What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-02 compared with 2023-11-02 · 153 added, 251 removed, 271 unchanged (60% of the section changed)

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We have invested in our Customer Success organization to help ensure customers are able to build and deploy applications on our platform.

We have several strategic partnerships, including with KPMG, Accenture, PwC, EY, Infosys, Wipro, and Deloitte, which allow them to refer customers to us in order to purchase subscriptions.

We have several strategic partnerships, including with Accenture, Capgemini, Deloitte, EY, KPMG, PwC, and TCS, which allow them to refer customers to us in order to purchase subscriptions.

Our partners then provide professional services directly to the customers using our platform.

We intend to continue our focus on adding new customers with our strategic partners.

We intend to continue focusing on adding new customers with our strategic partners.

In addition, over time we expect our professional services revenue as a percentage of total revenue to decline as we increasingly rely on strategic partners to help our customers deploy our software.

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organizations with over 2,000 employees and $2 billion in annual revenue.

Revenue from government agencies represented 21.1% and 20.6% of our total revenue for the three and nine months ended September 30, 2023, respectively, as compared to 21.2% and 19.2% of our total revenue for the three and nine months ended September 30, 2022, respectively.

No single end-customer accounted for more than 10% of our total revenue in the three and nine months ended September 30, 2023 or 2022.

Revenue from government agencies represented 21.7% and 20.5% of our total revenue for the three months ended March 31, 2024 and 2023, respectively.

No single end-customer accounted for more than 10% of our total revenue in the three months ended March 31, 2024 or 2023.

We offer our platform globally.

Our platform supports multiple languages to facilitate collaboration and address challenges in multinational organizations.

In the three and nine months ended September 30, 2023, 35.3% and 35.6%, respectively, of our total revenue was generated from customers outside of the United States as compared to 31.3% and 33.2% in the three and nine months ended September 30, 2022, respectively.

As of September 30, 2023, we operated in 16 countries.

In the three months ended March 31, 2024 and 2023, 37.2% and 33.4%, respectively, of our total revenue was generated from customers outside of the United States.

As of March 31, 2024, we operated in 16 countries.

We believe we have a significant opportunity to continue to grow our international footprint, and we are investing in new geographies, including through investment in direct and indirect sales channels, professional services, and customer support and implementation partners.

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We offer a leading custom software platform and intend to continue to invest to expand our customer base.

The degree to which prospective customers recognize the need for our platform, and subsequently allocate budget dollars to purchase our software, will drive our ability to acquire new customers and increase sales to existing customers, which, in turn, will affect our future financial performance.

The degree to which prospective customers recognize the need for our software platform and its ability to enable their organizations to digitally transform, and subsequently allocate budget dollars to purchase our software, will drive our ability to acquire new customers and increase sales to existing customers, which, in turn, will affect our future financial performance.

• Growth of Our Customer Base - We believe we have a substantial opportunity to grow our customer base.

We define a customer as an entity with an active subscription or maintenance and support contract or a legacy perpetual license as of the specified measurement date.

Furthermore, we define a new customer as an entity that has entered into its first active subscription or maintenance and support contract within one calendar year of the specified measurement date while existing customers are defined as entities that have maintained an active subscription or maintenance and support contract for at least one calendar year from the specified measurement date.

Legacy customers from entities acquired in business combinations are not counted as new customers until they enter into a new active subscription or maintenance and support contract with us subsequent to the completion of the business combination.

Additionally, to the extent we contract with one or more entities under common control, we count those entities as separate customers.

We have aggressively invested, and intend to continue to invest, in our sales team in order to drive sales to new customers.

We continue to make investments to enhance the expertise of our sales and marketing organization within our key industry verticals of financial services, government, and life sciences.

We continue to make investments to enhance the expertise of our sales and marketing organization within our key industry verticals of financial services, government, life sciences, insurance, and manufacturing.

In addition, we have established relationships with strategic partners who work with organizations undergoing digital transformations.

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Many of our customers begin by building a single application and then grow to build dozens of applications on our platform.

Generally, the development of new applications on our platform results in the expansion of our user base within an organization and a

corresponding increase in revenue.

Generally, the development of new applications on our platform results in the expansion of our user base within an organization and a corresponding increase in revenue.

As a result of this “land and expand” strategy, we have generated significant additional revenue from our customer base.

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We have also re-focused some of our professional services personnel to become customer success managers.

Their role is to ensure customers realize value from our platform and to support strategic partners and the “land and expand” strategy versus delivering billable hours.

Their role is to ensure customers realize value from our platform and support strategic partners and the “land and expand” strategy versus delivering billable hours.

• Mix of Subscriptions and Professional Services Revenue - We believe our professional services have driven customer success and facilitated the adoption of our platform by customers.

During the initial period of deployment by a customer, we generally provide a greater amount of support in building applications and training than later in the deployment, with a typical engagement lasting from two to six months.

At the same time, many of our customers have historically purchased subscriptions only for a limited set of their total potential end users.

During the initial period of

deployment of our platform by a customer, we generally provide a greater amount of support in building applications and training than later in the deployment, with a typical engagement lasting from two to six months.

At the same time, many of our customers have historically purchased subscriptions for only a limited set of their total potential end users.

As a result of these factors, the proportion of total revenue for a customer associated with professional services is relatively high during the initial deployment period.

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These partners perform professional services with respect to any new service contracts they originate.

As the usage of partners expands, we expect the proportion of our total revenue from subscriptions to increase over time relative to professional services.

For the nine months ended September 30, 2023 and 2022, 74.1% and 72.2% of our revenue, respectively, was derived from sales of subscriptions while the remaining 25.9% and 27.8%, respectively, was derived from the sale of professional services.

As the usage of strategic partners expands, we expect the proportion of our total revenue from subscriptions to increase over time relative to professional services.

For the three months ended March 31, 2024 and 2023, 78.5% and 73.2% of our revenue, respectively, was derived from sales of subscriptions while the remaining 21.5% and 26.8%, respectively, was derived from the sale of professional services.

• Investments in Growth - We have made, and plan to continue to make, investments for long-term growth, including investing in our platform and infrastructure to continuously maximize their power and speed, meet the evolving needs of our customers, and take advantage of our market opportunity.

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All dollar amounts are presented in thousands.

