What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-06 compared with 2025-08-06 · 140 added, 123 removed, 367 unchanged (42% of the section changed)

43 unchanged sentences

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

Q1 Q2 Q3 Q1 Q2 Q3

(in millions except percentage)

22 unchanged sentences

These changes are expected to potentially have a significant impact on the biopharmaceutical industries, creating a mix of opportunities and challenges for us.

On October 1, 2025, the U.S.

federal government experienced a shutdown, resulting in certain regulatory agencies, including the U.S.

Food and Drug Administration (“FDA”) and the U.S.

Securities and Exchange Commission (“SEC”), furloughing employees and temporarily suspending various activities.

We have not experienced any material impacts to our operations or financials but continue to monitor the impacts.

If the government shutdown continues for an extended period, it could increase uncertainty in the overall economic

environment and adversely impact business operations across multiple industries, including the pharmaceutical industry.

Prolonged delays or disruptions in regulatory reviews, approvals, or filings could adversely affect our operations, financial condition, and results of operations.

In addition to the external regulatory environment, internally, we initiated a review process in 2024 to evaluate the long-term strategic options for our regulatory services business.

13 unchanged sentences

Adjusted EBITDA, adjusted net income, and adjusted diluted earnings per share are non-GAAP measures and are presented for supplemental purposes only and should not be considered as an alternative or substitute to financial information presented in accordance with GAAP.

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.

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 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 JUNE 30, SIX MONTHS ENDED

THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,

2025 2024 2025 2024

4 unchanged sentences

(Benefit from) Provision for income taxes(a) (1,792) (290) 6,226 (736)

Depreciation and amortization 18,818 16,597 37,432 33,025

Intangible asset amortization and fixed assets depreciation(a) 18,626 16,792 56,058 49,817

Currency (gain) loss(a) (534) 1,546 (1,173) 2,526

5 unchanged sentences

Reorganization expense(h) 38 1,730 1,123 3,944

Loss (gain) on disposal of fixed assets(i) (1) 13 5 13

Loss on disposal of fixed assets(i) 31 — 36 13

Executive recruiting expense(j) — 222 661 645

Litigation and settlement expense(k) 246 — 246 —

Adjusted EBITDA $ 35,248 $ 33,061 $ 102,026 $ 88,522

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

THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED

THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,

2025 2024 2025 2024

9 unchanged sentences

Reorganization expense(h) 38 1,730 1,123 3,944

Loss (gain) on disposal of fixed assets(i) (1) 13 5 13

Loss on disposal of fixed assets(i) 31 — 36 13

Executive recruiting expense(j) — 222 661 645

Income tax expense impact of adjustments(k) (3,799) (8,273) (8,869) (15,362)

Litigation and settlement expense(k) 246 — 246 —

Income tax expense impact of adjustments(l) (6,477) (7,079) (15,348) (22,442)

Adjusted net income $ 22,246 $ 20,253 $ 56,050 $ 48,193

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

THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED

THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,

2025 2024 2025 2024

8 unchanged sentences

Reorganization expense(h) — 0.01 0.01 0.02

Loss (gain) on disposal of fixed assets(i) — — — —

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

Executive recruiting expense(j) — — — —

Income tax expense impact of adjustments(k) (0.02) (0.05) (0.05) (0.10)

Litigation and settlement expense(k) — — — —

Income tax expense impact of adjustments(l) (0.04) (0.04) (0.10) (0.14)

Adjusted diluted earnings per share $ 0.14 $ 0.13 $ 0.35 $ 0.30

Basic weighted average common shares outstanding 160,403,011 160,642,052 160,769,603 160,225,375

Effect of potentially dilutive shares outstanding (l) 932,945 961,455 645,088 925,274

Effect of potentially dilutive shares outstanding (m) 197,559 323,745 494,273 723,301

Adjusted diluted weighted average common shares outstanding 160,600,570 160,965,797 161,263,876 160,948,676

11 unchanged sentences

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

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

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

(k) Represents expense related to a non-recurring employment litigation and settlement outside the normal course of business.

(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.

In addition to adjusted EBITDA, adjusted net income, and adjusted diluted earnings per share, management also uses organic revenue, a non-GAAP financial metric, to measure the growth of our existing business operations excluding the impact of acquisitions and divestitures.

1 unchanged sentence

The table below presents revenue growth from organic operations and acquisitions:

SIX MONTHS ENDED

JUNE 30, Growth

vs YTD Q2 2024

NINE MONTHS ENDED SEPTEMBER 30, Growth YTD Q3 2025 vs YTD Q3 2024

(in thousands except percentage)

10 unchanged sentences

We recognize subscription fees ratably over the term of the subscription, usually one to three years.

Any subscription revenue paid upfront that is not recognized in the current period is included in deferred revenue in our condensed consolidated balance sheet until earned.

