What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-07 compared with 2025-11-06 · 175 added, 335 removed, 268 unchanged (66% of the section changed)

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Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

Appian is The Process Company.

We deliver a software platform that helps organizations run better processes that reduce costs, improve customer experiences, and gain a strategic edge.

Committed to client success, we serve many of the world’s largest companies across various industries.

We believe processes define each organization.

Processes are how they operate, deliver value, and interact with their customers.

Nothing is more transformative for an organization than improving their processes.

Appian has both the platform and the expertise to enable enterprise transformation.

Appian provides process automation technology.

For over 25 years, our highly reliable and scalable platform has been leveraged by large enterprises and governments.

Combining leading edge process orchestration and intelligence, we provide everything an organization needs to design, automate, and optimize critical processes, facilitating continuous adaptation in changing environments.

Appian provides capabilities to tackle any process challenge.

Appian tightly integrates data fabric;

robotic process automation, or RPA;

intelligent document processing, or IDP;

generative artificial intelligence, or generative AI;

artificial intelligence agents, or AI agents;

low-code design;

application programming interfaces, or APIs;

business rules;

and process intelligence capabilities in a single platform.

These capabilities are unified and scalable, meeting enterprise demands and easy to change as requirements evolve.

• Process Orchestration:

The Appian platform coordinates tasks between AI, automation, and humans to ensure processes run efficiently and intelligently.

RPA enables customers to build bots with low-code to automate repetitive manual tasks.

Appian AI agents extract data, process documents, and initiate processes at scale.

API integration easily connects systems with low-code design tools and hundreds of prebuilt connections.

• Data Fabric:

Appian’s data fabric is an integrated data layer that unifies data across systems without requiring companies to migrate their data.

Appian empowers users to explore data in real-time, build reports, and get AI-powered insights for smarter decision-making.

Our patented data fabric technology supports both analytical and transactional workloads, which allows users to build applications that create and update enterprise data.

It also includes row-level security rules to enforce access controls at every level.

Our data fabric functionality powers and is designed to secure our AI offering.

• Process Intelligence:

Process intelligence allows users to gain deep insights into process performance through Appian’s Process HQ.

It also preps data for process mining with just a few clicks, even across multiple sources.

Companies can use AI to monitor processes, identify issues, and get intelligent recommendations for optimization.

• Artificial Intelligence:

We believe the key to unlocking AI’s full potential is embedding it inside a business process.

Process is where business happens.

It’s where companies make decisions, save and spend money, serve customers, and scale business operations.

When AI operates within processes, it gains purpose, governance, and accountability—all essential to delivering value from AI.

Appian can embed AI into every process, which gives AI the context and actions it needs to accelerate outcomes for the enterprise.

Appian delivers six key benefits with our “AI in process” approach:

Process makes AI easy.

Deploying AI in isolated projects is complex and costly.

By embedding AI within a process, enterprises can easily access valuable AI capabilities when and where they need them.

Process gives AI structure.

AI is only as useful as the structure surrounding it.

A process gives AI defined goals in a structured flow of work.

AI can work alongside humans and automation tools, escalating issues so humans always maintain oversight and control.

Process gives AI data.

AI is nothing without data.

But most enterprises struggle to feed AI complete data from across systems, while still ensuring privacy and maintaining access privileges.

By integrating AI into processes, enterprises ensure AI receives quality, real-time data from all systems.

Organizations can enforce privacy controls to prevent unauthorized access and optimize data governance to comply with regulations (such as GDPR, HIPAA, etc.).

Process makes AI safe.

AI is powerful, but no one wants to give AI free reign over their enterprises.

Processes provide crucial safety mechanisms, including human approval steps for high-risk actions and escalation paths to ensure AI errors don’t cause harm.

Additionally, activity logs make auditing and compliance simple for organizations with strict regulatory requirements.

Process makes AI measurable.

For many enterprises, AI is a black box, which can’t be measured for impact.

Appian processes track every AI action, allowing organizations to measure performance, identify bottlenecks, and optimize outcomes.

Process makes AI enterprise-grade.

A process provides the necessary infrastructure to scale AI use.

The right tooling puts AI to work with security certifications, enterprise scalability, and other capabilities such as process orchestration, automation, and intelligence.

Processes take AI from a collection of disconnected pilots to an enterprise-wide capability.

Appian’s unified approach delivers all the capabilities leading organizations need to orchestrate their business processes in one place.

It empowers enterprises to transform their processes and improve business outcomes.

We have generated the majority of our revenue from sales of subscriptions, which include (1) cloud subscriptions bundled with maintenance and support and hosting services and (2) term license subscriptions bundled with maintenance and support.

Our subscription contracts are priced based primarily on the number of users who access and utilize the applications built on our platform or, alternatively, non-user-based single application licenses.

• Comprehensive Automation Platform.

The Appian platform provides a complete set of features and tools, allowing our customers to apply the right tool to each step of their process.

Our capabilities include business rules engines, pre-built connections, Application Program Interface (API) integrations, intelligent document processing (IDP), robotic process automation (RPA), and artificial intelligence (AI).

• Unified Data Fabric.

Appian’s patented data fabric is an integrated layer that unifies data across the enterprise without requiring companies to migrate their data, eliminating the need for additional systems and tools and accelerating time to insight.

Our data fabric allows every worker, system, and agent to have the context it needs to act with confidence.

• Enterprise-Grade Controls.

Appian delivers best-in-class security, auditability, and enterprise guardrails to support even the most mission critical workloads and most sensitive and confidential data.

In addition, Appian provides process mining functionality that allows organizations to identify bottlenecks and compliance risks.

• Interactive Design.

Our visual design tools allow business users, technical experts, and implementation specialists to collaborate on the automation, improvement, and streamlining of existing processes, assisted by AI.

This iterative process continues after the initial implementation, allowing our customers to seamlessly evolve and optimize their processes over time.

• Implementation Excellence.

Appian has an elite team of implementation and process specialists with a 25-year track record of partnering with our customers to ensure the success of their applications.

