What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-08-06 compared with 2024-05-07 · 249 added, 141 removed, 268 unchanged (59% of the section changed)

10 unchanged sentences

Our goal is to enable the life science industry to use data, modeling, and analytics to make better decisions during drug development and commercialization to increase productivity rates and vastly reduce development costs.

Drug development is necessarily a highly regulated process involving the collection of vast amounts of laboratory, clinical and evidence data, and there are many failures at every step along the way which add to total cost.

The pharmaceutical industry spends more than $260 billion annually on R&D.

The pharmaceutical industry spends more than $260 billion annually on research and development (“R&D”).

Generally, companies spend an average of $6.2 billion per US Food and Drug Administration ("FDA") approved drug.

Our software and scientists incorporate modern advances in scientific understanding, drug development experience, data analysis, and AI resulting in significant opportunities to decrease the cost and increase the odds of new drug approval and commercial success.

Our software and scientists incorporate modern advances in scientific understanding, drug development experience, data analysis, and artificial intelligence (“AI”) resulting in significant opportunities to decrease the cost and increase the odds of new drug approval and commercial success.

Our proprietary biosimulation platforms are built on biology, chemistry, and pharmacology principles with proprietary mathematical algorithms that model how medicines and diseases behave in the body.

5 unchanged sentences

AI and machine learning technologies are being incorporated across our software and services portfolios, providing opportunities to expand the number of data sources utilized, better predict outcomes, and streamline reporting.

For example, we are using machine learning to automate and speed the process of biosimulation, and we have created an AI application to aid creating regulatory documents from scientific analyses and clinical data.

For example, we are using machine learning to automate and speed the process of biosimulation, and we have created an AI application to aid in creating regulatory documents from scientific analyses and clinical data.

We believe that AI predictive models will continue to enhance the accuracy and usefulness of biosimulation models and be utilized broadly across drug development.

2 unchanged sentences

We offer services, leveraging our technology, delivered by scientists with extensive drug development experience to aid our clients in applying biosimulation and MIDD to their specific projects.

Since 2014, customers who leverage our solutions have received more than 90% of all new drug approvals by FDA.

Since 2014, customers who leverage our solutions have received more than 90% of all new drug approvals by the FDA.

We have worked with nearly 2,400 life sciences companies and academic institutions and have collaborated on more than 8,000 customer projects in the last decade across a wide variety of therapeutic areas, ranging from cancer and hematology to diabetes and hundreds of rare diseases.

Our software products are licensed by more than 57,000 users and are also used by 23 global drug regulatory agencies, including the U.S.

FDA, Japan’s Pharmaceuticals and Medical Devices Agency (“PMDA”), and China Food and Drug Administration ("cFDA").

FDA, Japan’s Pharmaceuticals and Medical Devices Agency, and the China Food and Drug Administration.

With continued innovation in and adoption of our biosimulation software, technology, and services, we believe more life science companies worldwide will leverage more of our end-to-end platform to reduce cost, accelerate speed to market, and ensure safety, and efficacy of medicines for all patients.

Key Factors Affecting Our Performance

We believe that the growth of and future success of our business depends on many factors.

While each of these factors presents significant opportunities for our business, they also pose important challenges that we must successfully address to sustain our growth and improve results of operations.

We believe that the growth and future success of our business depend on many factors.

Customer Retention and Expansion

6 unchanged sentences

• Net Retention Rates:

Our net retention rates measure the percentage of recurring revenue that is retained from existing software customers over a specific time period of time, inclusive of price increases and expansion.

The table below summarizes our quarterly bookings and net retention rate trends:

Our net retention rates measure the percentage of recurring revenue that is retained from existing software customers over a specific period of time, inclusive of price increases and expansion, excluding revenue from acquisitions occurred within the past 12 months.

The table below summarizes our quarterly bookings and net software retention rate trends:

(in millions except percentage)

3 unchanged sentences

We have invested and intend to continue to invest in expanding the breadth and depth of our solutions, including through acquisitions and international expansion.

We expect to continue to invest (i) in scientific talent to expand our ability to deliver solutions across the drug development spectrum;

(ii) in sales and marketing to promote our solutions to new and existing customers and in existing and expanded geographies;

(iii) in research and development to support existing solutions and innovate new technology;

(iv) in other operational and administrative functions to support our expected growth;

and (v) in complementary businesses.

We expect to continue to invest in (i) scientific talent to expand our ability to deliver solutions across the drug development spectrum;

(ii) sales and marketing to promote our solutions to new and existing customers and in existing and expanded geographies;

(iii) research and development to support existing solutions and innovate new technology;

(iv) other operational and administrative functions to support our expected growth;

and (v) complementary businesses.

We expect that our headcount and our total operating expenses will continue to increase over time.

11 unchanged sentences

development, brand awareness and reputation, total cost, and the ability to securely integrate with other enterprise applications and the overall drug development process in the customer.

Macroeconomic challenges

Uncertain macroeconomic conditions, including higher inflation, rising interest rates and instability in the financial system, geopolitical conflicts, and the residual effects of the COVID-19 pandemic, may pose challenges to our business.

We believe that any impacts these conditions may have on our business would be transitory and that we are well-equipped to manage them going forward.

Macroeconomic conditions

Uncertain macroeconomic conditions, including higher inflation, rising interest rates and instability in the financial system, geopolitical conflicts, and pandemics or other infectious disease outbreaks, may pose challenges to our business.

We believe that any impacts these conditions may have on our business would be transitory and we are well-equipped to manage them going forward.

Non-GAAP Measures

Management uses various financial metrics, including total revenues, income from operations, net income, and certain metrics that are not required by, or presented in accordance with, GAAP, such as adjusted EBITDA, adjusted net income, and adjusted diluted earnings per share, to measure and assess the performance of our business, to evaluate the effectiveness of our business strategies, to make budgeting decisions, to make certain compensation decisions, and to compare our performance against that of other peer companies using similar measures.

We believe that presentation of the GAAP and the non-GAAP metrics in this filing will aid investors in understanding our business.

We believe that the presentation of the GAAP and the non-GAAP metrics in this filing will aid investors in understanding our business.

Management measures operating performance based on adjusted EBITDA defined for a particular period as net income (loss) excluding interest expense, provision (benefit) for income taxes, depreciation and amortization expense, intangible asset amortization, equity-based compensation expense, acquisition and integration expense, and other items not indicative of our ongoing operating performance.

Management also measures operating performance based on adjusted net income defined for a particular period as net income (loss) excluding, equity-based compensation expense, amortization of acquisition-related intangible assets, goodwill impairment expense, acquisition and integration expense, and other items not indicative of our ongoing operating performance.

