ZoomInfo Technologies Inc.

Previous wording

ZoomInfo is a global leader in modern go-to-market software, data, and intelligence for sales, marketing, operations, and recruiting teams. Our cloud-based platform delivers comprehensive and high-quality intelligence and analytics to provide sales, marketing, operations, and recruiting professionals accurate information and insights on the organizations and professionals they target. This enables our customers to shorten sales cycles and increase win rates by empowering sellers, marketers, and recruiters to deliver the right message to the right person at the right time in the right way.

Current wording

ZoomInfo is a global leader in modern go-to-market software, data, and intelligence for sales, marketing, operations, and recruiting teams. Our go-to-market intelligence platform empowers businesses with AI-ready insights, trusted data, and advanced automation providing sales, marketing, operations, and recruiting professionals accurate information and insights on the organizations and professionals they target. This enables our customers to shorten sales cycles and increase win rates by empowering sellers, marketers, and recruiters to efficiently deliver the right message to the right person at the right time in the right way.

Previous wording

ZoomInfo defines the modern go-to-market technology stack across three distinct layers that build upon each other:

Current wording

ZoomInfo is the modern go-to-market intelligence platform, consisting of three distinct layers that build upon each other:

Previous wording

•Our Orchestration Layer integrates and enriches our data sources. At this stage, our products assign and route data, leads, and insights to the appropriate people. This creates a dataset that is continuously updated and can be used to power automated business workflows. Our services connect with major CRM providers.

Current wording

•Our Orchestration Layer integrates and enriches our data sources. At this stage, our products assign and route data, leads, and insights to the appropriate people. This creates a dataset that is continuously updated and can be used to power automated business workflows. Our services connect with major CRM system providers enabling sales operations professionals to access a suite of products, services, and solutions to ingest, match, enrich, and connect data feeds into multiple systems.

Previous wording

•Our Engagement Layer allows sales, marketing, operations, and recruiting professionals to put data-driven insights into action to identify and communicate with prospects and customers. In ZoomInfo Sales, frontline teams, managers, and leaders use Engage for multi-touch and multi-channel sales engagement, as well as Chorus for call and web meeting recording, transcription, insight generation, and coaching. In ZoomInfo Marketing, marketers drive awareness, lead generation, and deal acceleration campaigns through account-based marketing, advertising, and onsite conversion optimization solutions, along with ZoomInfo Chat for intelligent onsite experiences through live conversation and chatbots. In ZoomInfo Talent, recruiters and talent acquisition professionals access a platform that helps them efficiently find candidates. Recruiters can filter and reach more good-fit candidates, use pipeline management tools to collaborate and organize the hiring process, and automate the candidate outreach process. In ZoomInfo Operations, our sales operations customers use a suite of products, services, and solutions to ingest, match, enrich, and connect data feeds into multiple systems.

Current wording

•Our Engagement Layer allows sales, marketing, operations, and recruiting professionals to put data-driven insights into action to identify and communicate with prospects and customers. Go-to-market professionals use our engagement layer for multi-touch and multi-channel sales engagement, web meeting recording, transcription, insight generation, and coaching. Marketers drive awareness, lead generation, and deal acceleration campaigns through account-based marketing, advertising, and onsite conversion optimization solutions including chat functionality. Recruiters and talent acquisition professionals can locate and reach more better suited candidates, use pipeline management tools to collaborate and organize the hiring process, and automate aspects of the candidate outreach process by more efficiently finding and engaging candidates.

Previous wording

We generate substantially all of our revenue from sales of subscriptions to our platform. Subscriptions include the use of our platform and access to customer support. Subscriptions generally range from one to three years in length. Over 45% of customer contracts (based on annualized value) are multi-year agreements. We typically bill our customers at the beginning of each annual, semi-annual, or quarterly period and recognize revenue ratably over the term of the subscription period.