Advances in AI offer the promise of unprecedented innovation in business productivity.

Despite this potential, currently most business implementations of AI fail, and the technology is frequently sidelined as an assistant rather than integrated as a digital worker within core business operations.

This presents a unique opportunity for Appian, since we provide the process framework that organizations need to drive value from AI investments.

We believe in order to fully realize the value of AI, organizations need to embed AI capabilities directly into workflows.

To be effective, AI requires strict controls and defined guardrails that eliminate errors and hallucinations, ensuring AI activities are guided by organizational policies and regulations.

As a leader in process automation, we provide the tools and guardrails necessary for AI to deliver repeatable and scalable business value.

The impact of AI also depends on data.

Without proprietary data, AI lacks the internal context necessary to help solve specific business problems.

Most enterprises today struggle to provide AI with relevant data across systems while still ensuring privacy and maintaining access privileges.

Our data fabric is designed to provide the data AI needs, grant secure and performant access to information from across the enterprise, and obviate the need for complex and slow data migrations.

We generate the majority of our revenue from sales of subscriptions, which include (1) cloud subscriptions bundled with maintenance and support and hosting services and (2) other subscriptions, which include self-managed licenses bundled with maintenance and support.

Our subscription contracts are priced based primarily on the number of users who access and utilize the applications built on our platform, non-user-based single application licenses, or consumption-based pricing.

Our subscription contract terms generally vary from one to three years with most providing for payment in advance on an annual, quarterly, or monthly basis.

Due to the variability of our billing terms and the episodic nature of our customers purchasing additional subscriptions, we do not believe changes in our deferred revenue in a given period are directly correlated with our revenue growth.

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

We believe our professional services have driven customer success and facilitated the adoption of our platform by customers.

We have a number of strategic partnerships with companies, including 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

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

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

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

Additionally, they often go to market with their own pre-built solutions using our platform, delivering software license revenue to us.

We intend to continue to invest in both our professional services group and strategic partnerships to drive increased adoption of our platform.

We believe our investment in professional services, including strategic partners building their practices around Appian, will drive increased adoption of our platform.

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Generally, our sales team targets its efforts at organizations with over 2,000 employees and $2.0 billion in annual revenue.

For the three and nine months ended September 30, 2025, revenue generated from government agencies represented 32.4% and 33.3%, respectively, of total revenue, of which revenue from U.S.

federal government agencies was 25.0% and 24.9% of total revenue, respectively.

For the three and nine months ended September 30, 2024, revenue generated from government agencies represented 31.0% and 30.6%, respectively, of total revenue, of which revenue from U.S.

For the three months ended March 31, 2026 and 2025, revenue generated from U.S.

federal government agencies was 25.8% and 23.9% of total revenue, respectively.

No single end-customer accounted for more than 10% of our total revenue in the three months ended March 31, 2026 or 2025.

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, 2025, 39.7% and 38.2%, respectively, of our total revenue was generated from customers outside of the United States as compared to 36.3% and 37.2% in the three and nine months ended September 30, 2024, respectively.

As of September 30, 2025, we operated in 16 countries.

In the three months ended March 31, 2026 and 2025, 37.6% and 36.2%, respectively, of our total revenue was generated from customers outside of the United States.

As of March 31, 2026, 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.

Our business model focuses on maximizing the lifetime value of customer relationships, which is a function of the duration of a customer’s deployment of our platform as well as the price and number of subscriptions of our platform that a customer purchases.

We incur significant customer acquisition costs, including expenses associated with hiring new sales representatives, who can take anywhere from six months to a year to become productive given the length of our sales cycle, and marketing costs which, with the exception of certain types of sales commissions, are expensed as incurred.

We incur significant customer acquisition costs, including expenses associated with hiring new sales representatives, who can take anywhere from six months to a year to become productive

given the length of our sales cycle, and marketing costs which, with the exception of certain types of sales commissions, are expensed as incurred.

At the same time, we believe the costs we incur to retain customers and drive additional purchases of software are lower than our customer acquisition costs on a relative basis.

Over time, we expect a large portion of our customers to renew their subscriptions and purchase additional subscriptions as they continue to build more applications and add more users to our platform.

Over the last three years, we had a quarterly average cloud subscriptions gross renewal rate of 98%.

We calculate our cloud subscriptions gross renewal rate by dividing (i) the cloud subscriptions revenue from renewing cloud customers in the current 12-month period that were cloud customers during the entirety of the prior 12-month period, by (ii) our cloud subscriptions revenue from all cloud customers in the corresponding prior 12-month period that were cloud customers during the entirety of such prior 12-month period.

The calculation includes the impact of customers that churned during the current 12-month period but excludes the impact of price changes, additional users, upsells, and downsells during the same period.

Key Factors Affecting Our Performance

The following are several key factors that affect our performance:

• Market Adoption of Our Platform - Our ability to grow our customer base and drive market adoption of our platform is affected by the pace at which organizations digitally transform.

• Market Adoption of Our Platform - Our ability to grow our customer base and drive market adoption of our platform is affected by the pace at which organizations automate processes.

We expect our revenue growth will be primarily driven by the pace of adoption and penetration of our platform.

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 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.

We offer a leading process automation platform and intend to continue to invest to expand our customer base.

The degree to which prospective customers recognize the need for our software platform and its ability to enable their organizations to automate processes, 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 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, life sciences, insurance, and manufacturing.

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

We have 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, life sciences, insurance, and manufacturing.

In addition, we have established relationships with strategic partners who work with organizations undergoing process automations.

Our ability to continue to grow our customer base is dependent, in part, upon our ability to differentiate ourselves within the increasingly competitive markets in which we participate.

• Further Penetration of Existing Customers - Our sales team seeks to generate additional revenue from existing customers by adding new users or application licenses to our platform.

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

• Further Penetration of Existing Customers - Our sales team seeks to generate additional revenue from existing customers by adding new users or application licenses.

In addition, we encourage our customers to upgrade to higher service tiers in order to take advantage of incremental functionality.