Any subscription revenue paid upfront

that is not recognized in the current period is included in deferred revenue in our condensed consolidated balance sheet until earned.

• Software maintenance :

28 unchanged sentences

Provision for (benefit from) income taxes consists of U.S.

federal and state income taxes and income taxes in certain foreign jurisdictions in which we conduct

federal and state income taxes and income taxes in certain foreign jurisdictions in which we conduct business.

We expect income tax expense to increase over time as the Company continues to grow more profitable.

Business Combinations

Since 2013 and as of June 30, 2025, we have completed 21 acquisitions, of which 14 have included software or technology.

Since 2013 and as of September 30, 2025, we have completed 21 acquisitions, of which 14 have included software or technology.

Details of acquisitions that have closed since the beginning of fiscal year 2024 are provided below.

4 unchanged sentences

The results of Chemaxon have been included in our consolidated results of operations and comprehensive income (loss) since the date of acquisition.

The current purchase price allocation for Chemaxon is preliminary.

The primary areas of the preliminary purchase price allocation that are not yet finalized relate to the fair value of deferred taxes and residual goodwill.

The Company expects to continue to obtain information to assist in determining the fair values of the net assets acquired at the acquisition date during the measurement period.

Any adjustments to the preliminary purchase price allocation identified during the measurement period, which will not exceed one year from the acquisition date, will be accounted for prospectively.

For more information about our acquisitions, see Note 4.

1 unchanged sentence

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 and six months ended June 30, 2025 to the three and six months ended June 30, 2024, respectively.

Three Months Ended June 30, 2025 Versus Three Months Ended June 30, 2024

The following table summarizes our unaudited statements of operations data for the three months ended at June 30, 2025 and 2024:

THREE MONTHS ENDED JUNE 30, 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 nine months ended September 30, 2025 to the three and nine months ended September 30, 2024, respectively.

Three Months Ended September 30, 2025 Versus Three Months Ended September 30, 2024

The following table summarizes our unaudited statements of operations data for the three months ended at September 30, 2025 and 2024:

THREE MONTHS ENDED SEPTEMBER 30, CHANGE

2025 2024 $ %

3 unchanged sentences

Total revenues $ 104,616 $ 94,820 $ 9,796 10 %

Total revenues increased $11.3 million, or 12%, to $104.6 million for the three months ended June 30, 2025 as compared to the same period in 2024.

The overall revenue growth was primarily due to an increase in revenue from our technology-enabled services and software product offerings, driven by strong demand from existing customers, expansion of relationships with existing customers and new customers as well as growth from business acquisition, which increased by $5.3 million.

Software revenues increased $8.5 million, or 22%, to $46.7 million for the three months ended June 30, 2025 as compared to the same period in 2024, primarily driven by growth from business acquisition, which increased by $5.1 million, as well as strong demand within existing customers, and expansion of relationships with existing customers.

Services revenues increased $2.8 million, or 5%, to $57.9 million for the three months ended June 30, 2025 as compared to the same period in 2024, primarily attributed to continued growth in technology-enabled services with existing and new customers.

Total revenues increased $9.8 million, or 10%, to $104.6 million for the three months ended September 30, 2025 as compared to the same period in 2024.

The overall revenue growth was primarily driven by growth from a business acquisition, which increased revenue by $5.8 million, as well as increased revenue from our technology-enabled services and software product offerings, driven by strong demand from existing customers, expansion of relationships with existing customers and new customers.

Software revenues increased $7.9 million, or 22%, to $43.8 million for the three months ended September 30, 2025 as compared to the same period in 2024, primarily driven by growth from a business acquisition, which increased revenue by $5.6 million, as well as strong demand within existing customers and expansion of relationships with existing customers.

Services revenues increased $1.9 million, or 3%, to $60.8 million for the three months ended September 30, 2025 as compared to the same period in 2024, primarily attributed to continued growth in technology-enabled services with existing and new customers.

Cost of Revenues

THREE MONTHS ENDED JUNE 30, CHANGE

THREE MONTHS ENDED SEPTEMBER 30, CHANGE

2025 2024 $ %

2 unchanged sentences

% of total revenues 38 % 39 %

Cost of revenues increased $0.9 million, or 2%, to $40.7 million for the three months ended June 30, 2025 as compared to the same period in 2024.

The increase was primarily due to a $1.3 million increase in intangible assets amortization, a $1.2 million increase in license and service cost, a $0.7 million increase in professional and consulting expense, and a $0.1 million increase in equipment and software expense, partially offset by a $1.3 million decrease in in employee-related costs, and a $1.2 million decrease in stock-based compensation costs.

Cost of revenues increased $2.5 million, or 7%, to $39.7 million for the three months ended September 30, 2025 as compared to the same period in 2024.

The increase was primarily due to a $1.2 million increase in intangible assets amortization, a $0.7 million increase in professional and consulting expense, a $0.7 million increase in license cost, and a $0.2 million increase in equipment and software expense, partially offset by a $0.4 million decrease in employee-related costs.

