ZoomInfo Technologies Inc

Previous wording

We are focused on continuing to grow the number of customers that use our platform in the United States and around the world. The majority of revenue growth when comparing the three months ended March 31, 2024 to the three months ended March 31, 2023 was the result of new customers added over the last 24 months. Our operating results and growth prospects will depend in part on our ability to continue to attract new customers. Additionally, acquiring new customers strengthens the power of our contributory networks. We plan to continue to invest in our efficient go-to-market effort to acquire new customers.

Current wording

We are focused on continuing to grow the number of customers that use our platform in the United States and around the world. While we added new customers over the last 24 months that contributed incremental revenues for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, our total revenues decreased period over period primarily as a result of the change in accounting estimate during the current period. Refer to the “Factors Affecting the Comparability of Our Results of Operations” section further below. Our operating results and growth prospects will depend in part on our ability to continue to attract new customers. Additionally, acquiring new customers strengthens the power of our contributory networks. We plan to continue to invest in our efficient go-to-market effort to acquire new customers.

Previous wording

We believe that expanding the value that we provide to our customers and the corresponding revenue generated as a result is an important measure of the health of our business. We monitor net revenue retention to measure that growth. Net revenue retention is a metric that we calculate based on customers of ZoomInfo at the beginning of the twelve-month period, and is calculated as: (a) the total annual contract value ("ACV") for those customers at the end of the twelve-month period, divided by (b) the total ACV for those customers at the beginning of the twelve-month period. Our net revenue retention rate was 85% as of March 31, 2024. In the near term, we expect our net retention rate to be impacted by macroeconomic conditions. See section "Recent Developments - Impact of Macroeconomic Conditions." We also measure our success in expanding relationships with existing customers by the number of customers that contract for more than $100,000 in ACV. As of March 31, 2024, we had 1,760 customers with over $100,000 in ACV.

Current wording

We believe that expanding the value that we provide to our customers and the corresponding revenue generated as a result is an important measure of the health of our business. We monitor net revenue retention to measure that growth. Net revenue retention is a metric that we calculate based on customers of ZoomInfo at the beginning of the twelve-month period, and is calculated as: (a) the total annual contract value ("ACV") for those customers at the end of the twelve-month period, divided by (b) the total ACV for those customers at the beginning of the twelve-month period. Our net revenue retention rate was 85% as of June 30, 2024. In the near term, we expect our net retention rate to be impacted by macroeconomic conditions. See section "Recent Developments - Impact of Macroeconomic Conditions." We also measure our success in expanding relationships with existing customers by the number of customers that contract for more than $100,000 in ACV. As of June 30, 2024, we had 1,797 customers with over $100,000 in ACV.

Previous wording

We anticipate that restructuring and transaction expenses, including potential impairments, will be influenced by future acquisition activity, strategic restructuring activities, and the commencement of new leases. Specifically, as new leases commence, we may face increased impairment expenses for spaces that we do not intend to occupy and/or that we plan to sublease, which could cause these costs to vary, potentially significantly, from our historic levels. Refer to Note 11 - Leases for further information.

Current wording

Our operating expenses consist of sales and marketing, research and development, general and administrative, and amortization of other acquired intangibles. The most significant component of our operating expenses is personnel costs, which consists of salaries, bonuses, sales commissions, equity-based compensation, and other employee-related benefits. Operating expenses also include overhead costs for facilities, technology, professional fees, depreciation and amortization expense, marketing, and restructuring and transaction-related expenses. We anticipate that restructuring and transaction-related expenses, including potential impairments, will be influenced by future acquisition activity, strategic restructuring activities, and the commencement of new leases. Specifically, as new leases commence, we may face increased impairment expenses for spaces that we do not intend to occupy and/or that we plan to sublease, which could cause these costs to vary, potentially significantly, from our historic levels. Refer to Note 11 - Leases for further information.

Previous wording

General and administrative. General and administrative expenses primarily consist of employee-related costs such as salaries, bonuses, equity-based compensation, and other employee related benefits for our executive, finance, legal, human resources, IT, and business operations and administrative teams, as well as overhead costs. Additionally, we incur expenses related to bad debt and collections, as well as for professional fees including legal services, accounting, banking, and other consulting services. We also incur charges associated with litigation settlements, such as the Class Action settlement previously disclosed, which are presented within General and administrative on the Consolidated Statements of Operations.

