ZoomInfo Technologies Inc.

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such difference include, but are not limited to, those identified below and those discussed in the sections titled “Cautionary Statement Regarding Forward-Looking Statements” and “Risk Factors” included elsewhere in this Annual Report on Form 10-K.

Current wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and related notes included elsewhere in this Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such difference include, but are not limited to, those identified below and those discussed in the sections titled “Cautionary Statement Regarding Forward-Looking Statements” and “Risk Factors” included elsewhere in this Form 10-K.

Previous wording

Numerical figures included in this Annual Report on Form 10-K are subject to immaterial rounding adjustments. Accordingly, numerical figures shown as totals in various tables may not be arithmetic aggregations of the figures that precede them.

Current wording

Numerical figures included in this Form 10-K are subject to immaterial rounding adjustments. Accordingly, numerical figures shown as totals in various tables may not be arithmetic aggregations of the figures that precede them.

Previous 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.

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, agent-assisted selling 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

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 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.

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 53% 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 our contracts. 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.

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 software, insights, and data enable over 35,000 companies to go-to-market more effectively and efficiently. Our customers are primarily businesses that sell to other businesses and operate in almost every industry vertical. They range from the largest global enterprises, to mid-market companies, down to small businesses. The top five industries that we serve, as measured by ACV, on December 31, 2024 are software, which comprised 32% of ACV (compared to 33% a year prior), non-IT business services, which comprised 20% of ACV (compared to 18% a year prior), IT business services, which comprised 8% of ACV (compared to 10% a year prior), financial, insurance & real estate, which comprised 8% of ACV (compared to 8% a year prior), and manufacturing, which comprised 6% of ACV (compared to 5% a year prior).

Current wording

Our software, insights, and data enable over 35,000 companies to go-to-market more effectively and efficiently. Our customers are primarily businesses that sell to other businesses and operate in almost every industry vertical. They range from the largest global enterprises, to mid-market companies, down to small businesses. The top five industries that we serve, as measured by ACV, as of December 31, 2025 are software, which comprised 32% of ACV (compared to 32% a year prior), non-IT business services, which comprised 18% of ACV (compared to 20% a year prior), IT business services, which comprised 8% of ACV (compared to 8% a year prior), financial, insurance & real estate, which comprised 9% of ACV (compared to 8% a year prior), and manufacturing, which comprised 7% of ACV (compared to 6% a year prior).

Previous wording

For the year ended December 31, 2024, no single customer contributed more than 10% of revenue. Revenues derived from customers and partners located outside the United States, as determined based on the address provided by our customers and partners, accounted for approximately 12%, 13%, and 12% of total revenue for the years ended December 31, 2024, 2023, and 2022, respectively. As of December 31, 2024, 1,867 customers contracted for more than $100,000 in ACV for ZoomInfo services.

Current wording

For the year ended December 31, 2025, no single customer contributed more than 10% of revenue. Revenues derived from customers and partners located outside the United States, as determined based on the address provided by our customers and partners, accounted for approximately 12%, 12%, and 13% of total revenue for the years ended December 31, 2025, 2024, and 2023, respectively. As of December 31, 2025 and 2024, our number of customers with over $100,000 in ACV was 1,921 and 1,867, respectively.

Previous wording

We generated revenue of $1,214.3 million for the year ended December 31, 2024, as compared to revenue for the year ended December 31, 2023 of $1,239.5 million, and GAAP income from operations of $97.4 million for the year ended December 31, 2024, as compared to GAAP income from operations of $259.5 million for the year ended December 31, 2023. GAAP operating income margin was 8% for the year ended December 31, 2024, as compared to 21% in 2023. GAAP net income for the year ended December 31, 2024 was $29.1 million, as compared to GAAP net income of $107.3 million for the year ended December 31, 2023. In addition to our consolidated U.S. GAAP financial measures, we review various non-GAAP financial measures, including Adjusted Operating Income, Adjusted Operating Income Margin, and Adjusted Net Income. See “Non-GAAP Financial Measures” below. Our Adjusted Operating Income was $428.5 million for the year ended December 31, 2024, as compared to $498.6 million for the year ended December 31, 2023. Our Adjusted Operating Income Margin was 35% for the year ended December 31, 2024, as compared to 40% in 2023. Adjusted net income was $363.8 million for the year ended December 31, 2024, as compared to $413.1 million for the year ended December 31, 2023. See “Non-GAAP Financial Measures” below for definitions.