Sales and Marketing Expenses

THREE MONTHS ENDED JUNE 30, CHANGE

THREE MONTHS ENDED SEPTEMBER 30, CHANGE

2025 2024 $ %

2 unchanged sentences

% of total revenues 12 % 12 %

Sales and marketing expenses increased by $1.8 million, or 15%, to $14.0 million for the three months ended June 30, 2025 as compared to the same period in 2024.

Sales and marketing expenses increased primarily due to a $1.5 million increase in employee-related costs mainly resulting from head count growth driven by acquisitions along with investment to build the commercial organization, and a $0.1 million increase in marketing expense.

Sales and marketing expenses increased by $1.7 million, or 15%, to $13.0 million for the three months ended September 30, 2025 as compared to the same period in 2024.

Sales and marketing expenses increased primarily due to a $1.7 million increase in employee-related costs mainly resulting from head count growth driven by acquisitions along with investment to build the commercial organization, and a $0.3 million increase in stock-based compensation costs, partially offset by a $0.2 million decrease in marketing expense and a $0.2 million decrease in commission expense.

Research and Development Expenses

THREE MONTHS ENDED JUNE 30, CHANGE

THREE MONTHS ENDED SEPTEMBER 30, CHANGE

2025 2024 $ %

2 unchanged sentences

% of total revenues 10 % 9 %

Research and development expenses decreased by $0.1 million, or 1%, to $9.0 million for the three months ended June 30, 2025 as compared to the same period in 2024.

The decrease in research and development expenses was primarily due to a $1.3 million increase in capitalized cost in R&D, a $0.7 million decrease in stock-based compensation costs, a $0.2 million decrease in license cost, and a $0.1 million decrease in professional and consulting expense, partially offset by a $2.3 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.

Research and development expenses increased by $2.0 million, or 24%, to $10.3 million for the three months ended September 30, 2025 as compared to the same period in 2024.

The increase in research and development expenses was primarily due to a $3.5 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, and a $0.2 million increase in professional and consulting expense, partially offset by a $1.2 million increase in capitalized cost in R&D, a $0.2 million decrease in stock-based compensation costs, and a $0.2 million decrease in license cost.

General and Administrative Expenses

THREE MONTHS ENDED JUNE 30, CHANGE

THREE MONTHS ENDED SEPTEMBER 30, CHANGE

2025 2024 $ %

2 unchanged sentences

% of total revenues 24 % 23 %

General and administrative expenses decreased by $10.9 million, or 39%, to $17.2 million for the three months ended June 30, 2025 as compared to the same period in 2024.

The decrease in general and administrative expenses was primarily due to an $8.5 million reduction related to remeasurement changes in the fair value of contingent consideration, a $2.6 million decrease in transaction costs primarily due to significant refinancing expenses for a term loan and revolving line of credit incurred in the same quarter of the prior year, a $1.3 million decrease in employee-related costs primarily due to decrease in organizational restructure expense, and a $0.7 million decrease in provision for credit allowance, partially offset by a $1.1 million increase in professional and consulting expense, a $0.7 million increase in equipment and software expense, a $0.3 million increase in stock-based compensation costs, and a $0.3 million increase in facility and lease-related expense.

General and administrative expenses increased by $2.6 million, or 12%, to $24.6 million for the three months ended September 30, 2025 as compared to the same period in 2024.

The increase in general and administrative expenses was primarily due to a $1.3 million increase in stock-based compensation costs, a $0.7 million increase in equipment and software expense, a $0.7 million increase in provision for credit allowance, a $0.5 million increase in miscellaneous operation expenses, a $0.3 million increase in employee-related costs, a $0.3 million reduction related to remeasurement changes in the fair value of contingent consideration, and a $0.2 million increase in public company and transaction expenses, partially offset by a $1.2 million decrease in lease abandonment expense, and a $0.2 million decrease in executive recruiting expense.

Depreciation and Amortization

THREE MONTHS ENDED JUNE 30, CHANGE

THREE MONTHS ENDED SEPTEMBER 30, CHANGE

2025 2024 $ %

3 unchanged sentences

% of total revenues 13 % 14 %

Amortization and depreciation expense increased by $1.0 million, or 7%, to $14.2 million for the three months ended June 30, 2025 as compared to the same period in 2024.

Amortization and depreciation expense increased by $0.6 million, or 4%, to $14.0 million for the three months ended September 30, 2025 as compared to the same period in 2024.

The increase in depreciation and amortization expense was primarily due to a $0.7 million net increase in intangible assets amortization, which included a $1.3 million increase in amortization of capitalized software, partially offset by a $0.5 million decrease in amortization of acquired intangible assets.

In addition, depreciation expense for fixed assets decreased $0.1 million, primarily due to a $0.1 million decrease in depreciation of furniture and fixture.

