SailPoint, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Description of Business and Summary of Significant Accounting Policies

Organization

On February 12, 2025, in connection with our initial public offering ("IPO"), SailPoint Parent, LP converted into a Delaware corporation pursuant to a statutory conversion and changed its name to SailPoint, Inc. (the "Corporate Conversion"). The purpose of the Corporate Conversion was to reorganize the Company's corporate structure so that the entity offering its securities to the public in the IPO would be a corporation rather than a limited partnership. References in this Quarterly Report on Form 10-Q to “SailPoint,” the “Company,” “we,” “us” and “our” (i) for periods prior to the Corporate Conversion, refer to SailPoint Parent, LP and, where appropriate, its consolidated subsidiaries and (ii) for periods after the Corporate Conversion, refer to SailPoint, Inc. and, where appropriate, its consolidated subsidiaries.

In conjunction with the Corporate Conversion, all of the Company's outstanding partnership units were converted into an aggregate of 499,060,464 shares of our common stock. The number of shares of common stock issuable to holders of Class A Units of SailPoint Parent, LP ("Class A Units") and holders of Class B Units of SailPoint Parent, LP ("Class B Units") in connection with the Corporate Conversion were determined pursuant to the applicable provisions of the plan of conversion. The Company continues to be controlled by Thoma Bravo UGP, LLC (together with its affiliated entities, "Thoma Bravo") following the Corporate Conversion. Immediately after the Corporate Conversion and the closing of the IPO, Thoma Bravo controlled approximately 86.2% of the voting power of the Company. The condensed consolidated financial statements and footnotes give effect to the Corporate Conversion on a prospective basis as of the conversion date.

The Company conducts business as SailPoint and delivers solutions to enable comprehensive identity security for the enterprise.

Completion of Initial Public Offering

On February 14, 2025, the Company closed its IPO of 60.0 million shares of its common stock, of which 57.5 million shares were sold by the Company and 2.5 million shares were sold by certain selling stockholders, at an initial offering price to the public of $23.00 per share for an aggregate offering price of approximately $1.4 billion. The Company received net proceeds of approximately $1.2 billion, net of approximately $62.8 million of underwriting discounts and commissions and approximately $11.5 million of offering costs, net.

Basis of Presentation

The accompanying condensed consolidated financial statements, which include the accounts of the Company and its wholly owned subsidiaries, have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”). All intercompany accounts and transactions have been eliminated in consolidation.

The condensed consolidated balance sheet data as of January 31, 2026 was derived from the Company’s audited financial statements included in its Annual Report on Form 10-K for the fiscal year ended January 31, 2026 (the “fiscal 2026 Form 10-K”) but does not include all disclosures required by GAAP. Therefore, these interim condensed consolidated financial statements and accompanying footnotes should be read in conjunction with the Company’s annual consolidated financial statements and related footnotes included in the fiscal 2026 Form 10-K.

The accompanying condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, that are, in the opinion of management, necessary for the fair presentation of the Company’s results for the interim periods presented. The results of operations for the three and six months ended July 31, 2026 shown in this report are not necessarily indicative of the results to be expected for the full year ending January 31, 2027 or any other period.

Beginning with the year ended January 31, 2026, the Company began presenting "perpetual license revenue" and "cost of perpetual license revenue" as part of "revenue - services and other" and "cost of revenue - services and other," respectively, as the amounts were not material and has recast prior period amounts accordingly to conform to the presentation in the Company's fiscal 2026 Form 10-K.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions about future events that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Future events and their effects cannot be determined with certainty. On an ongoing basis, management evaluates these estimates, judgments, and assumptions.

The Company bases its estimates on historical and anticipated results and trends and on various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to future events. In particular, the Company makes estimates with respect to the fair value allocation of multiple performance obligations in revenue recognition, the expected period of benefit of contract acquisition costs, and estimated useful lives and impairment of intangible assets and goodwill arising from business combinations. Appropriate adjustments, if any, to the estimates used are made prospectively based upon such periodic evaluation. Actual results could differ from those estimates.