Current wording

We generated revenue of $1,249.5 million for the year ended December 31, 2025, as compared to revenue for the year ended December 31, 2024 of $1,214.3 million, and GAAP income from operations of $225.7 million for the year ended December 31, 2025, as compared to GAAP income from operations of $97.4 million for the year ended December 31, 2024. GAAP operating income margin was 18% for the year ended December 31, 2025, as compared to 8% for the year ended December 31, 2024. GAAP net income for the year ended December 31, 2025 was $124.2 million, as compared to GAAP net income of $29.1 million for the year ended December 31, 2024. In addition to our consolidated U.S. GAAP financial measures, we review various non-GAAP financial measures, including Adjusted Operating Income, Adjusted Operating Income Margin, and Adjusted Net Income. See “Non-GAAP Financial Measures” below for definitions. Our Non-GAAP Adjusted Operating Income was $445.9 million for the year ended December 31, 2025, as compared to $428.5 million for the year ended December 31, 2024. Our Non-GAAP Adjusted Operating Income Margin was 36% for the year ended December 31, 2025, as compared to 35% in 2024. Non-GAAP Adjusted Net Income was $369.2 million for the year ended December 31, 2025, as compared to $363.8 million for the year ended December 31, 2024.

Previous wording

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

Previous wording

See Note 11 - Stockholders' Equity of our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K for further information.

Current wording

In February 2025, our board of directors authorized an additional $500.0 million in repurchases under the Share Repurchase Program. See Note 10 - Stockholders' Equity of our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K for further information.

Previous wording

We are focused on continuing to grow the number of customers using our platform in the United States and around the world, and efficiently transacting with those customers. Acquiring new customers while optimizing the profile of those customers and the go-to-market channels we use to attract these customers will play a part in determining our operating results and growth prospects in the future. Acquiring new customers also strengthens the power of our contributory networks. We plan to continue to invest in our efficient go-to-market effort to expand our customer base. As of December 31, 2024, 2023 and 2022, we had over 35,000, 35,000, and 30,000 customers, respectively. We define a customer as a company that maintains one or more active paid subscriptions to our platform.

Current wording

We are focused on continuing to grow the number of customers using our platform in the United States and around the world, and efficiently transacting with those customers. Acquiring new customers while optimizing the profile of those customers and the go-to-market channels we use to attract these customers will play a part in determining our operating results and growth prospects in the future. Acquiring new customers also strengthens the power of our contributory networks. We plan to continue to invest in our efficient go-to-market effort to expand our customer base. As of December 31, 2025, 2024 and 2023, we had over 35,000 customers. We define a customer as a company that maintains one or more active paid subscriptions to our platform.

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 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 annual retention rate was 87% and 87% as of December 31, 2024 and 2023, 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 December 31, 2024, 2023 and 2022, our customers with over $100,000 in ACV was 1,867, 1,820, and 1,926, respectively.

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 90% and 87% as of December 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 $100,000 or greater in ACV. As of December 31, 2025, 2024 and 2023, our customers with $100,000 or greater in ACV was 1,921, 1,867, and 1,820, respectively. Customers with $100,000 or greater in ACV comprised over 50% of total Company ACV as of December 31, 2025.

Previous wording

During the second quarter of 2024, we deployed a new business risk model to flag and require upfront pre-payment from prospects at the greatest risk of non-payment. This process was incorporated to mitigate the risk of future write-offs and invest in the long-term health of the Company. Concurrently, our efforts have shifted to customers more likely to pay, renew, and grow with us over time.

Current wording

During the second quarter of 2024, we deployed a new business risk model to flag and require upfront prepayment from prospects at the greatest risk of non-payment. This process was implemented to mitigate the risk of future write-offs and to invest in the long-term health of the Company. Concurrently, our efforts have shifted to customers more likely to pay, renew, and grow with us over time.

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.

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 on our Consolidated Statements of Operations. The charge represents a revision to our reserves for uncollectible accounts receivable, made up primarily of historical transactions with our SMB customers.

Previous wording

We derive primarily all of our revenue from subscription services and the remainder from recurring usage-based services and other revenue. Our subscription services consist of our SaaS applications. Pricing of our subscription contracts are generally based on the functionality provided, the number of users that access our applications, and the amount of data that the customer integrates into their systems. Our subscription contracts typically have a term ranging from one to three years and are non-cancelable. We typically bill for services in advance either annually, semi-annually, or quarterly, and we typically require payment at the beginning of each annual, semi-annual, or quarterly period.