In addition, depreciation expense for fixed assets

decreased $0.1 million, primarily due to a $0.1 million decrease in depreciation of computer equipment and furniture and fixture.

Interest Expense

THREE MONTHS ENDED JUNE 30, CHANGE

THREE MONTHS ENDED SEPTEMBER 30, CHANGE

2025 2024 $ %

2 unchanged sentences

% of total revenues 5 % 5 %

Interest expense decreased by $0.8 million, or 14%, to $4.8 million for the three months ended June 30, 2025, as compared to the same period in 2024.

The change in interest expense was primarily due to a $1.2 million decrease in interest from our floating rate term loan debt, primarily due to a decline in market interest rates and a reduced base margin rate resulting from the refinancing of the term loan, and a $0.2 million decrease related with the amortization of debt issuance cost, partially offset by a $0.6 million decrease in gain from our interest swap hedge activities.

Interest expense decreased by $0.2 million, or 3%, to $5.0 million for the three months ended September 30, 2025, as compared to the same period in 2024.

The change in interest expense was primarily due to a $0.8 million decrease in interest from our floating rate term loan debt, primarily due to a decline in market interest rates and a reduced base margin rate resulting from the refinancing of the term loan, and a $0.1 million decrease in other various items, partially offset by a $0.8 million decrease in gain from our interest swap hedge activities.

Net Other Income

THREE MONTHS ENDED JUNE 30, CHANGE

THREE MONTHS ENDED SEPTEMBER 30, CHANGE

2025 2024 $ %

2 unchanged sentences

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

Net other income decreased by $0.8 million to $1.5 million for the three months ended June 30, 2025 as compared to the same period in 2024.

The decrease in net other income was primarily due to a $1.2 million decrease in interest income, along with a $0.3 million increase in miscellaneous expense, partially offset by $0.7 million increase in gain from remeasurement related to the fluctuation of the foreign currency rate.

Provision for Income Taxes

THREE MONTHS ENDED JUNE 30, CHANGE

Net other income increased by $0.8 million to $1.7 million for the three months ended September 30, 2025 as compared to the same period in 2024.

The increase in net other income was primarily due to a $2.7 million increase in gain from remeasurement related to the fluctuation of the foreign currency rate, partially offset by a $1.3 million decrease in interest income, and a $0.6 million increase in other expense.

Benefits from Income Taxes

THREE MONTHS ENDED SEPTEMBER 30, CHANGE

2025 2024 $ %

(in thousands)

Provision for Income Taxes

Benefits from income taxes

$ (1,792) $ (290) $ (1,502) 518 %

Effective income tax rate 671 % 17 %

Our income tax expense was $8.2 million, resulting in an effective income tax rate of 131% for the three months ended June 30, 2025 as compared to an income tax expense of $0.3 million, or an effective income tax rate of (2)%, for the same period in 2024.

Our income tax expense for the three months ended June 30, 2025 and 2024 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.

Our income tax benefit was $1.8 million, resulting in an effective income tax rate of 671% for the three months ended September 30, 2025 as compared to an income tax benefit of $0.3 million, or an effective income tax rate of 17%, for the same period in 2024.

Our income tax benefit for the three months ended September 30, 2025 and 2024 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.

THREE MONTHS ENDED JUNE 30, CHANGE

Net Income (Loss)

THREE MONTHS ENDED SEPTEMBER 30, CHANGE

2025 2024 $ %

(in thousands)

Net income (loss)

$ 1,525 $ (1,371) $ 2,896 211 %

Net loss was $2.0 million representing a $10.6 million increase in net income for the three months ended June 30, 2025 as compared to a net loss of $12.6 million for the same period of 2024.

The increase in net income was primarily due to a $11.3 million increase in revenue, a $8.2 million decrease in operating expenses, partially offset by a $7.9 million increase in tax expense and a $0.9 million increase in cost of revenue.

Six Months Ended June 30, 2025 Versus Six Months Ended June 30, 2024

The following table summarizes our unaudited statements of operations data for the six months ended at June 30, 2025 and 2024:

SIX MONTHS ENDED JUNE 30, CHANGE

Net income was $1.5 million representing a $2.9 million increase in net income for the three months ended September 30, 2025 as compared to a net loss of $1.4 million for the same period of 2024.

The increase in net income was primarily due to a $9.8 million increase in revenue, a $1.5 million increase in tax benefit, and a $1.0 million decrease in total other net expense, partially offset by a $6.9 million increase in operating expenses, and a $2.5 million increase in cost of revenue.

Nine Months Ended September 30, 2025 Versus Nine Months Ended September 30, 2024

The following table summarizes our unaudited statements of operations data for the nine months ended September 30, 2025 and 2024:

NINE MONTHS ENDED SEPTEMBER 30, CHANGE

2025 2024 $ %

3 unchanged sentences

Total revenues $ 315,190 $ 284,787 $ 30,403 11 %

Total revenues increased $20.6 million, or 11%, to $210.6 million for the six months ended June 30, 2025 as compared to the same period in 2024.