Cloud Subscription Revenue

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 % Change 2023 2022 % Change

Cloud subscription revenue $ 77,247 $ 60,621 27.4 % $ 221,381 $ 171,083 29.4 %

Cloud subscription revenue includes cloud subscriptions bundled with maintenance and support and hosting services.

Our cloud subscription revenue for any customer is primarily determined by the number of users who access and utilize the applications built on our platform or by the number of application licenses purchased, as well as the price paid.

We believe increasing cloud subscription revenue is an indicator of the demand for our platform, the pace at which the market for our solutions is growing, the productivity of our sales team and strategic relationships in growing our customer base, and our ability to further penetrate our existing customer base.

Cloud Subscription Revenue Retention Rate

As of September 30,

Cloud subscription revenue retention rate 117 % 115 %

Cloud Subscriptions Revenue

Three Months Ended March 31,

2024 2023 % Change

Cloud subscriptions revenue

$ 86,603 $ 69,692 24.3 %

Cloud subscriptions revenue includes cloud subscriptions bundled with maintenance and support and hosting services.

Our cloud subscriptions revenue for any customer is primarily determined by the number of users who access and utilize the applications built on our platform or by the number of application licenses purchased, as well as the price paid.

We believe increasing cloud subscriptions revenue is an indicator of the demand for our platform, the pace at which the market for our solutions is growing, the productivity of our sales team and strategic relationships in growing our customer base, and our ability to further penetrate our existing customer base.

Cloud Subscriptions Revenue Retention Rate

As of March 31,

Cloud subscriptions revenue retention rate

A key factor to our success is the renewal and expansion of subscription agreements with our existing customers.

We calculate this metric over a set of customers who have been with us for at least one full year.

To calculate our cloud subscription revenue retention rate for a particular trailing 12-month period, we first establish the recurring cloud subscription revenue for the previous trailing 12-month period.

To calculate our cloud subscriptions revenue retention rate for a particular trailing 12-month period, we first establish the recurring cloud subscriptions revenue for the previous trailing 12-month period.

This effectively represents recurring dollars we should expect in the current trailing 12-month period from the cohort of customers from the previous trailing 12-month period without any expansion or contraction.

We subsequently measure the recurring cloud subscription revenue in the current trailing 12-month period from the cohort of customers from the previous trailing 12-month period.

Cloud subscription revenue retention rate is then calculated by dividing the aggregate recurring cloud subscription revenue in the current trailing 12-month period by the previous trailing 12-month period.

We subsequently measure the recurring cloud subscriptions revenue in the current trailing 12-month period from the cohort of customers from the previous trailing 12-month period.

Cloud subscriptions revenue retention rate is then calculated by dividing the aggregate

recurring cloud subscriptions revenue in the current trailing 12-month period by the previous trailing 12-month period.

This calculation includes the combined impact on our revenue from customer non-renewals, pricing changes, and growth in the number of users on our platform.

Our cloud subscription revenue retention rate can fluctuate from period to period due to large customer contracts in any given period.

Our cloud subscriptions revenue retention rate can fluctuate from period to period due to large customer contracts in any given period.

Key Components of Results of Operations

We generate revenue primarily through sales of subscriptions to our platform as well as professional services.

We generally sell our software on a per-user basis or through non-user based single application licenses.

We typically sell our software on a per-user basis or through non-user-based single application licenses.

We generally bill customers and collect payment for subscriptions to our platform in advance on an annual, quarterly, or monthly basis.

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Subscriptions

Cost of subscriptions revenue consists primarily of fees paid to our third-party managed hosting providers and other third-party service providers, personnel costs, including payroll and benefits for our technology operations and customer support teams, amortization of developed technology, and allocated overhead costs.

We expect cost of revenue to continue to increase in absolute dollars for the foreseeable future as our customer base grows.

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Gross Profit and Gross Margin

Gross profit and gross margin (defined as gross profit as a percentage of total revenue), have been, and will continue to be, affected by various factors, including the mix of cloud subscriptions and on-premises term license subscriptions, the mix of total subscriptions revenue and professional services revenue, subscription pricing, the costs associated with third-party hosting providers, and the extent to which we expand our professional services to support future growth.

costs associated with third-party hosting providers, and the extent to which we expand our professional services to support future growth.

Our gross margin may fluctuate from period to period based on the above factors.

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Professional Services Gross Margin

Professional services gross margin is affected by the growth in our professional services revenue as compared to the growth in, and timing of, the cost of our Customer Success organization as we continue to invest in the growth of our business, as well as by consultant utilization rates.

Professional services gross margin is affected by the growth in our professional services revenue as compared to the growth in, and timing of, the costs of our Customer Success organization as we continue to invest in the growth of our business, as well as by consultant utilization rates.

Professional services gross margin is also impacted by the amount of services performed by subcontractors and partners as opposed to internal resources.

In 2023, we expect professional services gross margin to be consistent with 2022;

In 2024, we expect professional services gross margin to be slightly lower than in 2023;

however, the margin remains subject to fluctuation based on the factors discussed above.

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Personnel-related costs such as salaries, bonuses, commissions, payroll tax payments, and stock-based compensation expense are the most significant components of each of these expense categories.

Other components of each operating expense category include professional fees for third-party services such as contract labor, legal, software development resources, and consulting.

In addition, operating expenses include allocated overhead costs, which are primarily comprised of facility costs, travel and entertainment expenditures, certain human resources costs (referral bonuses, training costs, and employee relations spending), office-related expenditures, and certain information technology costs (infrastructure, software, and cloud computing services).

Other components of each category include professional fees for third-party services such as legal, software development resources, and contractors.

In addition, operating expenses include allocated overhead costs, which are primarily comprised of facility costs, employee medical benefits, employee relations expense, and certain information technology costs for such items as infrastructure, software, and cloud computing services.

In general, our operating expenses are expected to continue to increase in absolute dollars as we invest resources in growing our various teams although at a more measured rate than prior years.

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Additional major expenses in this category include travel and entertainment, marketing activities and promotional events, subcontracting fees, and allocated overhead costs.

In order to continue to grow our business, geographical footprint, and brand awareness, we expect to continue investing resources in sales and marketing by increasing the number of sales and account management teams.

Additionally, we expect certain classes of expense such as travel and entertainment and in-person marketing events to increase relative to recent years.