Current wording

We derive primarily all of our revenue from subscription services and the remainder from recurring usage-based services and other revenue. Our subscription services primarily consist of our SaaS applications. Pricing of our subscription contracts are generally based on the functionality provided, the number of users that access our applications, and the amount of data that the customer integrates into their systems. Our subscription contracts typically have a term ranging from one to three years and are non-cancelable. We typically bill for services in advance either annually, semi-annually, or quarterly, and we typically require payment at the beginning of each annual, semi-annual, or quarterly period.

Previous 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.

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, amortization of internally developed capitalized software, and restructuring and transaction-related expenses.

Previous wording

We anticipate continued investment in cost of service, with cost of service as a percentage of revenue expected to remain consistent or modestly increase. This is driven by rising AI consumption costs and customer onboarding expenses as we migrate existing customers to Copilot and acquire and onboard new Copilot customers.

Current wording

We anticipate continued investment in cost of service, with cost of service as a percentage of revenue expected to slightly increase in the near term. This is driven by rising AI consumption costs and customer onboarding expenses for offerings such as ZoomInfo Copilot and ZoomInfo GTM Studio.

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 13 - Leases of our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K 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, litigation settlements, and restructuring and transaction-related expenses. We anticipate that restructuring and transaction-related expenses, including potential impairments, will be influenced by activities related to potential future acquisitions, strategic restructuring efforts, and leased spaces that we plan to sublease, which could cause these costs to vary, potentially significantly, from our historic levels.

Previous wording

Sales and marketing. Sales and marketing expenses primarily consist of employee compensation such as salaries, bonuses, sales commissions, equity-based compensation, and other employee-related benefits for our sales and marketing teams, as well as overhead costs, technology, and marketing programs. Sales commissions and related payroll taxes directly related to contract acquisition are capitalized and recognized as expenses over the estimated period of benefit.

Current wording

Sales and marketing. Sales and marketing expenses primarily consist of employee compensation such as salaries, bonuses, sales commissions, equity-based compensation, and other employee-related benefits for our sales and marketing teams, as well as overhead costs, technology, marketing programs, and restructuring and transaction-related expenses. Sales commissions and related payroll taxes directly related to contract acquisition are capitalized and recognized as expenses over the estimated period of benefit.

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 deferred commissions 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 and restructuring and transaction-related expenses as a percentage of revenue will fluctuate from period to period depending on the interplay of our investments in sales and marketing capacity, 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, 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.

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, technology, and restructuring and transaction-related expenses. 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

We anticipate that we will continue to invest in research and development in order to develop new features and functionality to drive incremental customer value in the future and that research and development expense as a percentage of revenue will modestly increase in the short-term, but will modestly decrease in the long-term as we drive efficiencies in that organization.

Current wording

We anticipate that we will continue to invest in research and development in order to develop new features and functionality to drive incremental customer value in the future and that research and development expense as a percentage of revenue in the short-term will be flat to a moderate increase, but will modestly decrease in the long-term as we drive efficiencies in that organization.

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 13 - Leases of our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K 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. Refer to Note 12 - Leases of our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K for further information. We also incur charges associated with litigation settlements, such as the settlement of 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 remeasurement of TRA liabilities, investment income, and realized and unrealized gains and losses related to the impact of transactions denominated in a foreign currency.

Current wording

Other (income) 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 or the Company’s state tax footprint could lead to substantial remeasurement 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 corporate income tax rates or the Company’s state tax footprint could lead to substantial remeasurement of the TRA liability recorded through Other (income) loss, net. Additionally, the magnitude of Other (income) 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, 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.

Current wording

The Company is subject to income taxes in the United States and various foreign jurisdictions. We recognize 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 have 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 evaluate recoverability of these deferred tax assets by assessing future expected taxable income from all sources, including reversing taxable temporary differences, forecasted and historical earnings, available carryback and carryforward periods, 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. As of December 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 loss (income), net on the Consolidated Statements of Operations.

Current wording

We regularly remeasure our deferred tax assets for statutory changes and other guidance, such as the One Big Beautiful Bill Act (OBBBA) passed on July 4, 2025, as well as changes in our state apportionment factors. Given the magnitude of our deferred tax assets, minor changes can materially affect our Provision for income taxes. Upon a remeasurement of our deferred tax assets, the TRA liability is typically concurrently remeasured with a partially offsetting impact within Other (income) 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 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 and operating results.