Current wording

We generate substantially all of our revenue from sales of subscriptions to our platform. Subscriptions include the use of our platform and access to customer support. Subscriptions generally range from one to three years in length. About 49% of customer contracts (based on annualized value) are multi-year agreements. We typically bill our customers at the beginning of each annual, semi-annual, or quarterly period and recognize revenue ratably over the term of the subscription period.

Previous wording

We sell access to our platform to both new and existing customers. We price our subscriptions based on the functionality, users, and records under management that are included in each product edition. Our paid products are ZoomInfo Sales, ZoomInfo Marketing, ZoomInfo Operations, and ZoomInfo Talent (with add-on options for some products). Additionally, customers can gain free access to ZoomInfo through ZoomInfo Lite (formerly Community Edition).

Current wording

We sell access to our platform to both new and existing customers. We price our subscriptions based on the functionality, users, and records under management that are included in each product edition. Our core paid products are ZoomInfo Copilot, ZoomInfo Sales, ZoomInfo Marketing, ZoomInfo Operations, and ZoomInfo Talent (with add-on options for some products), and we have a free community edition, ZoomInfo Lite.

Previous wording

Our business and financial condition have and may continue to be impacted by adverse macroeconomic conditions. See “Risk Factors - Geopolitical Risks” in Part I, Item 1A of our 2023 Form 10-K for further discussion of the possible impact of these issues on our business.

Current wording

Our business and financial condition have and may continue to be impacted by adverse macroeconomic conditions. See “Risk Related to Geopolitical and Macroeconomic Factors” in Part I, Item 1A of our 2024 Form 10-K for further discussion of the possible impact of these issues on our business.

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 September 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." Over the long term, we expect our net revenue retention rate to be influenced by our ability to move upmarket, as larger customers have historically exhibited higher net revenue retention. 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 September 30, 2024, we had 1,809 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 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 87% and 85% as of March 31, 2025 and 2024, respectively. In the near term, we expect our net retention rate to be impacted by macroeconomic conditions. See the caption above entitled “—Recent Developments — Impact of Macroeconomic Conditions.” Over the long term, we expect our net revenue retention rate to be influenced by our ability to move upmarket, as larger customers have historically exhibited higher net revenue retention. 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, 2025 and 2024 our customers with over $100,000 in ACV was 1,868 and 1,760, respectively.

Previous wording

Our historical results of operations are not comparable from period to period and may not be comparable to our financial results of operations in future periods. Set forth below is a brief discussion of the key factor impacting the comparability of our results of operations.

Current wording

Our historical results of operations are not comparable from period to period and may not be comparable to our financial results of operations in future periods. Set forth below is a brief discussion of the key factors impacting the comparability of our results of operations.

Previous wording

As a result, we recorded an incremental charge during the second quarter of 2024 impacting our reported Revenue and General and administrative expenses. The charge represents a revision to our reserves for uncollectible accounts receivable, made up primarily of historical transactions with our SMB customers from 2023.

Current wording

As a result, we recorded an incremental charge during the second quarter of 2024 impacting our reported Revenue and General and administrative expenses. The charge represents a revision to our reserves for uncollectible accounts receivable, made up primarily of historical transactions with our SMB customers.

Previous wording

Cost of service, excluding amortization of acquired technology. Cost of service, excluding amortization of acquired technology, includes direct expenses related to the support and operations of our services and research teams including salaries, benefits, equity-based compensation, and related expenses, such as employer taxes, allocated overhead for facilities, technology, third-party hosting fees, third-party data costs, and amortization of internally developed capitalized software.

Current wording

Cost of service. Cost of service includes direct expenses related to the support and operations of our services and research teams including salaries, benefits, equity-based compensation, and related expenses, such as employer taxes, allocated overhead for facilities, technology, third-party hosting fees, third-party data costs, and amortization of internally developed capitalized software.

Previous wording

Gross profit is revenue less cost of service, and gross margin is gross profit as a percentage of revenue. Gross profit has been and will continue to be affected by various factors, including leveraging economies of scale, the costs associated with third-party hosting services and third-party data, the level of amortization of acquired technology, and the extent to which we expand our customer support and research organizations. We expect that our gross margin will fluctuate from period to period depending on the interplay of these various factors.

