025, to the secondary offering of the Company’s Class A common stock, which occurred in May 2026, and to corporate development activities.

Previous wording

Comparison of the Three And Six Months Ended June 30, 2026 and 2025

Current wording

Comparison of the Three and Nine Months Ended September 30, 2026 and 2025

Previous wording

The following table provides an overview of our consolidated results of operations for the three and six months ended June 30, 2026 and 2025:

Current wording

The following table provides an overview of our consolidated results of operations for the three and nine months ended September 30, 2026 and 2025:

Previous wording

Revenues increased to $55.9 million for the three months ended June 30, 2026, from $42.1 million for the three months ended June 30, 2025, representing an increase of $13.8 million, or 32.8%. Revenues increased to $93.7 million for the six months ended June 30, 2026, from $71.4 million for the six months ended June 30, 2025, representing an increase of $22.2 million, or 31.2%. This increase was in each case primarily driven by higher policy counts and premium volume, supported by policy renewals and new policy sales.

Current wording

Revenues increased to $59.6 million for the three months ended September 30, 2026, from $44.4 million for the three months ended September 30, 2025, an increase of 34.3%. Revenues increased to $153.2 million for the nine months ended September 30, 2026, from $115.8 million for the nine months ended September 30, 2025, an increase of 32.3%. This increase was in each case primarily driven by higher policy counts and premium volume, supported by policy renewals and new policy sales. New policy sales during the three and nine months ended September 30, 2026, included additional new business from our agreement with Palomar, under which flood policies previously written by Palomar were renewed on our platform (the “Palomar rollover”), which concluded during that period.

Previous wording

Commission income was $42.5 million for the three months ended June 30, 2026, compared to $32.1 million for the three months ended June 30, 2025, an increase of 32.7%. Commission income was $71.6 million for the six months ended June 30, 2026, compared to $54.8 million for the six months ended June 30, 2025, an increase of 30.7%. The increase was in each case primarily due to growth in written premium and an increase in average ceding commission.

Current wording

Commission income was $45.9 million for the three months ended September 30, 2026, compared to $33.9 million for the three months ended September 30, 2025, an increase of 35.4%. Commission income was $117.5 million for the nine months ended September 30, 2026, compared to $88.7 million for the nine months ended September 30, 2025, an increase of 32.5%. The increase was in each case primarily due to growth in written premium and an increase in average ceding commission.

Previous wording

Fee income was $13.3 million for the three months ended June 30, 2026, compared to $10.0 million for the same period in 2025, an increase of 33.4%. Fee income was $22.1 million for the six months ended June 30, 2026, compared to $16.7 million for the six months ended June 30, 2025, an increase of 32.7%. Although the average policy fee remained relatively stable, increased volumes of new business and higher renewal acceptance rates drove overall growth in fee income in both periods.

Current wording

Fee income was $13.7 million for the three months ended September 30, 2026, compared to $10.4 million for the three months ended September 30, 2025, an increase of 30.7%. Fee income was $35.8 million for the nine months ended September 30, 2026, compared to $27.1 million for the nine months ended September 30, 2025, an increase of 31.9%. Although the average policy fee remained relatively stable, increased volumes of new business drove overall growth in fee income in both periods.

Previous wording

Total operating expenses were $29.3 million for the three months ended June 30, 2026, an increase of 41.1% compared to $20.8 million for the three months ended June 30, 2025. Total operating expenses were $53.7 million for the six months ended June 30, 2026, an increase of 55.6% compared to $34.5 million for the six months ended June 30, 2025. The primary drivers of these increases were higher share-based compensation costs associated with RSUs granted in 2025, higher agent commission costs, which are directly correlated with growth in our policy portfolio, and an increase in general and administrative costs.

Current wording

Total operating expenses were $31.6 million for the three months ended September 30, 2026, an increase of 33.5% compared to $23.7 million for the three months ended September 30, 2025. Total operating expenses were $85.3 million for the nine months ended September 30, 2026, an increase of 46.6% compared to $58.2 million for the nine months ended September 30, 2025. The primary drivers of these increases were higher share-based compensation costs associated with RSUs granted in 2025, higher agent commission costs, which are directly correlated with growth in our policy portfolio, and an increase in general and administrative costs.

Previous wording

Agent commission expenses were $16.5 million for the three months ended June 30, 2026, compared to $12.7 million for the three months ended June 30, 2025, representing a 29.7% increase. Agent commission expenses were $27.9 million for the six months ended June 30, 2026, compared to $21.7 million for the six months ended June 30, 2025, representing a 28.6% increase. The increase in commission expenses for the three and six months ended June 30, 2026 was primarily volume-driven, resulting from higher policy sales. Commission expense as a percentage of revenue declined year-over-year, reflecting normalized agent incentive activities three and six months ended June 30, 2026.