Management also measures operating performance based on adjusted net income defined for a particular period as net income (loss) excluding, equity-based compensation expense, amortization of acquisition-related intangible assets, acquisition and integration expense, and other items not indicative of our ongoing operating performance.

Further, management measures operating performance based on adjusted diluted earnings per share defined for a particular period as adjusted net income divided by the weighted-average diluted common shares outstanding.

3 unchanged sentences

Adjusted EBITDA, adjusted net income, and adjusted diluted earnings per share have certain limitations in that they do not include the impact of certain expenses that are reflected in our condensed consolidated statements of operations and comprehensive income (loss) that are necessary to run our business.

Other companies, including other companies in our industry, may not use these measures and may calculate both differently than as presented, limiting the usefulness as a comparative measure.

Other companies, including those in our industry, may not use these measures and may calculate them differently than those presented, limiting the usefulness as a comparative measure.

The following table reconciles net income (loss) to adjusted EBITDA:

THREE MONTHS ENDED MARCH 31,

THREE MONTHS ENDED

JUNE 30, SIX MONTHS ENDED

2024 2023 2024 2023

(in thousands)

10 unchanged sentences

Integration expense(f) — 55 — 157

Reorganization expense(g) 51 —

Loss on disposal of fixed assets(h) — 4

Executive recruiting expense(i) 380 196

Transaction - related expenses (g) 2,753 — 2,753 —

Severance expense(h) 183 — 183 —

Reorganization expense(i) 2,163 — 2,214 —

Loss on disposal of fixed assets(j) 13 25 13 29

Executive recruiting expense(k) 43 200 423 396

Adjusted EBITDA $ 26,318 $ 32,373 $ 55,461 $ 64,679

The following table reconciles net income (loss) to adjusted net income:

THREE MONTHS ENDED MARCH 31,

THREE MONTHS ENDED

JUNE 30, SIX MONTHS ENDED

2024 2023 2024 2023

(in thousands)

6 unchanged sentences

Integration expense(f) — 55 — 157

Reorganization expense(g) 51 —

Loss on disposal of fixed assets(h) — 4

Executive recruiting expense(i) 380 196

Income tax expense impact of adjustments(j) (7,089) (5,495)

Transaction - related expenses (g) 2,753 — 2,753 —

Severance expense(h) 183 — 183 —

Reorganization expense(i) 2,163 — 2,214 —

Loss on disposal of fixed assets(j) 13 25 13 29

Executive recruiting expense(k) 43 200 423 396

Income tax expense impact of adjustments(l) (8,273) (4,602) (15,362) (10,097)

Adjusted net income $ 11,393 $ 18,363 $ 27,941 $ 37,674

The following table reconciles diluted earnings per share to adjusted diluted earnings per share:

THREE MONTHS ENDED MARCH 31,

THREE MONTHS ENDED

JUNE 30, SIX MONTHS ENDED

2024 2023 2024 2023

Diluted earnings per share(a) $ (0.08) $ 0.03 $ (0.11) $ 0.04

5 unchanged sentences

Integration expense(f) — — — —

Reorganization expense(g) — —

Loss on disposal of fixed assets(h) — —

Executive recruiting expense(i) — —

Income tax expense impact of adjustments(j) (0.04) (0.03)

Transaction - related expenses (g) 0.02 — 0.02 —

Severance expense(h) — — — —

Reorganization expense(i) 0.01 — 0.01 —

Loss on disposal of fixed assets(j) — — — —

Executive recruiting expense(k) — — — —

Income tax expense impact of adjustments(l) (0.05) (0.03) (0.10) (0.06)

Adjusted diluted earnings per share $ 0.07 $ 0.12 $ 0.17 $ 0.24

Basic weighted average common shares outstanding 160,505,223 158,955,822 160,014,746 158,568,575

Effect of potentially dilutive shares outstanding (k) 889,094 1,550,387

Effect of potentially dilutive shares outstanding (m) 961,455 951,150 925,274 1,249,113

Adjusted diluted weighted average common shares outstanding 161,466,678 159,906,972 160,940,020 159,817,688

1 unchanged sentence

(a) Represents amounts as determined under GAAP.

(b) Represents expense related to equity-based compensation.

(b) Represents expenses related to equity-based compensation.

Equity-based compensation has been, and will continue to be for the foreseeable future, a recurring expense in our business and an important part of our compensation strategy.

3 unchanged sentences

(f) Represents integration costs related to post-acquisition integration activities.

(g) Represents expense related to reorganization, including legal entity reorganization and lease abandonment cost associated with the evaluation of our office space footprint.

(h) Represents the gain/loss related to disposal of fixed assets.

(i) Represents recruiting and relocation expenses related to hiring senior executives.

(j) Represents the income tax effect of the non-GAAP adjustments calculated using the applicable statutory rate by jurisdiction.

(k) Represents potentially dilutive shares that were included from our GAAP diluted weighted average common shares outstanding.

(g) Represents costs associated with our public offerings that are not capitalized, as well as debt issuance costs that are not deferred or treated as a contra-liability directly deducted from the carrying value of the associated debt liability.

(h) Represents charges for severance provided to former executives.

(i) Represents expenses related to reorganization, including legal entity reorganization and lease abandonment costs associated with the evaluation of our office space footprint.

(j) Represents the gain or loss related to the disposal of fixed assets.

(k) Represents recruiting and relocation expenses related to hiring senior executives.

(l) Represents the income tax effect of the non-GAAP adjustments calculated using the applicable statutory rate by jurisdiction.

(m) Represents potentially dilutive shares that were included from our GAAP diluted weighted average common shares outstanding.

Components of Results of Operations

Our business generates revenue from the sales of software products and delivery of consulting services.

Our business generates revenue from the sales of software products and the delivery of consulting services.

Our software business generates revenues from software licenses, software subscriptions and software maintenance as follows:

9 unchanged sentences

Our services business generates revenues primarily from technology-driven services and professional services, which include software implementation services.

Our service arrangements are time and materials, fixed fee, or prepaid.

Revenues are recognized over the time services are performed for time and materials, and over time by estimating progress to completion for fixed fee and prepaid services.

Our service arrangements are time and materials, a fixed fee, or prepaid.

Revenues are recognized over the time as services are performed for time and materials, and over time by estimating progress to completion for fixed fee and prepaid services.

Cost of Revenues

3 unchanged sentences

• Sales and Marketing .

Sales and marketing expense consists primarily of employee-related expenses, equity-based compensation, sales commissions, brand development, advertising, travel-related expenses and industry conferences and events.