As a result, we expect sales and marketing expense to increase in absolute dollars as we continue to invest to acquire new customers and further expand usage of our platform within our existing customer base.

In order to continue to grow our business, geographical footprint, and brand awareness, we expect to continue investing resources in sales and marketing by increasing the sales and marketing headcount in our principal markets and strategic growth areas.

We expect sales and marketing expense to increase in absolute dollars as we continue to invest to acquire new customers and further expand usage of our platform within our existing customer base.

We will continue our efforts to build on our brand reputation and increase market awareness of our platform.

Research and Development Expense

Research and development expense consists primarily of personnel costs for our employees who develop and enhance our platform, including salaries, bonuses, stock-based compensation, and other personnel costs.

Also included are non-personnel costs such as subcontracting, consulting and professional fees to third party development resources, and allocated overhead costs.

Also included are non-personnel costs such as subcontracting, consulting, professional fees to third party development resources, and allocated overhead costs.

Our research and development efforts are focused on enhancing the capabilities, speed, and power of our software platform.

In 2022, we opened a new product development center in India.

Although we expect research and development expense to continue to increase in absolute dollars as such costs are critical to maintain and improve the quality of applications and our competitive position, we believe our new product development center will result in cost savings over time.

Although we expect research and development expense to continue to increase in absolute dollars as such costs are critical to maintain and

improve the quality of applications and our competitive position, we believe our product development center will result in cost savings over time.

General and Administrative Expense

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Additional expenses included in this category are non-personnel costs such as travel-related expenses, contracting and professional fees for such services as audits, taxation, and legal, insurance and other corporate expenses, including allocated overhead costs, and bad debt expenses.

In 2023, we expect our general and administrative expense to decrease in absolute dollars largely due to an anticipated decline in legal costs, partially offset by amortization expense associated with the judgment preservation insurance (see Note 12 to the Condensed Consolidated Financial Statements for further discussion).

Other Non-Operating (Income) Expense

Other (Income) Expense, Net

Other (income) expense, net consists primarily of gains and losses related to changes in foreign currency exchange rates, interest income on our cash and cash equivalents and investments, and other sources of income or expense not related to our core business operations.

In 2024, we expect our general and administrative expense to increase in absolute dollars largely due to amortization expense associated with the judgment preservation insurance as discussed in Note 12 to the condensed consolidated financial statements and investments in our information technology team.

Other Non-Operating Expense

Other Expense (Income), Net

Other expense (income), net consists primarily of gains and losses related to changes in foreign currency exchange rates, interest income on our cash and cash equivalents and investments, and other sources of income or expense not related to our core business operations.

Interest Expense

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The following table sets forth our consolidated statements of operations (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Subscriptions $ 117,694 $ 98,957

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Loss before income taxes (33,388) (35,694)

Income tax expense (benefit) 178 255 2,137 (924)

Income tax (benefit) expense (465) 1,135

Net loss $ (32,923) $ (36,829)

(1) Stock-based compensation as a component of these line items is as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Cost of revenue

Subscriptions $ 211 $ 284 $ 713 $ 712

Professional services 1,535 1,401 4,598 3,788

Operating expenses

Sales and marketing 3,245 2,667 8,462 6,721

Research and development 2,930 3,454 9,466 8,831

General and administrative 3,090 3,530 9,976 7,375

Total stock-based compensation expense $ 11,011 $ 11,336 $ 33,215 $ 27,427

The following table sets forth our consolidated statements of operations data expressed as a percentage of total revenue:

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Subscriptions 78.5 % 73.2 %

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Loss before income taxes*

Income tax expense (benefit) 0.1 0.2 0.5 (0.3)

Net loss (16.2) % (37.3) % (25.4) % (34.0) %

(22.3) (26.4)

Income tax (benefit) expense (0.3) 0.8

(22.0) % (27.2) %

* Totals may not foot due to rounding.

Comparison of the Three Months Ended September 30, 2023 and 2022

Three Months Ended September 30,

Comparison of the Three Months Ended March 31, 2024 and 2023

Three Months Ended March 31,

2024 2023 $ Change % Change

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Total revenue $ 149,835 $ 135,235 $ 14,600 10.8 %

Total revenue increased $19.2 million, or 16.3%, in the three months ended September 30, 2023 compared to the same period in 2022 due to an increase in our subscriptions revenue of $17.3 million and an increase in our professional services revenue of $1.9 million.

The increase in subscriptions revenue was driven by a $16.6 million increase in cloud subscription revenue, a $0.4 million increase in maintenance and support revenue, and a $0.3

million increase in on-premises subscription revenue.

Total revenue increased $14.6 million, or 10.8%, in the three months ended March 31, 2024 compared to the same period in 2023 due to an increase in our subscriptions revenue of $18.7 million.

This increase was partially offset by a decrease in our professional services revenue of $4.1 million.

The increase in subscriptions revenue was driven by a $16.9 million increase in cloud subscription revenue, a $1.2 million increase in maintenance and support revenue, and a $0.6 million increase in on-premises subscription revenue.

With respect to new versus existing customers, there was a $5.9 million increase in subscriptions revenue stemming from sales of subscriptions to new customers, while the remaining $12.9 million of the increase was attributable to expanded deployments, price increases on renewals, and corresponding sales of additional subscriptions to existing customers.

The increase in professional services revenue was due primarily to a $6.5 million increase in sales to new customers, which was partially offset by a $4.6 million decrease in revenue from existing customers.

The decrease in

professional services revenue was due primarily to a $9.2 million decrease in revenue from existing customers, which was partially offset by a $5.0 million increase in sales to new customers.

Cost of Revenue

Three Months Ended September 30,

Three Months Ended March 31,

2024 2023 $ Change % Change

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Total gross margin 74.6 % 73.3 %

Cost of revenue increased $2.3 million, or 6.8%, in the three months ended September 30, 2023 compared to the same period in 2022, primarily due to a $1.7 million increase in hosting costs and a $1.5 million increase in professional services and product support personnel costs.

These increases were partially offset by a $0.5 million decrease in contractor costs and a $0.3 million decline in billable expenses.

Hosting costs increased as sales of our cloud offering increased in the three months ended September 30, 2023.

Personnel costs increased due to an increase in professional services and product support personnel headcount of 7.8% from September 30, 2022 to September 30, 2023 in addition to increased wages and fringe benefits and a $0.1 million increase in stock-based compensation expense.