We offer three service tiers ranging from a standard package with entry level features to our premium offering that includes access to features such as process mining and full AI integration.

Many of our customers establish Appian as a platform for process automation and expand their use to include application consolidation and legacy application modernization.

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.

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Cloud Subscriptions Revenue

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

2025 2024 % Change 2025 2024 % Change

Three Months Ended March 31,

2026 2025 % Change

Cloud subscriptions revenue

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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 September 30,

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 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 accounting for any expansion or contraction.

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 churn, upsells, downsells, pricing changes, and growth in the number of users on our platform.

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

Cloud Net Annualized Recurring Revenue (“ARR”) Expansion

As of March 31,

Cloud net ARR expansion

We believe cloud net ARR expansion provides real-time insight into the growth of our existing customer base and is indicative of our success in the renewal and expansion of cloud subscription agreements with existing customers.

To calculate this metric, we define ARR on a customer level as monthly recurring cloud subscriptions revenue multiplied by 12.

We then compare the period-end ARR of the previous year’s customer cohort to their ARR at the end of the current period.

The cloud net ARR expansion represents the ratio between these two periods.

Note for purposes of the calculation, a customer is defined pursuant to our updated methodology, and the calculation is performed on a constant currency basis.

Key Components of Results of Operations

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

We typically 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, through non-user-based single application licenses, or consumption-based pricing.

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

Subscriptions revenue is primarily derived from cloud subscriptions bundled with maintenance and support and hosting services and term license subscriptions bundled with maintenance and support.

Subscriptions revenue is primarily derived from cloud subscriptions bundled with maintenance and support and hosting services, license subscriptions, and maintenance and support for license subscriptions.

Our maintenance and support agreements provide customers with the right to unspecified software upgrades, maintenance releases and patches released during the term of the maintenance and support agreement on a when-and-if-available basis, and rights to technical support.

Term license subscriptions are offered when the customer prefers to self-manage the deployment of our platform within their own infrastructure.

License subscriptions are offered when the customer prefers to self-manage the deployment of our platform within their own infrastructure.

When our platform is delivered as a cloud subscription, we manage operational needs in third-party hosted data centers.

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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 acquired technology, and allocated overhead costs.

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, customer support, and portions of our information security teams, amortization of acquired 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

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 or reduce our professional services to support future changes in our growth.

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 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 or reduce our professional services to support future changes in our growth.

Our gross margin may fluctuate from period to period based on the aforementioned 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 costs of our professional services 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.

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 professional services organization.

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

The professional services margins for individual quarters remain subject to fluctuation based on the factors discussed above.

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

In addition, operating expenses include allocated overhead costs, which are primarily comprised of facility costs such as rent, employee medical benefits, employee relations expense, and certain information technology costs.

In general, our operating expenses are expected to continue to increase in absolute dollars as we invest resources in enhancing our product and growing our business, although such growth is expected to be at a more measured rate than prior years.

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We are focused on increasing the efficiency of our sales force and marketing activities by enhancing account targeting, messaging, field sales operations, and sales training in order to accelerate the adoption of our platform.

We expect sales and marketing headcount to marginally increase from current levels in 2025 due to expected growth in our principal markets and strategic growth areas.

Furthermore, we expect sales and marketing expense to increase in absolute dollars as we continue to invest in acquiring new customers, further expand usage of our platform within our existing customer base, and broaden our efforts to build on our brand reputation and increase market awareness of our platform.

We expect sales and marketing expense to increase in absolute dollars as we continue to grow the size of our sales force, invest in acquiring new customers, further expand usage of our platform within our existing customer base, and broaden our efforts to build on our brand reputation as well as 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, professional fees to third party development resources, certain information technology expenses, and allocated overhead costs.

Also included are non-personnel costs such as subcontracting, consulting, professional fees to third party development resources, cloud computing and software expenses, 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 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 continue to result in cost savings over time.

General and Administrative Expense

General and administrative expense consists primarily of personnel costs, including salaries, bonuses, stock-based compensation, and other personnel costs for our administrative, legal, information technology, human resources, finance, and accounting teams as well as our senior executives.

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 2025, we expect general and administrative expense to increase in absolute dollars largely due to investments in our information technology team.

General and administrative expense consists primarily of personnel costs, including salaries, bonuses, stock-based compensation, and other personnel costs for our administrative, legal, human resources, finance, and accounting teams as well as our senior executives.

Additional expenses included in this category are non-personnel costs such as travel-related expenses, information security costs related to the protection of our internal systems, 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.

Other Non-Operating Expense (Income)

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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,

2025 2024 2025 2024

Three Months Ended March 31,

Subscriptions $ 160,311 $ 134,352

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Total cost of revenue (1)

54,411 44,040

Gross profit 147,769 122,386

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Total operating expenses (1)

144,613 123,220

Operating income (loss) 3,156 (834)

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Other income, net

(1,398) (12,544) (24,678) (5,882)

Interest expense 4,172 5,318

Total other non-operating expense (income) 4,088 (398)

Income (loss) before income taxes

9,201 (781) 10,026 (77,925)

Loss before income taxes

Income tax expense 593 741

Net income (loss) $ 7,825 $ (2,100) $ 6,336 $ (78,615)

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,

$ (1,525) $ (1,177)

(1) Certain prior period operating expenses have been reclassified to conform to the current period presentation.

These changes have been reflected in the table above as well as within our results from operation discussion below.

For further information, refer to Note 2 of our consolidated financial statements.

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

Three Months Ended March 31,

Subscriptions 79.3 % 80.7 %

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Total cost of revenue*

24.2 24.1 24.4 25.4

Gross profit 73.1 73.5

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Total operating expenses*

68.8 80.6 75.3 89.2

Operating income (loss) 1.6 (0.5)

7.0 (4.6) 0.2 (14.6)

Other non-operating expense (income)

Other income, net — (3.4)

(0.7) (8.1) (4.7) (1.3)

Interest expense 2.1 3.2

Total other non-operating expense (income)*

2.1 (4.1) (1.7) 2.7

Income (loss) before income taxes

4.9 (0.5) 1.9 (17.3)

Loss before income taxes (0.5) (0.3)

Income tax expense 0.3 0.4

Net income (loss)

4.2 % (1.4) % 1.2 % (17.5) %

Net loss (0.8) % (0.7) %

* Totals may not foot due to rounding.

