Rimini Street, Inc.

Previous wording

•the evolution of the enterprise software management and support landscape facing our clients and prospects;

Current wording

•the evolution of the enterprise software management and support landscape facing our clients;

Previous wording

•our business plan and our ability to effectively manage our growth and associated investments;

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•our business plan and ability to effectively manage our growth and associated investments;

Previous wording

•the impact of any recessionary macro-economic trends, including inflation, rising interest rates and changes in foreign exchange rates;

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•the impact of any macro-economic trends, including inflation, rising interest rates and changes in foreign exchange rates;

Previous wording

•cost of revenue, including changes in costs associated with production and client support, and the results of any efforts to manage costs in light of current revenue expectations and expansion of our offerings;

Current wording

•cost of revenue, including changes in costs associated with production and client support, and the results of any efforts to manage costs to align with current revenue expectations and expansion of our offerings;

Previous wording

•our ability to prevent unauthorized access to our information technology systems and other cybersecurity threats, protect the confidential information of our employees and clients and comply with privacy and data protection regulations, as well as any deficiencies associated with generative artificial intelligence (AI) technologies potentially used by us or used by our third-party vendors and service providers;

Current wording

•our ability to prevent unauthorized access to our information technology systems and other cybersecurity threats, protect the confidential information of our employees and clients and comply with privacy and data protection regulations, as well as any deficiencies associated with generative artificial intelligence (AI) technologies potentially used by us or by our third-party vendors and service providers;

Previous wording

As of March 31, 2025, we employed over 2,000 professionals and supported over 3,090 active clients globally, including 71 Fortune 500 companies and 19 Fortune Global 100 companies across a broad range of industries. We define an active client as a distinct entity, such as a company, an educational or government institution, or a business unit of a company that purchases our services to support a specific product. For example, we count as two separate active clients instances where we provide support for two different products to the same entity.

Current wording

As of June 30, 2025, we employed over 2,010 professionals and supported approximately 3,060 active clients globally, including 70 Fortune 500 companies and 19 Fortune Global 100 companies across a broad range of industries. We define an active client as a distinct entity, such as a company, an educational or government institution, or a business unit of a company that purchases our services to support a specific product. For example, we count as two separate active clients instances where we provide support for two different products to the same entity.

Previous wording

Our subscription-based revenue provides a foundation for, and visibility into, future period results. For the three months ended March 31, 2025 and 2024, we generated revenue of $104.2 million and $106.7 million, respectively, representing a decrease of 2%. During the three months ended March 31, 2025, we recorded net income of $3.4 million, and as of March 31, 2025, we had an accumulated deficit of $235.1 million. Approximately 48% and 50% of our revenue was generated in the United States for the three months ended March 31, 2025 and 2024, respectively. Approximately 52% and 50% of our revenue was generated in foreign jurisdictions for the three months ended March 31, 2025 and 2024, respectively.

Current wording

Our subscription-based revenue provides a foundation for, and visibility into, future period results. For the three months ended June 30, 2025 and 2024, we generated revenue of $104.1 million and $103.1 million, respectively, representing an increase of 1%. During the three months ended June 30, 2025, we recorded net income of $30.3 million, and as of June 30, 2025, we had an accumulated deficit of $204.9 million. Approximately 47% and 50% of our revenue was generated in the United States for the three months ended June 30, 2025 and 2024, respectively. Approximately 53% and 50% of our revenue was generated in foreign jurisdictions for the three months ended June 30, 2025 and 2024, respectively.

Previous wording

In 2024, we announced that we would wind down services for Oracle PeopleSoft products and began the wind down project. The wind-down includes our Rimini Support™, Rimini Manage™ and Rimini Consult™ services for Oracle PeopleSoft products. As we provide services for Oracle PeopleSoft products to clients globally, the wind-down process is expected to take place over several phases. We expect significant reductions in revenue related to support for Oracle PeopleSoft products over time, but it is unclear when we will cease providing support services for Oracle PeopleSoft products, altogether, other than at the expiration of existing remaining client contracts for such services. Revenue related to providing services for Oracle PeopleSoft products accounted for approximately $7.0 million, or 7% of revenue, for the three months ended March 31, 2025 and $8.2 million, or 8% of revenue, for the three months ended March 31, 2024, respectively.

Current wording

On July 7, 2025, we and Mr. Ravin entered into a Settlement Agreement with Oracle Corporation relating to the Rimini II litigation. Under the terms of this agreement, we are required to complete the Wind Down no later than July 31, 2028 (the “Wind Down Period”). The Wind Down includes our Rimini Support, Rimini Manage and Rimini Consult services for Oracle PeopleSoft products. As we provide services for Oracle PeopleSoft products to clients globally, the Wind Down process is expected to take place over the Wind Down Period, but both the pace of revenue reduction and the final date that the Company will receive revenue from the discontinued services is unknown as of the date of this Report. We expect significant reductions in revenue related to services for Oracle PeopleSoft products over the course of the Wind Down Period. Revenue related to providing services for Oracle PeopleSoft products accounted for approximately 6% of revenue for the six months ended June 30, 2025 and approximately 8% of revenue for the six months ended June 30, 2024.