Current wording

Gross profit is revenue less cost of revenue, and gross margin is gross profit as a percentage of revenue. Gross profit has been and will continue to be affected by various factors, including leveraging economies of scale, the costs associated with third-party hosting services and third-party data, the level of amortization of acquired technology, and the extent to which we expand our customer support and research organizations. We expect that our gross margin will fluctuate from period to period depending on the interplay of these various factors.

Previous 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.

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 of our unaudited consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information.

Previous wording

We anticipate that we will continue to invest in sales and marketing capacity to enable future growth. We anticipate that sales and marketing expense excluding equity-based compensation as a percentage of revenue will fluctuate from period to period depending on the interplay of our growing investments in sales and marketing capacity excluding equity-based compensation, the recognition of revenue, and the amortization of contract acquisition costs.

Current wording

We anticipate that we will continue to invest in sales and marketing capacity to enable future growth. We anticipate that sales and marketing expense excluding equity-based compensation as a percentage of revenue will fluctuate from period to period depending on the interplay of our growing investments in sales and marketing capacity excluding equity-based compensation, the recognition of revenue, and the amortization of deferred commissions costs.

Previous wording

Research and development. Research and development expenses support our efforts to enhance our existing platform and develop new software products. Research and development expenses primarily consist of employee compensation such as salaries, bonuses, equity-based compensation, and other employee-related benefits for our engineering and product management teams, as well as overhead costs. Research and development expenses do not reflect amortization of internally developed capitalized software. We believe that our core technologies and ongoing innovation represent a significant competitive advantage for us.

Current wording

Research and development. Research and development expenses support our efforts to enhance our existing platform and develop new software products. Research and development expenses primarily consist of employee compensation such as salaries, bonuses, equity-based compensation, and other employee-related benefits for our engineering and product management teams, as well as overhead costs, and technology. Research and development expenses do not reflect amortization of internally developed capitalized software. We believe that our core technologies and ongoing innovation represent a significant competitive advantage for us.

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. General and administrative expenses also include restructuring and transaction-related expenses, such as 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.

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 restructuring and transaction-related expenses, such as impairment charges associated with our leasing activity. We also incur charges associated with litigation settlements, such as the settlement of the Class Action (as defined in the Company’s 2024 Form 10-K), which are presented within General and administrative on the Consolidated Statements of Operations.

Previous 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.

Current wording

Other loss, net consists primarily of the remeasurement of TRA liabilities, investment income, and 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 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 for income taxes section below for further information.

Current wording

Changes to existing tax law, including changes to corporate income tax rates or the Company’s state tax footprint could lead to substantial remeasurement of the TRA liability recorded through Other loss, net. Additionally, the magnitude of Other loss, 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 regarding remeasurement of TRA liability and deferred tax assets.

Previous wording

The Company recognizes deferred tax assets and liabilities based on temporary differences between the financial statement and tax basis of assets and liabilities, as well as from net operating loss and tax credit carryforwards. We evaluate the recoverability of these future deductible temporary differences, net operating losses and credits by assessing the carryforward period and adequacy of future expected taxable income from all sources, including reversing taxable temporary differences, future growth, and forecasted earnings, as well as historical earnings, taxable income in prior years, if carryback is permitted under the law, and prudent and feasible tax planning strategies. A valuation allowance is established if it is more likely than not that all or a portion of the deferred tax asset will not be realized.

Current wording

The Company recognizes deferred tax assets and liabilities based on temporary differences between the financial statement and tax basis of assets and liabilities, as well as from net operating loss and tax credit carryforwards. We evaluate the recoverability of these future deductible temporary differences, net operating losses and credits by assessing the carryforward period and adequacy of future expected taxable income from all sources, including reversing taxable temporary differences, future growth, and forecasted earnings, as well as historical earnings, taxable income in prior years, whether carryback is permitted under the law, and prudent and feasible tax planning strategies. A valuation allowance is established only if it is more likely than not that all or a portion of the deferred tax asset will not be realized.

Previous wording

The Company has significant U.S. deferred tax assets, including deferred tax assets created by various historical restructuring events. The preponderance of our deferred tax assets have long lives or are otherwise indefinite. We regularly review whether it is more likely than not that our U.S. deferred tax assets will be realizable. As of September 30, 2024, a valuation allowance continues to be recorded against certain state-level attributes.

Current wording

The Company has significant U.S. federal and state deferred tax assets, including deferred tax assets created by various historical restructuring events. The preponderance of our deferred tax assets have long lives or are otherwise indefinite. We regularly review whether it is more likely than not that our deferred tax assets will be realizable. As of March 31, 2025, a valuation allowance continues to be recorded against certain state-level attributes.

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 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 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, 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 for income taxes. We recognize the tax benefit of an uncertain tax position only if it is more likely than not the position will be 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.

Previous wording

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

Current wording

The following table presents our results of operations for the three months ended March 31, 2025 and 2024:

Previous wording

Revenue. Revenue was $303.6 million for the three months ended September 30, 2024, a decrease of $10.2 million, or 3%, as compared to $313.8 million for the three months ended September 30, 2023. The decrease was primarily due to elevated write-off levels resulting from the operational changes implemented during the second quarter of 2024. Refer to the Factors Affecting the Comparability of Our Results of Operations section above.

Current wording

Revenue. Revenue was $305.7 million for the three months ended March 31, 2025, a decrease of $4.4 million, or 1%, as compared to $310.1 million for the three months ended March 31, 2024. The decrease was primarily due to the effects of the operational changes implemented during the second quarter of 2024. Refer to the “Factors Affecting the Comparability of Our Results of Operations” section above.

Previous wording

Gross profit. Gross profit for three months ended September 30, 2024 was $256.3 million and represented a gross margin of 84%. Gross profit for three months ended September 30, 2023 was $269.0 million and represented a gross margin of 86%. The decrease in gross profit in the three months ended September 30, 2024 relative to the three months ended September 30, 2023 was $12.7 million, or 5%, primarily due to lower revenues, as described above, increased lease restructuring activities and increased amortization expense on internally developed capitalized software.

Current wording

Gross profit. Gross profit for the three months ended March 31, 2025 was $258.4 million and represented a gross margin of 85%. Gross profit for the three months ended March 31, 2024 was $266.7 million and represented a gross margin of 86%. The decrease in gross profit in the three months ended March 31, 2025 relative to the three months ended March 31, 2024 was $8.3 million, or 3%, primarily due to lower revenues, as described above, increased depreciation expense on internally developed capitalized software, and increased hosting fees.

Previous wording

Operating expenses. Operating expenses were $212.8 million for the three months ended September 30, 2024, an increase of $6.9 million, or 3%, as compared to $205.9 million for the three months ended September 30, 2023. Excluding equity-based compensation expense, operating expenses were $178.9 million for the three months ended September 30, 2024, an increase of $11.6 million, or 7%, as compared to $167.3 million for the three months ended September 30, 2023.

Current wording

Operating expenses. Operating expenses were $208.1 million for the three months ended March 31, 2025, a decrease of $15.6 million, or 7%, as compared to $223.7 million for the three months ended March 31, 2024. Excluding equity-based compensation expense, operating expenses were $181.3 million for the three months ended March 31, 2025, a decrease of $13.7 million, or 7%, as compared to $195.0 million for the three months ended March 31, 2024.

Previous wording

•Sales and marketing for the three months ended September 30, 2024 was $99.1 million, representing a decrease of $3.3 million, or 3%, as compared to $102.4 million for the three months ended September 30, 2023. Sales and marketing, excluding equity-based compensation expense, for the three months ended September 30, 2024 was $86.8 million, representing an increase of $1.9 million, or 2%, as compared to $84.9 million for the three months ended September 30, 2023, primarily due to charges incurred related to lease restructuring activities, partially offset by decreased compensation costs.

Current wording

•Sales and marketing for the three months ended March 31, 2025 was $106.0 million, representing an increase of $6.4 million, or 6%, as compared to $99.6 million for the three months ended March 31, 2024. Sales and marketing, excluding equity-based compensation expense, for the three months ended March 31, 2025 was $94.6 million, representing an increase of $6.8 million, or 8%, as compared to $87.8 million for the three months ended March 31, 2024, primarily due to increased employee compensation costs, employee benefit costs, and facilities expenses, partially offset by decreased marketing costs.

Previous wording

•Research and development for the nine months ended September 30, 2024 was $139.7 million representing a decrease of $3.5 million, or 2%, as compared to $143.2 million for the nine months ended September 30, 2023. Research and development, excluding equity-based compensation expense, for the nine months ended September 30, 2024 was $110.2 million, an increase of $1.0 million, or 1%, compared to $109.2 million for the nine months ended September 30, 2023.

Current wording

•Research and development for the three months ended March 31, 2025 was $51.1 million representing an increase of $7.4 million, or 17%, as compared to $43.7 million for the three months ended March 31, 2024. Research and development, excluding equity-based compensation expense, for the three months ended March 31, 2025 was $42.5 million, representing an increase of $7.6 million, or 22%, as compared to $34.9 million for the three months ended March 31, 2024, primarily due to increased employee compensation costs, employee benefit costs, severance costs, facilities, and depreciation expense.

Previous wording

•General and administrative for the three months ended September 30, 2024 was $60.6 million representing an increase of $10.1 million, or 20%, as compared to $50.5 million for the three months ended September 30, 2023. General and administrative, excluding equity-based compensation expense, for the three months ended September 30, 2024 was $49.5 million, representing an increase of $8.4 million, or 20%, as compared to $41.1 million for the three months ended September 30, 2023, primarily due to charges incurred related to lease impairment and lease restructuring activities, as well as increased compensation costs.

Current wording

•General and administrative for the three months ended March 31, 2025 was $45.8 million representing a decrease of $29.3 million, or 39%, as compared to $75.1 million for the three months ended March 31, 2024. General and administrative, excluding equity-based compensation expense, for the three months ended March 31, 2025 was $39.0 million, representing a decrease of $28.0 million, or 42%, as compared to $67.0 million for the three months ended March 31, 2024, primarily due to the charges related to Class Actions in the prior period as well as lower bad debt expense, partially offset by increased employee compensation costs, employee benefit costs, technology expenses, severance costs, and facilities expenses.

Previous wording

•Amortization of other acquired intangibles was $5.4 million for the three months ended September 30, 2024, flat as compared to $5.4 million for the three months ended September 30, 2023.

Current wording

•Amortization of other acquired intangibles was $5.2 million for the three months ended March 31, 2025, relatively flat as compared to $5.3 million for the three months ended March 31, 2024.

Previous wording

Equity-based compensation expense. Equity-based compensation expense was $36.6 million for the three months ended September 30, 2024, a decrease of $6.3 million, or 15%, as compared to $42.9 million for the three months ended September 30, 2023, due to lower weighted average grant date fair values of grants being amortized in the current period compared to those that were amortized in the prior year and higher capitalization of equity-based compensation, partially offset by decreased termination expense reversals.

Current wording

Equity-based compensation expense. Equity-based compensation expense was $29.6 million for the three months ended March 31, 2025, a decrease of $1.6 million, or 5%, as compared to $31.2 million for the three months ended March 31, 2024, due to lower weighted average grant date fair values of grants being amortized in the current period compared to those that were amortized in the prior period, and increased termination expense reversals, partially offset by increased amortization of expenditures for internal use developed software which were previously capitalized.

Previous wording

Income from operations. Income from operations was $43.5 million for the three months ended September 30, 2024, a decrease of $19.6 million, or 31%, as compared to income from operations of $63.1 million for the three months ended September 30, 2023. The decrease is primarily due to charges incurred related to lease impairment and lease restructuring activities and the lower revenue as described above. Operating income margin was 14% for three months ended September 30, 2024 as compared to operating income margin of 20% for the three months ended September 30, 2023.

Current wording

Income from operations. Income from operations was $50.3 million for the three months ended March 31, 2025, an increase of $7.3 million, or 17%, as compared to income from operations of $43.0 million for the three months ended March 31, 2024. The increase is primarily due to charges related to the Class Actions in the prior period as well as lower bad debt expense, partially offset by lower revenues, increased employee compensation and benefit costs, increased facilities costs, increased severance costs, and increased hosting and contractor expenses. Operating income margin was 16% for the three months ended March 31, 2025 as compared to operating income margin of 14% for the three months ended March 31, 2024.

Previous wording

Interest expense, net. Interest expense, net was $9.6 million for the three months ended September 30, 2024, a decrease of $2.3 million, or 19%, as compared to $11.9 million for the three months ended September 30, 2023, primarily due to both lower interest rates and higher interest income.

Current wording

Interest expense, net. Interest expense, net was $9.8 million for the three months ended March 31, 2025, a decrease of $0.3 million, or 3%, as compared to $10.1 million for the three months ended March 31, 2024, primarily due to lower interest rates partially offset by lower interest income.

Previous wording

Other income, net. Other income, net was $1.0 million for the three months ended September 30, 2024, which primarily consists of $2.2 million of investment income partially offset by $0.7 million of TRA remeasurement loss, as compared to other income of $8.0 million for the three months ended September 30, 2023, which primarily consists of $6.7 million of investment income.

Current wording

Other loss, net. Other loss, net was $0.9 million for the three months ended March 31, 2025, which consists of $1.2 million of TRA remeasurement loss, partially offset by $0.2 million of gain on foreign currency transactions and $0.1 million of investment income, as compared to other loss, net of $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.

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 September 30, 2024 was $11.1 million, representing an effective tax rate of 31.7%, as compared to provision for income taxes of $29.0 million, representing an effective tax rate of 49.0%, for the three months ended September 30, 2023. The effective tax rate differed from the U.S. federal statutory rate of 21.0% due to non-deductible equity compensation costs, U.S. state taxes, foreign taxes, 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 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, 2025 was $12.8 million, representing an effective tax rate of 32.2%, as compared to provision for income taxes of $14.4 million, representing an effective tax rate of 48.8%, for the three months ended March 31, 2024. The effective tax rate differed from the U.S. federal statutory rate of 21.0% due to non-deductible equity compensation costs, U.S. state taxes, foreign taxes, partially offset by research and development credits.

Previous wording

We define Adjusted Operating Income as income (loss) from operations adjusted for, as applicable, (i) the impact of fair value adjustments to acquired unearned revenue, (ii) amortization of acquired technology and other acquired intangibles, (iii) equity-based compensation expense, (iv) restructuring and transaction-related expenses, (v) integration costs and acquisition-related expenses, and (vi) legal settlement. We exclude the impact of fair value adjustments to acquired unearned revenue and amortization of acquired technology and other acquired intangibles, as well as equity-based compensation, because these are non-cash expenses or non-cash fair value adjustments and we believe that excluding these items provides meaningful supplemental information regarding performance and ongoing cash-generation potential. We exclude restructuring and transaction-related expenses, as well as integration costs and acquisition-related compensation, because such expenses are episodic in nature and have no direct correlation to the cost of operating our business on an ongoing basis. We have also excluded charges associated with the litigation settlement related to the Class Actions previously disclosed because we believe it represents an extraordinary litigation expense outside of our ordinary course of business and is not indicative of our operative performance. Adjusted Operating 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 Operating Income should not be considered as an alternative to operating income as an indicator of operating performance.