Comparison of the Three Months Ended September 30, 2025 and 2024

Three Months Ended September 30,

Comparison of the Three Months Ended March 31, 2026 and 2025

Three Months Ended March 31,

2026 2025 $ Change % Change

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Total revenue $ 202,180 $ 166,426 $ 35,754 21.5 %

Total revenue increased $33.0 million, or 21%, in the three months ended September 30, 2025 compared to the same period in 2024 due to an increase in our subscriptions revenue of $24.1 million coupled with an increase in our professional services revenue of $8.9 million.

The increase in subscriptions revenue was driven by a $19.5 million increase in cloud subscriptions revenue, a $3.5 million increase in term license subscriptions revenue, and a $1.0 million increase in maintenance and support revenue.

With respect to new versus existing customers, there was a $6.3 million increase in subscriptions revenue from sales to new customers, while the remaining $17.8 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 revenue from sales to new customers along with a $2.4 million increase in sales to existing customers.

Total revenue increased $35.8 million, or 21.5%, in the three months ended March 31, 2026 compared to the same period in 2025 due to an increase in our subscriptions revenue of $26.0 million coupled with an increase in our professional services revenue of $9.8 million.

The increase in subscriptions revenue was driven by a $24.7 million increase in cloud subscriptions revenue and a $1.3 million increase in other subscriptions revenue.

With respect to new versus existing customers, there was a $5.1 million increase in subscriptions revenue from sales to new customers, while the remaining $20.8 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 $5.7 million increase in revenue from sales to new customers along with a $4.1 million increase in sales to existing customers.

Cost of Revenue

Three Months Ended September 30,

Three Months Ended March 31,

2026 2025 $ Change % Change

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Total cost of revenue $ 54,411 $ 44,040 $ 10,371 23.5 %

Subscriptions gross margin 87.9 % 88.6 %

Professional services gross margin 30.9 % 25.6 %

Total gross margin 75.8 % 75.9 %

Cost of revenue increased $8.2 million, or 22%, in the three months ended September 30, 2025 compared to the same period in 2024, primarily due to a $3.1 million increase in hosting costs coupled with a $2.5 million increase in contractor costs and a $2.2 million increase in professional services and product support personnel costs.

Hosting costs increased due to an increase in sales of our cloud offering during the three months ended September 30, 2025, while contractor costs increased due to an increase in the usage of subcontractors for professional services engagements.

Professional services and product support personnel costs increased due to an increase in headcount from September 30, 2024 to September 30, 2025.

Sales and Marketing Expense

Three Months Ended September 30,

2025 2024 $ Change % Change

(dollars in thousands)

Sales and marketing $ 51,918 $ 50,865 $ 1,053 2.1 %

% of revenue 27.8 % 33.0 %

Sales and marketing expense increased $1.1 million, or 2%, in the three months ended September 30, 2025 compared to the same period in 2024, primarily due to a $1.3 million increase in marketing expenses and a $1.2 million increase in sales and marketing personnel costs.

These increases were partially offset by a $1.0 million decrease in contractor costs.

Although sales and marketing headcount decreased from September 30, 2024 to September 30, 2025, overall sales and marketing personnel costs increased due to higher bonuses and commissions expense.

Research and Development Expense

Three Months Ended September 30,

2025 2024 $ Change % Change

(dollars in thousands)

Research and development $ 40,263 $ 38,572 $ 1,691 4.4 %

% of revenue 21.5 % 25.0 %

Research and development expense increased $1.7 million, or 4%, in the three months ended September 30, 2025 compared to the same period in 2024.

This change is primarily attributable to a $1.0 million increase in research and development personnel costs and a $0.5 million increase in information technology costs.

Although research and development headcount remained relatively consistent period over period, overall personnel costs increased due to higher bonus expense, while information technology costs increased primarily due to a $0.4 million increase in cloud computing services spend.

General and Administrative Expense

Three Months Ended September 30,

2025 2024 $ Change % Change

(dollars in thousands)

General and administrative

$ 36,416 $ 34,688 $ 1,728 5.0 %

% of revenue 19.5 % 22.5 %

General and administrative expense increased $1.7 million, or 5%, in the three months ended September 30, 2025 compared to the same period in 2024 primarily due to a $1.3 million increase in general and administrative personnel costs and a $1.0 million increase in rent expense.

These increases were partially offset by a $0.8 million decrease in insurance expense.

Personnel costs increased due to an increase in headcount from September 30, 2024 to September 30, 2025 coupled with higher bonus expense and a $0.6 million increase in stock compensation expense.

Rent expense increased due to $0.8 million of lease impairment charges.

Insurance expense decreased due to a $0.5 million decrease in amortization of the judgment preservation insurance policy.

Other Income, Net

Three Months Ended September 30,

2025 2024 $ Change % Change

(dollars in thousands)

Other income, net

$ (1,398) $ (12,544) $ 11,146 (88.9) %

% of revenue (0.7) % (8.1) %

Other income, net was $1.4 million in the three months ended September 30, 2025 compared to other income, net of $12.5 million in the three months ended September 30, 2024.

This change was primarily due to $0.3 million in foreign exchange losses in the three months ended September 30, 2025 as compared to $9.2 million in foreign exchange gains in the three months ended September 30, 2024, in addition to a $1.8 million decrease in other income attributable to short-swing profit disgorgement payments to us from a public stockholder of our Class A common stock during the three months ended September 30, 2024.