Previous wording

Uncertainty regarding changes continuing to be made in laws and regulations by the current U.S. Presidential administration, along with uncertainty about the trade policies of such administration, particularly when pertaining to treaties, tariffs and other limitations on international trade, are causing economic and geopolitical uncertainty. Despite these macroeconomic and geopolitical pressures, we expect to continue to be able to market, sell and provide our current and future products and services to clients globally. We also expect to continue investing in the development and improvement of new and existing products and services to address client needs. Further, although our operations are influenced by general economic conditions, we do not believe the impacts of the economic disruptions described above had a significant net impact on our revenue or results of operations during the three months ended March 31, 2025.

Current wording

Uncertainty regarding changes continuing to be made in laws and regulations by the current U.S. administration, along with uncertainty about U.S. trade policies, particularly when pertaining to treaties, tariffs and other limitations on international trade, are causing economic and geopolitical uncertainty. Despite these macroeconomic and geopolitical pressures, we expect to continue to be able to market, sell and provide our current and future products and services to clients in non-sanctioned countries globally. We also expect to continue investing in the development and improvement of new and existing products and services to address client needs. Further, although our operations are influenced by general economic conditions, we do not believe the impacts of the economic disruptions described above had a significant net impact on our revenue or results of operations during the three and six months ended June 30, 2025.

Previous wording

Reference is made to Note 8 to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Report for a discussion of recent developments regarding our litigation with Oracle.

Current wording

Reference is made to Note 8 to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Report for a discussion of recent developments regarding our litigation with Oracle, including the July 7, 2025, Settlement Agreement referenced above.

Previous wording

Since we founded our company, we have made the expansion of our client base a priority. We believe that our ability to expand our client base is an indicator of the growth of our business, the success of our sales and marketing activities, and the value that our services bring to our clients. We define an active client as a distinct entity, such as a company, an educational or government institution, or a business unit of a company that purchases our services to support a specific product. For example, we count as two separate active clients when support for two different products is being provided to the same entity. As of March 31, 2025 and 2024, we had 3,092 and 3,040 active clients, respectively.

Current wording

Since the founding of our Company, we have made the expansion of our client base a priority. We believe that our ability to expand our client base is an indicator of the growth of our business, the success of our sales and marketing activities, and the value that our services bring to our clients. We define an active client as a distinct entity, such as a company, an educational or government institution, or a business unit of a company that purchases our services to support a specific product. For example, we count as two separate active clients when support for two different products is being provided to the same entity. As of June 30, 2025 and 2024, we had approximately 3,060 and 3,007 active clients, respectively.

Previous wording

We define a unique client as a distinct entity, such as a company, an educational or government institution or a subsidiary, division or business unit of a company that purchases one or more of our products or services. We count as two separate unique clients when two separate subsidiaries, divisions or business units of an entity purchase our products or services. As of March 31, 2025 and 2024, we had 1,575 and 1,535 unique clients, respectively.

Current wording

We define a unique client as a distinct entity, such as a company, an educational or government institution or a subsidiary, division or business unit of a company that purchases one or more of our products or services. We count as two separate unique clients when two separate subsidiaries, divisions or business units of an entity purchase our products or services. As of June 30, 2025 and 2024, we had approximately 1,553 and 1,532 unique clients, respectively.

Previous wording

Our annualized recurring revenue was $396 million and $416 million as of March 31, 2025 and 2024, respectively. The decline reflects the recent reduction in client retention.

Current wording

Our annualized recurring revenue was $394 million and $399 million as of June 30, 2025 and 2024, respectively. The decline reflects the recent reduction in client retention, not fully offset by new client engagements.

Previous wording

We define revenue retention rate as the actual subscription revenue (dollar-based) recognized in a 12-month period from clients that existed on the day prior to the start of the 12-month period divided by our annualized recurring revenue as of the day prior to the start of the 12-month period. Our revenue retention rate was 88% and 89% for the 12 months ended March 31, 2025 and 2024, respectively. The decline in our revenue retention rate for the 12 months ended March 31, 2025 was due to attrition during the trailing twelve months, as certain clients did not renew specific subscriptions due to a variety of reasons; however, in some cases these clients maintained or added subscriptions for other products and services. Our calculated net billings during the three months ended March 31, 2025 increased $5.4 million compared to the three months ended March 31, 2024, primarily due to foreign currency exchange rate changes.

