Rubrik, Inc.

Note 1 – Description of Business

Rubrik, Inc. (“Rubrik” or the “Company”) is a security and artificial intelligence (“AI”) operations company, with a mission to secure and accelerate the world’s AI transformation. Rubrik built the Rubrik Security Cloud (“RSC”) suite with Zero Trust design principles to secure data across enterprise, cloud, SaaS, unstructured data, and identity providers. RSC delivers a cloud native SaaS platform that detects, analyzes, and remediates data security risks and unauthorized user activities. Rubrik launched Rubrik Agent Cloud in February 2026 to provide a comprehensive AI operations suite that can dynamically monitor, control, and remediate agentic actions. The Company was incorporated in December 2013 as ScaleData, Inc., a Delaware corporation, and changed its name to Rubrik, Inc. in October 2014. The Company is headquartered in Palo Alto, California.

Note 2 – Basis of Presentation and Summary of Significant Accounting Policies

Fiscal Year

The Company’s fiscal year ends on January 31. For example, references to fiscal 2027 and 2026 refer to the fiscal year ending January 31, 2027 and 2026, respectively.

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, they do not include all disclosures normally required in annual consolidated financial statements prepared in accordance with U.S. GAAP. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2026, as filed with the SEC on March 19, 2026 (the “Annual Report”).

The unaudited condensed consolidated financial statements and notes include the Company and its wholly-owned subsidiaries and reflect all adjustments that, in the opinion of management, are necessary for a fair presentation of the periods presented. All intercompany accounts and transactions have been eliminated in consolidation.

Certain prior period amounts reported in the unaudited condensed consolidated financial statements and notes have been reclassified to conform to the current year presentation. For the three and six months ended July 31, 2026 and 2025, the Company combined maintenance revenue and other revenue into “Other” on the unaudited condensed consolidated statements of operations. The presentation of cost of revenue has been conformed to reflect the changes related to the presentation of revenues. Such reclassifications related to the presentation of revenue and cost of revenue did not impact total revenue, loss from operations or net loss.

Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Such management estimates include, but are not limited to, the estimation of standalone selling prices for performance obligations, the estimates for material rights, the application of a portfolio approach for capitalization of deferred commissions, the determination of the period of benefit for deferred commissions, the determination of fair value of the Company’s common stock prior to the completion of the IPO, the valuation of stock-based awards, the valuation and assessment of recoverability of intangible assets and their estimated useful lives, the assessment of goodwill impairment, the incremental borrowing rate used to value operating lease liabilities, the valuation of deferred income tax assets and uncertain tax positions, and contingencies. Management evaluates these estimates and assumptions on an ongoing basis using historical experience and other factors and makes adjustments when facts and circumstances dictate. Actual results could differ materially from these estimates.

Revenue Recognition

The Company generates revenue primarily from the sale of subscriptions and typically invoices customers at the inception of the contract. The Company’s contracts with customers have a typical stated duration ranging fromone tofive years, with the majority of contracts having a stated duration ofthree years. The Company’s contracts with customers are generally non-cancelable and non-refundable. The Company primarily sells products and services to end users through distributors and resellers (“Channel Partners”). Channel Partners are the Company’s customers. The Company offers rebates to its Channel Partners calculated as a fixed percentage

of the total selling price of a revenue contract. The Company accounts for rebates as consideration payable to a customer and records the amounts as a reduction to revenue.

The Company determines revenue recognition through the following steps:

•Identification of the contract, or contracts, with a customer;

•Identification of the performance obligations in the contract;

•Determination of the transaction price;

•Allocation of the transaction price to the performance obligations in the contract; and

•Recognition of revenue when, or as, the Company satisfies a performance obligation.

Payment terms of the Company’s contracts range from 30 days to 60 days after fulfillment or service commencement date, except for certain contracts, which are billed in installments over the contract term.

The Company determines its transaction price based on the expected amount it is entitled to receive in exchange for transferring promised products and services to the customer.