Contractor costs decreased as a result of a decline in the usage of subcontractors.

Billable expenses decreased primarily as a result of lower travel and entertainment expenses stemming from fewer in-person engagements.

Subscriptions gross margin was 89.1% for the three months ended September 30, 2023, consistent with a margin of 89.2% in the same period in 2022 due primarily to increased hosting costs as sales of our cloud offering increased.

The increase in hosting costs was partially offset by an increase in subscriptions revenue during the three months ended September 30, 2023 as compared to the three months ended September 30, 2022.

Professional services gross margin increased to 25.5% for the three months ended September 30, 2023 compared to 22.0% in the same period in 2022 due largely to an increase in professional services revenue in the comparable periods coupled with a lower rate of professional services expense growth.

Gross margin increased to 73.7% for the three months ended September 30, 2023 compared to 71.4% for the three months ended September 30, 2022, driven largely by the higher gross profit margin from professional services.

Cost of revenue increased $1.9 million, or 5.3%, in the three months ended March 31, 2024 compared to the same period in 2023, primarily due to a $1.6 million increase in hosting costs and a $0.8 million increase in professional services and product support personnel costs.

These increases were partially offset by a $0.5 million decrease in contractor costs.

Hosting costs increased due to an increase in sales of our cloud offering during the three months ended March 31, 2024.

Although cost of sales headcount was flat year over year, personnel costs increased due to increased wages from March 31, 2023 to March 31, 2024, which were partially offset by a $0.1 million decrease in stock-based compensation expense.

Contractor costs decreased due to a decrease in the usage of subcontractors for professional services engagements.

Subscriptions gross margin increased to 89.6% for the three months ended March 31, 2024, compared to 89.4% in the same period in 2023.

The increase in subscriptions gross margin was attributable to an increase in subscriptions revenue during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, which was substantially offset by an increase in hosting costs.

Professional services gross margin decreased to 20.0% for the three months ended March 31, 2024 compared to 29.3% in the same period in 2023 due largely to a decrease in professional services revenue in the comparable periods coupled with a modest increase in professional services expenses.

Gross margin increased to 74.6% for the three months ended March 31, 2024 compared to 73.3% for the three months ended March 31, 2023, driven largely by the increase in subscriptions revenue and the improved subscriptions gross margin as compared to the prior year.

Sales and Marketing Expense

Three Months Ended September 30,

Three Months Ended March 31,

2024 2023 $ Change % Change

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% of revenue 38.8 % 46.7 %

Sales and marketing expense increased $0.8 million, or 1.4%, in the three months ended September 30, 2023 compared to the same period in 2022, primarily due to a $4.9 million increase in sales and marketing personnel costs.

This increase was partially offset by a $3.4 million decrease in overhead costs and a $0.8 million decrease in marketing costs.

Although sales and marketing personnel headcount fell 0.9% year over year, personnel costs increased due to increased wages and fringe benefits relative to the prior year, a $1.8 million increase in commissions expense due to increased sales, and a $0.6 million increase in stock-based compensation expense.

Overhead costs decreased primarily due to the absence of non-recurring expenditures for an internal sales and marketing event that occurred in the third quarter of the prior year and a decrease in certain allocated costs (primarily IT spending).

Marketing costs decreased primarily due to a decrease in advertising expense stemming from a decrease in the number of advertising campaigns launched in the three months ended September 30, 2023 relative to the three months ended September 30, 2022.

Sales and marketing expense decreased $4.9 million, or 7.8%, in the three months ended March 31, 2024 compared to the same period in 2023, primarily due to a $6.7 million decrease in sales and marketing personnel costs.

This decrease was partially offset by a $0.8 million increase in marketing costs and a $0.7 million increase in travel expenses.

Sales and marketing personnel costs decreased due to a decrease in sales and marketing headcount of 7.3% from March 31, 2023 to March 31, 2024 in addition to a $2.9 million decrease in severance costs.

These personnel decreases were partially offset by a $0.5 million increase in commissions expense.

Marketing costs increased primarily due to spending on our annual internal sales and marketing event and increased spending on public relations and lead generation.

Research and Development Expense

Three Months Ended September 30,

Three Months Ended March 31,

2024 2023 $ Change % Change

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% of revenue 26.5 % 30.8 %

Research and development expense decreased $0.5 million, or 1.3%, in the three months ended September 30, 2023 compared to the same period in 2022, primarily due to a $0.4 million decrease in professional fees.

Professional fees decreased due to a decline in consulting fees stemming from a lower usage of external resources to assist in our platform development efforts relative to the prior year.

Research and development expense decreased $1.9 million, or 4.5%, in the three months ended March 31, 2024 compared to the same period in 2023, primarily due to a $2.6 million decrease in research and development personnel costs and a $0.2 million decrease in professional fees.

These decreases were partially offset by a $0.9 million increase in overhead costs.

Although research and development personnel headcount increased 2.1% from March 31, 2023 to March 31, 2024, overall personnel costs decreased due to realized cost savings stemming from our product development center in India as well as a $0.6 million decrease in stock-based compensation expense.

Professional fees decreased due to a decline in consulting fees stemming from a lower usage of external resources to assist in our platform development efforts in the three months ended March 31, 2024 relative to the three months ended March 31, 2023.

Overhead costs increased primarily due to an increase in certain allocated costs tied to our growth, primarily related to cloud computing services, our new leased facility in India, and computer software costs.

General and Administrative Expense

Three Months Ended September 30,

Three Months Ended March 31,

2024 2023 $ Change % Change

(dollars in thousands)

General and administrative expense $ 23,440 $ 29,357 $ (5,917) (20.2) %

General and administrative

$ 33,446 $ 29,694 $ 3,752 12.6 %

% of revenue 22.3 % 22.0 %

General and administrative expense decreased $5.9 million, or 20.2%, in the three months ended September 30, 2023 compared to the same period in 2022 primarily due to a $7.2 million decrease in professional fees and a $0.4 million decrease in general and administrative personnel costs.

These decreases were partially offset by a $1.7 million increase in overhead costs.

Professional fees decreased due to a $7.6 million decline in legal fees incurred relative to the three months ended September 30, 2022.

Personnel costs decreased due to a decrease in general and administrative personnel headcount of 4.3% from September 30, 2022 to September 30, 2023 and a $0.4 million decrease in stock-based compensation expense.