Current wording

We define revenue retention rate as the actual subscription revenue (dollar-based) recognized in a 12-month period from clients that existed on the day prior to the start of the 12-month period divided by our annualized recurring revenue as of the day prior to the start of the 12-month period. Our revenue retention rate was 90% and 88% for the 12 months ended June 30, 2025 and 2024, respectively. The improvement in our revenue retention rate for the 12 months ended June 30, 2025 was due to attrition during the preceding trailing twelve months, as certain clients did not renew specific subscriptions due to a variety of reasons; however, in some cases these clients maintained or added subscriptions for other products and services.

Previous wording

We define gross profit as the difference between revenue and the costs incurred in providing the software products and services. Gross profit margin is the ratio of gross profit divided by revenue. Our gross profit margin was approximately 61.0% and 59.8% for the three months ended March 31, 2025 and 2024, respectively. Our gross profit margin increased for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 due to better management of costs in our non-core products and services.

Current wording

We define gross profit as the difference between revenue and the costs incurred in providing the software products and services. Gross profit margin is the ratio of gross profit divided by revenue. Our gross profit margin was approximately 60.4% and 59.1% for the three months ended June 30, 2025 and 2024, respectively. Our gross profit margin improved for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 due to better management of costs in our non-core products and services.

Previous wording

Cost of revenue. Cost of revenue decreased from $42.9 million for the three months ended March 31, 2024 to $40.7 million for the three months ended March 31, 2025, a decrease of $2.2 million or 5%. The key drivers related to the cost of revenue decrease were a decline in employee compensation and benefits of $2.2 million and a $0.3 million decrease in engineering consulting costs. These costs were offset, in part, by a $0.2 million increase in administrative allocations and a $0.1 million increase in all other costs.

Current wording

Cost of revenue. Cost of revenue decreased from $42.2 million for the three months ended June 30, 2024 to $41.3 million for the three months ended June 30, 2025, a decrease of $0.9 million or 2%. The key drivers related to the cost of revenue decrease were a decline in employee compensation and benefits of $1.8 million, offset in part by a $0.5 million increase in engineering consulting costs, a $0.1 million increase in administrative allocations and a $0.3 million increase in all other costs.

Previous wording

General and administrative expenses. General and administrative expenses decreased from $18.4 million for the three months ended March 31, 2024 to $17.5 million for the three months ended March 31, 2025, a decrease of $0.9 million or 5%. This decrease was comprised of several items, which included a decrease in employee compensation and benefits of $0.8 million, an increase in administrative allocations of $0.5 million and a decrease of contract labor of $0.4 million. These favorable variances were offset by an increase in all other costs of $0.3 million, an increase in professional fees of $0.2 million, an increase in rent and facility costs of $0.2 million and an increase in computer supplies, software and license costs of $0.1 million.

Current wording

General and administrative expenses. General and administrative expenses decreased from $19.5 million for the three months ended June 30, 2024 to $16.8 million for the three months ended June 30, 2025, a decrease of $2.7 million or 14%. This decrease was comprised of several items, which included a decrease in employee compensation and benefits of $0.9 million, a decrease in professional fees of $0.8 million, a decrease in bad debt expense of $0.5 million, an increase in administrative allocations of $0.3 million and a decrease of contract labor of $0.3 million. These favorable variances were offset by an increase in rent and facility costs of $0.3 million.

Previous wording

Reorganization costs. During the year ended December 31, 2024, we began a process to optimize our cost structure through a headcount reduction. We recognized reorganization costs of $0.5 million for the three months ended March 31, 2025 compared to no costs for the three months ended March 31, 2024. The costs were primarily related to severance costs associated with our 2024 reorganization plan. We are likely to incur additional reorganization costs during the second quarter of 2025 as we continue to optimize our cost structure in areas where opportunities to streamline our operations exist.

Current wording

Reorganization costs. During the year ended December 31, 2024, we began a process to optimize our cost structure through a headcount reduction. We recognized reorganization costs of $0.7 million for the three months ended June 30, 2025 compared to $3.2 million for the three months ended June 30, 2024. The costs were primarily related to severance costs associated with our reorganization plan. We are likely to incur additional reorganization costs during the third quarter of 2025 as we continue to optimize our cost structure in areas where opportunities to streamline our operations exist.

Previous wording

Interest expense. Interest expense increased from $1.3 million for the three months ended March 31, 2024 to $1.7 million for the three months ended March 31, 2025. Interest expense increased primarily due to borrowing $15.0 million in October 2024 under the revolving line of credit, which resulted in interest expense of $0.3 million for the three months ended March 31, 2025. Our effective interest rates related to our term loan decreased from an interest rate of 8.6% for the three months ended March 31, 2024 to an interest rate of 8.0% for the three months ended March 31, 2025. The interest expense for the term loan increased by $0.1 million due to a higher principal balance outstanding for the respective periods.