The overall revenue growth was primarily due to an increase in revenue from our technology-enabled services and software product offerings, driven by growth from business acquisition, which increased by $11.2 million, as well as strong demand from existing customers, expansion of relationships with existing customers and new customers.

Software revenues increased $15.6 million, or 20%, to $93.1 million for the six months ended June 30, 2025 as compared to the same period in 2024, primarily driven by by growth from business acquisition, which increased by $10.6 million, as well as strong demand within existing customers, and expansion of relationships with existing customers.

Services revenues increased $5.1 million, or 4%, to $117.5 million for the six months ended June 30, 2025 as compared to the same period in 2024, primarily attributed to continued growth in technology-enabled services with existing and new customers.

Total revenues increased $30.4 million, or 11%, to $315.2 million for the nine months ended September 30, 2025 as compared to the same period in 2024.

The overall revenue growth was primarily driven by growth from a business acquisition, which increased revenue by $17.0 million, as well as increased revenue from our technology-enabled services and software product offerings, driven by strong demand from existing customers, expansion of relationships with existing customers and new customers.

Software revenues increased $23.5 million, or 21%, to $136.9 million for the nine months ended September 30, 2025 as compared to the same period in 2024, primarily driven by growth from a business acquisition, which increased revenue by $16.2 million, as well as strong demand within existing customers, and expansion of relationships with existing customers.

Services revenues increased $6.9 million, or 4%, to $178.3 million for the nine months ended September 30, 2025 as compared to the same period in 2024, primarily attributed to continued growth in technology-enabled services with existing and new customers.

Cost of Revenues

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NINE MONTHS ENDED SEPTEMBER 30, CHANGE

2025 2024 $ %

2 unchanged sentences

% of total revenues 39 % 41 %

Cost of revenues increased $3.2 million, or 4%, to $82.2 million for the six months ended June 30, 2025 as compared to the same period in 2024.

Cost of revenues increased $5.7 million, or 5%, to $122.0 million for the nine months ended September 30, 2025 as compared to the same period in 2024.

The increase was primarily due to a $3.7 million increase in intangible assets amortization, a $2.4 million increase in license and service cost, a $1.5 million increase in professional and consulting expense, a $0.5 million increase related to executive recruiting expenses, and a $0.5 million increase in equipment and software expense, partially offset by a $1.7 million decrease in employee related costs and a $1.2 million decrease in stock-based compensation costs.

Sales and Marketing Expenses

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NINE MONTHS ENDED SEPTEMBER 30, CHANGE

2025 2024 $ %

2 unchanged sentences

% of total revenues 13 % 12 %

Sales and marketing expenses increased by $3.8 million, or 17%, to $26.7 million for the six months ended June 30, 2025 as compared to the same period in 2024.

Sales and marketing expenses increased primarily due to a $3.5 million increase in employee-related costs mainly resulting from head count growth driven by investment to build the commercial organization along with acquisitions, a $0.2 million increase in stock-based compensation costs, a $0.2 million increase in equipment and software expense, and a $0.1 million increase in sales commission and bonus, partially offset by a $0.2 million decrease in travel related expenses.

Sales and marketing expenses increased by $5.5 million, or 16%, to $39.7 million for the nine months ended September 30, 2025 as compared to the same period in 2024.

Sales and marketing expenses increased primarily due to a $5.1 million increase in employee-related costs mainly resulting from head count growth driven by investment to build the commercial organization along with acquisitions, a $0.6 million increase in stock-based compensation costs, and a $0.3 million increase in equipment and software expense, partially offset by a $0.2 million decrease in travel related expenses, a $0.2 million decrease in professional and consulting expense, and a $0.1 million decrease in marketing expense.

Research and Development Expenses

SIX MONTHS ENDED JUNE 30, CHANGE

NINE MONTHS ENDED SEPTEMBER 30, CHANGE

2025 2024 $ %

2 unchanged sentences

% of total revenues 9 % 10 %

Research and development expenses decreased by $1.6 million, or 7%, to $19.5 million for the six months ended June 30, 2025 as compared to the same period in 2024.

The decrease in research and development expenses was primarily due to a $3.6 million increase in capitalized cost in R&D, reflecting strategic investments, a $1.4 million decrease in stock-based compensation costs, and a $0.4 million decrease in licensing cost, and a $0.3 million decrease in professional and consulting expense, partially offset by a $4.1 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.

Research and development expenses increased by $0.4 million, or 1%, to $29.8 million for the nine months ended September 30, 2025 as compared to the same period in 2024.

The increase in research and development expenses was primarily due to a $7.6 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, partially offset by a $4.8 million increase in capitalized cost in R&D, reflecting strategic investments, a $1.6 million decrease in stock-based compensation costs, a $0.6 million decrease in licensing cost, and a $0.1 million decrease in professional and consulting expense.