The Company’s contracts with customers can include multiple products and services. The Company determines performance obligations in a customer contract by assessing whether products and services are capable of being distinct and distinct in the context of the contract, including customer options that are determined to be material rights. The transaction price is allocated to the separate performance obligations based on the relative standalone selling price basis. The standalone selling price is determined based on the price at which the performance obligation either is sold separately or, if not observable through past transactions, is estimated taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations. For performance obligations that are not sold separately, standalone selling price is determined based on observable inputs, overall pricing trends, market conditions and other factors, such as the price charged by the Company’s competitors for similar products and services with any necessary or appropriate adjustments.

Subscription revenue

Subscription revenue consists of software-as-a-service (“SaaS”) subscriptions, subscription support service offerings, and subscription term-based licenses with related support services.

SaaS subscriptions include standalone sales of SaaS subscription offerings as well as sales of RSC. RSC is a fully-hosted subscription in the case of protection of cloud, SaaS, and unstructured data applications. When RSC is securing enterprise applications, it is a hybrid cloud subscription which includes software hosted from the cloud (as a service) and on-premise software licenses. RSC is accounted for as a single performance obligation because the software hosted from the cloud (as a service) and the on-premise software licenses are not separately identifiable and serve together to fulfill the Company’s promise to RSC customers, which is to provide a single, unified data security solution. The Company’s subscription capabilities are primarily sold as editions which bundle multiple products and include the Foundation Edition, Business Edition, and Enterprise Edition. Subscription revenue related to SaaS is recognized ratably over the subscription period. Support services revenue are recognized ratably over the subscription period.

Subscription term-based licenses provide customers with a right to use the software for a fixed term commencing upon delivery of the license to the customers. Support services are bundled with each subscription term-based license for the term of the subscription. Subscription revenue related to subscription term-based licenses includes upfront revenue recognized at the later of the start date of the subscription term-based license and the date when the subscription term-based license is delivered. The remainder of the revenue is recognized ratably over the subscription period for support services, commencing on the date the service is made available to customers. The Company does not recognize software revenue related to the renewal of subscription term-based licenses earlier than the beginning of the related renewal period. The Company also sells Rubrik-branded commodity servers (“Rubrik-branded Appliances”) support which is recognized ratably over the support period.

Other revenue

Other revenue includes fees earned from sales of professional services, software updates on a when-and-if-available basis, telephone and integrated web-based support, Rubrik-branded Appliance maintenance relating to our perpetual licenses, and Rubrik-branded Appliances. Revenue related to professional services is typically recognized as the services are performed. Revenue for Rubrik-branded Appliances is recognized when shipped to the customer, as the Company's shipping term is free on board shipping point, meaning control of the Rubrik-branded Appliance transfers to the customer upon shipment. When we sell our software license with our Rubrik-branded Appliances, revenue for both the Rubrik-branded Appliances and software licenses are recognized at the same time.

Amounts billed to customers for shipping and handling costs are classified as other revenue, and the Company’s shipping and handling costs are classified as cost of revenue.

Judgments

The Company identifies performance obligations in a customer contract by assessing whether products and services are capable of being distinct and distinct in the context of the contract. The determination of the performance obligations for RSC when offered as a hybrid cloud subscription requires significant judgment due to the ongoing interaction between the software hosted from the cloud (as a service) and the on-premise software licenses. The Company has concluded that the software hosted from the cloud (as a service) and software licenses are not distinct from each other in the context of the contract such that revenue from the combined offering should be recognized ratably over the subscription period for which the software hosted from the cloud (as a service) is provided. In reaching this conclusion, the Company considered the nature of its promise to customers with a RSC hybrid cloud subscription, which is to provide a single, unified data security solution that operates seamlessly across multiple data sources and teams, and to give customers the ability to manage all their data sources consistently and/or in a manner they dictate. The Company only fulfills this multi-faceted promise by providing access to an integrated solution comprised of both cloud-based and on-premise software. The cloud-based software and on-premise software work together to provide features and functionalities necessary to fulfill that promise, which neither the software hosted from the cloud (as a service) nor the software licenses could provide on their own or together with third-party resources.

The Company had offered Subscription Credits for RSC to qualified customers in exchange for relinquishing their existing rights to next-generation Rubrik-branded Appliances at no cost (“Refresh Rights”). These are customer options that are accounted for as material rights.