Current wording

Interest expense. Interest expense increased from $1.5 million for the three months ended June 30, 2024 to $1.6 million for the three months ended June 30, 2025. Interest expense increased primarily due to initially borrowing $15.0 million in October 2024 under the revolving line of credit, which resulted in interest expense of $0.2 million for the three months ended June 30, 2025.

Previous wording

Other income (expenses), net. Other income (expenses), net is primarily comprised of interest income, foreign exchange gains and losses, and other non-operating income and expenses. For the three months ended March 31, 2025, net other expenses of approximately $0.1 million was comprised primarily of foreign exchange losses of $0.5 million and other expenses of $0.1 million, which were offset by interest income from cash and cash equivalents of $0.6 million. For the three months ended March 31, 2024, net other income of approximately $1.0 million was comprised primarily of gains from cash equivalents and investments.

Current wording

Other income (expenses), net. Other income (expenses), net is primarily comprised of interest income, foreign exchange gains and losses, and other non-operating income and expenses. For the three months ended June 30, 2025, net other income of approximately $1.2 million was comprised of foreign exchange losses of $1.2 million and other expenses of $0.1 million, which was offset by interest income primarily from cash and cash equivalents of $2.6 million, of which $1.7 million was related to interest income comprising a portion of the total $37.9 million of attorneys’ fees and costs remitted by Oracle to us. For the three months ended June 30, 2024, net other income of approximately $1.5 million was comprised primarily of gains from foreign exchanges of $0.9 million and interest income from cash and cash equivalents of $0.9 million, offset by other expenses of approximately $0.3 million.

Previous wording

Income taxes. We had an income tax expense of $1.7 million for the three months ended March 31, 2024 compared to $4.3 million for the three months ended March 31, 2025. For the three months ended March 31, 2025, the primary reason for the change in income taxes was due to an increase of income before taxes of $4.6 million in the current year period compared to the prior year period.

Current wording

Income taxes. We had an income tax expense of $0.4 million for the three months ended June 30, 2024 compared to $10.5 million for the three months ended June 30, 2025. For the three months ended June 30, 2025, the primary reason for the change in income taxes was due to an increase of income before taxes of $41.6 million in the current year period compared to the prior year period.

Previous wording

Revenue. Revenue declined from $106.7 million for the three months ended March 31, 2024 to $104.2 million for the three months ended March 31, 2025, a decrease of $2.5 million or 2%. Although there was an increase in the average number of unique clients from 1,535 for the three months ended March 31, 2024 to 1,577 for the three months ended March 31, 2025, revenue declined primarily due to the attrition of some large client contracts as certain clients did not renew specific subscriptions in prior periods due to varying reasons, which is now being reflected in our revenue within the current period. On a geographic basis, United States revenue declined from $53.8 million for the three months ended March 31, 2024 to $50.1 million for the three months ended March 31, 2025, a decrease of $3.7 million or 7%. Our international revenue grew from $52.9 million for the three months ended March 31, 2024 to $54.1 million for the three months ended March 31, 2025, an increase of $1.2 million or 2%.

Current wording

Revenue. Revenue declined from $209.9 million for the six months ended June 30, 2024 to $208.3 million for the six months ended June 30, 2025, a decrease of $1.6 million or 1%. Although there was a 2% increase in the average number of unique clients from 1,534 for the six months ended June 30, 2024 to 1,569 for the six months ended June 30, 2025, revenue declined primarily due to the attrition of some large client contracts as certain clients did not renew specific subscriptions in prior periods due to varying reasons, which is now being reflected in our revenue during the current period. On a geographic basis, United States revenue declined from $105.3 million for the six months ended June 30, 2024 to $99.3 million for the six months ended June 30, 2025, a decrease of $6.0 million or 6%. Our international revenue grew from $104.6 million for the six months ended June 30, 2024 to $109.1 million for the six months ended June 30, 2025, an increase of $4.5 million or 4%.

Previous wording

Gross profit. Gross profit decreased from $63.8 million for the three months ended March 31, 2024 to $63.5 million for the three months ended March 31, 2025, a decrease of $0.3 million or 0.5%. Gross profit margin for the three months ended March 31, 2024 was 59.8% compared to 61.0% for the three months ended March 31, 2025. For the three months ended March 31, 2025, the total cost of revenue decreased by 5% compared to a decline in revenue of 2% for the three months ended March 31, 2025. As a result, our gross profit margin improved by 120 basis points period over period. We expect margin pressures in the short-term as our ability to increase revenue remains challenged by a relative lack of new client contracts combined with unfavorable mix of margin level and continued investment in our new products and services.