Interest Expense

Three Months Ended September 30,

2025 2024 $ Change % Change

(dollars in thousands)

Interest expense $ 5,311 $ 6,168 $ (857) (13.9) %

% of revenue 2.8 % 4.0 %

Interest expense decreased by $0.9 million in the three months ended September 30, 2025 as compared to the corresponding period in 2024 primarily due to a lower effective interest rate and lower outstanding principal compared to the prior year period.

Income Tax Expense

Three Months Ended September 30,

2025 2024 $ Change % Change

(dollars in thousands)

Income tax expense $ 1,376 $ 1,319 $ 57 4.3 %

Income tax expense increased by $0.1 million in the three months ended September 30, 2025 as compared to the corresponding period in 2024.

This change was primarily driven by increased pre-tax book income in certain international subsidiaries for the three months ended September 30, 2025.

Comparison of the Nine Months Ended September 30, 2025 and 2024

Nine Months Ended September 30,

2025 2024 $ Change % Change

(dollars in thousands)

Subscriptions $ 414,197 $ 353,789 $ 60,408 17.1 %

Professional services 109,873 96,548 13,325 13.8

Total revenue $ 524,070 $ 450,337 $ 73,733 16.4 %

Total revenue increased $73.7 million, or 16%, in the nine months ended September 30, 2025 compared to the same period in 2024 due to an increase in our subscriptions revenue of $60.4 million as well as an increase in our professional services revenue of $13.3 million.

The increase in subscriptions revenue was driven by a $51.2 million increase in cloud subscriptions revenue, a $7.2 million increase in term license subscriptions revenue, and a $2.0 million increase in maintenance and support revenue.

With respect to new versus existing customers, there was a $15.1 million increase in subscriptions revenue from sales to new customers, while the remaining $45.3 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 $15.3 million increase in revenue from sales to new customers, which was partially offset by a $2.0 million decrease in sales to existing customers.

Cost of Revenue

Nine Months Ended September 30,

2025 2024 $ Change % Change

(dollars in thousands)

Cost of revenue

Gross Profit:

Subscriptions $ 137,407 $ 115,831

Professional services 10,362 6,555

Total cost of revenue $ 128,132 $ 114,494 $ 13,638 11.9 %

Total gross profit

$ 147,769 $ 122,386

Subscriptions gross margin 85.7 % 86.2 %

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Total gross margin 73.1 % 73.5 %

Cost of revenue increased $13.6 million, or 12%, in the nine months ended September 30, 2025 compared to the same period in 2024, primarily due to a $8.8 million increase in hosting costs coupled with a $4.9 million increase in contractor costs.

These increases were partially offset by a $0.3 million decrease in professional services and product support personnel costs.

Hosting costs increased due to an increase in sales of our cloud offering during the nine months ended September 30, 2025, while contractor costs increased due to an increase in the usage of subcontractors for professional services engagements.

Although professional services and product support headcount increased from September 30, 2024 to September 30, 2025, overall personnel costs decreased due to a $1.4 million decrease in severance expense as compared to the prior year.

Cost of revenue increased $10.4 million, or 23.5%, in the three months ended March 31, 2026 compared to the same period in 2025, primarily due to a $3.6 million increase in hosting costs coupled with a $3.6 million increase in professional services and product support personnel costs and a $2.3 million increase in contractor costs.

Hosting costs increased due to an increase in sales of our cloud offering during the three months ended March 31, 2026, while contractor costs increased due to an increase in the usage of subcontractors for professional services engagements.

Professional services and product support personnel costs increased due to an increase in salaries and an 18% increase in headcount from March 31, 2025 to March 31, 2026.

Sales and Marketing Expense

Nine Months Ended September 30,

Three Months Ended March 31,

2026 2025 $ Change % Change

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% of revenue 32.0 % 33.8 %

Sales and marketing expense decreased $8.7 million, or 5%, in the nine months ended September 30, 2025 compared to the same period in 2024, primarily due to a $6.1 million decrease in sales and marketing personnel costs, and a $1.5 million decrease in information technology spend.

These decreases were partially offset by a $1.3 million increase in travel and entertainment costs.

Sales and marketing personnel costs decreased due to a decrease in sales and marketing headcount from September 30, 2024 to September 30, 2025.

Information technology costs declined largely due to lower cloud computing expense.

Travel and entertainment expense increased due to a higher number of in-person events and engagements relative to the prior year.

Sales and marketing expense increased $8.3 million, or 14.8%, in the three months ended March 31, 2026 compared to the same period in 2025, primarily due to a $5.4 million increase in sales and marketing personnel costs, a $1.5 million increase in travel and entertainment costs, and a $1.1 million increase in marketing expenses.

Sales and marketing personnel costs increased due to a 9% increase in headcount from March 31, 2025 to March 31, 2026.

Travel and entertainment expenses increased due to increases in airfare and lodging associated with a higher number of in-person events and engagements relative to the prior year.

In addition, marketing expenses increased due to higher spend on marketing materials and events relative to the prior year.

Research and Development Expense

Nine Months Ended September 30,

Three Months Ended March 31,

2026 2025 $ Change % Change

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% of revenue 22.9 % 25.1 %

Research and development expense increased $2.3 million, or 2%, in the nine months ended September 30, 2025 compared to the same period in 2024.

This change is primarily attributable to a $1.6 million increase in

research and development personnel costs and a $1.5 million increase in information technology costs.

Although research and development headcount remained consistent period over period, overall personnel costs increased due to higher bonus expense and stock compensation, partially offset by a reduction in salaries expense.

Information technology costs increased primarily due to higher spend on cloud computing services and computer software.

Research and development expense increased $4.5 million, or 10.7%, in the three months ended March 31, 2026 compared to the same period in 2025.

This change is primarily attributable to a $2.6 million increase in research and development personnel costs and a $0.8 million increase in cloud computing and software costs.

Research and development personnel costs increased due to a 6% increase in headcount period over period in addition to a $0.7 million increase in stock compensation expense.