Current wording

Agent commission expenses were $17.4 million for the three months ended September 30, 2026, compared to $13.8 million for the three months ended September 30, 2025, representing a 25.6% increase. Agent commission expenses were $45.3 million for the nine months ended September 30, 2026, compared to $35.5 million for the nine months ended September 30, 2025, representing a 27.4% increase. The increase in commission expenses for the three and nine months ended September 30, 2026, was primarily volume-driven, resulting from higher policy sales. Commission expense as a percentage of revenue declined year-over-year, reflecting normalized agent incentive activities in the three and nine months ended September 30, 2026.

Previous wording

Share-based compensation was $7.0 million and $0.1 million for the three months ended June 30, 2026 and 2025, respectively. Share-based compensation was $13.9 million and $0.2 million for the six months ended June 30, 2026 and 2025, respectively. The increases for three and six months ended June 30, 2026 were related to the recognition of share-based compensation expense associated with the RSUs granted in 2025.

Current wording

Share-based compensation was $7.0 million and $0.1 million for the three months ended September 30, 2026 and 2025, respectively. Share-based compensation was $20.8 million and $0.3 million for the nine months ended September 30, 2026 and 2025, respectively. The increases for the three and nine months ended September 30, 2026, were related to the recognition of share-based compensation expense associated with the RSUs granted in 2025.

Previous wording

General and administrative expenses were $3.5 million for the three months ended June 30, 2026, up 30.2% from $2.7 million in the same period in 2025. General and administrative expenses were $6.9 million for the six months ended June 30, 2026, up 48.1% from $4.6 million for the same period in 2025. This increase was primarily driven by higher advertising fees, sales-linked policy administration costs, and LLM maintenance costs.

Current wording

General and administrative expenses were $3.9 million for the three months ended September 30, 2026, up 81.8% from $2.1 million in the three months ended September 30, 2025. General and administrative expenses were $10.8 million for the nine months ended September 30, 2026, up 58.8% from $6.8 million for the nine months ended September 30, 2025. This increase was primarily driven by higher advertising fees, higher software and AI usage costs, and higher professional fees and insurance premiums associated with being a public company.

Previous wording

Amortization expense for the three months ended June 30, 2026, was $1.0 million, compared to $0.9 million for the same period in 2025, representing an 11.5% increase. Amortization expense for the six months ended June 30, 2026, was $2.0 million, compared to $1.8 million for the same period in 2025, representing a 13.2% increase. The increases were attributable to higher amortization of capitalized software development costs, reflecting continued investment in our proprietary technology platform.

Current wording

Amortization expense for the three months ended September 30, 2026, was $1.0 million, compared to $0.9 million for the three months ended September 30, 2025, representing a 4.6% increase. Amortization expense for the nine months ended September 30, 2026, was $3.0 million, compared to $2.7 million for the nine months ended September 30, 2025, representing a 10.2% increase. The increases were attributable to higher amortization of capitalized software development costs, reflecting continued investment in our proprietary technology platform.

Previous wording

IPO Transaction costs recorded in the three and six months ended June 30, 2026, were $(0.1) million and $0.1 million, respectively, representing the Company's portion of the fees associated with the secondary Class A common stock offering that closed in May 2026. IPO Transaction costs recorded in the three and six months ended June 30, 2025, were $2.9 million and $3.5 million and reflect professional fees and other expenses related to our IPO, which was completed on October 2, 2025.

Current wording

Corporate transaction costs recorded for the three and nine months ended September 30, 2026, were $0.2 million and $0.2 million, respectively, and consisted primarily of legal fees related to corporate development activities. The nine-month amount also included the Company’s portion of the fees associated with the secondary Class A common stock offering that closed in May 2026. IPO transaction costs recorded in the three and nine months ended September 30, 2025, were $5.0 million and $8.4 million, respectively, and reflect professional fees and other expenses related to our IPO, which was completed on October 2, 2025.

Previous wording

Interest income for the three months ended June 30, 2026, was $0.3 million, compared to $0.2 million for the same period in 2025, reflecting a 6.1% increase. Interest expense was $3.6 million for the three months ended June 30, 2026, down from $5.9 million in the prior year, reflecting a 38.2% decrease. The decrease in interest expense was primarily due to a lower average debt balance under our credit facilities and a lower average interest rate during the three months ended June 30, 2026.