Concentration of Credit and Other Risks

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents, accounts receivable, and contract assets. The Company maintains its cash in bank deposit accounts that exceeded federally insured limits as of July 31, 2026 and January 31, 2026. There was no concentration of credit risk for customers as of July 31, 2026 and January 31, 2026 as no individual entity represented more than 10% of accounts receivable and contract assets as of such dates. No customer accounted for more than 10% of revenue during the three and six months ended July 31, 2026 or 2025. The Company did not experience concentration of credit risk in foreign countries as of July 31, 2026 and January 31, 2026 as no foreign country represented more than 10% of the Company’s condensed consolidated revenues or net assets as of such dates.

Significant Accounting Policies

There have been no changes to the Company’s significant accounting policies as previously disclosed in the fiscal 2026 Form 10-K.

Recently Adopted Accounting Pronouncements

Accounting Standards Update 2025-05

In July 2025, the Financial Accounting Standards Board (the "FASB") issued ASU-2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”), which amends Topic 326 to provide a practical expedient and an accounting policy election related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under Accounting Standards Codification (“ASC”) 606. Specifically, in developing reasonable and supportable forecasts as part of estimating expected credit losses, all entities may elect a practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. ASU 2025-05 is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. Entities should apply the new guidance prospectively. The Company adopted this standard prospectively and it did not have a material impact on its consolidated financial statements or disclosures.

Recently Issued Accounting Standards Not Yet Adopted

Accounting Standards Update 2025-06

In September 2025, the FASB issued ASU-2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software("ASU 2025-06"), which amends the guidance in ASC 350-40, Intangibles—Goodwill and Other—Internal-Use Software. The amendments modernize the recognition and disclosure framework for internal-use software costs, removing the previous “development stage” model and introducing a more judgment-based approach. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, and for interim periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact of the new standard on its consolidated financial statements and related disclosures.

Accounting Standards Update 2024-03

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosure (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires disaggregated disclosures, in the notes to the financial statements, of certain categories of expenses that are included in expense line items on the face of the income statement. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. ASU

2024-03 should be applied on a prospective basis, with a retrospective application permitted in the financial statements. The Company is currently evaluating the impact of the new standard on its consolidated financial statements and related disclosures.

2. Revenue Recognition

Disaggregation of Revenue

The following table presents the Company’s revenue disaggregated by subscription product categories (in thousands):

The following table summarizes the revenue the Company recognizes at a point in time and over time (in thousands):

Contract Balances

Deferred revenue consists primarily of payments received in advance of revenue recognition under the Company’s contracts with customers. Revenue recognized during the three months ended July 31, 2026 and 2025 that was included in the deferred revenue balances at the beginning of the respective periods was $212.3 million and $174.5 million, respectively. Revenue recognized during the six months ended July 31, 2026 and 2025 that was included in the deferred revenue balances at the beginning of the respective periods was $360.0 million and $290.8 million, respectively.

Remaining Performance Obligations

The Company’s contracts with customers include amounts allocated to performance obligations that will be satisfied at a later date. These remaining performance obligations represent contract value that has not yet been recognized as revenue. Remaining performance obligations includes both invoices that have been issued to customers but have not been recognized as revenue and amounts that will be invoiced and recognized as revenue in future periods. As of July 31, 2026, remaining performance obligations were $1.9 billion, of which the Company expects to recognize $931.1 million as revenue over the next 12 months.

3. Allowance for Expected Credit Losses

The following table presents the balance of the allowance for expected credit losses for accounts receivable and contract assets (in thousands):

For the three months ended July 31, 2026 and 2025, the provision for credit losses was $1.4 million and $0.8 million, respectively. For the six months ended July 31, 2026 and 2025, the provision for credit losses was $2.4 million and $4.3 million, respectively.

4. Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities recorded at fair value in the financial statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels which are directly related to the amount of subjectivity associated with the inputs to the valuation of these assets or liabilities are as follows:

•Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

•Level 2: Observable inputs, other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•Level 3: Unobservable inputs reflecting the Company’s own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

The following tables present information about the Company’s financial assets that are measured at fair value on a recurring basis (in thousands):

The Company’s carrying amounts of financial instruments, including cash, accounts receivable, accounts payable, and accrued expenses, are considered Level 1 and approximate their fair values due to their short maturities as of July 31, 2026 and January 31, 2026 and are excluded from the fair value tables above.

There were no transfers between fair value measurement levels during the period ended July 31, 2026 and January 31, 2026.

5. Acquisitions

Asset Acquisition

Security Savvy Ltd

On September 15, 2025, the Company acquired certain assets of Security Savvy Ltd, a third-party security platform that helps organizations manage identity-related risks associated with their software as a service ("SaaS") applications, for $18.4 million, which included $0.5 million in direct transaction costs that were capitalized as a component of the consideration transferred. The transaction was accounted for as an asset acquisition and substantially all of the acquired assets consisted of developed technology. The purchase price includes a holdback amount of $1.8 million to be paid 12 months from the date of closing subject to the resolution of certain indemnities. The purchase price also includes a contingent consideration of $0.2 million, which was paid and fully settled on November 21, 2025. The purchase price consideration was primarily allocated to a developed technology intangible asset with a useful life ofsix years.

Business Combinations

Entro

On June 29, 2026, the Company completed the acquisition of 100% of the outstanding equity interests of Entro Security Ltd. and its wholly owned subsidiary, Entro Security Inc. (collectively, "Entro"), for total purchase consideration of approximately $122.6 million in cash. In connection with the acquisition, the Company committed to issue up to $7.3 million in restricted stock to certain key employees and former shareholders of Entro who became employees. Because the issuance and vesting of these awards is contingent upon the recipients' continued employment with the Company, this arrangement is excluded from the consideration transferred and is recognized as post-combination compensation expense. The arrangement consists ofthree annual tranches of restricted stock valued at approximately $2.4 million each, to be granted and issued at closing and on the first and second anniversaries of the acquisition date, with each tranche vesting quarterly over aone-year service period. Entro is a cloud-based platform that secures non-human identities, machine secrets, and artificial intelligence ("AI") agents across enterprise environments, extending the Company's Identity Security Cloud product suite. The Company allocated the preliminary consideration transferred, subject to working capital adjustments and provisional income taxes, to intangible assets of $15.8 million for developed technology, with an estimated useful life offour years, $5.0 million for customer relationships intangible, with a useful life ofseven years, and $0.4 million for tradename and trademark with a useful life oftwo years, preliminary goodwill of $98.7 million, and net assets of $2.7 million. The goodwill arising from the acquisition is deductible for tax purposes.

Imprivata

On December 13, 2024, the Company acquired the Identity Governance and Administration business of Imprivata, a digital identity company for life- and mission-critical industries that is majority owned by Thoma Bravo, for aggregate consideration of $16.4 million, which includes contingent consideration that was settled in August 2025. The Company recorded intangible assets of $1.6 million for developed technology, with an estimated useful life of 3 years and a $8.2 million for customer relationships intangible, with a useful life of 4 years, goodwill of $9.3 million and net liabilities of $2.7 million. The goodwill arising from the acquisition is deductible for tax purposes.

Double Zero

On April 9, 2024, the Company acquired all of the outstanding stock of Double Zero Security, Inc. (“Double Zero”), a third-party provider of digital-identity threat detection and response for secure enterprise access. The aggregate consideration transferred in connection with this acquisition was $5.4 million, net of cash acquired. The Company recorded intangible assets of $1.4 million for developed technology, with an estimated useful life of 6 years. The Company recorded goodwill of $3.6 million, and net assets of $0.4 million.