General and Administrative Expense

Nine Months Ended September 30,

Three Months Ended March 31,

2026 2025 $ Change % Change

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% of revenue 16.7 % 15.1 %

General and administrative expense decreased $0.7 million, or 1%, in the nine months ended September 30, 2025 compared to the same period in 2024 primarily due to a $3.5 million decrease in rent expense and a $3.5 million decrease in insurance expense driven by lower amortization expense associated with our judgment preservation insurance policy.

Rent expense decreased due to $0.8 million of lease impairment charges in the nine months ended September 30, 2025 as compared to $5.5 million of lease impairment charges recorded in the prior year period.

These decreases were partially offset by increases of $2.0 million in general and administrative personnel costs, $1.8 million in professional fees, and $1.7 million in information technology spending.

Personnel costs increased due to an increase in headcount from September 30, 2024 to September 30, 2025 coupled with higher bonus expense and a $1.1 million increase in stock compensation expense.

Professional fees increased primarily due to a $2.9 million increase in expenses related to litigation with Pegasystems, while information technology spending increased due to higher spend on computer software and cloud computing.

General and administrative expense increased $8.6 million, or 34.3%, in the three months ended March 31, 2026 compared to the same period in 2025 primarily due to a $5.9 million increase in professional fees and a $2.4 million increase in general and administrative personnel costs.

These increases were partially offset by a $0.8 million decrease in insurance expense.

The increase in professional fees was the result of a net $5.2 million increase in legal fees associated with our litigation against Pegasystems.

Personnel costs increased largely due to an increase in salaries and an 18% increase in headcount from March 31, 2025 to March 31, 2026 coupled with a $0.7 million increase in stock compensation expense.

Insurance expense decreased due to a $1.0 million decrease in amortization expense related to our judgment preservation insurance policy due to a change in the estimated amortization period.

Other Income, Net

Nine Months Ended September 30,

Three Months Ended March 31,

2026 2025 $ Change % Change

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% of revenue — % (3.4) %

*** Indicates a percentage that is not meaningful.

Other income, net was $24.7 million in the nine months ended September 30, 2025 compared to other income, net of $5.9 million in the nine months ended September 30, 2024.

This change was primarily due to $19.4 million in foreign exchange gains in the nine months ended September 30, 2025 as compared to $2.5 million in foreign exchange losses in the nine months ended September 30, 2024.

In addition, there was a $3.2 million decrease in other income related to a non-recurring local government incentive payment and short-swing profit disgorgement payments to us from a public stockholder of our Class A common stock that were both received in the prior year.

Other income, net was $0.1 million in the three months ended March 31, 2026 compared to $5.7 million in the three months ended March 31, 2025.

This change was primarily due to $1.5 million in foreign exchange losses in the three months ended March 31, 2026 as compared to $4.1 million in foreign exchange gains in the three months ended March 31, 2025.

Interest Expense

Nine Months Ended September 30,

Three Months Ended March 31,

2026 2025 $ Change % Change

2 unchanged sentences

% of revenue 2.1 % 3.2 %

Interest expense decreased by $2.0 million in the nine months ended September 30, 2025 as compared to the corresponding period in 2024 primarily due to a lower effective interest rate and lower outstanding principal across the comparable periods.

Interest expense decreased by $1.1 million in the three months ended March 31, 2026 as compared to the corresponding period in 2025 primarily due to a lower effective interest rate and lower outstanding principal compared to the prior year period.

Income Tax Expense

Nine Months Ended September 30,

Three Months Ended March 31,

2026 2025 $ Change % Change

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Income tax expense $ 593 $ 741 $ (148) (20.0) %

*** Indicates a percentage that is not meaningful.

Income tax expense increased by $3.0 million in the nine months ended September 30, 2025 as compared to the corresponding period in 2024.

This change was primarily driven by increased pre-tax book income in certain international subsidiaries for the nine months ended September 30, 2025.

The change in pre-tax book income was primarily attributable to increases in unrealized foreign exchange gains.

Income tax expense decreased by $0.1 million in the three months ended March 31, 2026 as compared to the corresponding period in 2025.

This change was primarily driven by decreased pre-tax book income in certain international subsidiaries for the three months ended March 31, 2026.

Non-GAAP Financial Measures

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

These non-GAAP financial performance measures exclude the effect of stock-based compensation expense, unrealized foreign exchange rate gains and losses, 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, severance costs related to an involuntary reduction in our workforce, or Severance Costs, lease impairment and lease-related charges associated with actions taken to reduce the footprint of our leased office spaces, or Lease Impairment and Lease-Related Charges, and a short-swing profit disgorgement paid to us by an investor, or Short-Swing Profit Payment.

These non-GAAP financial performance measures exclude the effect of stock-based compensation expense, unrealized foreign exchange rate gains and losses, 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 lease impairments and lease-related charges associated with actions taken to reduce the footprint of our leased office spaces, or Lease Impairment and Lease-Related Charges.

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.

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 income (loss) before (1) other income,

net, (2) interest expense, (3) income tax expense, (4) depreciation expense and amortization of intangible assets, (5) stock-based compensation expense, (6) Litigation Expense, (7) JPI Amortization, (8) Severance Costs, and (9) Lease Impairment and Lease-Related Charges.

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

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

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 depiction of our operating performance.

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

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.

The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, as a substitute for, or superior to the financial information prepared and presented in accordance with GAAP, and our non-GAAP measures may be different from non-GAAP measures used by other companies.

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 Expense JPI Amortization Lease Impairment and Lease-Related Charges Short-Swing Profit Payment Unrealized Foreign Exchange Rate Gains and Losses Non-GAAP Measure

Three Months Ended September 30, 2025

GAAP Measure Stock-Based Compensation Litigation Expense JPI Amortization Lease Impairment and Lease-Related Charges Unrealized Foreign Exchange Rate Gains and Losses Non-GAAP Measure

Three Months Ended March 31, 2026

Subscriptions cost of revenue $ 22,904 $ (559) $ — $ — $ — $ — 22,345

1 unchanged sentence

Total cost of revenue 54,411 (2,197) — — — — 52,214

Sales and marketing expense 64,619 (2,403) — — — — 62,216

Research and development expense 46,324 (3,735) — — — — 42,589

General and administrative expense 33,670 (3,554) (6,948) (2,055) (302) — 20,811

Total operating expense 144,613 (9,692) (6,948) (2,055) (302) — 125,616

Operating income

Non-operating (income) expense (1,398) — — — — — 110 (1,288)

3,156 11,889 6,948 2,055 302 — 24,350

Non-operating income

(84) — — — — (848) (932)

Income tax impact of above items 593 507 — — — 199 1,299

Net income (loss) 7,825 9,885 2,130 3,153 1,105 — 296 24,394

Net income per share, basic

Net (loss) income

(1,525) 11,382 6,948 2,055 302 649 19,811

Net income per share, diluted (a, c)

Net (loss) income per share, basic (c)

$ (0.02) $ 0.15 $ 0.09 $ 0.03 $ — $ 0.01 $ 0.27

Three Months Ended September 30, 2024

Net (loss) income per share, diluted (a,c)

$ (0.02) $ 0.15 $ 0.09 $ 0.03 $ — $ 0.01 $ 0.27

Three Months Ended March 31, 2025

Subscriptions cost of revenue $ 18,521 $ (498) $ — $ — $ — $ — 18,023

1 unchanged sentence

Total cost of revenue 44,040 (1,954) — — — — 42,086

Sales and marketing expense 56,310 (2,246) — — — — 54,064

Research and development expense 41,830 (3,014) — — — — 38,816

General and administrative expense 25,080 (2,825) (1,712) (3,084) (312) 17,147

Total operating expense 123,220 (8,085) (1,712) (3,084) (312) — 110,027

10 unchanged sentences

GAAP Measure Stock-Based Compensation Litigation Expense JPI Amortization Severance Costs Lease Impairment and Lease-Related Charges Short-Swing Profit Payment Unrealized Foreign Exchange Rate Gains and Losses Non-GAAP Measure

Nine Months Ended September 30, 2025

Subscriptions cost of revenue $ 49,810 $ (672) $ — $ — $ — $ — $ — $ — $ 49,138

Professional services cost of revenue 78,322 (4,161) — — — — — — 74,161

Total cost of revenue 128,132 (4,833) — — — — — — 123,299

Total operating expense 394,642 (26,159) (6,324) (9,355) — (1,714) — — 351,090

Operating income 1,296 30,992 6,324 9,355 — 1,714 — — 49,681

Non-operating (income) expense (24,678) — — — — — — 20,879 (3,799)

Income tax impact of above items 3,690 1,125 — — — — — (1,732) 3,083

Net income (loss) 6,336 29,867 6,324 9,355 — 1,714 — (19,147) 34,449

Net income (loss) per share, basic

$ 0.09 $ 0.40 $ 0.09 $ 0.13 $ — $ 0.02 $ — $ (0.26) $ 0.47

Net income (loss) per share, diluted (a)

$ 0.08 $ 0.40 $ 0.08 $ 0.13 $ — $ 0.02 $ — $ (0.26) $ 0.46

Nine Months Ended September 30, 2024

Subscriptions cost of revenue $ 39,614 $ (641) $ — $ — $ — $ — $ — $ — $ 38,973

Professional services cost of revenue 74,880 (4,364) — — (1,398) — — — 69,118

Total cost of revenue 114,494 (5,005) — — (1,398) — — — 108,091

Total operating expense 401,729 (25,006) (3,442) (12,643) (4,136) (5,786) — — 350,716

Operating (loss) income (65,886) 30,011 3,442 12,643 5,534 5,786 — — (8,470)

Non-operating (income) expense

(5,882) — — — — — 1,799 (2,856) (6,939)

Income tax impact of above items 690 1,258 — — 1,096 — — 81 3,125

Net (loss) income (78,615) 28,753 3,442 12,643 4,438 5,786 (1,799) 2,775 (22,577)

Net (loss) income per share, basic and diluted (b)

$ (1.08) $ 0.40 $ 0.05 $ 0.17 $ 0.06 $ 0.08 $ (0.02) $ 0.04 $ (0.31)

(a) Accounts for the impact of 0.5 million shares of dilutive securities.

(b) Per share amounts do not foot due to rounding.

The following table reconciles GAAP net income (loss) to adjusted EBITDA for the three and nine months ended September 30, 2025 and 2024 (in thousands):

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

The following table reconciles GAAP net loss to adjusted EBITDA for the three months ended March 31, 2026 and 2025 (in thousands):

Three Months Ended March 31,

GAAP net loss

$ (1,525) $ (1,177)

GAAP net income (loss) $ 7,825 $ (2,100) $ 6,336 $ (78,615)

Other income, net (84) (5,716)

2 unchanged sentences

Depreciation expense and amortization of intangible assets

2,459 2,562 7,429 7,503

Stock-based compensation expense 11,889 10,039

Litigation Expense

2,130 1,979 6,324 3,442

JPI Amortization

3,153 3,635 9,355 12,643

Severance Costs

Lease Impairment and Lease-Related Charges

1,105 324 1,714 5,786

Adjusted EBITDA $ 26,623 $ 16,759

Liquidity and Capital Resources

The following table presents selected financial information and statistics pertaining to liquidity and capital resources as of September 30, 2025 and December 31, 2024:

September 30, 2025 December 31, 2024

The following table presents selected financial information and statistics pertaining to liquidity and capital resources as of March 31, 2026 and December 31, 2025:

March 31, 2026 December 31, 2025

Cash and cash equivalents $ 150,025 $ 135,810

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* 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.

We have in the past entered into, and may in the future enter into, investments in or acquisitions of complementary businesses, products, or technologies, which could also require us to seek additional equity financing, incur indebtedness, or use cash resources.

We have no present binding agreements or commitments to enter into any such acquisitions.

If we are unable to raise additional capital when desired, our business, operating results, and financial condition could be adversely affected.

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 revolving credit facility, will be sufficient to support working capital and capital expenditure requirements for at least the next twelve months.