Current wording

We have regularly taken tax positions, including with respect to our various corporate events and restructurings, in 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 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

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

Current wording

(1)Amounts include equity-based compensation expense, as follows:

Previous wording

Revenue. Revenue was $1,214.3 million for the year ended December 31, 2024, a decrease of $25.2 million, or 2%, as compared to $1,239.5 million for the year ended December 31, 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 $1,249.5 million for the year ended December 31, 2025, an increase of $35.2 million, or 3%, as compared to $1,214.3 million for the year ended December 31, 2024. The increase 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

Cost of revenue. Cost of revenue was $189.8 million for the year ended December 31, 2024, an increase of $11.3 million, or 6%, as compared to $178.5 million for the year ended December 31, 2023. Excluding equity-based compensation expense, cost of revenue was $179.3 million for the year ended December 31, 2024, an increase of $16.5 million, or 10%, as compared to $162.8 million for the year end December 31, 2023. The increase was primarily due to charges incurred related to lease restructuring activities, depreciation expense on internally developed capitalized software, and hosting fees.

Current wording

Cost of revenue. Cost of revenue was $199.6 million for the year ended December 31, 2025, an increase of $9.8 million, or 5%, as compared to $189.8 million for the year ended December 31, 2024. Excluding equity-based compensation expense, cost of revenue was $188.5 million for the year ended December 31, 2025, an increase of $9.2 million, or 5%, as compared to $179.3 million for the year ended December 31, 2024. The increase was primarily due to hosting and infrastructure expense and depreciation expense on internally developed capitalized software, partially offset by decreased charges incurred related to lease restructuring activities.

Previous wording

Gross profit. Gross profit for the year ended December 31, 2024 was $1,024.5 million and represented a gross margin of 84%. Gross profit for the year ended December 31, 2023 was $1,061.0 million and represented a gross margin of 86%. The decrease in gross profit in the year ended December 31, 2024 relative to the year ended December 31, 2023 was a decrease of $36.5 million, or 3%. The gross profit and gross margin decline in the year ended December 31, 2024 was primarily due to lower revenues, as described above, and charges incurred related to lease restructuring activities, increased amortization expense on internally developed capitalized software, and hosting fees.

Current wording

Gross profit. Gross profit for the year ended December 31, 2025 was $1,049.9 million and represented a gross margin of 84%. Gross profit for the year ended December 31, 2024 was $1,024.5 million and represented a gross margin of 84%. The increase in gross profit in the year ended December 31, 2025 relative to the year ended December 31, 2024 was an increase of $25.4 million, or 2%. The increase in gross profit in the year ended December 31, 2025 was primarily due to increased revenues, as described above, and decreased charges related to lease restructuring activities, partially offset by the increase of hosting and infrastructure expense and depreciation expense on internally developed capitalized software.

Previous wording

Operating expenses. Operating expenses were $927.1 million for the year ended December 31, 2024, an increase of $125.6 million, or 16%, as compared to $801.5 million for the year ended December 31, 2023. Excluding equity-based compensation expense, operating expenses were $799.6 million for the year ended December 31, 2024, an increase of $150.0 million, or 23%, as compared to $649.6 million for the year ended December 31, 2023.

Current wording

Operating expenses. Operating expenses were $824.2 million for the year ended December 31, 2025, a decrease of $102.9 million, or 11%, as compared to $927.1 million for the year ended December 31, 2024. Excluding equity-based compensation expense, operating expenses were $719.1 million for the year ended December 31, 2025, a decrease of $80.5 million, or 10%, as compared to $799.6 million for the year ended December 31, 2024.

Previous wording

Equity-based compensation expense. Equity-based compensation expense was $138.0 million for the year ended December 31, 2024, a decrease of $29.6 million, or 18%, as compared to $167.6 million for the year ended December 31, 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 $116.2 million for the year ended December 31, 2025, a decrease of $21.8 million, or 16%, as compared to $138.0 million for the year ended December 31, 2024, primarily 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.

Previous wording

Income from operations. Income from operations was $97.4 million for the year ended December 31, 2024, a decrease of $162.1 million, or 62%, as compared to $259.5 million for the year ended December 31, 2023. The decrease was primarily due to lease impairment and abandonment charges, lease restructuring activities, and costs incurred related to the Class Actions, as well as the change in accounting estimate of collectability of accounts receivable. Operating income margin was 8% for the year ended December 31, 2024 as compared to 21% for the year ended December 31, 2023.

Current wording

Income from operations. Income from operations was $225.7 million for the year ended December 31, 2025, an increase of $128.3 million, or 132%, as compared to $97.4 million for the year ended December 31, 2024. The increase was primarily due to an increase in revenue and lower operating expenses, primarily driven by decreases in charges related to lease restructuring activities, charges incurred related to the Class Actions, as well as the prior year impact of the revision to reserves for uncollectible accounts receivable. Operating income margin was 18% for the year ended December 31, 2025 as compared to 8% for the year ended December 31, 2024.