General and Administrative Expenses

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NINE MONTHS ENDED SEPTEMBER 30, CHANGE

2025 2024 $ %

2 unchanged sentences

% of total revenues 20 % 26 %

General and administrative expenses decreased by $14.2 million, or 28%, to $36.8 million for the six months ended June 30, 2025 as compared to the same period in 2024.

The decrease in general and administrative expenses was primarily due to a $11.6 million decrease related to remeasurement changes in the fair value of contingent consideration, a $2.6 million decrease in transaction costs primarily due to significant refinancing expenses for a term loan and revolving line of credit incurred in the same period of the prior year, a $1.1 million decrease in stock-based compensation costs, a $0.7 million decrease in merger and acquisition cost, a $0.5 million decrease in employee-related costs primarily due to lower organizational restructure expense, a $0.4 million decrease in provision for credit allowance, and a $0.2 million decrease in executive recruiting expense, partially offset by a $2.2 million increase in professional and consulting expense, and an $0.8 million increase in equipment and software expense.

General and administrative expenses decreased by $11.6 million, or 16%, to $61.5 million for the nine months ended September 30, 2025 as compared to the same period in 2024.

The decrease in general and administrative expenses was primarily due to a $11.3 million decrease related to remeasurement changes in the fair value of contingent consideration, a $2.4 million decrease in transaction costs primarily due to significant refinancing expenses for a term loan and revolving line of credit incurred in the same period of the prior year, a $2.0 million decrease in lease abandonment expense, a $0.8 million decrease in merger and acquisition cost, and a $0.5 million decrease in executive recruiting expense, partially offset by a $2.3 million increase in professional and consulting expense, a $1.6 million increase in equipment and software expense, a $0.6 million increase in miscellaneous operation expenses, a $0.4 million increase in facility and lease related expenses, a $0.3 million increase in public company expense, a $0.3 million increase in provision for credit allowance, and a $0.3 million increase in travel related expense.

Depreciation and Amortization

SIX MONTHS ENDED JUNE 30, CHANGE

NINE MONTHS ENDED SEPTEMBER 30, CHANGE

2025 2024 $ %

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% of total revenues 13 % 14 %

Amortization and depreciation expense increased by $1.9 million, or 7%, to $28.1 million for the six months ended June 30, 2025 as compared to the same period in 2024.

Amortization and depreciation expense increased by $2.5 million, or 6%, to $42.1 million for the nine months ended September 30, 2025 as compared to the same period in 2024.

The increase in depreciation and amortization expense was primarily due to a net $2.7 million increase in intangible assets amortization, which included a $4.4 million increase in amortization of capitalized software, partially offset by a $1.7 million decrease in amortization of acquired intangible assets.

In addition, depreciation expense for fixed assets decreased $0.1 million, primarily due to a $0.1 million decrease in depreciation of furniture and fixture.

In addition, depreciation expense for fixed assets decreased $0.2 million, primarily due to a $0.2 million decrease in depreciation of furniture and fixture, as well as leasehold improvements.

Interest Expense

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2025 2024 $ %

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% of total revenues 5 % 6 %

Interest expense decreased by $1.7 million, or 15%, to $9.6 million for the six months ended June 30, 2025, as compared to the same period in 2024.

The change in interest expense was primarily due to a $2.6 million decrease in interest from our floating rate term loan debt, primarily due to a decline in market interest rates and a reduced base margin rate resulting from the refinancing of the term loan, and a $0.5 million decrease related

with the amortization of debt issuance cost, partially offset by a $1.2 million decrease in gain from our interest swap hedge activities.

Interest expense decreased by $1.9 million, or 11%, to $14.6 million for the nine months ended September 30, 2025, as compared to the same period in 2024.

The change in interest expense was primarily due to a $3.4 million decrease in interest from our floating rate term loan debt, primarily due to a decline in market interest

rates and a reduced base margin rate resulting from the refinancing of the term loan, and a $0.5 million decrease related to the amortization of debt issuance cost, partially offset by a $1.9 million decrease in gain from our interest swap hedge activities.

Net Other Income

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2025 2024 $ %

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

Net other income decreased by $0.7 million to $3.2 million for the six months ended June 30, 2025 as compared to the same period in 2024.

The decrease in net other income was primarily due to a $2.2 million decrease in interest income, and $0.2 million increase in other miscellaneous expense, partially offset by a $1.6 million increase in gain from remeasurement related to the fluctuation of the foreign currency rate.

Net other income increased by $0.1 million to $5.0 million for the nine months ended September 30, 2025 as compared to the same period in 2024.

The increase in net other income was primarily due to a $4.3 million increase in gain from remeasurement related to the fluctuation of the foreign currency rate, partially offset by a $3.5 million decrease in interest income and a $0.7 million increase in other expense.