Sales and marketing expenses consist primarily of employee-related expenses, equity-based compensation, sales commissions, brand development, advertising, travel-related

expenses, and industry conferences and events.

We plan to continue to invest in sales and marketing to increase penetration of our existing client base and expand to new clients.

• Research and Development .

Research and development expense (“R&D”) consist primarily of employee-related expenses, equity-based compensation, third-party consulting, allocated software costs and tax credits.

R&D expense consist primarily of employee-related expenses, equity-based compensation, third-party consulting, allocated software costs, and tax credits.

We plan to continue to invest in our R&D efforts to enhance and scale our software product offerings by development of new features and increased functionality.

• General and Administrative .

General and administrative expense consists of personnel-related expenses associated with our executive, legal, finance, human resources, information technology, and other administrative functions, including salaries, benefits, bonuses, and equity-based compensation.

General and administrative expense also includes professional fees for external legal, accounting and other consulting services, allocated overhead costs, and other general operating expenses.

General and administrative expenses ("G&A") consist of personnel-related expenses associated with our executive, legal, finance, human resources, information technology, and other administrative functions, including salaries, benefits, bonuses, and equity-based compensation.

G&A expenses also include professional fees for external legal, accounting and other consulting services, allocated overhead costs, and other general operating expenses.

• Intangible Asset Amortization .

1 unchanged sentence

• Depreciation and Amortization Expense .

Depreciation and amortization expense consists of depreciation of property and equipment and amortization of leasehold improvements.

Depreciation and amortization expenses consist of depreciation of property and equipment and amortization of leasehold improvements.

Other Expenses

8 unchanged sentences

Business Combinations

Since 2013 and as of March 31, 2024, we have completed 20 acquisitions, of which 13 have included software or technology.

Since 2013 and as of June 30, 2024, we have completed 20 acquisitions, of which 13 have included software or technology.

Details of acquisitions that have closed since the beginning of fiscal year 2023 are provided below.

2 unchanged sentences

On June 20, 2023, we entered into an asset purchase agreement with the University of Washington and completed the acquisition of DIDB, including the Drug Interaction Database and related products, from The University of Washington for a total estimated consideration of $8.3 million.

The business combination was not significant to the Company’s consolidated financial statements.

Based on our purchase price allocation, approximately $0.3 million, $5.6 million, $0.4 million, and $2.3 million of the purchase price was assigned to trade names, database content/technology, customer relationships and goodwill, respectively.

The total estimated consideration included a portion of contingent consideration that is payable over the next two years in cash, not to exceed $2.0 million.

The business combination was not significant to the Company’s condensed consolidated financial statements.

Based on our purchase price allocation, approximately $0.3 million, $5.6 million, $0.4 million, and $2.3 million of the purchase price was assigned to trademarks, database content/technology, customer relationships and goodwill, respectively.

The total estimated consideration included a portion of contingent consideration that is

payable over the next two years in cash, not to exceed $2.0 million.

The fair value of the contingent consideration was estimated to be $0.8 million as of the acquisition date.

At March 31, 2024, the contingent consideration was remeasured to $0.1 million, resulting in a fair value adjustment of $4 thousand and recorded in G&A on the accompanying condensed consolidated statement of operations and comprehensive income (loss).

At June 30, 2024, the contingent consideration was remeasured to $0.1 million, resulting in a fair value adjustment of $4 thousand and recorded in G&A on the accompanying condensed consolidated statement of operations and comprehensive income (loss).

Formedix Limited ("Formedix")

3 unchanged sentences

The total estimated consideration included a portion of contingent consideration that is payable over two years in cash, not to exceed $9.0 million.

The fair value of the contingent consideration related to revenue threshold was estimated to be $4.4 million as of the acquisition date.

The fair value of the contingent consideration related to the revenue threshold was estimated to be $4.4 million as of the acquisition date.

Future payments of contingent consideration are based on achieving certain eligible revenue targets for each of the twelve-month periods ended December 31, 2023 and 2024, respectively.

1 unchanged sentence

In total, the fair value of the contingent consideration was estimated to be $5.2 million as of the acquisition date.

At March 31, 2024 the contingent consideration related to revenues was remeasured to $3.2 million, resulting in a negative fair value remeasurement and adjustment of $0.5 million and recorded in G&A on the accompanying condensed consolidated statement of operations and comprehensive income (loss).

During the six months ended June 30, 2024, the Company made payments of $1.8 million on contingent consideration.

At June 30, 2024 the contingent consideration related to revenues was remeasured to zero, resulting in a negative fair value remeasurement and adjustment of $1.9 million and recorded in G&A on the accompanying condensed consolidated statement of operations and comprehensive income (loss).

Applied BioMath, LLC ("ABM")

On December 12, 2023, we completed the acquisition of ABM, an industry-leader in providing model-informed drug discovery and development support to help accelerate and de-risk therapeutic research and development, for total estimated consideration of $36.6 million.

The business combination was not material to our consolidated financial statements.

The business combination was not material to our condensed consolidated financial statements.

Based on our preliminary purchase price allocation, approximately $4.6 million, $0.8 million, $13.7 million and $15.9 million of the purchase price was assigned to developed technology, non-compete agreements, customer relationships and goodwill, respectively.

2 unchanged sentences

The fair value of the contingent consideration was estimated to be $5.4 million as of the acquisition date.

At March 31, 2024, the contingent consideration was remeasured to $4.4 million, resulting in a negative fair value adjustment of $0.9 million and recorded in G&A on the accompanying condensed consolidated statement of operations and comprehensive income (loss).

The contingent considerations for all acquisitions were classified as a liability and included in accrued expense and other long-term liabilities on our condensed consolidated balance sheet.

The contingent consideration related with revenue threshold are remeasured on a recurring basis at fair value for each reporting period.

At June 30, 2024, the contingent consideration was remeasured to $4.7 million, resulting in a negative fair value adjustment of $0.7 million and recorded in G&A on the accompanying condensed consolidated statement of operations and comprehensive income (loss).

The contingent considerations for all acquisitions were classified as a liabilities and included in accrued expenses and other long-term liabilities on our condensed consolidated balance sheet.

The contingent considerations related with revenue threshold are remeasured on a recurring basis at fair value for each reporting period.

Any changes in the fair value of these contingent liabilities are included in the earnings in the condensed consolidated statements of operations and comprehensive income (loss).

7 unchanged sentences

Results of Operations

We have included the results of operations of acquired companies in our condensed consolidated results of operations from the date of their respective acquisitions, which impacts the comparability of our results of operations when comparing results for the three months ended March 31, 2024 to the three months ended at March 31, 2023.