The Company’s contracts with customers may include customer options that are material rights. The determination of the likelihood of customers exercising their options requires significant judgment. Management estimates the likelihood of customers exercising their options by taking into account available information such as the number and timing of options exercised or forfeited, and considers other factors such as customer churn that may impact the options that have yet to be exercised or forfeited. Depending on the type of customer option exercised, the amount of consideration allocated to the material rights will be recognized into revenue at a point in time or over time beginning on the date the customer accepts the option. Deferred revenue associated with customer options that are subsequently forfeited will be released into revenue at the time the options are forfeited.

Timing of revenue recognition (in thousands):

Contract assets

The Company invoices its customers in accordance with contractual billing terms established in each contract. As the Company performs under customer contracts, its right to consideration that is unconditional is classified as accounts receivable. If the Company’s right to consideration for such performance is contingent upon a future event or satisfaction of additional performance obligations, the amount of revenue the Company has recognized in excess of the amount it has billed to the customer is classified as a contract asset. Contract assets are included in prepaid expenses and other current assets and other assets, noncurrent in the unaudited condensed consolidated balance sheets. There were $16.2 million and $12.6 million of contract assets as of July 31, 2026 and January 31, 2026, respectively. The current and noncurrent contract assets balances as of July 31, 2026 were $6.2 million and $10.0 million, respectively, and as of January 31, 2026 were $3.8 million and $8.8 million, respectively.

Deferred revenue

Deferred revenue, which are contract liabilities, are amounts received or due from customers in advance of the Company’s performance. The current portion of deferred revenue represents the amount that is expected to be recognized as revenue within one year of the unaudited condensed consolidated balance sheet date. The Company invoices customers upfront for the majority of contracts, and the increase in the Company’s deferred revenue corresponds to an increase in revenue contracts that include SaaS and support in which the Company satisfies its performance obligations typically over the contractual service period. During the three and

six months ended July 31, 2026, the Company recognized revenue of approximately $368.1 million and $638.4 million, respectively, pertaining to amounts deferred at the beginning of each respective period.

Transaction price allocated to the remaining performance obligations

Transaction price allocated to the remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue for contracts that have been invoiced and will be recognized as revenue in future periods.

As of July 31, 2026, total remaining non-cancelable performance obligations under the Company’s contracts with customers was approximately $2.62 billion. The Company expects to recognize approximately 53% of this amount as revenue over the next 12 months, with the remaining balance to be recognized as revenue thereafter.

Concentration of Risk

Credit risk

The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, short-term investments, and accounts receivable. Cash and cash equivalents and short-term investments are primarily held inthree financial institutions and, at times, may exceed federally insured limits. The Company grants credit to customers in a wide variety of industries worldwide and generally does not require collateral. The Company has not experienced any material credit losses as of July 31, 2026.

Concentration of revenue and accounts receivable

The following customers individually accounted for 10% or more of total revenue or 10% or more of accounts receivable, net:

Vendor risk

The Company uses third-party vendors for delivering its SaaS. While these services are highly available and designed to be resilient to failure of infrastructure, the Company’s services could be significantly impacted if the third-party vendors’ services experience certain types of interruptions.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In July 2025, the FASB issued ASU 2025-05, Financial Instruments — Credit Losses, which provides a practical expedient for estimating expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under Topic 606, Revenue from Contracts with Customers. The Company adopted ASU 2025-05 effective February 1, 2026 on a prospective basis and elected the practical expedient. The adoption did not have a material impact on the Company’s unaudited condensed consolidated financial statements and related disclosures.

Recently Announced Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures, which requires entities to provide disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, on either a prospective or retrospective basis, with early adoption permitted. The Company is assessing the impact of adopting this standard.

In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software: Targeted Improvements to the Accounting for Internal-Use Software, which modernizes the accounting for internal-use software costs by increasing the operability of the recognition guidance considering different methods of software development. ASU 2025-06 is effective for annual

periods beginning after December 15, 2027 and interim periods within those annual reporting periods and can be applied prospectively, retrospectively, or with a modified transition approach, with early adoption permitted. The Company is assessing the impact of adopting this standard.