Additional Business Combination Related Information

The operating results of the acquired companies are included in the Company’s condensed consolidated statements of operations from the respective dates of acquisition. Pro forma results of operations have not been presented because the effects of these acquisitions, individually and in the aggregate, were not material to the Company’s condensed consolidated statements of operations. Unless otherwise noted above, goodwill arising from these acquisitions is not deductible for tax purposes.

The measurement period for the valuation of assets acquired and liabilities assumed ends as soon as information on the facts and circumstances that existed as of the applicable acquisition date becomes available but does not exceed 12 months from the acquisition date. The measurement periods have closed for the acquisitions of Imprivata and Double Zero as of July 31, 2026.

6. Commitments and Contingencies

Contractual Purchase Commitments

The Company has contractual commitments associated with agreements that are enforceable and legally binding. These contractual commitments do not include obligations under contracts that the Company can cancel without significant penalty or purchase orders as the purchase orders represent authorizations to purchase rather than binding agreements.

On February 1, 2026, the Company entered into a new amendment with its cloud storage provider, terminating the previous arrangement. The new agreement, effective February 1, 2026 through January 31, 2031, requires the Company to commit to minimum annual purchases of $107.0 million, $127.0 million, $147.0 million, $162.0 million, and $178.0 million in contract years one through five, respectively, for a total commitment of $721.0 million. If the Company does not meet the minimum purchase obligation during any contract year, it will be required to pay the difference. There have been no further amendments or material developments related to this agreement since its execution.

During the six months ended July 31, 2026, there were no other material changes outside the ordinary course of business to the Company’s non-cancelable contractual commitments previously disclosed in the fiscal 2026 Form 10-K.

Indemnification Arrangements

In the ordinary course of business, the Company enters into contractual arrangements under which it agrees to provide indemnification of varying scope and terms to customers, business partners, and other parties with respect to certain matters, including losses arising out of the breach of such agreements, intellectual property infringement claims made by third parties, and other liabilities with respect to the Company’s products, services, and business. In these circumstances, payment may be conditional on the other party making a claim pursuant to the procedures specified in a particular contract. The Company includes service level commitments to the Company’s cloud customers warranting certain levels of uptime reliability and performance and permitting those customers to receive credits in the event that the Company fails to meet those levels.

To date, the Company has not incurred any material costs as a result of these commitments, and the Company expects the time between any potential claims and issuance of the credits to be short. As a result, the Company has not accrued any liabilities related to these commitments in the accompanying condensed consolidated financial statements.

Litigation Claims and Assessments

The Company is subject to claims and suits that may arise from time to time in the ordinary course of business. In addition, some legal actions, claims, and governmental inquiries may be instituted or asserted in the future against the Company and its subsidiaries. Although the outcome of these legal proceedings cannot be predicted with certainty and no assurances can be provided, based upon current information, the Company does not believe the liabilities, if any, which may ultimately result from the outcome of such matters, individually or in the aggregate, will have a material adverse impact on these condensed consolidated financial statements.

7. Credit Agreement and Debt

2025 Credit Agreement

On June 25, 2025, the Company entered into a credit agreement (the "2025 Credit Agreement") that provides for afive-year $250.0 million secured revolving credit facility, including a letter of credit sub-facility of up to $10.0 million (the "2025 Revolving Credit Facility"). The 2025 Revolving Credit Facility matures on June 25, 2030. The Company incurred deferred financing costs of $2.7 million related to the entry into the 2025 Credit Agreement, which are included in other non-current assets on the accompanying condensed consolidated balance sheets. These costs are being amortized to interest expense over the life of the 2025 Credit Agreement on a straight-line basis. Amortization of deferred financing costs related to the 2025 Credit Agreement was$0.1 million and$0.3 millionfor thethree and six months ended July 31, 2026, respectively. Amortization of deferred financing costs related to the 2025 Credit Agreement was$0.1 million for both thethree and six months ended July 31, 2025. The Company is subject to customary letter of credit fees, including a fronting fee equal to 0.125% per annum of the daily maximum amount then available to be drawn under such letters of credit, as well as customary issuance and administration fees. These fees were$0.1 million and $0.3 million for thethree and six months ended July 31, 2026, respectively, and are recorded as interest expense on the condensed consolidated statements of operations.