Three Months Ended March 31, 2024 Versus Three Months Ended March 31, 2023

The following table summarizes our unaudited statements of operations data for the three months ended at March 31, 2024 and 2023:

THREE MONTHS ENDED MARCH 31, CHANGE

We have included the results of operations of acquired companies in our condensed consolidated results of operations from the date of their respective acquisitions, which impacts the comparability of our results of operations when comparing results for the three and six months ended June 30, 2024 to the three and six months ended June 30, 2023, respectively.

Three Months Ended June 30, 2024 Versus Three Months Ended June 30, 2023

The following table summarizes our unaudited statements of operations data for the three months ended at June 30, 2024 and 2023:

THREE MONTHS ENDED JUNE 30, CHANGE

2024 2023 $ %

3 unchanged sentences

Total revenues $ 93,313 $ 90,450 $ 2,863 3 %

Total revenues increased $6.4 million, or 7%, to $96.7 million for the three months ended March 31, 2024 as compared to the same period in 2023.

Total revenues increased $2.9 million, or 3%, to $93.3 million for the three months ended June 30, 2024 as compared to the same period in 2023.

The overall increase in revenues was primarily due to growth in our software product offerings from strong demand within existing customers, client expansions, and new customers.

Software revenues increased $6.3 million, or 19%, to $39.3 million for the three months ended March 31, 2024 as compared to the same period in 2023, primarily driven by strong demand within existing customers and expanding relationships with customers.

Services revenues of $57.3 million were relatively flat for the three months ended March 31, 2024, as compared to the same period in 2023.

Software revenues increased $4.5 million, or 13%, to $38.2 million for the three months ended June 30, 2024 as compared to the same period in 2023, primarily driven by strong demand within existing customers and expanding relationships with customers.

Services revenues decreased $1.6 million, or 3%, to $55.1 million for the three months ended June 30, 2024 as compared to the same period in 2023, primarily attributed to decrease in revenue from consulting services as compared to the same period in 2023.

Cost of Revenues

THREE MONTHS ENDED MARCH 31, CHANGE

THREE MONTHS ENDED JUNE 30, CHANGE

2024 2023 $ %

1 unchanged sentence

Cost of revenues $ 39,809 $ 36,224 $ 3,585 10 %

Cost of revenues increased by $4.4 million, or 13%, to $39.3 million for the three months ended March 31, 2024 as compared to the same period in 2023.

The increase was primarily due to a $1.9 million increase in employee-related costs resulting from billable head count growth, a $1.2 million increase in stock-based compensation costs, a $0.8 million increase in intangible assets amortization, a $0.5 million increase in equipment and software expenses.

Cost of revenues increased by $3.6 million, or 10%, to $39.8 million for the three months ended June 30, 2024 as compared to the same period in 2023.

The increase was primarily due to a $2.5 million increase in employee-related costs resulting from billable headcount growth, an $0.8 million increase in intangible assets amortization, a $0.5 million increase in stock-based compensation costs, and a $0.5 million increase in equipment and software expenses, partially offset by a $0.8 million decrease in consulting and professional costs.

Sales and Marketing Expenses

THREE MONTHS ENDED MARCH 31, CHANGE

THREE MONTHS ENDED JUNE 30, CHANGE

2024 2023 $ %

2 unchanged sentences

% of total revenues 13 % 9 %

Sales and marketing expenses increased by $2.7 million, or 34%, to $10.7 million for the three months ended March 31, 2024 as compared to the same period in 2023.

Sales and marketing expenses increased primarily due to a $1.7 million increase in employee-related costs primarily resulting from head count growth, a $0.2 million increase in stock-based compensation costs, a $0.2 million increase in travel expenses, a $0.2 million increase in marketing expenses, and a $0.2 million increase in professional and consulting expenses.

Sales and marketing expenses increased by $4.1 million, or 51%, to $12.2 million for the three months ended June 30, 2024 as compared to the same period in 2023.

Sales and marketing expenses increased primarily due to a $1.6 million increase in employee-related costs mainly resulting from head count growth driven by acquisitions along with investment to build the commercial organization, a $1.1 million increase in commission expenses, a $0.5 million increase in stock-based compensation costs, a $0.5 million increase in marketing expenses, a $0.2 million increase in professional and consulting expenses, a $0.1 million increase in travel expense, and a $0.1 million increase in equipment and software expense.

Research and Development Expenses

THREE MONTHS ENDED MARCH 31, CHANGE

THREE MONTHS ENDED JUNE 30, CHANGE

2024 2023 $ %

2 unchanged sentences

% of total revenues 10 % 9 %

Research and development expenses increased by $2.7 million, or 29%, to $12.0 million for the three months ended March 31, 2024, as compared to the same period in 2023.

The change in research and development expenses was primarily due to a $3.0 million increase in employee-related costs primarily resulting from head count growth, and a $0.2 million increase in the cost of licenses, partially offset by a $0.5 million increase in capitalized cost in R&D.

Research and development expenses increased by $1.2 million, or 15%, to $9.1 million for the three months ended June 30, 2024 as compared to the same period in 2023.

The change in research and development expenses was primarily due to a $2.7 million increase in employee-related costs, mainly resulting from head count growth associated with investments in software development, including AI integration across our product portfolio, a $0.2 million increase in the equipment and software expense, and a $0.2 million increase in license expenses, partially offset by a $2.0 million increase in capitalized cost in R&D.

General and Administrative Expenses

THREE MONTHS ENDED MARCH 31, CHANGE

THREE MONTHS ENDED JUNE 30, CHANGE

2024 2023 $ %

2 unchanged sentences

% of total revenues 30 % 16 %

General and administrative expenses increased by $3.2 million, or 16%, to $23.0 million for the three months ended March 31, 2024 as compared to the same period in 2023.

The increase in general and administrative expenses was primarily due to a $1.6 million increase related to change in the fair value of contingent consideration, a $1.1 million increase in employee-related costs primarily resulting from head count growth, a $0.5 million increase in merger and acquisition expenses, a $0.2 million increase in equipment and software expenses, a $0.2 million increase in executive recruiting expense, and a $0.2 million increase in credit allowance provision expense, partially offset by a $0.9 million decrease in stock-based compensation costs.

General and administrative expenses increased by $13.8 million, or 97%, to $28.1 million for the three months ended June 30, 2024 as compared to the same period in 2023.

The increase in general and administrative expenses was primarily due to a $5.0 million increase in stock-based compensation costs, a $1.0 million increase in employee-related costs primarily resulting from head count growth, a $2.6 million increase in transaction expense primarily related to refinancing of a term loan and a revolving line of credit, a $2.3 million increase in reorganization expense, a $1.5 million increase related to remeasurement changes in the fair value of contingent consideration, an $0.8 million increase in provision for credit allowance, and a $0.7 million increase in professional and consulting expenses.

Intangible Asset Amortization

THREE MONTHS ENDED MARCH 31, CHANGE

THREE MONTHS ENDED JUNE 30, CHANGE

2024 2023 $ %

2 unchanged sentences

% of total revenues 14 % 12 %

Intangible asset amortization expense increased by $2.1 million, or 20%, to $12.6 million for the three months ended March 31, 2024, as compared to the same period in 2023.

The increase in intangible asset amortization expense was primarily due to $1.3 million increase in amortization in acquired intangible assets and $0.8 million increase in amortization in capitalized software.

Intangible asset amortization expense increased by $2.2 million, or 20%, to $12.7 million for the three months ended June 30, 2024 as compared to the same period in 2023.

The increase in intangible asset amortization expense was primarily due to a $1.3 million increase in amortization in acquired intangible assets and a $0.9 million increase in amortization in capitalized software.

Depreciation and Amortization Expense

THREE MONTHS ENDED MARCH 31, CHANGE

THREE MONTHS ENDED JUNE 30, CHANGE

2024 2023 $ %

2 unchanged sentences

% of total revenues — % — %

Depreciation and amortization expense of $0.4 million was relatively flat for the three months ended March 31, 2024, as compared to the same period in 2023.

Depreciation and amortization expense increased $0.1 million, to $0.5 million for the three months ended June 30, 2024 as compared to the same period in 2023.

The increase in depreciation and amortization expense was primarily due to a $0.1 million increase in depreciation expense for computer equipment.

Interest Expense

THREE MONTHS ENDED MARCH 31, CHANGE

THREE MONTHS ENDED JUNE 30, CHANGE

2024 2023 $ %

2 unchanged sentences

% of total revenues 6 % 6 %

Interest expense increased by $0.3 million, or 5%, to $5.8 million for the three months ended March 31, 2024 as compared to the same period in 2023.

The increase in interest expense was primarily due to an $0.8 million increase in our floating rate term loan debt, driven by the uptick in market interest rates.

Interest expense of $5.6 million for the three months ended June 30, 2024, was nearly flat as compared to the same period in 2023.

The change in interest expense was primarily due to a $0.3 million increase in our floating rate term loan debt, driven by the uptick in market interest rates.

The increase in interest expense was partially offset by a $0.3 million increase in gain from our interest swap hedge activities.

Net Other (Income ) Expense

THREE MONTHS ENDED MARCH 31, CHANGE

THREE MONTHS ENDED JUNE 30, CHANGE

2024 2023 $ %

2 unchanged sentences

% of total revenues (3) % (1) %

Net other income increased by $1.1 million, to $1.6 million for the three months ended March 31, 2024 as compared to the same period in 2023.

The increase in net other income was primarily due to a $1.2 million increase interest income primarily from cash investments.

Net other income increased by $1.3 million, to $2.4 million for the three months ended June 30, 2024 as compared to the same period in 2023.

The increase in net other income was primarily due to a $1.0 million remeasurement gain related to the fluctuation of the foreign currency rate and a $0.3 million increase in interest income.

Provision (Benefit) for Income Taxes

THREE MONTHS ENDED MARCH 31, CHANGE

THREE MONTHS ENDED JUNE 30, CHANGE

2024 2023 $ %

2 unchanged sentences

Effective income tax rate (2) % 44 %

Our income tax benefit was $0.8 million, resulting in an effective income tax rate of 14% for the three months ended March 31, 2024 as compared to an income tax expense of $1.1 million, or an effective income tax rate of 45%, for the same period in 2023.

Our income tax expense for the three months ended March 31, 2024 and 2023 was primarily due to the tax effects of U.S.

pre-tax income, the relative mix of domestic and international earnings, the impact of non-deductible items, adjustments to the valuation allowances, the effects of tax elections made for U.K.

earnings, and discrete tax items.

Our income tax expense was $0.3 million, resulting in an effective income tax rate of (2)% for the three months ended June 30, 2024 as compared to an income tax expense of $3.7 million, or an effective income tax rate of 44%, for the same period in 2023.

Our income tax expense for the three months ended June 30, 2024 and 2023 was primarily due to the tax effects of U.S.

pre-tax income, the relative mix of domestic and international earnings, the impact of non-deductible items, adjustments to the valuation allowances, the effects of tax elections made for United Kingdom earnings, and discrete tax items.

Net Income (Loss)

THREE MONTHS ENDED MARCH 31, CHANGE

THREE MONTHS ENDED JUNE 30, CHANGE

2024 2023 $ %

1 unchanged sentence

Net income (loss) $ (12,574) $ 4,706 $ (17,280) (367) %

Net loss was $4.7 million representing a $6.0 million change in net income for the three months ended March 31, 2024 as compared to a net income of $1.4 million for the same period of 2023.

Net loss was $12.6 million representing a $17.3 million change in net income for the three months ended June 30, 2024 as compared to a net income of $4.7 million for the same period of 2023.

The decrease in net income was primarily due to a $21.4 million increase in operating expense, a $3.6 million increase in cost of revenue, partially offset by a $2.9 million increase in revenue, a $3.4 million decrease in tax expense, and a $1.3 million increase in total other income.

Six Months Ended June 30, 2024 Versus Six Months Ended June 30, 2023

The following table summarizes our unaudited statements of operations data for the six months ended at June 30, 2024 and 2023:

SIX MONTHS ENDED JUNE 30, CHANGE

2024 2023 $ %

(in thousands)

Software $ 77,514 $ 66,728 $ 10,786 16 %

Services 112,453 114,023 (1,570) (1) %

Total revenues $ 189,967 $ 180,751 $ 9,216 5 %

Total revenues increased $9.2 million, or 5%, to $190.0 million for the six months ended June 30, 2024 as compared to the same period in 2023.

The overall increase in revenues was primarily due to growth in our software product offerings from strong demand within existing customers, client expansions, and new customers.

Software revenues increased $10.8 million, or 16%, to $77.5 million for the six months ended June 30, 2024 as compared to the same period in 2023, primarily driven by strong demand within existing customers and expanding relationships with customers.

Services revenues decreased $1.6 million, or 1% to $112.5 million for the six months ended June 30, 2024 as compared to the same period in 2023, primarily attributed to decrease in revenue from consulting service as compared to the same period in 2023.