Current wording

Interest income for the nine months ended September 30, 2026, was $0.8 million, compared to $0.7 million for the nine months ended September 30, 2025, reflecting an 8.5% increase. Interest expense was $10.7 million for the nine months ended September 30, 2026, down from $13.8 million in the nine months ended September 30, 2025, reflecting a 22.1% decrease. The decrease in interest expense was primarily due to a lower average debt balance under our credit facilities and a lower average interest rate during the nine months ended September 30, 2026.

Previous wording

Income tax expense was $7.4 million for the three months ended June 30, 2026, compared to $4.0 million for the same period in 2025, representing an increase of 82.5%. The increase was primarily driven by higher taxable income in the three months ended June 30, 2026, compared to the prior year period. In addition, the effective tax rate for the three months ended June 30, 2026, was 31.9%, compared to 25.8% in the same period in 2025. The change in the effective tax rate reflects the impact of changes in the U.S. federal statutory rate primarily due to limitations on deductions for officer compensation and state income taxes, partially offset by the excess benefits of stock compensation.

Current wording

Income tax expense was $7.5 million for the three months ended September 30, 2026, compared to $4.0 million for the three months ended September 30, 2025, representing an increase of 88.7%. The increase was primarily driven by higher taxable income in the three months ended September 30, 2026, compared to the three months ended September 30, 2025. In addition, the effective tax rate for the three months ended September 30, 2026, was 30.2%, compared to 25.6% in the three months ended September 30, 2025. The change in the effective tax rate reflects the impact of limitations on deductions for officer compensation and state income taxes, partially offset by excess tax benefits from share-based compensation.

Previous wording

Income tax expense was $10.1 million for the six months ended June 30, 2026, compared to $7.5 million for the same period in 2025, representing an increase of 34.8%. The increase was primarily driven by higher taxable income in the six months ended June 30, 2026, compared to the prior year period. In addition, the effective tax rate for the six months ended June 30, 2026, was 30.4%, compared to 25.8% in the same period in 2025. The change in effective tax rate reflects the impact of changes in the U.S. federal statutory rate primarily due to limitations on deductions for officer compensation and state income taxes, partially offset by the excess benefits of stock compensation..

Current wording

Income tax expense was $17.6 million for the nine months ended September 30, 2026, compared to $11.5 million for the nine months ended September 30, 2025, representing an increase of 53.4%. The increase was primarily driven by higher taxable income in the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025. In addition, the effective tax rate for the nine months ended September 30, 2026, was 30.3%, compared to 25.7% in the nine months ended September 30, 2025. The change in effective tax rate reflects the impact of limitations on deductions for officer compensation and state income taxes, partially offset by excess tax benefits from share-based compensation.

Previous wording

In managing our business, our management regularly reviews certain KPIs to evaluate our operations, guide decision-making, and measure progress. We utilize a variety of operational metrics to understand growth and retention and ultimately to drive profitability.

Current wording

In managing our business, our management regularly reviews certain key performance indicators (“KPIs”) to evaluate our operations, guide decision-making, and measure progress. We utilize a variety of operational metrics to understand growth and retention and ultimately to drive profitability.

Previous wording

The table below compares certain of our KPIs as of and for the three and six months ended June 30, 2026 and 2025, respectively, and our revenue retention rate for the twelve months ended June 30, 2026 and 2025, respectively:

Current wording

The table below compares certain of our KPIs as of and for the three and nine months ended September 30, 2026 and 2025, respectively, and our revenue retention rate for the twelve months ended September 30, 2026 and 2025, respectively:

Previous wording

Adjusted EBITDA and Adjusted EBITDA margin: We define Adjusted EBITDA as net income (the most directly comparable GAAP measure) adjusted to exclude interest expense (net of interest income), income taxes, depreciation, and amortization, and further adjusted for other non-cash or non-recurring items, including share-based compensation. By removing these expenses, we believe Adjusted EBITDA provides a clearer representation of operating performance.

Current wording

Adjusted EBITDA and Adjusted EBITDA margin: We define Adjusted EBITDA as net income (the most directly comparable GAAP measure) adjusted to exclude interest expense (net of interest income), income taxes, depreciation, and amortization, and further adjusted for share-based compensation, employer payroll taxes on equity awards, corporate transaction related expenses and one-time expenses. Employer payroll taxes on equity awards are cash expenses; we exclude them because their amount and timing depend on our stock price at vesting or exercise and are not driven by our operating performance. By removing these expenses, we believe Adjusted EBITDA provides a clearer representation of operating performance.