Previous wording

Other loss (income), net. Other loss, net was $26.1 million for the year ended December 31, 2024 which primarily consists of the TRA remeasurement loss of $38.5 million, partially offset by investment income of $9.5 million, as compared to other income, net of $178.8 million for the year ended December 31, 2023 which primarily consists of the TRA remeasurement gain of $160.7 million and investment income of $22.0 million, partially offset by a loss on foreign currency transactions of $3.9 million.

Current wording

Other (income) loss, net. Other income, net was $11.2 million for the year ended December 31, 2025 which primarily consists of the TRA remeasurement gain of $6.9 million and investment income of $0.6 million, as compared to other loss, net of $26.1 million for the year ended December 31, 2024 which primarily consists of the TRA remeasurement loss of $38.5 million, partially offset by investment income of $9.5 million.

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 year ended December 31, 2024 was $2.2 million, representing an effective tax rate of 7.2%, as compared to provision for income taxes of $281.5 million, representing an effective tax rate of 72.4%, for the year ended December 31, 2023. The decrease in income tax expense was primarily due to remeasurement of the deferred tax assets resulting from state tax law and apportionment changes and reduction in income before income taxes. The effective tax rate differed from the U.S. statutory rate of 21% due to the remeasurement of deferred tax assets for the effect of state tax law and apportionment changes and research and development tax credits, partially offset by non-deductible equity-based compensation expense, shortfalls in tax-deductible equity compensation compared to amounts recognized in our financial accounts, U.S. state taxes and valuation allowance established over certain state tax attributes. Refer to Note 17 - Income Taxes of our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K for additional information.

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 year ended December 31, 2025 was $70.1 million, representing an effective tax rate of 36.1%, as compared to a provision for income taxes of $2.2 million, representing an effective tax rate of 7.2%, for the year ended December 31, 2024. The increase in income tax expense was primarily due to the remeasurement of the deferred tax assets resulting from state tax law and apportionment changes and an increase in income before income taxes. The effective tax rate differed from the U.S. statutory rate of 21% primarily due to shortfalls in tax-deductible equity compensation compared to amounts recognized in our financial statements and U.S. state taxes, including the remeasurement of deferred tax assets for the effect of state tax law and apportionment changes, partially offset by research and development tax credits. Refer to Note 16 - Income Taxes of our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K for additional information.

Previous wording

Net income. Net income was $29.1 million for the year ended December 31, 2024, a decrease of $78.2 million or 73%, as compared to $107.3 million for the year ended December 31, 2023. The decrease was primarily due to lease impairment and abandonment charges, lease restructuring activities, charges incurred related to the Class Actions, and impacts resulting from revising our estimates of collectability of accounts receivable.

Current wording

Net income. Net income was $124.2 million for the year ended December 31, 2025, an increase of $95.1 million or 327%, as compared to $29.1 million for the year ended December 31, 2024. The increase was primarily due to the increase in revenue and lower operating expense, primarily driven by decreases in charges related to lease restructuring activities, charges incurred related to the Class Actions, as well as the prior year impact of the revision to reserves for uncollectible accounts receivable.

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 expense, 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 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 the sum of revenue and the impact of fair value adjustments to acquired unearned revenue.

Current 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) litigation 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 expense, 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 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 the sum of revenue and the impact of fair value adjustments to acquired unearned revenue.

Previous wording

Adjusted Operating Income for the year ended December 31, 2024 was $428.5 million and represented an Adjusted Operating Income Margin of 35%. Adjusted Operating Income for the year ended December 31, 2023 was $498.6 million and represented an Adjusted Operating Income Margin of 40%. The change in Adjusted Operating Income in the year ended December 31, 2024 relative to the year ended December 31, 2023 was a decrease of $70.1 million, or 14%, and primarily due to the change in accounting estimate of collectability of accounts receivable resulting in both reduced revenues as well as incremental bad debt expense combined with increased employee benefit and facility expenses.

Current wording

Adjusted Operating Income for the year ended December 31, 2025 was $445.9 million and represented an Adjusted Operating Income Margin of 36%. Adjusted Operating Income for the year ended December 31, 2024 was $428.5 million and represented an Adjusted Operating Income Margin of 35%. The change in Adjusted Operating Income in the year ended December 31, 2025 relative to the year ended December 31, 2024 was an increase of $17.4 million, or 4%, and primarily due to higher revenue in the current period as well as the prior year impact of the revision to reserves for uncollectible accounts receivable, partially offset by increased technology expense and hosting and infrastructure expense.