Current wording

Gross profit. Gross profit increased from $124.8 million for the six months ended June 30, 2024 to $126.4 million for the six months ended June 30, 2025, an increase of $1.6 million or 1%. Gross profit margin for the six months ended June 30, 2024 was 59.5% compared to 60.7% for the six months ended June 30, 2025. For the six months ended June 30, 2025, the total cost of revenue decreased by 4%, primarily due to a decrease in average headcount of 5% compared to a decline in revenue of 1% for the six months ended June 30, 2025. As a result, our gross profit margin improved by 120 basis points period over period. We do not expect the Wind Down of PeopleSoft to unfavorably impact our gross margins going forward. We will continue to monitor and manage our overall gross margin as we enter and invest in a broader mix of products and services.

Previous wording

Sales and marketing expenses. As a percentage of our revenue, sales and marketing expenses were 33% and 37% for the three months ended March 31, 2025 and 2024, respectively. In dollar terms, sales and marketing expenses decreased from $39.1 million for the three months ended March 31, 2024 to $34.3 million for the three months ended March 31, 2025, a decrease of $4.9 million or 12%. This decline was primarily due to a reduction of $4.0 million related to travel and entertainment costs incurred as part of a sales training event held in January 2024. In addition, our employee compensation and benefits declined $0.9 million for the three months ended March 31, 2025. We will continue to seek additional revenue by selectively investing in resources and marketing programs that we believe will be scalable and help drive future revenue growth.

Current wording

Sales and marketing expenses. As a percentage of our revenue, sales and marketing expenses were 35% and 36% for the six months ended June 30, 2025 and 2024, respectively. In dollar terms, sales and marketing expenses decreased from $76.5 million for the six months ended June 30, 2024 to $72.3 million for the six months ended June 30, 2025, a decrease of $4.2 million or 6%. This decline was primarily due to a reduction of $3.6 million related to travel and entertainment costs incurred as part of a sales training event held in January 2024. In addition, both our employee compensation and benefits and marketing and advertising costs declined $0.5 million and $0.7 million, respectively, for the six months ended June 30, 2025. These declines were offset, in part, by increases in administrative allocations and all other costs of $0.5 million and $0.6 million, respectively, for the six months ended June 30, 2025. We will continue to seek additional revenue by selectively investing in resources and marketing programs that we believe will be scalable and help drive future revenue growth.

Previous wording

Professional fees and other costs associated with litigation decreased from $2.9 million for the three months ended March 31, 2024 to $1.9 million for the three months ended March 31, 2025, a decrease of $1.0 million. This decrease was primarily due to the timing of when the litigation costs were incurred related to our appeal of the Rimini II decision with the Ninth Circuit, which occurred on June 5, 2024. Please refer to the litigation matters as disclosed in Note 8 to our Unaudited Condensed Consolidated Financial Statements, included in Part I, Item 1 of this Report for further information.

Current wording

Professional fees and other costs associated with litigation decreased from $4.5 million for the six months ended June 30, 2024 to $4.2 million for the six months ended June 30, 2025, a decrease of $0.3 million. This decrease was primarily due to the timing of when litigation costs relating to the Rimini II litigation were incurred. Please refer to Note 8 to our Unaudited Condensed Consolidated Financial Statements, included in Part I, Item 1 of this Report, for additional information regarding our litigation with Oracle.

Previous wording

As of March 31, 2025, we had a working capital deficit of $60.1 million and an accumulated deficit of $235.1 million. For the three months ended March 31, 2025, we recorded net income of $3.4 million. As of March 31, 2025, we had available cash, cash equivalents and restricted cash of $123.8 million.

Current wording

As of June 30, 2025, we had a working capital deficit of $24.7 million and an accumulated deficit of $204.9 million. For the three months ended June 30, 2025, we recorded net income of $30.3 million. As of June 30, 2025, we had available cash, cash equivalents and restricted cash of $102.5 million.

Previous wording

In April 2024, we refinanced our Original Credit Facility, which had an outstanding principal balance of $70.9 million, with a new five-year senior secured credit facility (“2024 Credit Facility”) consisting of a $75.0 million term loan and a $35.0 million revolving line of credit. As of March 31, 2025, we had outstanding term loan borrowings of $72.2 million as well as borrowings on the revolving line of credit of $15.0 million under our 2024 Credit Facility. As a result, we had net availability of $20.0 million under our revolving line of credit as of March 31, 2025.

Current wording

In April 2024, we refinanced our Original Credit Facility, which had an outstanding principal balance of $70.9 million, with a new five-year senior secured credit facility (“2024 Credit Facility”) consisting of a $75.0 million term loan and a $35.0 million revolving line of credit. As of June 30, 2025, we had outstanding term loan borrowings of $71.3 million as well as borrowings on the revolving line of credit of $10.0 million under our 2024 Credit Facility. As a result, we had net availability of $25.0 million under our revolving line of credit as of June 30, 2025. On July 15, 2025, we repaid the remaining $10.0 million outstanding balance due under our revolving line of credit, resulting in $35.0 million of borrowing capacity.