Current wording

General and administrative. General and administrative expenses primarily consist of employee-related costs such as salaries, bonuses, equity-based compensation, and other employee related benefits for our executive, finance, legal, human resources, IT, and business operations and administrative teams, as well as overhead costs. Additionally, we incur expenses related to bad debt and collections, as well as for professional fees including legal services, accounting, banking, and other consulting services. General and administrative expenses also include impairment charges associated with our leasing activity. Refer to Note 11 - Leases for further information. We also incur charges associated with litigation settlements, such as the Class Action settlement previously disclosed, which are presented within General and administrative on the Consolidated Statements of Operations.

Previous wording

Other loss (income), net consists primarily of the revaluation of TRA liabilities, investment income, and foreign currency realized and unrealized gains and losses related to the impact of transactions denominated in a foreign currency.

Current wording

Other income, net consists primarily of the revaluation of TRA liabilities, investment income, and foreign currency realized and unrealized gains and losses related to the impact of transactions denominated in a foreign currency.

Previous wording

Changes to existing tax law including changes to the corporate income tax rates and the Company’s state tax footprint could lead to substantial revaluations of the TRA liability recorded through Other loss (income), net. Additionally, the magnitude of Other loss (income), net may increase as we expand operations internationally and add complexity to our operations. Refer to the Provision for income taxes section below for further information.

Current wording

Changes to existing tax law including changes to the corporate income tax rates and the Company’s state tax footprint could lead to substantial revaluations of the TRA liability recorded through Other income, net. Additionally, the magnitude of Other income, net may increase as we expand operations internationally and add complexity to our operations. Refer to the Provision (benefit) for income taxes section below for further information.

Previous wording

The value of our deferred tax assets are regularly remeasured to consider the impact of statutory changes and other guidance, as well as changes in our state income apportionment factors. Given the amount of our deferred tax assets, minor changes can materially affect our Provision for income taxes. A significant portion of our deferred tax assets are associated with our TRA, and upon a remeasurement of our deferred tax assets, the TRA liability is typically concurrently remeasured with a partially offsetting impact within Other loss (income), net on the Consolidated Statements of Operations.

Current wording

The value of our deferred tax assets are regularly remeasured to consider the impact of statutory changes and other guidance, as well as changes in our state income apportionment factors. Given the amount of our deferred tax assets, minor changes can materially affect our Provision (benefit) for income taxes. A significant portion of our deferred tax assets are associated with our TRA, and upon a remeasurement of our deferred tax assets, the TRA liability is typically concurrently remeasured with a partially offsetting impact within Other income, net on the Consolidated Statements of Operations.

Previous wording

We have regularly taken tax positions, including with respect to our various corporate events and restructurings in the ordinary course of determining our Provision for income taxes. We recognize the tax benefit of an uncertain tax position only if it is more likely than not the position is sustainable upon examination by the taxing authority based on the technical merits. We regularly review our tax positions with consideration of a number of factors, including changes in facts or circumstances, changes in tax law or guidance, correspondence with tax authorities during the course of audits and effective settlement of audit issues. Changes in the recognition or measurement of uncertain tax positions could result in material increases or decreases in our Provision for income taxes in the period in which we make the change, which could have a material impact on our effective tax rate and operating results.

Current wording

We have regularly taken tax positions, including with respect to our various corporate events and restructurings in the ordinary course of determining our Provision (benefit) for income taxes. We recognize the tax benefit of an uncertain tax position only if it is more likely than not the position is sustainable upon examination by the taxing authority based on the technical merits. We regularly review our tax positions with consideration of a number of factors, including changes in facts or circumstances, changes in tax law or guidance, correspondence with tax authorities during the course of audits and effective settlement of audit issues. Changes in the recognition or measurement of uncertain tax positions could result in material increases or decreases in our Provision (benefit) for income taxes in the period in which we make the change, which could have a material impact on our effective tax rate and operating results.

Previous wording

The following table presents our results of operations for the three months ended March 31, 2024 and 2023:

Current wording

The following table presents our results of operations for the three and six months ended June 30, 2024 and 2023:

Previous wording

Cost of Service. Cost of service was $43.4 million for the three months ended March 31, 2024, a decrease of $2.1 million, or 5%, as compared to $45.5 million for the three months ended March 31, 2023. Excluding equity-based compensation expenses, cost of service was $40.9 million for three months ended March 31, 2024, a decrease of $0.5 million, or 1%, as compared to $41.4 million for three months ended March 31, 2023.

Current wording

Cost of Service. Cost of service was $45.9 million for the three months ended June 30, 2024, an increase of $2.3 million, or 5%, as compared to $43.6 million for the three months ended June 30, 2023. Excluding equity-based compensation expenses, cost of service was $43.2 million for three months ended June 30, 2024, an increase of $3.0 million, or 7%, as compared to $40.2 million for three months ended June 30, 2023, primarily due to increased amortization expense on internally developed capitalized software, hosting fees, and facilities expense.

Previous wording

Gross profit. Gross profit for three months ended March 31, 2024 was $266.7 million and represented a gross margin of 86%. Gross profit for three months ended March 31, 2023 was $255.2 million and represented a gross margin of 85%. The increase in gross profit in the three months ended March 31, 2024 relative to the three months ended March 31, 2023 was $11.5 million, or 5%, primarily due to higher revenues. The gross margin improvement in the three months ended March 31, 2024 was due to efficiencies in cost of service.

Current wording

Gross profit. Gross profit for three months ended June 30, 2024 was $245.6 million and represented a gross margin of 84%. Gross profit for three months ended June 30, 2023 was $265.0 million and represented a gross margin of 86%. The decrease in gross profit in the three months ended June 30, 2024 relative to the three months ended June 30, 2023 was $19.4 million, or 7%, primarily due to lower revenues, as described above, and increased amortization expense on internally developed capitalized software.

Previous wording

•Research and development for the three months ended March 31, 2024 was $43.7 million representing an increase of $1.4 million, or 3%, as compared to $42.3 million for the three months ended March 31, 2023. Research and development, excluding equity-based compensation, for the three months ended March 31, 2024 was $34.9 million, representing a decrease of $0.5 million, or 1%, as compared to $35.4 million for the three months ended March 31, 2023.

Current wording

•Research and development for the three months ended June 30, 2024 was $48.3 million representing a decrease of $5.0 million, or 9%, as compared to $53.3 million for the three months ended June 30, 2023. Research and development, excluding equity-based compensation, for the three months ended June 30, 2024 was $38.1 million, relatively flat as compared to $37.9 million for the three months ended June 30, 2023.

Previous wording

Equity-based compensation expense. Equity-based compensation expense was $31.2 million for the three months ended March 31, 2024, a decrease of $6.5 million, or 17%, as compared to $37.7 million for the three months ended March 31, 2023, due to lower grant date fair values of grants being amortized in the current period compared to those that were amortized in the prior year, capitalization of equity-based compensations, and terminations.

Current wording

Equity-based compensation expense. Equity-based compensation expense was $36.4 million for the three months ended June 30, 2024, a decrease of $9.9 million, or 21%, as compared to $46.3 million for the three months ended June 30, 2023, due to lower grant date fair values of grants being amortized in the current period compared to those that were amortized in the prior year, capitalization of equity-based compensation, and terminations.

Previous wording

Interest expense, net. Interest expense, net was $10.1 million for the three months ended March 31, 2024, an increase of $0.2 million, or 2%, as compared to $9.9 million for the three months ended March 31, 2023.

Current wording

Interest expense, net. Interest expense, net was $9.8 million for the three months ended June 30, 2024, a decrease of $2.2 million, or 18%, as compared to $12.0 million for the three months ended June 30, 2023, primarily due to both lower interest rates and higher interest income.

Previous wording

Revenue. Revenue was $310.1 million for the three months ended March 31, 2024, an increase of $9.4 million, or 3%, as compared to $300.7 million for the three months ended March 31, 2023. This increase was primarily due to the addition of new customers over the past 12 months partially offset by cancellations and reduction in spend among certain existing customers.

Current wording

Revenue. Revenue was $601.6 million for the six months ended June 30, 2024, a decrease of $7.7 million, or 1%, as compared to $609.3 million for the six months ended June 30, 2023. The decrease was primarily due to the change in accounting estimate resulting in reduced revenues by $15.3 million, partially offset by the addition of new customers over the past 12 months.

Previous wording

•Sales and marketing for the three months ended March 31, 2024 was $99.4 million, representing a decrease of $3.8 million, or 4%, as compared to $103.2 million for the three months ended March 31, 2023. Sales and marketing, excluding equity-based compensation, for the three months ended March 31, 2024 was $87.6 million, representing an increase of $3.9 million, or 5%, as compared to $83.7 million for the three months ended March 31, 2023, primarily due to additional marketing, benefits, facilities, and technology expenses.

Current wording

•Sales and marketing for the six months ended June 30, 2024 was $200.1 million, representing a decrease of $7.6 million, or 4%, as compared to $207.7 million for the six months ended June 30, 2023. Sales and marketing, excluding equity-based compensation, for the six months ended June 30, 2024 was $174.3 million, representing an increase of $3.7 million, or 2%, as compared to $170.6 million for the six months ended June 30, 2023, primarily due to additional marketing, employee-related benefits, facilities expenses and lease abandonment charges, partially offset by lower amortization of commissions.

Previous wording

•General and administrative for the three months ended March 31, 2024 was $75.1 million representing an increase of $37.4 million, or 99%, as compared to $37.7 million for the three months ended March 31, 2023. General and administrative, excluding equity-based compensation, for the three months ended March 31, 2024 was $67.0 million, representing an increase of $36.5 million, or 120%, as compared to $30.5 million for the three months ended March 31, 2023, primarily due to charges incurred related to the Class Actions (See Note 9 - Commitments and Contingencies for further information) as well as incremental bad debt accruals.

Current wording

•General and administrative for the six months ended June 30, 2024 was $186.4 million representing an increase of $106.5 million, or 133%, as compared to $79.9 million for the six months ended June 30, 2023. General and administrative, excluding equity-based compensation, for the six months ended June 30, 2024 was $168.8 million, representing an increase of $106.0 million, or 169%, as compared to $62.8 million for the six months ended June 30, 2023, primarily due to charges incurred related to the Class Actions (See Note 9 - Commitments and Contingencies for further information) and lease impairment and abandonment charges, as well as incremental bad debt expense resulting from the change in accounting estimate.

Previous wording

•Amortization of other acquired intangibles were $5.3 million, representing a decrease of $0.3 million, or 5%, for the three months ended March 31, 2024 as compared to $5.6 million for the three months ended March 31, 2023.

Current wording

•Amortization of other acquired intangibles was $10.8 million, representing a decrease of $0.3 million, or 3%, for the six months ended June 30, 2024 as compared to $11.1 million for the six months ended June 30, 2023.

Previous wording

Income from operations. Income from operations was $43.0 million for the three months ended March 31, 2024, a decrease of $23.3 million, or 35%, as compared to $66.3 million for the three months ended March 31, 2023. The decrease was primarily due to costs incurred related to the Class Actions, partially offset by higher revenues. Operating income margin was 14% for three months ended March 31, 2024 as compared to 22% for the three months ended March 31, 2023 primarily due to higher operating expenses.

Current wording

Income (loss) from operations. Income from operations was $23.0 million for the six months ended June 30, 2024, a decrease of $102.9 million, or 82%, as compared to $125.9 million for the six months ended June 30, 2023. The decrease was primarily due to costs incurred related to the Class Actions, lease impairment and abandonment charges, and the change in accounting estimate of collectibility of accounts receivable. Operating income margin was 4% for the six months ended June 30, 2024 as compared to 21% for the six months ended June 30, 2023.

Previous wording

Other loss (income), net. Other loss, net was $3.4 million for the three months ended March 31, 2024, which consists of $9.4 million of TRA remeasurement loss, partially offset by $3.7 million of investment income and $2.3 million of gain on foreign currency transactions, as compared to other income of $14.0 million for the three months ended March 31, 2023, which consists of $10.1 million of TRA remeasurement gain and $4.0 million of investment income, offset by $0.1 million of loss on foreign currency transactions.

Current wording

Other income, net. Other income was $2.5 million for the six months ended June 30, 2024, which primarily consists of $7.3 million of investment income, offset by $9.2 million of TRA remeasurement loss, as compared to other income of $21.1 million for the six months ended June 30, 2023, which primarily consists of $11.2 million of TRA remeasurement gain, and $10.5 million of investment income.

Previous wording

Provision for income taxes. The Company is subject to income taxes in the United States and various foreign jurisdictions. Provision for income taxes for the three months ended March 31, 2024 was $14.4 million, representing an effective tax rate of 48.8%, as compared to provision for income taxes of $23.7 million, representing an effective tax rate of 34.8%, for the three months ended March 31, 2023. The decrease in income tax expense was primarily due to a reduction in income before taxes. The annual effective tax rate differed from the U.S. federal statutory rate due to non-deductible equity compensation costs, U.S. state taxes including the remeasurement of deferred tax assets for the effect of state law changes, foreign taxes, tax costs accrued for future repatriations of foreign earnings; partially offset by research and development credits. Refer to Note 14 - Income Taxes of our unaudited consolidated financial statements included in Part I, Item 1 of this Form 10-Q for additional information related to the components of our income tax provision.

Current wording

Provision (benefit) for income taxes. The Company is subject to income taxes in the United States and various foreign jurisdictions. Provision for income taxes for the six months ended June 30, 2024 was $14.2 million, representing an effective tax rate of 288.9%, as compared to provision for income taxes of $40.3 million, representing an effective tax rate of 32.8%, for the six months ended June 30, 2023. The decrease in income tax expense was primarily due to a reduction in income before taxes. The annual effective tax rate differed from the U.S. federal statutory rate due to non-deductible equity compensation costs, U.S. state taxes including the remeasurement of deferred tax assets for the effect of state law changes, foreign taxes, and tax costs accrued for future repatriations of foreign earnings, partially offset by research and development credits. Refer to Note 14 - Income Taxes of our unaudited consolidated financial statements included in Part I, Item 1 of this Form 10-Q for additional information related to the components of our income tax provision.

Previous wording

We define Adjusted Net Income as net income (loss) adjusted for, as applicable, (i) the impact of fair value adjustments to acquired unearned revenue, (ii) loss on debt modification and extinguishment, (iii) amortization of acquired technology and other acquired intangibles, (iv) equity-based compensation expense, (v) restructuring and transaction-related expenses, (vi) integration costs and acquisition-related expenses, (vii) legal settlement, (viii) TRA liability remeasurement (benefit) expense and (ix) tax impacts of adjustments to net income (loss). Adjusted Net Income is presented because it is used by management to evaluate our financial performance and for planning and forecasting purposes. Additionally, we believe that it and similar measures are widely used by securities analysts and investors as a means of evaluating a company’s operating performance. Adjusted Net Income should not be considered as an alternative to cash flows from operating activities as a measure of liquidity or as an alternative to operating income or net income as indicators of operating performance.

Current wording

We define Adjusted Net Income as net income (loss) adjusted for, as applicable, (i) the impact of fair value adjustments to acquired unearned revenue, (ii) loss on debt modification and extinguishment, (iii) amortization of acquired technology and other acquired intangibles, (iv) equity-based compensation expense, (v) restructuring and transaction-related expenses, (vi) integration costs and acquisition-related expenses, (vii) legal settlement, (viii) TRA liability remeasurement (benefit) expense, (ix) other (income) loss, net and (x) tax impacts of adjustments to net income (loss). Adjusted Net Income is presented because it is used by management to evaluate our financial performance and for planning and forecasting purposes. Additionally, we believe that it and similar measures are widely used by securities analysts and investors as a means of evaluating a company’s operating performance. Adjusted Net Income should not be considered as an alternative to cash flows from operating activities as a measure of liquidity or as an alternative to operating income or net income as indicators of operating performance.

Previous wording

The following table presents a reconciliation of Income from operations to Adjusted Operating Income for the periods presented:

Current wording

The following table presents a reconciliation of Income (loss) from operations to Adjusted Operating Income for the periods presented:

Previous wording

(3)Represents charges associated with certain legal settlements. For the three months ended March 31, 2024, these charges are related to costs incurred due to the Class Actions. See Note 9 - Commitments and Contingencies for further information.

Current wording

(3)Represents charges associated with certain legal settlements. For thesix months ended June 30, 2024, these charges are related to costs incurred due to the Class Actions. See Note 9 - Commitments and Contingencies for further information.

Previous wording

Adjusted Operating Income for the three months ended March 31, 2024 was $119.4 million and represented an Adjusted Operating Income Margin of 39%. Adjusted Operating Income for the three months ended March 31, 2023 was $120.3 million and represented an Adjusted Operating Income Margin of 40%. The decrease of $0.9 million, or 1%, in Adjusted Operating Income was primarily due to increased general and administrative expenses due to higher bad debt accruals. Adjusted Operating Income Margin decreased to 39% in the three months ended March 31, 2024 from 40% in the three months ended March 31, 2023.

Current wording

Adjusted Operating Income for the three months ended June 30, 2024 was $81.6 million and represented an Adjusted Operating Income Margin of 28%. Adjusted Operating Income for the three months ended June 30, 2023 was $125.6 million and represented an Adjusted Operating Income Margin of 41%. The decrease of $44.0 million, or 35%, in Adjusted Operating Income was primarily due to the change in accounting estimate of collectibility of accounts receivable resulting in both reduced revenues as well as incremental bad debt expense.

Previous wording

(4)Represents tax expense associated with GAAP Net income excluded from Adjusted Net Income (Non-GAAP). This includes the tax effects associated with equity compensation, remeasurement of deferred tax assets for the effect of state law changes, and TRA liability remeasurement.

Current wording

(4)Represents tax expense associated with GAAP Net income (loss) excluded from Adjusted Net Income (Non-GAAP). This includes the tax effects associated with equity compensation, remeasurement of deferred tax assets for the effect of state law changes, and TRA liability remeasurement.

Previous wording

(1)Primarily represents revaluations on TRA liability and foreign exchange remeasurement gains and losses.

Current wording

(1)Primarily represents revaluations on TRA liability and investment income.

Previous wording

(3)Represents costs directly associated with acquisition or disposal activities, including employee severance and termination benefits, contract termination fees and penalties, and other exit or disposal costs. For three months ended March 31, 2024, this expense is primarily related to the accelerated expense of obsolete software purchase commitments. For the three months ended March 31, 2023, this expense is primarily related to costs pursuant to the 2021 and 2022 acquisitions.

Current wording

(3)Represents costs directly associated with acquisition or disposal activities, including employee severance and termination benefits, contract termination fees and penalties, and other exit or disposal costs. For three and six months ended June 30, 2024, this expense is primarily related to lease impairment and abandonment charges. For the three and six months ended June 30, 2023, this expense is primarily related to costs associated with a June 2023 reduction in force.

Previous wording

(4)Represents charges associated with certain legal settlements. For the three months ended March 31, 2024, these charges related to costs incurred due to the Class Actions. See Note 9 - Commitments and Contingencies for further information.

Current wording

(4)Represents charges associated with certain legal settlements. For the six months ended June 30, 2024, these charges related to costs incurred due to the Class Actions. See Note 9 - Commitments and Contingencies for further information.

Previous wording

As of March 31, 2024, we had $405.9 million of cash and cash equivalents, $34.3 million of short-term investments, and $250.0 million available under our first lien revolving credit facility. We have financed our operations primarily through cash generated from operations and financed various acquisitions through cash generated from operations supplemented with debt offerings.

Current wording

As of June 30, 2024, we had $385.9 million of cash and cash equivalents, $13.4 million of short-term investments, and $250.0 million available under our first lien revolving credit facility. We have financed our operations primarily through cash generated from operations and financed various acquisitions through cash generated from operations supplemented with debt offerings.

Previous wording

We generally invoice our subscription customers annually, semi-annually, or quarterly in advance of our subscription services. Therefore, a substantial source of our cash is from such prepayments, which are included on our Consolidated Balance Sheets as unearned revenue. Unearned revenue consists of billed fees for our subscriptions, prior to satisfying the criteria for revenue recognition, which are subsequently recognized as revenue in accordance with our revenue recognition policy. As of March 31, 2024, we had unearned revenue of $444.3 million, of which $443.0 million was recorded as a current liability and is expected to be recorded as revenue in the next 12 months, provided all other revenue recognition criteria have been met.

Current wording

We generally invoice our subscription customers annually, semi-annually, or quarterly in advance of our subscription services. Therefore, a substantial source of our cash is from such prepayments, which are included on our Consolidated Balance Sheets as unearned revenue. Unearned revenue consists of billed fees for our subscriptions, prior to satisfying the criteria for revenue recognition, which are subsequently recognized as revenue in accordance with our revenue recognition policy. As of June 30, 2024, we had unearned revenue of $440.4 million, of which $438.9 million was recorded as a current liability and is expected to be recorded as revenue in the next 12 months, provided all other revenue recognition criteria have been met.

Previous wording

Net cash provided by operating activities was $115.9 million for the three months ended March 31, 2024 as a result of net income of $15.1 million, adjusted by non-cash charges of $101.1 million and the net change in our operating and liabilities of $0.3 million. The non-cash charges are comprised of equity-based compensation of $31.2 million, depreciation and amortization of $20.0 million, amortization of deferred commission costs of $17.4 million, a decrease in deferred tax assets net of deferred tax liabilities of $13.2 million, TRA remeasurement of $9.6 million, and provision for bad debt expense of $9.2 million. The net change in operating assets and liabilities was primarily the result of an increase in deferred costs and other assets of $17.6 million, a decrease in accounts payable of $16.9 million, an increase in prepaid expenses and other current assets of $11.9 million, partially offset by a decrease in accounts receivable of $39.3 million and an increase in accrued expenses and other liabilities of $5.5 million.

Current wording

Net cash provided by operating activities was $242.2 million for the six months ended June 30, 2024 as a result of net loss of $9.3 million, adjusted by non-cash charges of $242.6 million and the net change in our operating and liabilities of $8.9 million. The non-cash charges are primarily comprised of equity-based compensation of $67.6 million, asset impairments and lease abandonment charges of $48.7 million, depreciation and amortization of $40.9 million, amortization of deferred commission costs of $33.6 million, provision for bad debt expense of $32.5 million, TRA remeasurement of $9.2 million, and a decrease in deferred tax assets net of deferred tax liabilities of $8.3 million. The net change in operating assets and liabilities was primarily the result of a decrease in accounts receivable of $49.6 million and an increase in accrued expenses and other liabilities of $18.3 million, partially offset by an increase in deferred costs and other assets of $35.5 million and a decrease in accounts payable of $15.1 million.

Previous wording

Net cash provided by operations was $108.6 million for the three months ended March 31, 2023 as a result of net income of $44.5 million, adjusted by non-cash charges of $104.2 million and the net change in our operating assets and liabilities of $40.1 million. The non-cash charges are primarily comprised of equity-based compensation of $37.7 million, a decrease in deferred tax assets net of deferred tax liabilities of $27.9 million, depreciation and amortization of $20.9 million, amortization of deferred commission costs of $18.8 million, and provision for bad debt expense of $6.1 million, partially offset by TRA remeasurement of $10.1 million. The net change in operating assets and liabilities was primarily the result of a decrease in accrued expenses and other liabilities of $34.0 million, an increase in deferred costs and other assets of $16.4 million, a decrease in accounts payable of $10.3 million, an increase in prepaid expenses and other current assets of $9.9 million, partially offset by an increase in unearned revenue of $31.5 million.

Current wording

Net cash provided by operations was $225.2 million for the six months ended June 30, 2023 as a result of net income of $82.6 million, adjusted by non-cash charges of $209.1 million and the net change in our operating assets and liabilities of $66.5 million. The non-cash charges are primarily comprised of equity-based compensation of $84.0 million, a decrease in deferred tax assets net of deferred tax liabilities of $42.0 million, depreciation and amortization of $40.7 million, amortization of deferred commission costs of $38.3 million, and provision for bad debt expense of $11.3 million, partially offset by TRA remeasurement of $11.2 million. The net change in operating assets and liabilities was primarily the result of an increase in deferred costs and other assets of $39.2 million, a decrease in accrued expenses and other liabilities of $28.5 million, a decrease in accounts payable of $12.7 million, an increase in prepaid expenses and other current assets of $11.0 million, partially offset by an increase in unearned revenue of $23.2 million.

Previous wording

We may make future acquisitions as part of our business strategy which may require the use of capital resources and drive additional future restructuring and transaction-related cash expenditures as well as integration and acquisition-related compensation cash costs. During the three months ended March 31, 2024, and 2023, we incurred the following cash expenditures:

Current wording

We may make future acquisitions as part of our business strategy which may require the use of capital resources and drive additional future restructuring and transaction-related cash expenditures as well as integration and acquisition-related compensation cash costs. During the six months ended June 30, 2024, and 2023, we incurred the following cash expenditures:

Previous wording

(1)Represents cash payments directly associated with acquisition or disposal activities, including employee severance and termination benefits, contract termination fees and penalties, and other exit or disposal costs. For the three months ended March 31, 2024, these payments related primarily to obsolete software purchase commitments, Waltham sublease cost and Israel lease impairment charges. For the three months ended March 31, 2023, these payments related primarily to legal costs paid related to 2021 and 2022 acquisitions and Waltham sublease cost.

Current wording

(1)Represents cash payments directly associated with acquisition or disposal activities, including employee severance and termination benefits, contract termination fees and penalties, and other exit or disposal costs. For the six months ended June 30, 2024, these payments related primarily to obsolete software purchase commitments, Waltham sublease cost and various lease impairment charges. For the six months ended June 30, 2023, these payments related primarily to legal costs paid related to 2021 and 2022 acquisitions and Waltham sublease cost.

Previous wording

(2)Represents cash payments directly associated with integration activities for acquisitions and acquisition-related compensation, which includes transaction bonuses and retention awards. For the three months ended March 31, 2024, these payments related to deferred compensation from the acquisition of Insent.

Current wording

(2)Represents cash payments directly associated with integration activities for acquisitions and acquisition-related compensation, which includes transaction bonuses and retention awards. For the six months ended June 30, 2024, these payments related to deferred compensation from the acquisition of Insent. For the six months ended June 30, 2023, these payments related to retention compensation from the Insent acquisition.

Previous wording

(3)Represents cash payments associated with legal settlements and associated legal fees. For the three months ended March 31, 2024, these payments related to legal costs incurred due to the Class Actions. See Note 9 - Commitments and Contingencies for further information.

Current wording

(3)Represents cash payments associated with legal settlements and associated legal fees. For the six months ended June 30, 2024, these payments related to legal costs incurred due to the Class Actions. See Note 9 - Commitments and Contingencies for further information.

Previous wording

Net cash provided by investing activities for the three months ended March 31, 2024 was $35.4 million, consisting of maturities of short-term investments of $48.2 million, partially offset by purchases of property and equipment and other assets of $12.8 million.

Current wording

Net cash provided by investing activities for the six months ended June 30, 2024 was $44.6 million, primarily consisting of maturities of short-term investments of $69.0 million, partially offset by purchases of property and equipment and other assets of $23.9 million.

Previous wording

Net cash used in investing activities for the three months ended March 31, 2023 was $19.6 million, consisting of purchases of short-term investments of $63.6 million, purchases of property and equipment and other assets of $6.4 million, partially offset by maturities of short-term investments of $50.4 million.

Current wording

Net cash used in investing activities for the six months ended June 30, 2023 was $33.0 million, consisting of purchases of short-term investments of $114.7 million, purchases of property and equipment and other assets of $12.6 million, offset by maturities of short-term investments of $94.3 million.

Previous wording

Net cash used in financing activities for the three months ended March 31, 2024 was $192.7 million and comprised of payments relating to the repurchase of common stock of $151.0 million, TRA payments of $31.6 million, payments of taxes related to net share settlement of equity awards of $7.1 million, repayment of debt of $1.5 million, payments of debt issuance and modification costs of $0.8 million, and payments of deferred consideration of $0.7 million.

Current wording

Net cash used in financing activities for the six months ended June 30, 2024 was $348.2 million and comprised of payments relating to the repurchase of common stock of $299.2 million, TRA payments of $31.6 million, payments of taxes related to net share settlement of equity awards of $14.6 million, repayment of debt of $3.0 million, payments of debt issuance and modification costs of $1.9 million, and payments of deferred consideration of $0.7 million, partially offset by proceeds from issuance of common stock under the employee stock purchase plan of $2.8 million.