The Company is subject to quarterly financial covenants relating to maintaining a Total Net Leverage Ratio (as defined in the 2025 Credit Agreement) of generally not more than 4.00 to 1.00 (which may be increased to 4.50 to 1.00 for a limited period in the event a material acquisition is consummated). The Company was in compliance with all applicable covenants as of July 31, 2026.

All obligations under the 2025 Revolving Credit Facility are unconditionally guaranteed by the Company and each Restricted Subsidiary other than any Excluded Subsidiary (each, as defined in the 2025 Credit Agreement) and are supported by a security interest in substantially all of the borrowers' and guarantors' tangible and intangible assets (subject to permitted liens).

The Company may voluntarily repay and reborrow outstanding loans under the 2025 Revolving Credit Facility at any time without a premium or a penalty. The Company hadno outstanding 2025 Revolving Credit Facility balance as of July 31, 2026.

2022 Credit Agreement

On August 16, 2022, the Company entered into a Credit Agreement (the "2022 Credit Agreement") that provided for (i) asix-year $125.0 million senior secured revolving credit facility, including a letter of credit sub-facility of up to $5.0 million (the “2022 Revolving Credit Facility”), and (ii) aseven-year $1.59 billion term loan facility (the “Term Loans”). After the closing of the IPO, the Company fully repaid its Term Loans and recorded an extinguishment of debt related to the remaining balance of its deferred financing costs of $15.3 million during the three months ended April 30, 2025, which is recorded within interest expense on the condensed consolidated statement of operations.

On June 25, 2025, the 2022 Credit Agreement was terminated upon the Company's entry into the 2025 Credit Agreement. The remaining unamortized deferred financing costs of $1.4 million for the 2022 Revolving Credit Facility was recorded as a loss from extinguishment of debt and included in interest expense on the condensed consolidated statements of operations for thethree months ended July 31, 2025. There wasno amortization of debt issuance costs related to the 2022 Credit Agreement for thethree and six months ended July 31, 2026. Amortization of debt issuance costs was $0.2 million and $0.5 million for thethree and six months ended July 31, 2025, respectively.

There wasno interest expense recognized related to the Term Loans for the three and six months ended July 31, 2026. Total interest expense recognized related to the Term Loans for the six months ended July 31, 2025 was$22.3 million, consisting of contractual interest expense of$6.7 million, amortization of debt issuance costs of $0.2 million, and $15.3 million loss from theextinguishment of debt. There wasno interest expense related to the Term Loans for thethree months ended July 31, 2025.

8. Related Party Transactions

The Company is an affiliate of Thoma Bravo. The Company engaged in ordinary sales transactions with entities affiliated with Thoma Bravo, withno significant activity for the three months ended July 31, 2026 and $0.1 million for the three months ended July 31, 2025, and $0.8 million for each of the six months ended July 31, 2026 and 2025.

The Company engaged in ordinary purchase transactions with entities affiliated with Thoma Bravo of $0.2 million and $0.9 million for the three months ended July 31, 2026 and 2025, respectively, and $1.5 million and $2.2 million for the six months ended July 31, 2026 and 2025, respectively.

9. Equity-Based Compensation

Omnibus Incentive Plan and Other Awards

On February 12, 2025, the shareholders and the Company's Board of Directors (the "Board") approved the SailPoint, Inc. Omnibus Incentive Plan (the "Omnibus Plan"), which then became effective. The aggregate number of shares of common stock that may be issued pursuant to the Omnibus Plan is 61,083,763, subject to an annual increase on February 1 of each fiscal year, equal to the lesser of (a)5% of the aggregate number of shares of common stock outstanding on January 31 of the immediately preceding fiscal year and (b) such smaller number of shares as determined by the Board. Pursuant to the "evergreen" provision contained in the Omnibus Plan, the Board approved an increase of 28,189,081 additional shares to be added to the plan effective as of February 1, 2026. As of July 31, 2026, the maximum number of shares authorized under the Omnibus Plan was 89,272,844 and the number of shares available for issuance was 44,924,448.