Overhead costs increased primarily due to amortization expense related to our judgment preservation insurance policy.

Other Non-Operating Expense, Net

Three Months Ended September 30,

General and administrative expense increased $3.8 million, or 12.6%, in the three months ended March 31, 2024 compared to the same period in 2023 primarily due to an increase of $4.5 million in amortization expense related to our judgment preservation insurance policy.

This increase was partially offset by a $0.7 million decrease in professional fees and a $0.4 million decrease in general and administrative personnel costs.

Professional fees decreased due to a $1.2 million decline in legal fees incurred relative to the three months ended March 31, 2023, which was partially offset by a $0.4 million increase in contract labor expense.

Personnel costs decreased due to a decrease in headcount of 10.7% from March 31, 2023 to March 31, 2024, which was partially offset by a $0.2 million increase in stock-based compensation expense.

Other Non-Operating Expense (Income), Net

Three Months Ended March 31,

2024 2023 $ Change % Change

(dollars in thousands)

Other expense, net

Other expense (income), net

$ 8,207 $ (2,690) $ 10,897 ***

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*** Indicates a percentage that is not meaningful.

Other expense, net was $1.9 million in the three months ended September 30, 2023 compared to other expense, net of $5.9 million in the three months ended September 30, 2022.

This change was primarily due to $4.3 million in foreign exchange losses in the three months ended September 30, 2023 as compared to $6.1 million in foreign exchange losses in the three months ended September 30, 2022.

In addition, there was a $2.1 million increase in interest income in the three months ended September 30, 2023 relative to the prior year stemming from increased investments.

Other expense, net was $8.2 million in the three months ended March 31, 2024 compared to other income, net of $2.7 million in the three months ended March 31, 2023.

This change was primarily due to $11.5 million in foreign exchange losses in the three months ended March 31, 2024 as compared to $0.6 million in foreign exchange gains

in the three months ended March 31, 2023.

In addition, there was a $0.1 million decrease in interest income in the three months ended March 31, 2024 relative to the prior year.

Interest Expense

Three Months Ended September 30,

Three Months Ended March 31,

2024 2023 $ Change % Change

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% of revenue 3.8 % 2.3 %

*** Indicates a percentage that is not meaningful.

Interest expense increased $4.8 million in the three months ended September 30, 2023 as compared to the corresponding period in 2022 primarily due to interest expense incurred on the new credit facility borrowings that we entered into during the fourth quarter of 2022.

Comparison of the Nine Months Ended September 30, 2023 and 2022

Nine Months Ended September 30,

2023 2022 $ Change % Change

(dollars in thousands)

Subscriptions $ 296,554 $ 246,908 $ 49,646 20.1 %

Professional services 103,490 95,297 8,193 8.6 %

Total revenue $ 400,044 $ 342,205 $ 57,839 16.9 %

Total revenue increased $57.8 million, or 16.9%, in the nine months ended September 30, 2023 compared to the same period in 2022 due to an increase in our subscriptions revenue of $49.6 million and an increase in our professional services revenue of $8.2 million.

The increase in subscriptions revenue was driven by a $50.3 million increase in cloud subscription revenue and a $1.7 million increase in maintenance and support revenue, both of which were partially offset by a $2.4 million decrease in on-premises subscription revenue.

With respect to new versus existing customers, there was a $17.1 million increase in subscriptions revenue stemming from sales of

subscriptions to new customers along with a $32.6 million increase attributable to expanded deployments, price increases on renewals, and corresponding sales of additional subscriptions to existing customers.

The increase in professional services revenue was due primarily to a $16.7 million increase in sales to new customers, which was partially offset by an $8.5 million decrease in revenue from existing customers.

Cost of Revenue

Nine Months Ended September 30,

2023 2022 $ Change % Change

(dollars in thousands)

Cost of revenue

Subscriptions $ 32,492 $ 26,065 $ 6,427 24.7 %

Professional services 76,515 72,011 4,504 6.3 %

Total cost of revenue $ 109,007 $ 98,076 $ 10,931 11.1 %

Subscriptions gross margin 89.0 % 89.4 %

Professional services gross margin 26.1 % 24.4 %

Total gross margin 72.8 % 71.3 %

Cost of revenue increased $10.9 million, or 11.1%, in the nine months ended September 30, 2023 compared to the same period in 2022, primarily due to a $6.2 million increase in professional services and product support personnel costs and a $4.8 million increase in hosting costs.

Personnel costs increased due to an increase in professional services and product support personnel headcount of 7.8% from September 30, 2022 to September 30, 2023 in addition to increased wages and fringe benefits and a $0.8 million increase in stock-based compensation expense.

Hosting costs increased as sales of our cloud offering increased in the nine months ended September 30, 2023.

Subscriptions gross margin decreased to 89.0% for the nine months ended September 30, 2023 as compared to 89.4% for the nine months ended September 30, 2022 as an increase in subscriptions revenue was offset by an increase in hosting costs.

Professional services gross margin increased to 26.1% for the nine months ended September 30, 2023 compared to 24.4% in the same period in 2022 due largely to the aforementioned increase in professional services revenue, which was partially offset by higher personnel costs.

Gross margin rose to 72.8% for the nine months ended September 30, 2023 compared to 71.3% for the nine months ended September 30, 2022 driven largely by the higher gross margin from professional services.

Sales and Marketing Expense

Nine Months Ended September 30,

2023 2022 $ Change % Change

(dollars in thousands)

Sales and marketing $ 181,338 $ 157,104 $ 24,234 15.4 %

% of revenue 45.3 % 45.9 %

Sales and marketing expense increased $24.2 million, or 15.4%, in the nine months ended September 30, 2023 compared to the same period in 2022, primarily due to a $27.7 million increase in sales and marketing personnel costs which was partially offset by a $3.3 million decrease in marketing costs.

Although sales and marketing personnel headcount fell 0.9% year over year, personnel costs increased due to increased wages and fringe benefits relative to the prior year, a $7.1 million increase in commissions expense due to increased sales, a $5.2 million increase in severance costs, and a $1.7 million increase in stock-based compensation expense.

Marketing costs decreased primarily due to a decrease in advertising expense stemming from a decrease in the number of

advertising campaigns launched in the nine months ended September 30, 2023 relative to the nine months ended September 30, 2022, which was partially offset by an increase in the cost of marketing events.