Sources of Funds

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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).

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, as amended to date, 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.

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

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

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

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

Over the past two years, we have also initiated several share repurchase programs as follows:

• In February 2024, our Board of Directors authorized a share repurchase program, under which we repurchased approximately 1.3 million shares of our common stock for approximately $50.0 million during the first quarter of 2024.

• In May 2025, our Board of Directors authorized a second program to repurchase up to $10.0 million of our common stock from May 2025 to December 2025.

In the second quarter of 2025, we repurchased 0.3 million shares under this program at an average share price of $31.91 and totaling $10.0 million.

• In August 2025, our Board of Directors authorized a third program to repurchase up to $10.0 million of our common stock from August 2025 to August 2027.

In the third quarter of 2025, we repurchased 0.3 million shares under this program at an average share price of $30.60 and totaling $10.0 million.

We have also initiated several share repurchase programs as follows (in thousands except average price paid per share):

Board approval date

Value of shares authorized

Number of shares repurchased

Average price paid per share

Value of shares repurchased

February 2024 $ 50,000 1,321 $ 37.86 $ 49,999

May 2025 $ 10,000 313 $ 31.91 $ 10,000

August 2025 $ 10,000 327 $ 30.60 $ 10,000

February 2026 $ 50,000 843 $ 25.85 $ 21,808

On May 5, 2026, the Board of Directors approved an additional $50.0 million for the Share Repurchase Program, bringing the total aggregate authorization under the program to $100.0 million.

All other terms and conditions of the Share Repurchase Program remain unchanged.

Outside of the above items and cash used by operations, other uses of cash in 2026 to date have included capital expenditures related to the expansion of new leased facilities and principal repayments of our term loan debt.

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The agreement, which was originated in July 2021 and amended in October 2024, currently contains minimum annual spending requirements of $44.0 million from November 2024 to October 2029.

Spending under this agreement for the three and nine months ended September 30, 2025 totaled $14.3 million and

$37.6 million, respectively.

Spending under this agreement for the three and nine months ended September 30, 2024 totaled $10.8 million and $31.8 million, respectively.

Spending under this agreement for the three months ended March 31, 2026 and 2025 totaled $16.2 million and $10.4 million, respectively.

We expect to meet our minimum annual spending requirement during the term of the arrangement.

Historical Cash Flows

Nine Months Ended September 30,

Three Months Ended March 31,

2026 2025 $ Change % Change

(dollars in thousands)

Beginning cash, cash equivalents, and restricted cash $ 118,552 $ 149,351 $ (30,799) (20.6) %

Beginning cash and cash equivalents

$ 135,810 $ 118,552 $ 17,258 14.6 %

Operating activities:

Net income (loss) 6,336 (78,615) 84,951 ***

(1,525) (1,177) (348) 29.6

Stock-based compensation and other non-cash adjustments 15,163 8,358 6,805 81.4

Changes in working capital 35,189 37,785 (2,596) (6.9)

Net cash provided by (used by) operating activities 61,737 (6,993) 68,730 ***

Net cash provided by operating activities 48,827 44,966 3,861 8.6

Investing activities:

Net cash used by investing activities (5,283) (24,077) 18,794 (78.1)

(27,454) (34,294) 6,840 (19.9)

Financing activities:

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Effect of exchange rates (534) 1,050 (1,584) ***

Net change 6,697 (50,158) 56,855 ***

Ending cash and cash equivalents

Net increase in cash and cash equivalents

14,215 16,430 (2,215) (13.5)

Ending cash and cash equivalents $ 150,025 $ 134,982 $ 15,043 11.1 %

*** Indicates a percentage that is not meaningful.

Operating Activities

Net cash provided by operating activities was $61.7 million for the nine months ended September 30, 2025 as compared to $7.0 million of net cash used by operating activities for the nine months ended September 30, 2024.

The increase in net cash provided by operating activities was primarily driven by increased cash collections stemming from strong contract bookings in the fourth quarter of 2024 and the first nine months of 2025, as well as our continuing cost management activities.

Net cash provided by operating activities was $48.8 million for the three months ended March 31, 2026 as compared to $45.0 million of net cash provided by operating activities for the three months ended March 31, 2025.

The increase in net cash provided by operating activities was primarily driven by increased cash collections stemming from strong contract bookings in the fourth quarter of 2025 and the first three months of 2026, as well as our continuing cost management activities.

Investing Activities

Net cash used by investing activities was $27.5 million for the nine months ended September 30, 2025 as compared to $34.3 million in net cash used by investing activities for the nine months ended September 30, 2024.

Net cash used by investing activities was $5.3 million for the three months ended March 31, 2026 as compared to $24.1 million in net cash used by investing activities for the three months ended March 31, 2025.

This change was primarily driven by a $26.2 million increase in proceeds from the maturity of investments.

This increase was partially offset by a $16.6 million increase in purchases of short-term investments.

This increase was partially offset by a $7.8 million decrease in purchases of short-term investments.

Financing Activities

Net cash used by financing activities was $30.1 million for the nine months ended September 30, 2025 as compared to $8.5 million of net cash used by financing activities for the nine months ended September 30, 2024.

The increase in net cash used by financing activities was primarily due to a $50.0 million decrease in proceeds from borrowings, which was partially offset by a $30.0 million decrease in repurchases of common stock, a $1.3 million

increase in debt repayments, and a $1.0 million increase in payments for employee taxes related to the net share settlement of equity awards during the nine months ended September 30, 2025.

Net cash used by financing activities was $28.8 million for the three months ended March 31, 2026 as compared to $5.5 million of net cash used by financing activities for the three months ended March 31, 2025.

The increase in net cash used by financing activities was primarily due to a $21.8 million increase in repurchases of common stock and a $1.9 million increase in payments for employee taxes related to the net share settlement of equity awards during the three months ended March 31, 2026.

Critical Accounting Estimates

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What changed 10-Q

Item 2. Management’s Discussion and Analysis