Under the Omnibus Plan, the Company may grant stock options, stock appreciation rights, restricted stock awards ("RSAs"), restricted stock units ("RSUs"), stock awards, dividend equivalents, other stock-based awards, cash awards, and substitute awards intended to align the interests of award holders with those of the Company's stockholders. Awards made under the Omnibus Plan vest based on continued service to the Company and/or its affiliates. Equity-based compensation costs for granted awards are recognized as an expense on a straight-line basis over the requisite service period as the services are performed.

Capitalized equity-based compensation expense is recorded as part of property and equipment, net on the condensed consolidated balance sheets and is amortized on a project-by-project basis using the straight-line method.

During the six months ended July 31, 2026, the Company granted 25,173,794 RSUs that vest ratably, predominantly overtwo tofour years based on continued service to the Company. Remaining total unrecognized equity-based compensation related to outstanding RSUs as of July 31, 2026 is$433.4 million, with a weighted average remaining life of 3.0 years.

In addition to awards granted under the Omnibus Plan, during the six months ended July 31, 2026, the Company issued 160,670 RSAs outside of the Omnibus Plan that vest ratably overone year based on continued service to the Company. Remaining total unrecognized equity-based compensation related to outstanding RSAs as of July 31, 2026 is$2.6 million, with a weighted average remaining life of 0.8 years.

Equity-Based Compensation Expense

A summary of the Company’s equity-based compensation expense by award type is presented below (in thousands):

On January 31, 2025, the Board approved modifications to accelerate the vesting of certain incentive units, equity appreciation rights (“EARs”), and cash-settled awards subject to the pricing and closing of the IPO. Prior to the Corporate Conversion, the Company modified 3,036,888 incentive units and 377,077 EARs. Upon the IPO, the vested incentive units were considered redeemable. For the six months ended July 31, 2025, as a result of the modifications and the closing of the IPO, the Company recognized $113.8 million of equity-based compensation expense in the condensed consolidated statement of operations, which was comprised of $61.5 million, $12.6 million, and $39.8 million of expense for the modified incentive units, EARs, and cash-settled awards, respectively.

A summary of the Company’s equity-based compensation expense as recognized in the condensed consolidated statements of operations is presented below (in thousands):

There are equity-based compensation awards that could potentially dilute basic earnings per share in the future that were not included in the computation of diluted basic earnings per share because to do so would have been anti-dilutive. The following table summarizes the Company’s anti-dilutive securities (in thousands):

Employee Stock Purchase Plan

In February 2025, the Board adopted the SailPoint, Inc. Employee Stock Purchase Plan (the "ESPP"). The ESPP authorized the issuance of shares of common stock pursuant to purchase rights granted to employees. The aggregate number of shares of common stock originally authorized for issuance under the ESPP was 11,106,139 shares, subject to an annual increase on February 1 of each fiscal year, equal to the lesser of (a)1% of the aggregate number of shares of common stock outstanding on January 31 of the immediately preceding fiscal year and (b) such smaller number of shares as determined by the Board. As of July 31, 2026, the maximum number of shares authorized and available for issuance under the ESPP was 16,743,955.

Under the ESPP, employees are offered the right to purchase shares at a discount during one or more offering periods. The plan administrator designates the terms and conditions of each offering, including the offering period. The first such offering period is six months and commenced April 11, 2026. Future offering periods are expected to also besix months and are to begin on each April 11th and October 11th. Stock-based compensation related to the ESPP is recognized on a straight-line basis over the applicable offering period. Under the ESPP, eligible employees may purchase shares of the Company's common stock at a price equal to 85% of the lower of the fair market value of the Company's common stock on (i) the first trading day of the applicable offering period and (ii) the last trading day of the applicable offering period. As of July 31, 2026, no shares were purchased under the ESPP. Remaining unrecognized equity-based compensation related to the ESPP as of July 31, 2026 is$1.4 million, with a weighted average remaining life of 0.2 years.