Research and Development Expense

Nine Months Ended September 30,

2023 2022 $ Change % Change

(dollars in thousands)

Research and development $ 118,502 $ 101,401 $ 17,101 16.9 %

% of revenue 29.6 % 29.6 %

Research and development expense increased $17.1 million, or 16.9%, in the nine months ended September 30, 2023 compared to the same period in 2022, primarily due to a $17.8 million increase in research and development personnel costs.

This increase was partially offset by a $0.5 million decrease in professional fees.

Personnel costs increased due to an increase in research and development personnel headcount of 9.1% from September 30, 2022 to September 30, 2023 in addition to increased wages and fringe benefits coupled with a $0.6 million increase in stock-based compensation expense and a $1.2 million increase in severance costs.

Professional fees decreased due to a decrease in consulting fees stemming from a lower usage of external resources to assist in our platform development efforts relative to the prior year.

General and Administrative Expense

Nine Months Ended September 30,

2023 2022 $ Change % Change

(dollars in thousands)

General and administrative expense $ 82,342 $ 90,014 $ (7,672) (8.5) %

% of revenue 20.6 % 26.3 %

General and administrative expense decreased $7.7 million, or 8.5%, in the nine months ended September 30, 2023 compared to the same period in 2022 primarily due to a $21.0 million decrease in professional fees.

This decrease was partially offset by a $9.6 million increase in general and administrative personnel costs and a $3.7 million increase in allocated overhead costs.

Professional fees decreased due to a $23.7 million decline in legal fees incurred relative to the nine months ended September 30, 2022, which was partially offset by a $1.8 million increase in consulting fees.

Although general and administrative personnel headcount fell 4.3% year over year, personnel costs increased due to increased wages and fringe benefits relative to the prior year and a $2.6 million increase in stock-based compensation expense.

Overhead costs increased primarily due to an increase in lease expense resulting from an expansion of our corporate headquarters, and amortization expense related to our judgment preservation insurance policy.

Other Non-Operating (Income) Expense, Net

Nine Months Ended September 30,

Interest expense increased by $2.5 million in the three months ended March 31, 2024 as compared to the corresponding period in 2023 primarily due to interest expense incurred on additional credit facility borrowings that we entered into during the three months ended March 31, 2024 and the latter half of 2023.

Income Tax (Benefit) Expense

Three Months Ended March 31,

2024 2023 $ Change % Change

(dollars in thousands)

Other (income) expense, net

Income tax (benefit) expense

$ (465) $ 1,135 $ (1,600) ***

% of revenue (1.2) % 3.7 %

*** Indicates a percentage that is not meaningful.

Other income, net was $4.6 million in the nine months ended September 30, 2023 compared to other expense, net of $12.8 million in the nine months ended September 30, 2022.

This change was primarily due to $2.4 million in foreign exchange losses in the nine months ended September 30, 2023 as compared to $14.5 million in foreign exchange losses in the nine months ended September 30, 2022.

In addition, there was a $6.6 million increase in interest income in the nine months ended September 30, 2023 relative to the prior year stemming from increased investments.

Interest Expense

Nine Months Ended September 30,

2023 2022 $ Change % Change

(dollars in thousands)

Interest expense $ 12,790 $ 222 $ 12,568 ***

% of revenue 3.2 % 0.1 %

(0.3) % 0.8 %

*** Indicates a percentage that is not meaningful.

Interest expense increased $12.8 million in the nine months ended September 30, 2023 as compared to the corresponding period in 2022 primarily due to interest expense incurred on the new credit facility borrowings that we entered into during the fourth quarter of 2022.

Income tax expense decreased by $1.6 million in the three months ended March 31, 2024 as compared to the corresponding period in 2023.

This change was primarily driven by the estimated annual effective tax rate applied to current period pre-tax book losses for certain of our international subsidiaries for the three months ended March 31, 2024 as compared to current period pre-tax book income for those same subsidiaries for the three months ended March 31, 2023.

Non-GAAP Financial Measures

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We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to measures used by management in its financial and operational decision-making and (2) they are used by institutional investors and the analyst community to help them analyze the health of our business.

Our non-GAAP financial performance measures include non-GAAP net loss, non-GAAP net loss per share, and non-GAAP operating loss.

These non-GAAP financial performance measures exclude the effect of stock-based compensation expense, certain litigation-related expenses consisting of legal and other professional fees associated with the Pegasystems cases (net of insurance reimbursements), amortization of the judgment preservation insurance (“JPI”) policy and severance costs related to involuntary reductions in our workforce.

While some of these items may be recurring in nature and should not be disregarded in the evaluation of our earnings performance, it is useful to exclude such items when analyzing current results and trends compared to other periods as these items can vary significantly from period to period depending on specific underlying transactions or events that may occur.

Therefore, while we may incur or recognize these types of expenses in the future, we believe removing these items for purposes of calculating the non-GAAP financial measures provides investors with a more focused presentation of our ongoing operating performance.

Our non-GAAP financial performance measures include the following:

non-GAAP subscriptions cost of revenue, non-GAAP professional services costs of revenue, non-GAAP total cost of revenue, non-GAAP total operating expense, non-GAAP operating loss, non-GAAP income tax (benefit) expense, non-GAAP net loss, and non-GAAP net loss per share, basic and diluted.

These non-GAAP financial performance measures exclude the effect of stock-based compensation expense, certain non-ordinary litigation-related expenses consisting of legal and other professional fees associated with the Pegasystems cases (net of insurance reimbursements), or Litigation Expense, amortization of the judgment preservation insurance policy, or JPI Amortization, and severance costs related to an involuntary reduction in our workforce in 2023, or Severance Costs.

While some of these items may be recurring in

nature and should not be disregarded in the evaluation of our earnings performance, it is useful to exclude such items when analyzing current results and trends compared to other periods as these items can vary significantly from period to period depending on specific underlying transactions or events that may occur.

Therefore, while we may incur or recognize these types of expenses in the future, we believe removing these items for purposes of calculating our non-GAAP financial measures provides investors with a more focused presentation of our ongoing operating performance.

We also discuss adjusted EBITDA, a non-GAAP financial performance measure we believe offers a useful view of the overall operation of our business.