Cost of Revenues

SIX MONTHS ENDED JUNE 30, CHANGE

2024 2023 $ %

(in thousands)

Cost of revenues $ 79,064 $ 71,080 $ 7,984 11 %

Cost of revenues increased by $8.0 million, or 11%, to $79.1 million for the six months ended June 30, 2024 as compared to the same period in 2023.

The increase was primarily due to a $4.4 million increase in employee-related costs resulting from billable headcount growth, a $1.7 million increase in stock-based compensation costs, a $1.6 million increase in intangible assets amortization, a $1.0 million increase in equipment and software expenses, and a $0.2 million decrease in capitalized cost in R&D, partially offset by a $1.1 million decrease in professional and consulting expenses.

Sales and Marketing Expenses

SIX MONTHS ENDED JUNE 30, CHANGE

2024 2023 $ %

(in thousands)

Sales and marketing $ 22,900 $ 16,113 $ 6,787 42 %

% of total revenues 12 % 9 %

Sales and marketing expenses increased by $6.8 million, or 42%, to $22.9 million for the six months ended June 30, 2024 as compared to the same period in 2023.

Sales and marketing expenses increased primarily due to a $2.6 million increase in employee-related costs mainly resulting from head count growth driven by acquisitions along with investment to build the commercial organization, a $1.8 million increase in commission expense, a $0.8 million increase in stock-based compensation costs, a $0.7 million increase in marketing expenses, a $0.4 million increase in travel expenses, a $0.3 million increase in professional and consulting expenses, and a $0.2 million increase in equipment and software expenses.

Research and Development Expenses

SIX MONTHS ENDED JUNE 30, CHANGE

2024 2023 $ %

(in thousands)

Research and development $ 21,062 $ 17,175 $ 3,887 23 %

% of total revenues 11 % 10 %

Research and development expenses increased by $3.9 million, or 23%, to $21.1 million for the six months ended June 30, 2024 as compared to the same period in 2023.

The change in research and development expenses was primarily due to a $5.7 million increase in employee-related costs, mainly resulting from head count growth associated with investments in software development, including AI integration across our product portfolio, a $0.4 million increase in the cost of licenses, a $0.4 million increase in equipment and software expense, partially offset by a $2.6 million increase in capitalized cost in R&D.

General and Administrative Expenses

SIX MONTHS ENDED JUNE 30, CHANGE

2024 2023 $ %

(in thousands)

General and administrative $ 51,050 $ 34,017 $ 17,033 50 %

% of total revenues 27 % 19 %

General and administrative expenses increased by $17.0 million, or 50%, to $51.1 million for the six months ended June 30, 2024 as compared to the same period in 2023.

The increase in general and administrative expenses was primarily due to a $2.1 million increase in employee-related costs primarily resulting from head count growth, a $4.1 million increase in stock-based compensation costs, a $3.1 million increase related to remeasurement changes in the fair value of contingent consideration, a $2.6 million increase in transaction expense primarily related to refinancing of our term loan and revolving line of credit, a $2.3 million increase in reorganization expense, a $1.0 million increase in provision for credit allowance, a $0.8 million increase in merger and acquisition expenses, a $0.6 million increase in professional and consulting expenses, and a $0.2 million increase in public company-related expenses.

Intangible Asset Amortization

SIX MONTHS ENDED JUNE 30, CHANGE

2024 2023 $ %

(in thousands)

Intangible asset amortization $ 25,336 $ 21,117 $ 4,219 20 %

% of total revenues 13 % 12 %

Intangible asset amortization expense increased by $4.2 million, or 20%, to $25.3 million for the six months ended June 30, 2024, as compared to the same period in 2023.

The increase in intangible asset amortization expense was primarily due to a $2.5 million increase in amortization in acquired intangible assets and a $1.7 million increase in amortization in capitalized software.

Depreciation and Amortization Expense

SIX MONTHS ENDED JUNE 30, CHANGE

2024 2023 $ %

(in thousands)

Depreciation and amortization $ 883 $ 772 $ 111 14 %

% of total revenues — % — %

Depreciation and amortization expense increased $0.1 million, to $0.9 million for the six months ended June 30, 2024 as compared to the same period in 2023.

The increase in depreciation and amortization expense was primarily due to an increase in depreciation expense for computer equipment.

Interest Expense

SIX MONTHS ENDED JUNE 30, CHANGE

2024 2023 $ %

(in thousands)

Interest expense $ 11,329 $ 11,143 $ 186 2 %

% of total revenues 6 % 6 %

Interest expense increased by $0.2 million, or 2%, to $11.3 million for the six months ended June 30, 2024 as compared to the same period in 2023.

The increase in interest expense was primarily due to a $1.1 million increase in our floating rate term loan debt, driven by the uptick in market interest rates.

The increase in interest expense was partially offset by a $0.8 million increase in gain from our interest swap hedge activities.

Net Other (Income ) Expense

SIX MONTHS ENDED JUNE 30, CHANGE

2024 2023 $ %

(in thousands)

Net other (income ) expense $ (3,954) $ (1,516) $ (2,438) 161 %

% of total revenues (2) % (1) %

Net other income increased by $2.4 million, or 161%, to $4.0 million for the six months ended June 30, 2024 as compared to the same period in 2023.

The increase in net other income was primarily due to a $1.5 million

increase in interest income, primarily from cash investments, and a $1.0 million remeasurement gain related to the fluctuation of the foreign currency rate.

Provision (Benefit) for Income Taxes

SIX MONTHS ENDED JUNE 30, CHANGE

2024 2023 $ %

(in thousands)

Provision (benefit) for income taxes $ (446) $ 4,786 $ (5,232) (109) %

Effective income tax rate 3 % 44 %

Our income tax benefit was $0.4 million, resulting in an effective income tax rate of 3% for the six months ended June 30, 2024 as compared to an income tax expense of $4.8 million, or an effective income tax rate of 44% for the same period in 2023.

Our income tax expense for the six months ended June 30, 2024 and 2023 was primarily due to the tax effects of U.S.

Net Income (Loss)

SIX MONTHS ENDED JUNE 30, CHANGE

2024 2023 $ %

(in thousands)

Net income (loss) $ (17,257) $ 6,064 $ (23,321) 385 %

Net loss was $17.3 million representing a $23.3 million change in net income for the six months ended June 30, 2024 as compared to a net income of $6.1 million for the same period of 2023.

The decrease in net income was primarily due to a $32.0 million increase in operating expense, a $8.0 million increase in cost of revenue, partially offset by a $9.2 million increase in revenue, a $5.2 million decrease in tax expense, and a $2.4 million increase in total other income.

Liquidity and Capital Resources

We have consistently generated positive cash flow from operations, providing $4.3 million and $10.0 million as a source of funds for the three months ended March 31, 2024 and 2023, respectively.

We have consistently generated positive cash flow from operations, providing $14.1 million and $28.0 million as a source of funds for the six months ended June 30, 2024 and 2023, respectively.

Our additional liquidity comes from several sources:

maintaining adequate balances of cash and cash equivalents, issuing common stock, and accessing credit facilities and revolving lines of credit.

The following table provides a summary of the major sources of liquidity for the three and twelve months periods ended at March 31, 2024 and December 31, 2023 and as of March 31, 2024 and December 31, 2023.

March 31, 2024 December 31, 2023

(in thousands)

The following table provides a summary of the major sources of liquidity for the six and twelve months periods ended at June 30, 2024 and December 31, 2023 and as of June 30, 2024 and December 31, 2023.

June 30, 2024 December 31, 2023

(dollars in thousands)

Net cash from operating activities (a)

14,110 82,755

Cash and cash equivalents (b)

3 unchanged sentences

___________________________________

(a) Net cash from operating activities for three months ended at March 31, 2024 and twelve months ended at December 31, 2023.

(b) Cash balance as of March 31, 2024 and December 31, 2023 included $46.2 million and $47.3 million cash and cash equivalents, respectively, held outside of the United States.

Our material cash requirements from known contractual obligations are principal and interest payments of long-term debt.

(a) Net cash from operating activities for six months ended at June 30, 2024 and twelve months ended at December 31, 2023.

(b) Cash balances a June 30, 2024 and December 31, 2023 included $42.5 million and $47.3 million in cash and cash equivalents, respectively, held outside of the United States.

Our material cash requirements from known contractual obligations are principal and interest payments on long term debt.

We also have future cash obligations of $18.4 million for lease contracts, which have remaining terms of one to six years.

The principal amount of long-term debt outstanding as of March 31, 2024 matures in the following years:

Remainder of 2024 2025 2026 TOTAL

The principal amount of long-term debt outstanding as of June 30, 2024 matures in the following years:

Remainder of 2024 2025 2026 2027 2028 Thereafter TOTAL

( in thousands)

3 unchanged sentences

Our expected primary uses on a short-term and long-term basis are for repayment of debt, interest payments, working capital, capital expenditures, geographic or service offering expansion, acquisitions, investments, and other general corporate purposes.

We believe we will meet short and longer-term expected future cash requirements and obligations through a combination of cash flows from operating activities, available cash balances, and potential future equity or debt transactions.

We believe we will meet short- and long-term expected future cash requirements and obligations through a combination of cash flows from operating activities, available cash balances, and potential future equity or debt transactions.

Our future capital requirements, however, will depend on many factors, including funding for potential acquisitions, investments, and other growth and strategic opportunities, which could increase our cash requirements.

1 unchanged sentence

The following table presents a summary of our cash flows for the periods shown:

THREE MONTHS ENDED MARCH 31,

SIX MONTHS ENDED JUNE 30,

(in thousands)

8 unchanged sentences

Our cash flows from operating activities primarily include net income adjusted for (i) non-cash items included in net income, such as provisions (recoveries) for credit losses, depreciation and amortization, stock-based compensation, deferred taxes, and other non-cash items and (ii) changes in the balances of operating assets and liabilities.

Net cash provided by operating activities in the first three months of 2024 was $4.3 million, compared to $10.0 million in the same period of 2023.

The $5.7 million decrease in cash from operating activities was primarily driven by decrease in cash-adjusted net income, reduced cash inflows from deferred

revenues, more cash utilized for acquiring prepaid and other assets, and increased payments for accounts payable, accrued expenses, and other liabilities, partially offset by higher cash collected from accounts receivable.

Net cash provided by operating activities in the first six months of 2024 was $14.1 million, compared to $28.0 million in the same period of 2023.

The $13.9 million decrease in cash from operating activities was primarily driven by a decrease in cash-adjusted net income, an increase in accounts receivable, and an increase in cash used to obtain prepaid and other assets, partially offset by increased cash inflows from deferred revenues.

Investing activities

Net cash used by investing activities in the first three months of 2024 was $3.6 million, an increase of $0.8 million, compared to $2.7 million in the same period of 2023.

The change in investing activities was primarily due to a $0.6 million increase in cash utilized in capitalized development costs and a $0.3 million increase in cash utilized in capital expenditures to support our growth.

Net cash used by investing activities in the first six months of 2024 was $9.7 million, a decrease of $4.8 million, compared to $14.5 million in the same period of 2023.

The change in investing activities was primarily due to a $7.6 million decrease in cash used for business acquisition, partially offset by a $2.4 million increase in cash utilized in capitalized development costs and a $0.5 million increase in cash utilized in capital expenditures to support our growth.

Financing Activities

Net cash used by financing activities in the first three months of 2024 was $10.3 million, compared to $0.9 million cash used in the same period of 2023.

The $9.5 million decrease in cash flow in financing activities was primarily due to an $8.6 million increase in cash payments for contingent consideration related to business acquisition, and a $0.9 million increase in cash payments associated with share awards vested and withheld for payroll tax.

We have been a party to a Credit Agreement since August 2017 that provided for a senior secured term loan and commitments under a revolving credit facility.

We and our lenders most recently modified the Credit Agreement on June 17, 2021.

The maturity date of the term loans under the Credit Agreement is August 2026;

the termination date of the revolving credit commitments is August 2025.

Borrowings under the Credit Agreement bear interest at a rate per annum equal to either (i) the Eurocurrency rate, with a floor of 0.00%, as adjusted for the reserve percentage required under regulations issued by the Federal Reserve Board for determining maximum reserve requirements with respect to Eurocurrency funding, plus an applicable margin rate of 3.50% for the term loan and between 4.00% and 3.50% for revolving credit loans, depending on the applicable first lien leverage ratio, or (ii) an alternative base rate (“ABR”), with a floor of 1.00%, plus an applicable margin rate of 2.50% for the term loan or between 3.00% and 2.50% for revolving credit loans, depending on the applicable first lien leverage ratio (with the ABR determined as the greatest of (a) the prime rate, (b) the federal funds effective rate, plus 0.50%), and (c) the Eurocurrency rate plus 1.00%.

Additionally, we are obligated to pay commitment fees and other customary fees under the revolving credit facility.

In response to the discontinuation of LIBOR, we executed a LIBOR transition amendment in June 2023, formalizing the replacement of LIBOR with the Secured Overnight Funding Rate (“SOFR”).

As part of this modification, a Credit Spread Adjustment (“CSA”) was introduced to aligning SOFR with LIBOR in terms of the overall interest rate earned by lenders under the Credit Agreement.