The Company uses a Monte Carlo option-pricing model to estimate the fair value of ESPP awards. The grant date for each offering period is the first trading day of the offering period, and compensation cost is measured using the fair value of the award on that date. The following table summarizes the assumptions used in the Monte Carlo model to determine the grant-date fair value of employee stock purchase rights granted under the ESPP for the offering period with a grant date occurring during the six months ended July 31, 2026:

10. Balance Sheet Related Items

Property and Equipment

The cost and accumulated depreciation of property and equipment are as follows (in thousands):

Depreciation and amortization expense was $2.7 million and $2.3 million for the three months ended July 31, 2026 and 2025, respectively, which includes amortization of software development costs of$1.0 million and$0.4 million for the three months ended July 31, 2026 and 2025, respectively. Depreciation and amortization expense was $5.0 million and $4.4 million for the six months ended July 31, 2026 and 2025, respectively, which includes amortization of software development costs of $1.7 million and $0.7 million for the six months ended July 31, 2026 and 2025, respectively,

Prepayments and Other Current Assets and Other Non-Current Assets

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

Amortization expense related to capitalized implementation costs was$0.5 million and$0.4 million for the three months ended July 31, 2026 and 2025, respectively. Amortization expense related to capitalized implementation costs was $1.4 million and $0.7 millionfor the six months ended July 31, 2026 and 2025, respectively.

Other non-current assets consisted of the following (in thousands):

Accrued Expenses and Other Liabilities

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

11. Income Taxes

The provision for income taxes consists of U.S. and state income taxes and income taxes in foreign jurisdictions in which the Company conducts business.

The effective tax rate for thethree months ended July 31, 2026 and 2025 was 11.9% and 74.8%, respectively. The effective tax rate for thesix months ended July 31, 2026 and 2025 was 8.9% and 19.6%, respectively. For the three and six months ended July 31, 2026, the effective tax rate differs from the statutory rate primarily as a result of certain non-deductible equity-based compensation, non-deductible executive officer compensation, and an increase in valuation allowance. For the three and six months ended July 31, 2025, the effective tax rate differs from the statutory rate primarily as a result of a net discrete tax benefit for the change in valuation allowance for interest expense and Texas research and development credit carryforwards from changes in tax law.

12. Segments and Geographic Information

Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (the "CODM"). The CODM is comprised of the Company's Chief Executive Officer, Chief Financial Officer and President. The Company's CODM reviews financial information presented on a consolidated basis for the purposes of making operating decisions, allocating resources, and evaluating financial performance. Accordingly, the Company determined that it operates inone reportable segment. The CODM utilizes GAAP and non-GAAP measures of profit and loss for evaluating the Company's overall performance and informing resource allocation to support strategic priorities. The GAAP measure of profit and loss used by the CODM for such purposes is net loss. Significant expense categories regularly provided to the CODM are those disclosed in the condensed consolidated financial statements and related notes.

The following is a summary of consolidated revenues within geographic areas determined by the billing address of the customer for the periods presented (in thousands):

No single country other than the United States represented more than 10% of the Company's revenue.

13. Employee Benefit Plans

The Company has established a defined contribution savings plan under Section 401(k) of the Internal Revenue Code of 1986 (the “401(k) Plan”). The 401(k) Plan covers substantially all employees who meet minimum age and service requirements and allows participants to defer a percentage of their annual compensation as defined in the 401(k) Plan. The Company matches portions of employees’ voluntary contributions. Additional employer contributions may also be made at the Company’s discretion. The Company recorded expense of $2.4 million and $2.0 million for the three months ended July 31, 2026 and 2025, respectively, for matching contributions to the 401(k) Plan. The Company recorded expense of $4.9 million and $4.3 million for the six months ended July 31, 2026 and 2025, respectively, for matching contributions to the 401(k) Plan.