Current wording

We define Adjusted Operating Income as income (loss) from operations adjusted for, as applicable, (i) amortization of acquired technology and other acquired intangibles, (ii) equity-based compensation expense, (iii) restructuring and transaction-related expenses, (iv) integration costs and acquisition-related expenses, (v) and legal settlement. We exclude the impact of amortization of acquired technology and other acquired intangibles, as well as equity-based compensation expense, because these are non-cash expenses and we believe that excluding these items provides meaningful supplemental information regarding performance and ongoing cash-generation potential. We exclude restructuring and transaction-related expenses, as well as integration costs and acquisition-related compensation, because such expenses are episodic in nature and have no direct correlation to the cost of operating our business on an ongoing basis. We have also excluded charges associated with litigation settlements related to class actions because we believe it represents an extraordinary litigation expense outside of our ordinary course of business and is not indicative of our operative performance. Adjusted Operating 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. We define Adjusted Operating Income Margin as Adjusted Operating Income divided by revenue.

Previous wording

Adjusted Operating Income for the three months ended September 30, 2024 was $111.7 million and represented an Adjusted Operating Income Margin of 37%. Adjusted Operating Income for the three months ended September 30, 2023 was $126.2 million and represented an Adjusted Operating Income Margin of 40%. The decrease of $14.5 million, or 11%, in Adjusted Operating Income was primarily due to the lower revenues in the current period as described above.

Current wording

Adjusted Operating Income for the three months ended March 31, 2025 was $100.9 million and represented an Adjusted Operating Income Margin of 33%. Adjusted Operating Income for the three months ended March 31, 2024 was $119.4 million and represented an Adjusted Operating Income Margin of 39%. The decrease of $18.5 million, or 15%, in Adjusted Operating Income was primarily due to the increased employee compensation costs, employee benefit costs, technology expenses, facilities expenses, and lower revenue partially offset by lower bad debt expense and marketing expenses.

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, (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.

Current wording

We define Adjusted Net Income as net income (loss) adjusted for, as applicable, (i) loss on debt modification and extinguishment, (ii) amortization of acquired technology and other acquired intangibles, (iii) equity-based compensation expense, (iv) restructuring and transaction-related expenses, (v) integration costs and acquisition-related expenses, (vi) legal settlement, (vii) TRA liability remeasurement (benefit) expense, (viii) other (income) loss, net 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.

Previous wording

Adjusted Net Income for the three months ended September 30, 2024 was $103.7 million compared to $105.0 million, representing a decrease of $1.3 million, or 1%, relative to the three months ended September 30, 2023. This decrease was primarily due to the lower Adjusted Operating Income in the current period as described above, mostly offset by the decrease in tax expense.

Current wording

Adjusted Net Income for the three months ended March 31, 2025 was $81.9 million compared to $100.5 million, representing a decrease of $18.6 million, or 18%, relative to the three months ended March 31, 2024. This decrease was primarily due to the lower Adjusted Operating Income in the current period as described above, partially offset by the decrease in tax expense.

Previous wording

EBITDA is defined as earnings before interest, taxes, depreciation, and amortization. Management further adjusts EBITDA to exclude certain items of a significant or unusual nature, as applicable, including other (income) expense, net, loss on debt modification and extinguishment, impact of certain non-cash items, such as fair value adjustments to acquired unearned revenue and equity-based compensation, restructuring and transaction-related expenses, integration costs and acquisition-related compensation, and legal settlement. We exclude these items because these are non-cash expenses or non-cash fair value adjustments, which we do not consider indicative of performance and ongoing cash-generation potential or are episodic in nature and have no direct correlation to the cost of operating our business on an ongoing basis. Adjusted EBITDA 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 EBITDA 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

EBITDA is defined as earnings before interest, taxes, depreciation, and amortization. Management further adjusts EBITDA to exclude certain items of a significant or unusual nature, including, as applicable, other (income) expense, net, loss on debt modification and extinguishment, impact of certain non-cash items, such as equity-based compensation expense, restructuring and transaction-related expenses, integration costs and acquisition-related expenses, and litigation settlement. We exclude these items because these are either non-cash expenses which we do not consider indicative of performance and ongoing cash-generation potential or are episodic in nature and have no direct correlation to the cost of operating our business on an ongoing basis. Adjusted EBITDA 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 EBITDA 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.