Previous wording

•It excludes the impact of financing decisions (debt vs. equity) by adding back interest, thus focusing on the performance of the underlying operations.

Current wording

•It excludes the impact of financing activities, including interest expense, to focus on the performance of the underlying operations.

Previous wording

•It excludes non-cash charges like amortization and share-based compensation (which depends on equity grant timing and valuation assumptions).

Current wording

•It excludes non-cash charges like amortization and share-based compensation (which depends on equity grant timing and valuation assumptions), and employer payroll taxes on equity awards, which are cash expenses whose amount and timing depend on our stock price at vesting or exercise.

Previous wording

•It removes any other non-recurring, one-time expenses, most often related to corporate finance activities such as expenses associated with our IPO in 2025.

Current wording

•It removes corporate transaction related expenses and one-time expenses, most often related to corporate finance activities, such as expenses associated with our IPO in 2025, and to corporate development activities.

Previous wording

In conjunction with Adjusted EBITDA, we also calculate Adjusted EBITDA margin, or Adjusted EBITDA as a percentage of total revenue. We believe that Adjusted EBITDA margin is a useful measurement of operating profitability for the same reasons we find Adjusted EBITDA useful and also because it provides a period-to-period comparison of our operating performance. Below is a reconciliation of Adjusted EBITDA to net income (the most directly comparable GAAP measure), as well as our Adjusted EBITDA margin to net income margin (the most directly comparable GAAP measure), for the three and six months ended June 30, 2026 and 2025, and for the twelve months ended June 30, 2026 and 2025:

Current wording

In conjunction with Adjusted EBITDA, we also calculate Adjusted EBITDA margin, or Adjusted EBITDA as a percentage of total revenue. We believe that Adjusted EBITDA margin is a useful measurement of operating profitability for the same reasons we find Adjusted EBITDA useful and also because it provides a period-to-period comparison of our operating performance. Below is a reconciliation of Adjusted EBITDA to net income (the most directly comparable GAAP measure), as well as our Adjusted EBITDA margin to net income margin (the most directly comparable GAAP measure), for the three and nine months ended September 30, 2026 and 2025, and for the twelve months ended September 30, 2026 and 2025:

Previous wording

Adjusted EBITDA was $34.5 million for the three months ended June 30, 2026, an increase of $9.2 million, or 36.5%, from $25.2 million for the three months ended June 30, 2025. Our Adjusted EBITDA margin for the three months ended June 30, 2026, was 61.7%, an increase from 60.0% for the three months ended June 30, 2025. This increase was primarily due to higher revenue leading to increased operating leverage.

Current wording

Adjusted EBITDA was $92.8 million for the nine months ended September 30, 2026, an increase of $23.7 million, or 34.3%, from $69.1 million for the nine months ended September 30, 2025. Our Adjusted EBITDA margin for the nine months ended September 30, 2026, was 60.5%, an increase from 59.7% for the nine months ended September 30, 2025. This increase was primarily due to higher revenue leading to increased operating leverage.

Previous wording

While our revenue and Adjusted EBITDA grew 33.0% and 31.8%, respectively, for the twelve months ended June 30, 2026, from the twelve months ended June 30, 2025, our headcount increased by only around 10.8% over the same period. The accelerated growth in revenue and Adjusted EBITDA relative to our growth in employees illustrates the scalability of our existing platform and emphasis on efficient growth.

Current wording

While our revenue and Adjusted EBITDA grew 33.8% and 34.3%, respectively, for the twelve months ended September 30, 2026, from the twelve months ended September 30, 2025, our average number of employees increased by 4.8%. The accelerated growth in revenue and Adjusted EBITDA relative to our growth in employees illustrates the scalability of our existing platform and emphasis on efficient growth.

Previous wording

We believe that Adjusted EBITDA per share (basic and diluted) is a useful measurement for the same reasons we find Adjusted EBITDA useful and also because, by implementing the conversion of the Redeemable Convertible Preferred Stock for periods prior to our IPO, we believe Adjusted EBITDA per share (basic and diluted) provides a clearer representation of operating performance on a per-share and period-over-period basis. The most directly comparable GAAP measures are diluted earnings per share and basic earnings per share, respectively.

Current wording

We believe that Adjusted EBITDA per share (basic and diluted) is a useful measurement for the same reasons we find Adjusted EBITDA useful and also because, by implementing the conversion of the Redeemable Convertible Preferred Stock for periods prior to our IPO, we believe Adjusted EBITDA per share (basic and diluted) provides a clearer representation of operating performance on a per-share and period-over-period basis. The most directly comparable GAAP measures are basic earnings per share and diluted earnings per share, respectively.