We define adjusted EBITDA as net loss before (1) other non-operating (income) expenses, net, (2) interest expense, (3) income tax expense (benefit), (4) depreciation expense and amortization of intangible assets, (5) stock-based compensation expense, (6) litigation expenses (net of insurance reimbursements) directly associated with the Pegasystems cases, (7) JPI amortization, and (8) severance costs.

We define adjusted EBITDA as net loss before (1) other expense (income), net, (2) interest expense, (3) income tax (benefit) expense, (4) depreciation expense and amortization of intangible assets, (5) stock-based compensation expense, (6) Litigation Expense, (7) JPI Amortization, and (8) Severance Costs.

The most directly comparable GAAP financial measure to adjusted EBITDA is net loss.

Users should consider the

limitations of using adjusted EBITDA, including the fact this measure does not provide a complete measure of our operating performance.

Users should consider the limitations of using adjusted EBITDA, including the fact this measure does not provide a complete measure of our operating performance.

Adjusted EBITDA is not intended to purport to be an alternative to net loss as a measure of operating performance or to cash flows from operating activities as a measure of liquidity.

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The following tables reconcile our non-GAAP measures to their nearest comparable GAAP measures (in thousands, except per share data):

GAAP Measure Stock-Based Compensation Litigation Expenses JPI Amortization

Severance Costs Non-GAAP Measure

Three Months Ended September 30, 2023

Subscriptions cost of revenue $ 11,265 $ (211) $ — $ — $ — $ 11,054

Professional services cost of revenue 24,804 (1,535) — — — 23,269

Total cost of revenue 36,069 (1,746) — — — 34,323

Total operating expense 116,242 (9,265) 4,961 (1,485) — 110,453

Operating loss (15,217) 11,011 (4,961) 1,485 — (7,682)

Income tax expense 178 88 — — — 266

Net loss (22,251) 11,099 (4,961) 1,485 — (14,628)

Net loss per share, basic and diluted $ (0.30) $ 0.15 $ (0.07) $ 0.02 $ — $ (0.20)

Nine Months Ended September 30, 2023

Subscriptions cost of revenue $ 32,492 $ (713) $ — $ — $ (30) $ 31,749

Professional services cost of revenue 76,515 (4,598) — — (158) 71,759

Total cost of revenue 109,007 (5,311) — — (188) 103,508

Total operating expense 382,182 (27,904) 2,772 (1,485) (6,111) 349,454

Operating loss (91,145) 33,215 (2,772) 1,485 6,299 (52,918)

Income tax expense 2,137 731 — — 139 3,007

Net loss (101,435) 33,946 (2,772) 1,485 6,438 (62,338)

Net loss per share, basic and diluted $ (1.39) $ 0.46 $ (0.04) $ 0.02 $ 0.09 $ (0.86)

GAAP Measure Stock-Based Compensation Litigation Expenses Non-GAAP Measure

Three Months Ended September 30, 2022

GAAP Measure Stock-Based Compensation Litigation Expense

JPI Amortization Non-GAAP Measure

Three Months Ended March 31, 2024

Subscriptions cost of revenue $ 12,270 $ (213) $ — $ — $ 12,057

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Operating loss (19,535) 10,606 742 4,504 (3,683)

Income tax (benefit) expense

(465) 604 — — 139

Net loss (32,923) 10,002 742 4,504 (17,675)

Net loss per share, basic and diluted $ (0.45) $ 0.14 $ 0.01 $ 0.06 $ (0.24)

Nine Months Ended September 30, 2022

GAAP Measure Stock-Based Compensation Litigation Expense

Severance Costs

Non-GAAP Measure

Three Months Ended March 31, 2023

Subscriptions cost of revenue $ 10,448 $ (272) $ — $ (11) $ 10,165

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Net loss per share, basic and diluted $ (0.51) $ 0.15 $ 0.03 $ 0.06 $ (0.27)

The following table reconciles GAAP net loss to adjusted EBITDA for the three and nine months ended September 30, 2023 and 2022 (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

The following table reconciles GAAP net loss to adjusted EBITDA for the three months ended March 31, 2024 and 2023 (in thousands):

Three Months Ended March 31,

GAAP net loss $ (32,923) $ (36,829)

Other expense (income), net 8,207 (2,690)

1,939 5,876 (4,637) 12,815

Interest expense 5,646 3,118

Income tax expense (benefit) 178 255 2,137 (924)

Depreciation and amortization of intangibles

2,340 1,759 7,046 5,332

Income tax (benefit) expense

Depreciation expense and amortization of intangible assets

Stock-based compensation expense 10,606 11,056

Litigation expenses (4,961) 1,810 (2,772) 20,432

Litigation Expense

JPI Amortization

1,485 — 1,485 —

Severance Costs

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Liquidity and Capital Resources

The following table presents selected financial information and statistics pertaining to liquidity and capital resources as of September 30, 2023 and December 31, 2022:

September 30, 2023 December 31, 2022

The following table presents selected financial information and statistics pertaining to liquidity and capital resources as of March 31, 2024 and December 31, 2023:

March 31, 2024 December 31, 2023

Cash and cash equivalents $ 170,108 $ 149,351

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Working capital* 95,950 43,183

* Defined as current assets net of current liabilities, excluding the current portion of restricted cash.

* Defined as current assets net of current liabilities.

We believe our existing cash and cash equivalents and short-term investments and marketable securities, together with any positive cash flows from operations and available borrowings under our line of credit, will be sufficient to support working capital and capital expenditure requirements for at least the next twelve months.

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We have historically financed our operations in large part with equity financing arrangements.

Through September 30, 2023, we have completed four public offerings and received net proceeds of $344.8 million.

Outside of equity offerings, we have financed our operations through sales of subscriptions and professional services.

Our last public offering was completed in June 2020, which was our fourth round of public offerings.

Through these public offerings, we received net proceeds of $344.8 million.

To further help strengthen our financial position and support our growth initiatives, in November 2022 we entered into a Senior Secured Credit Facilities Credit Agreement, or the Credit Agreement, which provides for a five-year term loan facility in an aggregate principal amount of $200.0 million and, in addition, up to $100.0 million for a revolving credit facility, including a letter of credit sub-facility in the aggregate availability amount of $20.0 million and a swingline sub-facility in the aggregate availability amount of $10.0 million (as a sublimit of the revolving loan facility).

The Credit Agreement matures on November 3, 2027.