Note 3 – Revenue by Geography

The geographic regions are the Americas, EMEA (Europe, the Middle East, and Africa) and APAC (Asia Pacific). The following table sets forth revenue by geographic area based on ship to address (in thousands):

For the three months ended July 31, 2026 and 2025, United States accounted for $287.5 million and $216.6 million, respectively, or 67% and 70%, respectively, of consolidated total revenue. For the six months ended July 31, 2026 and 2025, United States accounted for $555.7 million and $411.9 million, respectively, or 68% and 70%, respectively, of consolidated total revenue.

Note 4 – Business Combinations and Intangible Assets

In June 2026, the Company completedtwo immaterial acquisitions for aggregate purchase consideration of $27.2 million and accounted for them as business combinations from the respective dates of acquisition. $3.8 million of the purchase consideration was allocated to intangible assets and $23.6 million was allocated to goodwill. The remaining assets acquired and liabilities assumed on the acquisition date were not material.

Acquired intangible assets are as follows (in thousands):

The Company recognized $3.2 million and $1.2 million in amortization expense related to acquired intangible assets for the three months ended July 31, 2026 and 2025, respectively, and $6.0 million and $2.2 million in amortization expense related to acquired intangible assets for the six months ended July 31, 2026 and 2025, respectively.

The following table summarizes the estimated future amortization expense of the acquired intangible assets as of July 31, 2026 (in thousands):

Note 5 – Fair Value of Financial Instruments

The Company classifies its financial instruments within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement. Three levels of input may be used to measure fair value:

•Level 1 – Observable inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

•Level 2 – Observable inputs are quoted for similar assets and liabilities in active markets or inputs other than quoted prices which are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments.

•Level 3 – Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. These inputs will be based on the Company’s own assumptions and will require significant management judgment or estimation.

The Company did not have any level 3 investments as of July 31, 2026 and January 31, 2026. The following table summarizes the Company’s cash and available-for-sale marketable securities’ amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value by significant investment category reported as cash and cash equivalents or short-term investments (in thousands):

The following table summarizes the estimated fair value of the Company’s investments by their remaining contractual maturity dates (in thousands):

For available-for-sale debt securities that have unrealized losses, the Company evaluates whether (i) the Company has the intention to sell any of these investments, (ii) it is not more likely than not that the Company will be required to sell any of these available-for-sale debt securities before recovery of the entire amortized cost basis, and (iii) the decline in the fair value of the investment is due to credit or non-credit related factors. Based on this evaluation, the Company determined that for its short-term investments there wereno material credit or non-credit related impairments as of July 31, 2026 and January 31, 2026.

Convertible Notes

As of July 31, 2026, the total estimated fair value of the Convertible Notes (as defined below) was $1.14 billion. The fair value was determined based on the quoted price of the Convertible Notes in an inactive market on the last trading day of the reporting period and is classified within Level 2 of the fair value hierarchy. See Note 7, Debt.

Note 6 – Balance Sheet Components

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):

Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

Depreciation expense related to the Company’s property and equipment, which did not include amortization expense related to capitalized internal-use software, was $5.2 million and $4.4 million for the three months ended July 31, 2026 and 2025, respectively, and $10.3 million and $8.8 million for the six months ended July 31, 2026 and 2025, respectively.

Amortization expense relating to capitalized internal-use software was $4.1 million and $2.8 million for the three months ended July 31, 2026 and 2025, respectively, and $8.3 million and $5.5 million for the six months ended July 31, 2026 and 2025, respectively.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

Note 7 – Debt

Convertible Notes

In June 2025, the Company issued $1.15 billion aggregate principal amount of 0.00% convertible senior notes due 2030 (the “Convertible Notes” or “Notes”). Refer to Note 8, Debt of our Annual Report on Form 10-K for the fiscal year ended January 31, 2026, for additional information on the Convertible Notes.

As of July 31, 2026, the conditions allowing holders of the Convertible Notes to convert have not been met.

The net carrying amount of the Convertible Notes was as follows (in thousands):

For each of the three and six months ended July 31, 2026, amortization of debt discount and issuance costs was $1.1 million and $2.2 million, respectively. For each of the three and six months ended July 31, 2025, amortization of debt discount and issuance costs was $0.6 million. The debt discount and issuance costs are being amortized into interest expense on the unaudited condensed consolidated statements of operations over the term of the Convertible Notes at an effective interest rate of 0.19%.

Capped Calls

In connection with the pricing of the Convertible Notes and the exercise in full by the initial purchasers of their option to purchase additional Convertible Notes, the Company entered into capped call transactions (the “Capped Calls”) with certain affiliates of certain initial purchasers of the Convertible Notes and other financial institutions. Refer to Note 8, Debt of our Annual Report on Form 10-K for the fiscal year ended January 31, 2026, for additional information on the Capped Calls.

Note 8 – Commitments and Contingencies

Purchase Commitments

As of July 31, 2026, there were no significant changes outside the ordinary course of business to the Company's commitments and purchase obligations since January 31, 2026.

Litigation

From time to time, the Company receives inquiries and/or claims or is involved in legal disputes and/or matters. In the opinion of management, any liabilities resulting from these claims will not have a material adverse effect on the Company’s results of operations, financial position, and cash flows.

Warranties and Indemnifications

The Company provides to qualifying customers a services warranty program for recovery of certain expenses related to data recovery and restoration in the event that data backed up using the Company’s solutions cannot be recovered following a ransomware attack. To date, costs relating to the warranty program have not been material.

The Company typically provides indemnification to customers for certain losses suffered or expenses incurred as a result of third-party claims arising from the Company’s infringement of a third-party’s intellectual property. Certain of these indemnification provisions survive termination or the expiration of the applicable agreement. The Company has not incurred a material liability relating to these indemnification provisions, and therefore, has not recorded a liability during any period for these indemnification provisions.

Note 9 – Stockholders’ Deficit

Equity Incentive Plan

The Company has reserved shares of its common stock for future issuance as follows (in thousands):

Stock Options

Options issued under the Company’s 2014 Plan and 2024 Plan generally are exercisable for periods not to exceedten years and generally vest over four years with 25% vesting afterone year and the remainder vesting monthly thereafter in equal installments.

A summary of the stock option activity and related information is as follows:

There were no options granted during the six months ended July 31, 2026 and 2025.

The intrinsic value of the options exercised represents the difference between the estimated fair market value of the Company’s common stock on the date of exercise and the exercise price of each option.

As of July 31, 2026, there was approximately $30.0 million of unrecognized stock-based compensation expense related to stock options, which is expected to be recognized over a weighted-average period of 1.6 years.

Restricted Stock Units

The Company grants service-based condition RSUs, service- and performance-based conditions RSUs, and service-, market-, and performance-based conditions RSUs. RSUs issued under the 2014 Plan and 2024 Plan typically have an expiry period ofseven years from the grant date.

Previously, upon vesting of awards, the Company sold a portion of the shares that employees received to fund the required withholding taxes (“sell-to-cover”). During the second quarter of fiscal 2027, the Company transitioned from a sell-to-cover process to net share settlement to cover any required withholding taxes, by retaining the number of shares with a value equal to the amount of the tax and remitting an equal amount of cash to the appropriate tax authorities. Cash payments associated with the net share settlement of employee tax withholding obligations are classified as financing activities in the condensed consolidated statement of cash flows. The change to net share settlement does not affect the fair value, vesting conditions, or classification of employee awards.

A summary of the RSU activity and related information is as follows:

For the six months ended July 31, 2026 and 2025, the total grant date fair value of vested RSUs was $197.9 million and $144.6 million, respectively.

As of July 31, 2026, there was approximately $952.8 million of unrecognized stock-based compensation expense relating to RSUs, which is expected to be recognized over a weighted-average period of 1.6 years.

Restricted Stock

The Company issued 0.5 million shares of restricted stock in connection with the Predibase acquisition to certain Predibase employees with an aggregate fair value of $40.4 million determined based on the closing price of $88.11 per share of the Company's Class A common stock on July 18, 2025. These amounts are subject to vesting and continued employment, and will be recognized as stock-based compensation expense over the requisite service period ofthree years.

As of July 31, 2026, there was approximately $26.2 million of unrecognized stock-based compensation expense relating to the restricted stock.

2024 Employee Stock Purchase Plan

The Company estimated the fair value of ESPP purchase rights using a Black-Scholes option-pricing model with the following assumptions:

As of July 31, 2026, there was approximately $23.2 million of unrecognized stock-based compensation expense related to the ESPP, which is expected to be recognized over a weighted-average period of 1.1 years.

Stock-Based Compensation Expense

Total stock-based compensation expense included in the Company’s unaudited condensed consolidated statements of operations was as follows (in thousands):

Note 10 – Net Loss Per Share

For periods in which there were Class A and Class B shares outstanding, the rights, including the liquidation and dividend rights, of the holders of Class A and Class B common stock are identical, except with respect to voting, conversion, and transfer rights. As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis to each class of common stock and the resulting basic and diluted net loss per share attributable to common stockholders are, therefore, the same for both Class A and Class B common stock on both individual and combined basis.

The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share amounts):

The following outstanding potentially dilutive securities were excluded from the computation of diluted net loss per share for the periods presented because the impact of including them would have been antidilutive (in thousands):

The Company entered into the Capped Calls in connection with the issuance of the Convertible Notes. The effect of the Capped Calls was excluded from the calculation of diluted net loss per share attributable to the Company’s Class A common stockholders as the effect of the Capped Calls would have been anti-dilutive. The Capped Calls are generally expected to reduce the potential dilution to the Company’s Class A common stock upon any conversion of the relevant series of the Convertible Notes. See Note 7, Debt.

Note 11 – Income Taxes

The Company recorded an income tax expense of $5.5 million and $1.8 million for the three months ended July 31, 2026 and 2025, respectively, and $10.1 million and $3.1 million for the six months ended July 31, 2026 and 2025, respectively.

For the three months ended July 31, 2026 and 2025, the income tax provision consisted of taxes on the income of the Company's foreign subsidiaries, foreign withholding taxes, and U.S. state taxes, partially offset by excess benefits from stock-based compensation deductions in the UK.

For the six months ended July 31, 2026 and 2025, the income tax provision consisted of taxes on the income of the Company's foreign subsidiaries, foreign withholding taxes, and U.S. state taxes, partially offset by excess benefits from stock-based compensation deductions in the UK.

As of July 31, 2026, the Company maintained a full valuation allowance on its U.S. federal and state net deferred tax assets as it was more likely than not that those deferred tax assets will not be realized.

Note 12 – Segment Reporting

The Company hasone reportable segment which is software and services. The software and services segment provides unified data security solutions to customers primarily under SaaS arrangements. The Company manages the business activities on a consolidated

basis. The technology used in the customer arrangements is primarily based on a single software platform that is deployed to and implemented by customers in a similar manner. The types of software and services from which the Company generates revenue are described under the “Revenue Recognition” policy within the “Note 2, Basis of Presentation and Summary of Significant Accounting Policies.”

The Company’s chief operating decision maker is its chief executive officer. The chief operating decision maker assesses performance for the software and services segment and decides how to allocate resources based on net loss that is also reported on the consolidated statements of operations as consolidated net loss. The chief operating decision maker does not use any segment assets measure to assess performance and decide how to allocate resources.

The chief operating decision maker uses net loss and the functional areas as a percentage of revenue to evaluate and decide where to invest within the software and services segment. Net loss is used to monitor budget versus actual results. The chief operating decision maker also uses net loss in competitive analysis by benchmarking to the Company’s competitors. The competitive analysis along with the monitoring of budgeted versus actual results are used in assessing the performance of the segment.

The Company does not have intra-entity sales or transfers.

The following table presents the segment information (in thousands):

(1) Adjusted subscription cost of revenue is subscription cost of revenue adjusted for stock-based compensation expense, amortization of acquired intangibles, and stock-based compensation from amortization of capitalized internal-use software as follows (in thousands):

(2) See Note 9 for stock-based compensation expense by captions.

(3) Other items include foreign currency exchange gains (losses).