Previous wording

A key component of our business model requires that substantially all clients prepay us annually for the services we will provide over the following year or longer. As a result, we typically collect cash from our clients in advance of when the related service costs are incurred, which resulted in deferred revenue of $234.8 million that is included in current liabilities as of March 31, 2025. Therefore, we believe that working capital deficit is not as meaningful in evaluating our liquidity since the costs of fulfilling our commitments to provide services to clients are currently limited to approximately 39% of the related deferred revenue based on our gross profit percentage of 61% for the three months ended March 31, 2025.

Current wording

A key component of our business model requires that substantially all clients prepay us annually for the services we will provide over the following year or longer. As a result, we typically collect cash from our clients in advance of when the related service costs are incurred, which resulted in deferred revenue of $241.4 million that is included in current liabilities as of June 30, 2025. Therefore, we believe that working capital deficit is not as meaningful in evaluating our liquidity since the costs of fulfilling our commitments to provide services to clients are currently limited to approximately 40% of the related deferred revenue based on our gross profit percentage of 60% for the three months ended June 30, 2025.

Previous wording

For the next year, assuming that our operations are not significantly impacted by rising inflation, continued interest rate changes, other global economic or geopolitical uncertainties, political and trade turmoil between the U.S. and China and other countries, or the litigation matters as disclosed in Note 8 to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Report, we believe that cash, cash equivalents and restricted cash of $123.8 million as of March 31, 2025, plus future cash flows from operating activities and our 2024 Credit Facility will be sufficient to meet our anticipated cash needs including working capital requirements, planned capital expenditures and our contractual obligations.

Current wording

For the next year, assuming that our operations are not significantly impacted by rising inflation, continued interest rate changes, other global economic or geopolitical uncertainties, political and trade turmoil between the U.S. and China and other countries, or the litigation matters as disclosed in Note 8 to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Report, we believe that cash, cash equivalents and restricted cash of $102.5 million as of June

Previous wording

The effect of foreign currency translation changes was favorable for $2.8 million for the three months ended March 31, 2025 compared to an unfavorable impact of $4.4 million for the three months ended March 31, 2024, respectively, due to favorable foreign exchange impacts related to our foreign cash. For the three months ended March 31, 2025, we experienced a change in foreign currency exchange rates as the U.S. dollar weakened against the majority of foreign currencies where we operate. The favorable foreign currency impact was primarily related to our foreign cash held in Japan, Brazil and the United Kingdom as those local currencies strengthened against the U.S. dollar.

Current wording

The effect of foreign currency translation changes was favorable for $7.0 million for the six months ended June 30, 2025 compared to an unfavorable impact of $7.4 million for the six months ended June 30, 2024, respectively, due to favorable foreign exchange impacts related to our foreign cash. For the six months ended June 30, 2025, we experienced a change in foreign currency exchange rates as the U.S. dollar weakened against the majority of foreign currencies where we operate. The favorable foreign currency impact was primarily related to our foreign cash held in Japan, the United Kingdom and other foreign entities as those local currencies strengthened against the U.S. dollar.

Previous wording

For the three months ended March 31, 2024, cash flows provided by operating activities amounted to approximately $11.1 million. The key drivers resulting in our cash provided by operating activities for the three months ended March 31, 2024, included net income of $1.3 million and adjustments to reconcile net income to net cash totaling $4.0 million, as well as favorable changes in operating assets and liabilities of $5.7 million, resulting in net cash provided by operating activities of $11.1 million.

Current wording

For the six months ended June 30, 2025, cash flows provided by operating activities amounted to approximately $15.9 million. The key drivers resulting in our cash provided by operating activities for the six months ended June 30, 2025, included net income of $33.6 million and adjustments to reconcile net income to net cash totaling $20.7 million, offset in part by unfavorable changes in operating assets and liabilities of $38.4 million, resulting in net cash provided by operating activities of $15.9 million.

Previous wording

For the three months ended March 31, 2025, adjustments to reconcile net income to net cash consisted primarily of stock-based compensation expense of $2.7 million, amortization and accretion related to operating lease ROU assets of $1.2 million, depreciation and amortization expense of $0.9 million, accretion and amortization of debt discount and issuance costs of $0.2 million and a favorable change in deferred income taxes of $2.5 million. For the three months ended March 31, 2025, the changes in operating assets and liabilities, net consisted of favorable changes to accounts receivable of $57.5 million and deferred contract costs of $2.0 million. The favorable change to accounts receivable was a result of collecting $134.3 million during the three months ended March 31, 2025 which was offset by billings, net of $79.4 million during the three months ended March 31, 2025. As a result, our days sales outstanding for accounts receivable was 97 days as of March 31, 2025. The favorable change in deferred contract costs was due to capitalizing $2.7 million of commissions and amortizing $4.7 million of deferred contract costs during the three months ended March 31, 2025.