The CSA varied depending on the selected interest period.

All obligations under the Credit Agreement are unconditionally guaranteed by our wholly owned direct and indirect subsidiaries, subject to certain exceptions.

Net cash used by financing activities in the first six months of 2024 was $14.1 million, compared to $7.3 million in the same period of 2023.

The $6.8 million increase in cash outflow in financing activities was primarily due to a $10.4 million increase in cash payments for contingent consideration related to business acquisition, and a $2.3 million increase in cash payments associated with share awards vested and withheld for payroll tax, partially offset by a $5.1 million increase in cash proceeds net of debt issuance cost from refinancing of term loan debt, and an $0.8 million decrease in quarterly prepayment payment of term loan debt.

We have been a party to a Credit Agreement since August 2017 that provides for a senior secured term loan and commitments under a revolving credit facility (as amended, the “Credit Agreement”).

On June 26, 2024, we entered into the Fifth Amendment to the Credit Agreement (the 'Amendment'), primarily amended (1) the principal amount of the term loan to $300.0 million and the maturity date to June 26, 2031;

and (2) extending

the termination date of $100.0 million revolving credit commitment to June 26, 2029.

The term loan under this Amendment has substantially the same terms as the existing term loans and revolving credit commitments.

Borrowings under the Credit Agreement bear interest at a rate per annum equal to, at the election of the Borrowers, either (i) the Term SOFR rate, with a floor of 0.00% plus an applicable margin rate of 3.00% for the Term Loans and between 3.50% and 2.75% for loans under the Revolving Facility, depending on the applicable first lien leverage ratio or (ii) an Alternate Base Rate (“ABR”), with a floor of 1.00%, plus an applicable margin rate of 2.00% for the Term Loans or between 2.50% and 1.75% for loans under the Revolving Facility, depending on the applicable first lien leverage ratio.

The ABR is determined as the greatest of (a) the prime rate, (b) the federal funds effective rate, plus 0.50% and (iii) the Term SOFR rate plus 1.00%.

Additionally, we are obligated to pay a commitment fee on the unused amount and other customary fees.

All obligations under the Credit Agreement, and the guarantees of those obligations, are secured on a first lien basis, subject to certain exceptions, by substantially all of our assets and the assets of the other guarantors.

As of March 31, 2024, we were in compliance with the covenants of the Credit Agreement.

As of March 31, 2024, we had $293.7 million of outstanding borrowings on the term loan, and $100.0 million of availability under the revolving credit facility under the Credit Agreement.

As of June 30, 2024, we were in compliance with the covenants of the Credit Agreement.

As of June 30, 2024, we had $300.0 million of outstanding borrowings on the term loan, and $100.0 million of availability under the revolving credit facility under the Credit Agreement.

Contractual Obligations and Commercial Commitments

There have been no material changes to our contractual obligations during the three months ended March 31, 2024 from those disclosed in our 2023 Annual Report, except for payments made in the ordinary course of business.

We recorded income tax benefit of $0.8 million for the three months ended March 31, 2024 and income tax expense of $1.1 million for the three months ended March 31, 2023.

As of March 31, 2024, we had federal and state NOLs of approximately $1.6 million and $0.04 million, respectively, which are available to reduce future taxable income and expire between 2035 and 2036 and 2029 and 2040, respectively.

There have been no material changes to our contractual obligations during the six months ended June 30, 2024 from those disclosed in our 2023 Annual Report, except for payments made in the ordinary course of business.

We recorded income tax benefit of $0.4 million for the six months ended June 30, 2024 and income tax expense of $4.8 million for the six months ended June 30, 2023.

As of June 30, 2024, we had federal and state NOLs of approximately $1.6 million and $0.04 million, respectively, which are available to reduce future taxable income and expire between 2035 and 2036 and 2029 and 2040, respectively.

We had federal and state R&D tax credit carryforwards of approximately $0.3 million and $0, respectively, to offset future income taxes, which expire between 2027 and 2028.

3 unchanged sentences

Our carryforwards are subject to review and possible adjustment by the appropriate taxing authorities.

As required by Accounting Standards Codification (‘‘ASC’’) Topic 740, Income Taxes, our management has evaluated the positive and negative evidence bearing upon the realizability of our deferred tax assets, which are composed principally of NOL carryforwards, Section 174 carryforwards, investment tax credit carryforward, and foreign tax credit carryforwards.

Management has determined that it is more likely than not that we will not realize the benefits of foreign tax credit carryforwards.

1 unchanged sentence

As a result, a valuation allowance of $31.5 million was recorded at December 31, 2023.

As of March 31, 2024, the valuation allowance remained unchanged from December 31, 2023.

As of June 30, 2024, the valuation allowance remained unchanged from December 31, 2023.

Off-Balance Sheet Arrangements

1 unchanged sentence

Critical Accounting Estimates

Our accounting policies are more fully described in Note 2, “Summary of Significant Accounting Policies,” in our audited consolidated financial statements included in our 2023 Annual Report.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Our accounting policies are more fully described in Note 2.

“Summary of Significant Accounting Policies,” in our audited consolidated financial statements included in our 2023 Annual Report.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

We monitor estimates and assumptions on a continuous basis and update these estimates and assumptions as facts and circumstances change and new information is obtained.

Actual results could differ materially from those estimates and assumptions.

We discussed the accounting policies that we believe are most critical to the

portrayal of our results of operations and financial condition and require management’s most difficult, subjective and complex judgments in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our 2023 Annual Report.

There were no significant changes to our critical accounting estimates during the three months ended March 31, 2024.

We discussed the accounting policies that we believe are most critical to the portrayal of our results of operations and financial condition and require management’s most difficult, subjective, and complex judgments in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our 2023 Annual Report.

There were no significant changes to our critical accounting estimates during the three months ended June 30, 2024.

Recently Adopted and Issued Accounting Standards

We have reviewed all recently issued standards and have determined that, other than as disclosed in Note 2 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report, such standards will not have a material impact on our condensed consolidated financial statements or do not otherwise apply to our operations.

We have reviewed all recently issued standards and have determined that, other than as disclosed in Note 2.“Summary of Significant Accounting Policies” to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report, such standards will not have a material impact on our condensed consolidated financial statements or do not otherwise apply to our operations.

Quantitative and Qualitative Disclosures About Market Risk

For information regarding our exposure to certain market risks, see “Quantitative and Qualitative Disclosures about Market Risk,” in Part II, Item 7A of the Company’s 2023 Annual Report.

There were no material changes to the Company’s market risk exposure during the three months ended March 31, 2024.

There were no material changes to the Company’s market risk exposure during the six months ended June 30, 2024.

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