Provision (Benefit) for Income Taxes

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2025 2024 $ %

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Effective income tax rate 59 % 4 %

Our income tax expense was $8.0 million, resulting in an effective income tax rate of 74% for the six months ended June 30, 2025 as compared to an income tax benefit of $0.4 million, or an effective income tax rate of 3%, for the same period in 2024.

Our income tax benefit for the six months ended June 30, 2025 and 2024 was primarily due to the tax effects of U.S.

Our income tax expense was $6.2 million, resulting in an effective income tax rate of 59% for the nine months ended September 30, 2025, as compared to an income tax benefit of $0.7 million, or an effective income tax rate of 4%, for the same period in 2024.

Our income tax expense for the nine months ended September 30, 2025 and 2024 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.

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Net Income (Loss)

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NINE MONTHS ENDED SEPTEMBER 30, CHANGE

2025 2024 $ %

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$ 4,300 $ (18,628) $ 22,928 123 %

Net income was $2.8 million representing a $20.0 million increase in net income for the six months ended June 30, 2025 as compared to a net loss of $17.3 million for the same period of 2024.

The increase in net income was primarily due to a $20.6 million increase in revenue, a $10.1 million decrease in operating expenses, a $1.7 million decrease in interest expense, partially offset by an $8.5 million increase in tax expense, a $3.2 million increase in cost of revenue, and a $0.7 million decrease in net other income.

Net income was $4.3 million representing a $22.9 million increase in net income for the nine months ended September 30, 2025 as compared to a net loss of $18.6 million for the same period of 2024.

The increase in net income was primarily due to a $30.4 million increase in revenue, a $3.2 million decrease in operating expenses, a $1.9 million decrease in interest expense, partially offset by an $7.0 million increase in tax expense and a $5.7 million increase in cost of revenue.

Liquidity and Capital Resources

We have consistently generated positive cash flow from operations, providing $35.2 million and $14.1 million as a source of funds for the six months ended June 30, 2025 and 2024, respectively.

We have consistently generated positive cash flow from operations, providing $67.5 million and $31.1 million as a source of funds for the nine months ended September 30, 2025 and 2024, 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 six- and 12-month periods ended at June 30, 2025 and December 31, 2024 and as of June 30, 2025 and December 31, 2024.

JUNE 30, 2025 DECEMBER 31,

The following table provides a summary of the major sources of liquidity for the nine- and 12-month periods ended at September 30, 2025 and December 31, 2024 and as of September 30, 2025 and December 31, 2024.

SEPTEMBER 30, 2025 DECEMBER 31,

(dollars in thousands)

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Term loan credit facilities 296,250 298,500

Gross revolving line of credit 100,000 100,000

Revolving line of credit 100,000 100,000

___________________________________

(a) Net cash from operating activities for six months ended June 30, 2025 and twelve months ended December 31, 2024.

(b) Cash balances as of June 30, 2025 and December 31, 2024 included $62.3 million and $45.8 million in cash and cash equivalents, respectively, held outside of the United States.

(a) Net cash from operating activities for nine months ended September 30, 2025 and twelve months ended December 31, 2024.

(b) Cash balances as of September 30, 2025 and December 31, 2024 included $71.7 million and $45.8 million in cash and cash equivalents, respectively, held outside of the United States.

On April 11, 2025, our Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to $100.0 million of its common stock.

During the second quarter ended June 30, 2025, we repurchased 1,793,279 shares of our common stock for a total purchase price of $25.0 million.

As of June 30, 2025, approximately $75.0 million remained available under the stock repurchase program.

During the nine months ended September 30, 2025, we repurchased 3,023,677 shares of our common stock for a total purchase price and fees of $38.7 million.

As of September 30, 2025, approximately $61.3 million net after fees, remained available under the stock repurchase program.

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

We also have future cash obligations of $16.2 million for lease contracts, which have remaining terms of one to nine years.

The principal amount of long-term debt outstanding as of June 30, 2025 matures in the following years:

The principal amount of long-term debt outstanding as of September 30, 2025 matures in the following years:

Remainder of 2025 2026 2027 2028 2029 Thereafter TOTAL

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

SIX MONTHS ENDED JUNE 30,

NINE MONTHS ENDED SEPTEMBER 30,

(in thousands)

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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 six months of 2025 was $35.2 million, compared to $14.1 million in the same period of 2024.

The $21.1 million increase in cash from operating activities was primarily driven by an increase in cash-adjusted net income, a decrease in accounts receivable, and a lower cash outflows related to prepaid and other assets, partially offset by lower cash inflows from deferred revenues and increase cash outflow in accrued expenses and other liabilities.

Net cash provided by operating activities in the first nine months of 2025 was $67.5 million, compared to $31.1 million in the same period of 2024.

The $36.4 million increase in cash from operating activities was primarily driven by an increase in cash-adjusted net income, a decrease in accounts receivable, a decrease in cash outflow in accrued expenses and other liabilities, and lower cash outflows related to prepaid and other assets, partially offset by lower cash inflows from deferred revenues.

Investing Activities

Net cash used by investing activities in the first six months of 2025 was $12.7 million, an increase of $3.0 million, compared to $9.7 million in the same period of 2024.

Net cash used in investing activities in the first nine months of 2025 was $19.5 million, an increase of $4.3 million, compared to $15.2 million in the same period of 2024.

The change in investing activities was primarily due to a $4.8 million increase in cash utilized in capitalized software development costs to support our growth and a $0.5 million decrease in cash outflow for capital expenditure.

Financing Activities

Net cash used by financing activities in the first six months of 2025 was $44.7 million, compared to $14.1 million in the same period of 2024.

The $30.6 million increase in cash outflow in financing activities was primarily due to a $25.0 million increase in cash used for repurchasing the company's common stock, a $6.3 million decrease in cash inflow from debt refinancing activities, a $2.8 million increase in cash payments for contingent consideration related to a business acquisition, a $0.7 million increase in prepayments on term loan debt, partially offset by a $3.1 million decrease in cash payments associated with share awards vested and withheld for payroll tax and a $1.2 million decrease in payment for debt refinancing fees.

Net cash used by financing activities in the first nine months of 2025 was $59.2 million, compared to $19.7 million in the same period of 2024.

The $39.5 million increase in cash outflow in financing activities was primarily due to a $38.7 million increase in cash used in connection with repurchasing the Company's common stock, a $6.3 million decrease in cash inflow from debt refinancing activities, and a $0.7 million increase in prepayments on term loan debt, partially offset by a $3.1 million decrease in cash payments associated with share awards vested and withheld for payroll tax, a $1.9 million decrease in cash payments for contingent consideration related to a business acquisition, and a $1.2 million decrease in payment for debt refinancing fees.

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”), which primarily (1) amended the principal amount of the term loan to $300.0 million and the maturity date to June 26, 2031;

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

and (2) extended the termination date associated with the $100.0 million revolving credit commitment to June 26, 2029.

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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 June 30, 2025, we were in compliance with the covenants of the Credit Agreement.

As of June 30, 2025, we had $297.0 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 September 30, 2025, we were in compliance with the covenants of the Credit Agreement.

Additionally, in October 2025, the Company entered into a Sixth Amendment to its Credit Agreement, which, among other changes, reduces the applicable rate for existing term loans.

For further details on the Sixth Amendment, see Note 14, “Subsequent Event”.

As of September 30, 2025, we had $296.3 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 six months ended June 30, 2025 from those disclosed in our 2024 Annual Report, except for payments made in the ordinary course of business.

We recorded income tax expense of $8.0 million for the six months ended June 30, 2025 and income tax benefit $0.4 million for the six months ended June 30, 2024.

As of June 30, 2025, we had federal and state NOLs of approximately $6.2 million and $4.9 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 nine months ended September 30, 2025 from those disclosed in our 2024 Annual Report, except for payments made in the ordinary course of business.

We recorded income tax expense of $6.2 million for the nine months ended September 30, 2025 and income tax benefit $0.7 million for the nine months ended September 30, 2024.

As of September 30, 2025, we had federal and state NOLs of approximately $6.2 million and $4.9 million, respectively, which are available to reduce future taxable income and expire between 2035 and 2036 and 2029 and 2040, respectively.

We had federal R&D tax credit carryforwards of approximately $0.3 million to offset future income taxes, which expire between 2027 and 2048.

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At the foreign subsidiaries, management has determined that it is more likely than not that we will not realize the benefits of certain NOL carryforwards.

As a result, a

valuation allowance of $24 million is recorded at December 31, 2024.

As of June 30, 2025, the valuation allowance remained unchanged from December 31, 2024.

As a result, a valuation allowance of $24 million is recorded at December 31, 2024.

As of September 30, 2025, the valuation allowance remained unchanged from December 31, 2024.

On July 4, 2025, the United States enacted the One Big Beautiful Bill Act (the “OBBBA”), which includes changes to U.S.

tax law such as significant amendments to the U.S.

federal income tax code.

Key provisions include the permanent reinstatement of immediate expensing for domestic research expenditures, the restoration of full expensing for qualified machinery, equipment and other short-lived assets, and several modifications to existing international tax provisions.

These provisions were enacted subsequent to the end of third quarter of 2025 and therefore are not reflected in the accompanying condensed consolidated financial statements.

The Company is in the process of evaluating the impact of the OBBBA.

Off-Balance Sheet Arrangements

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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 2024 Annual Report.

There were no significant changes to our critical accounting estimates during the three months ended June 30, 2025.

There were no significant changes to our critical accounting estimates during the three months ended September 30, 2025.

Recently Adopted and Issued Accounting Standards

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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 2024 Annual Report.

There were no material changes to the Company’s market risk exposure during the six months ended June 30, 2025.

There were no material changes to the Company’s market risk exposure during the nine months ended September 30, 2025.

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