Current wording

For the six months ended June 30, 2025, adjustments to reconcile net income to net cash consisted primarily of stock-based compensation expense of $5.6 million, amortization and accretion related to operating lease ROU assets of $2.4 million, depreciation and amortization expense of $1.8 million, accretion and amortization of debt discount and issuance costs of $0.3 million and a favorable change in deferred income taxes of $10.6 million. For the six months ended June 30, 2025, the changes in operating assets and liabilities, net consisted of favorable changes to accounts receivable of $31.1 million and deferred contract costs of $2.4 million. The favorable change to accounts receivable was a result of collecting $218.4 million during the six months ended June 30, 2025 which was offset by billings, net of $190.1 million during the six months ended June 30, 2025. As a result, our days sales outstanding for accounts receivable was 88 days as of June 30, 2025. The favorable change in deferred contract costs was due to capitalizing $7.0 million of commissions and amortizing $9.4 million of deferred contract costs during the six months ended June 30, 2025.

Previous wording

Offsetting these favorable changes were unfavorable changes to deferred revenue of $27.7 million, accrued compensation, benefits, commissions and other liabilities of $7.3 million, prepaid expenses, deposits and other of $1.2 million and accounts payable of $0.4 million. The use of cash for deferred revenue was due to recognizing $104.2 million in revenue for the current period, which was offset by recording billings, net of $79.4 million during the current period. The unfavorable use of accrued liabilities was primarily due to the payments of $4.3 million for bonuses and of $2.2 million for commissions during the three months ended March 31, 2025.

Current wording

Offsetting these favorable changes were unfavorable changes to deferred revenue of $23.3 million, accrued compensation, benefits, commissions and other of $6.6 million and prepaid expenses, deposits and other of $42.6 million. The use of cash for deferred revenue was due to recognizing $208.3 million in revenue for the current period, which was offset by recording billings, net of $190.1 million during the current period. The unfavorable use of prepaid expenses, deposits and other of $42.6 million was primarily due to the recognition of a receivable of $37.9 million because of the orders issued in the Rimini II litigation by the District Court in June 2025 regarding the return of attorneys’ fees and costs to us. The unfavorable use of accrued liabilities was primarily due to payments for bonuses, commissions and taxes during the six months ended June 30, 2025.

Previous wording

For the three months ended March 31, 2025, cash flows provided by operating activities amounted to approximately $33.7 million. The key drivers resulting in our cash provided by operating activities for the three months ended March 31, 2025, included net income of $3.4 million and adjustments to reconcile net income to net cash totaling $7.4 million, as well as favorable changes in operating assets and liabilities of $22.9 million, resulting in net cash provided by operating activities of $33.7 million.

Current wording

For the six months ended June 30, 2024, cash flows provided by operating activities amounted to approximately $17.3 million. The key drivers resulting in our cash provided by operating activities for the six months ended June 30, 2024, included a net income of $0.2 million and adjustments to reconcile a net loss to net cash totaling $6.8 million, as well as favorable changes in operating assets and liabilities of $10.4 million, resulting in net cash provided by operating activities of $17.3 million.

Previous wording

For the three months ended March 31, 2024, adjustments to reconcile net income to net cash consisted primarily of stock-based compensation expense of $2.6 million, amortization and accretion related to operating lease ROU assets of $1.1 million, depreciation and amortization expense of $0.9 million and accretion and amortization of debt discount and issuance costs of $0.2 million. These favorable items were offset by deferred income taxes of $0.8 million. For the three months ended March 31, 2024, the changes in operating assets and liabilities, net consisted of favorable changes to accounts receivable of $39.8 million, prepaid expenses, deposits and other assets of $3.5 million and deferred contract costs of $2.5 million. The favorable change to accounts receivable was a result of collecting $116.7 million during the three months ended March 31, 2024 which was offset by billings, net of $74.1 million during the three months ended March 31, 2024. As a result, our days sales outstanding for accounts receivable was 97 days as of March 31, 2024. The favorable change in deferred contract costs was due to capitalizing $2.5 million of commissions and amortizing $5.0 million of deferred contract costs during the three months ended March 31, 2024.

Current wording

For the six months ended June 30, 2024, adjustments to reconcile a net loss to net cash consisted primarily of stock-based compensation expense of $5.0 million, amortization and accretion related to operating lease ROU assets of $2.2 million, depreciation and amortization expense of $1.7 million, accretion and amortization of debt discount and issuance costs of $0.4 million and an unfavorable change in deferred income taxes of $2.6 million. For the six months ended June 30, 2024, the changes in operating assets and liabilities, net consisted of favorable changes to accounts receivable of $29.9 million, prepaid expenses, deposits and other assets of $2.1 million and deferred contract costs of $4.2 million. The favorable change to accounts receivable was a result of collecting $222.5 million during the six months ended June 30, 2024 which was offset by billings, net of $185.7 million during the six months ended June 30, 2024. As a result, our days sales outstanding for accounts receivable was 73 days as of June 30, 2024. The favorable change in deferred contract costs was due to capitalizing $5.7 million of commissions and amortizing $9.9 million of deferred contract costs during the six months ended June 30, 2024.

Previous wording

Offsetting these favorable changes were unfavorable changes to accrued liabilities of $8.4 million, deferred revenue of $29.3 million and accounts payable of $2.3 million. The unfavorable use of cash for accrued liabilities related primarily to paying incremental compensation related to bonuses and commissions of $8.1 million during the current period. The use of cash for deferred revenue was due to recognizing $106.7 million in revenue for the current period, which was offset by recording billings, net of $74.1 million during the current period.

Current wording

Offsetting these favorable changes were unfavorable changes to accrued liabilities of $7.0 million, deferred revenue of $17.3 million and accounts payable of $1.5 million. The unfavorable use of cash for accrued liabilities related primarily to paying incremental compensation related to bonuses and commissions of $6.2 million during the current period. The use of cash for deferred revenue was due to recognizing $209.9 million in revenue for the current period, which was offset by recording billings, net of $185.7 million during the current period.

Previous wording

Cash used in investing activities totaled $0.9 million for the three months ended March 31, 2025 and cash provided by investing activities totaled $8.7 million for the three months ended March 31, 2024. For the three months ended March 31, 2025, cash used in investing activities was primarily driven by capital expenditures for leasehold improvements, software development costs, and computer equipment of $0.9 million. Specifically, these capital expenditures included construction in progress for leasehold improvements in Brazil of $0.4 million and Korea of $0.1 million, as well as capitalized software development costs in our U.S. entity of $0.3 million.

Current wording

Cash used in investing activities totaled $2.7 million for the six months ended June 30, 2025 and cash provided by investing activities totaled $7.8 million for the six months ended June 30, 2024. For the six months ended June 30, 2025, cash used in investing activities was primarily driven by capital expenditures for leasehold improvements, software development costs, and computer equipment of $2.7 million. Specifically, these capital expenditures included construction in progress for leasehold improvements in Brazil of $1.4 million and Korea of $0.4 million, as well as capitalized software development costs in our U.S. entity of $0.4 million.

Previous wording

For the three months ended March 31, 2024, cash provided by investing activities was primarily driven by proceeds from sales and maturities of short-term investments of $17.3 million offset by purchases of short-term investments of $7.5 million and capital expenditures for leasehold improvements, software development costs, and computer equipment of $1.2 million. The capital expenditures consisted primarily of capitalized software development costs, new computer equipment, and furniture and fixtures in our U.S. entity of $0.7 million and $0.4 million for computer equipment at our foreign locations, primarily in Brazil of $0.2 million and in India of $0.2 million.

Current wording

For the six months ended June 30, 2024, cash provided by investing activities of $7.8 million was primarily driven by proceeds from sales and maturities of short-term investments of $17.3 million, which were offset by purchases of short-term investments of $7.5 million and capital expenditures of $2.0 million for leasehold improvements, software development costs, and computer equipment. The capital expenditures of $2.0 million consisted primarily of capitalized software development costs, new computer equipment, and furniture and fixtures in our U.S. entity of $1.4 million and $0.6 million for computer equipment at our foreign locations, primarily in Brazil of $0.2 million and in India of $0.2 million.

Previous wording

For the three months ended March 31, 2025, cash utilized in financing activities of $1.0 million was attributable to principal payments related to the 2024 Credit Facility of $0.9 million and capital lease payments of $0.1 million. These activities were offset, in part, by proceeds from stock option exercises of $6 thousand.

Current wording

For the six months ended June 30, 2025, cash utilized in financing activities of $7.1 million was attributable to principal payments related to the 2024 Credit Facility for the revolving line of credit of $5.0 million and the term loan of $1.9 million. In addition, capital lease payments of $0.2 million were made during the six months ended June 30, 2025. These activities were offset, in part, by proceeds from stock option exercises of $9 thousand

Previous wording

For the three months ended March 31, 2024, cash utilized in financing activities of $1.8 million was attributable to principal payments related to the Original Credit Facility of $1.7 million and capital lease payments of $0.1 million.

Current wording

For the six months ended June 30, 2024, cash provided by financing activities of $1.1 million was attributable to proceeds received from the 2024 Credit Facility of $2.9 million, which were offset by principal payments related to the Original Credit Facility of $1.7 million and capital lease payments of $0.2 million.