We will use the proceeds from the $150.0 million term loan to fund the continued growth of our business and support our working capital requirements.

We were in compliance with all covenants as of September 30, 2023.

We believe, based on our current financial forecasts and trends, that we will remain compliant with all covenants for the foreseeable future.

As of September 30, 2023, we had used borrowing capacity of $62.0 million under our $75.0 million revolving credit facility, and we had outstanding letters of credit totaling $11.9 million in connection with securing our leased office space.

We will use the proceeds from the term loan to fund the continued growth of our business and support our working capital requirements.

We were in compliance with all covenants as of March 31, 2024.

As of March 31, 2024, we had used borrowing capacity of $62.0 million under our $100.0 million revolving credit facility, and we had outstanding letters of credit totaling $11.8 million in connection with securing our leased office space.

We expect future sources of funds to consist primarily of cash generated from sales of subscriptions and the related professional services.

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However, as we continue to invest in growing our business, operating expenses have also increased.

Outside of cash used in operations, other uses of cash in 2023 to date have included capital expenditures related to the expansion of our headquarters, repayments of existing debt, and purchases of investments.

In addition, on September 1, 2023, we entered into a Judgment Preservation Insurance (“JPI”) policy in connection with our $2.036 billion judgment against Pegasystems (see Note 12 to the condensed consolidated financial statements for additional details).

In 2023, we entered into a Judgment Preservation Insurance (“JPI”) policy in connection with our $2.036 billion judgment against Pegasystems.

See Note 12 to the condensed consolidated financial statements for additional details.

The total cost of the policy was $57.3 million, which we paid with operating cash on hand.

In addition, in February 2024 our Board of Directors authorized a share repurchase program, under which we repurchased approximately $50.0 million worth of our common stock during the three months ended March 31, 2024.

Outside of the above items and cash used by operations, other uses of cash in 2024 to date have included capital expenditures related to the expansion of the new leased facility for our research development center in India and principal repayments of our term loan debt.

Furthermore, we have a non-cancellable cloud hosting arrangement with Amazon Web Services that contains provisions for minimum purchase commitments.

Specifically, purchase commitments under the agreement total $131.0 million over five years.

The agreement, which started in July 2021 and is now in its third year as of September 30, 2023, contains minimum spending requirements of $25.0 million in the second year and $28.0 million in each of the third, fourth, and fifth years.

The agreement, which started in July 2021 and is now in its third year as of March 31, 2024, contains minimum spending requirements of $28.0 million in each of the third, fourth, and fifth years.

Spending under this agreement for the three months ended March 31, 2024 and 2023, totaled $10.3 million and $9.4 million, respectively.

The timing of payments under the agreement may vary, and the total amount of payments may exceed the minimum depending on the volume of services utilized.

Spending under this agreement for the three and nine months ended September 30, 2023, totaled $9.3 million and $27.8 million, respectively.

Spending under this agreement for the three and nine months ended September 30, 2022 totaled $9.0 million and $24.8 million, respectively.

We expect to meet our minimum purchase commitments for the remainder of the contract term.

Historical Cash Flows

Nine Months Ended September 30,

Three Months Ended March 31,

2024 2023 $ Change % Change

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Changes in working capital 27,461 (2,381) 29,842 ***

Net cash used by operating activities (102,198) (93,958) (8,240) 8.8

Net cash provided by (used in) operating activities 18,866 (25,265) 44,131 ***

Investing activities:

Net cash provided by investing activities

Net cash provided by (used in) investing activities

7,459 (12,316) 19,775 ***

Financing activities:

Net cash provided by financing activities 82,388 25,205 57,183 ***

Net cash (used in) provided by financing activities (4,249) 88,144 (92,393) ***

Effect of exchange rates (1,319) 15 (1,334) ***

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Operating Activities

Net cash used by operating activities was $102.2 million for the nine months ended September 30, 2023 as compared to $94.0 million used by operating activities for the nine months ended September 30, 2022.

The increase in net cash used by operating activities was due to the $57.3 million payment for our JPI policy.

This increase was mostly offset by a decline in legal fees and stronger collections from accounts receivable across the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022.

Net cash provided by operating activities was $18.9 million for the three months ended March 31, 2024 as compared to $25.3 million used in operating activities for the three months ended March 31, 2023.

The increase in net cash provided by operating activities was due to stronger collections from accounts receivable and a decline in legal fees and other operating expenses across the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

Investing Activities

Net cash provided by investing activities was $0.9 million for the nine months ended September 30, 2023 as compared to $20.3 million in net cash provided by investing activities for the nine months ended September 30, 2022.

This change was primarily driven by a $22.2 million increase in purchases of investments and a $2.4 million increase in capital expenditures, both of which were partially offset by a $5.2 million increase in proceeds from the sale of investments.

Net cash provided by investing activities was $7.5 million for the three months ended March 31, 2024 as compared to $12.3 million in net cash used in investing activities for the three months ended March 31, 2023.

This change was primarily driven by a $24.2 million decrease in purchases of investments, partially offset by a decline of $6.6 million in proceeds from the sale of investments and a $2.2 million decrease in capital expenditures.

Financing Activities

Net cash provided by financing activities was $82.4 million for the nine months ended September 30, 2023 as compared to $25.2 million of net cash provided by financing activities for the nine months ended September 30, 2022.

The increase in net cash provided by financing activities was primarily due to a $92.0 million increase in proceeds from borrowings during the nine months ended September 30, 2023.

This increase was partially offset by a $24.5 million decrease in proceeds received from the exercise of stock options, a $7.2 million increase in payments for employee tax withholdings associated with the net settlement of stock awards, and a $2.6 million increase in debt repayments.

Net cash used in financing activities was $4.2 million for the three months ended March 31, 2024 as compared to $88.1 million of net cash provided by financing activities for the three months ended March 31, 2023.

The decrease in net cash provided by financing activities was primarily due to a $50.0 million increase in common stock repurchases, a $42.0 million decrease in proceeds from borrowings, and a $0.5 million increase in debt repayments during the three months ended March 31, 2024.

Critical Accounting Estimates

There have been no material changes in our critical accounting policies from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 16, 2023.

There have been no material changes in our critical accounting estimates from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 15, 2024.

We are not aware of any specific events or circumstances that would require us to update our estimates, assumptions, and judgments.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis