Certara, Inc. 10-Q

Item 1. Financial Statements CERTARA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA) SEPTEMBER 30, 2025 DECEMBER 31, 2024 Assets Current assets: Cash and cash equivalents $ 172,711 $ 179,183 Accounts receivable, net of allowance for credit losses of $ 1,937 and $ 2,164 , respectively 89,051 102,189 Prepaid expenses and other current assets 21,541 29,480 Total current assets 283,303 310,852 Other assets: Property and equipment, net 1,846 2,167 Operating lease right-of-use assets 12,371 13,841 Goodwill 773,036 757,038 Intangible assets, net of accumulated amortization of $ 396,928 and $ 338,809 , respectively 459,543 485,214 Deferred income taxes 3,961 3,961 Other long-term assets 1,796 2,031 Total assets $ 1,535,856 $ 1,575,104 Liabilities and stockholders' equity Current liabilities: Accounts payable $ 3,457 $ 3,502 Accrued expenses 59,865 56,451 Current portion of deferred revenue 65,023 77,829 Current portion of long-term debt 3,000 3,000 Other current liabilities 4,175 5,306 Total current liabilities 135,520 146,088 Long-term liabilities: Deferred revenue, net of current portion 857 1,049 Deferred income taxes 30,848 40,421 Operating lease liabilities, net of current portion 8,965 11,166 Long-term debt, net of current portion and debt discount 290,541 292,425 Other long-term liabilities 4,318 25,299 Total liabilities 471,049 516,448 Commitments and contingencies (refer to note 10) Stockholders' equity Preferred shares, $ 0.01 par value, 50,000,000 shares authorized, no shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively — — Common shares, $ 0.01 par value, 600,000,000 shares authorized, 163,873,911 and 161,958,810 shares issued, 159,396,847 and 161,009,112 shares outstanding as of September 30, 2025 and December 31, 2024, respectively 1,640 1,620 Additional paid-in capital 1,247,464 1,216,925 Accumulated deficit ( 123,981 ) ( 128,281 ) Accumulated other comprehensive income (loss) 1,947 ( 13,424 ) Treasury stock at cost, 4,477,064 and 949,698 shares at September 30, 2025 and December 31, 2024, respectively ( 62,263 ) ( 18,184 ) Total stockholders' equity 1,064,807 1,058,656 Total liabilities and stockholders' equity $ 1,535,856 $ 1,575,104 The accompanying notes are an integral part of the condensed consolidated financial statements. 7 Table of Contents CERTARA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED) THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, (IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA) 2025 2024 2025 2024 Revenues $ 104,616 $ 94,820 $ 315,190 $ 284,787 Cost of revenues 39,718 37,189 121,955 116,253 Operating expenses: Sales and marketing 12,998 11,347 39,704 34,247 Research and development 10,266 8,271 29,760 29,333 General and administrative 24,647 22,030 61,487 73,080 Depreciation and amortization 13,982 13,389 42,104 39,608 Total operating expenses 61,893 55,037 173,055 176,268 Income (loss) from operations 3,005 2,594 20,180 ( 7,734 ) Other income (expenses): Interest expense ( 5,011 ) ( 5,187 ) ( 14,619 ) ( 16,516 ) Net other income 1,739 932 4,965 4,886 Total other expenses ( 3,272 ) ( 4,255 ) ( 9,654 ) ( 11,630 ) Income (loss) before income taxes ( 267 ) ( 1,661 ) 10,526 ( 19,364 ) Provision (benefit) for income taxes ( 1,792 ) ( 290 ) 6,226 ( 736 ) Net income (loss) attributable to common stockholders: 1,525 ( 1,371 ) 4,300 ( 18,628 ) Other comprehensive income (loss): Foreign currency translation adjustment, net of tax of $( 144 ), $( 390 ), $( 1,130 ), and $( 346 ), respectively ( 2,418 ) 5,700 18,957 4,992 Change in fair value from interest rate swap, net of tax of $( 198 ), $( 795 ), $( 1,222 ), and $( 788 ), respectively ( 584 ) ( 2,385 ) ( 3,586 ) ( 2,412 ) Total other comprehensive income (loss) ( 3,002 ) 3,315 15,371 2,580 Comprehensive income (loss) $ ( 1,477 ) $ 1,944 $ 19,671 $ ( 16,048 ) Net income (loss) per share attributable to common stockholders: Basic $ 0.01 $ ( 0.01 ) $ 0.03 $ ( 0.12 ) Diluted $ 0.01 $ ( 0.01 ) $ 0.03 $ ( 0.12 ) Weighted average common shares outstanding: Basic 160,403,011 160,642,052 160,769,603 160,225,375 Diluted 160,600,570 160,642,052 161,263,876 160,225,375 The accompanying notes are an integral part of the condensed consolidated financial statements. 8 CERTARA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE DATA) COMMON STOCK ADDITIONAL PAID-IN CAPITAL ACCUMULATED DEFICIT ACCUMULATED OTHER COMPREHENSIVE INCOME TREASURY STOCK TOTAL STOCKHOLDERS' EQUITY SHARES AMOUNT SHARES AMOUNT Balance as of June 30, 2025 163,856,290 1,639 1,237,891 ( 125,506 ) 4,949 ( 3,241,400 ) $ ( 48,394 ) $ 1,070,579 Equity-based compensation expense, net of forfeiture — — 9,574 — — — — 9,574 Common stock withheld for tax liabilities — — — — — ( 5,266 ) ( 59 ) ( 59 ) Common shares issued for employee share-based compensation 17,621 1 ( 1 ) — — — — — Common shares repurchased — — — — — ( 1,230,398 ) ( 13,810 ) ( 13,810 ) Change in fair value from interest rate swap, net of tax — — — — ( 584 ) — — ( 584 ) Net income — — — 1,525 — — — 1,525 Foreign currency translation adjustment, net of tax — — — — ( 2,418 ) — — ( 2,418 ) Balance as of September 30, 2025 163,873,911 $ 1,640 $ 1,247,464 $ ( 123,981 ) $ 1,947 ( 4,477,064 ) $ ( 62,263 ) $ 1,064,807 Balance as of December 31, 2024 161,958,810 1,620 1,216,925 ( 128,281 ) ( 13,424 ) ( 949,698 ) $ ( 18,184 ) $ 1,058,656 Equity-based compensation expense, net of forfeiture — — 24,889 — — — — 24,889 Common stock withheld for tax liabilities — — — — — ( 503,689 ) ( 5,019 ) ( 5,019 ) Common shares issued for employee share-based compensation 1,459,757 15 ( 15 ) — — — — — Common shares issued for contingent consideration 455,344 5 5,665 — — — — 5,670 Common shares repurchased — — — — — ( 3,023,677 ) ( 39,060 ) ( 39,060 ) Change in fair value from interest rate swap, net of tax — — — — ( 3,586 ) — — ( 3,586 ) Net income — — — 4,300 — — — 4,300 Foreign currency translation adjustment, net of tax — — — — 18,957 — — 18,957 Balance as of September 30, 2025 163,873,911 $ 1,640 $ 1,247,464 $ ( 123,981 ) $ 1,947 ( 4,477,064 ) $ ( 62,263 ) $ 1,064,807 The accompanying notes are an integral part of the condensed consolidated financial statements. 9 CERTARA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE DATA) COMMON STOCK ADDITIONAL PAID-IN CAPITAL ACCUMULATED DEFICIT ACCUMULATED OTHER COMPREHENSIVE LOSS TREASURY STOCK TOTAL STOCKHOLDERS' EQUITY SHARES AMOUNT SHARES AMOUNT Balance as of June 30, 2024 161,764,197 $ 1,618 $ 1,201,009 $ ( 133,487 ) $ ( 8,328 ) ( 882,883 ) $ ( 17,411 ) $ 1,043,401 Equity-based compensation expense, net of forfeiture — — 8,187 — — — 8,187 Common stock withheld for tax liabilities — — — — — ( 8,895 ) ( 127 ) ( 127 ) Common shares issued for employee share-based compensation 27,792 — — — — — — — Change in fair value from interest rate swap, net of tax — — — — ( 2,385 ) — — ( 2,385 ) Net loss — — — ( 1,371 ) — — — ( 1,371 ) Foreign currency translation adjustment, net of tax — — — — 5,700 — — 5,700 Balance as of September 30, 2024 161,791,989 $ 1,618 $ 1,209,196 $ ( 134,858 ) $ ( 5,013 ) ( 891,778 ) $ ( 17,538 ) $ 1,053,405 Balance as of December 31, 2023 160,284,901 $ 1,603 $ 1,178,461 $ ( 116,230 ) $ ( 7,593 ) ( 436,615 ) $ ( 9,401 ) $ 1,046,840 Equity-based compensation awards — — 27,043 — — — — 27,043 Common stock withheld for tax liabilities — — — — — ( 455,163 ) ( 8,137 ) ( 8,137 ) Common shares issued for employee share-based compensation 1,297,519 13 ( 13 ) — — — — — Restricted stock forfeiture ( 5,123 ) — — — — — — — Common shares issued for contingent consideration 214,692 2 3,705 — — — — 3,707 Change in fair value from interest rate swap, net of tax — — — — ( 2,412 ) — — ( 2,412 ) Net loss — — — ( 18,628 ) — — — ( 18,628 ) Foreign currency translation adjustment, net of tax — — — — 4,992 — — 4,992 Balance as of September 30, 2024 161,791,989 $ 1,618 $ 1,209,196 $ ( 134,858 ) $ ( 5,013 ) ( 891,778 ) $ ( 17,538 ) $ 1,053,405 The accompanying notes are an integral part of the condensed consolidated financial statements. 10 CERTARA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) NINE MONTHS ENDED SEPTEMBER 30, (IN THOUSANDS) 2025 2024 Cash flows from operating activities: Net income (loss) $ 4,300 $ ( 18,628 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 56,058 49,817 Amortization of debt issuance costs 432 891 Provision for credit losses 688 393 Equity-based compensation expense 24,889 27,043 Change in fair value of contingent considerations ( 3,212 ) 8,092 Deferred income taxes ( 7,455 ) ( 12,626 ) Changes in assets and liabilities: Accounts receivable 13,385 ( 10,973 ) Prepaid expenses and other assets 1,748 ( 2,473 ) Accounts payable, accrued expenses, and other liabilities ( 6,576 ) ( 9,774 ) Deferred revenues ( 15,603 ) ( 2,122 ) Other operating activities, net ( 1,146 ) 1,457 Net cash provided by operating activities 67,508 31,097 Cash flows from investing activities: Capital expenditures ( 757 ) ( 1,210 ) Capitalized software development costs ( 18,770 ) ( 13,995 ) Net cash used in investing activities ( 19,527 ) ( 15,205 ) Cash flows from financing activities: Proceeds from borrowings on term loan debt — 6,305 Payment of debt issuance costs — ( 1,216 ) Payments on long-term debt ( 2,250 ) ( 1,505 ) Common stock repurchase program ( 38,674 ) — Payments for business acquisition related contingent consideration ( 13,230 ) ( 15,156 ) Payment of taxes on shares withheld for employee taxes ( 5,019 ) ( 8,135 ) Net cash used in financing activities ( 59,173 ) ( 19,707 ) Effect of foreign exchange rate on cash and cash equivalents 4,720 1,887 Net decrease in cash and cash equivalents ( 6,472 ) ( 1,928 ) Cash and cash equivalents, and restricted cash, at beginning of period 179,183 234,951 Cash and cash equivalents, and restricted cash, at end of period $ 172,711 $ 233,023 Supplemental disclosures of cash flow information Cash paid for interest $ 10,456 $ 11,171 Cash paid for taxes $ 8,769 $ 11,630 Supplemental schedule of noncash investing and financing activities Stock issuance or establish liabilities related to business acquisition contingent consideration $ 5,670 $ 3,707 The accompanying notes are an integral part of the condensed consolidated financial statements. 11 CERTARA, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) (UNAUDITED) 1. Description of Business Certara, Inc. and its wholly-owned subsidiaries (together, the “Company”) deliver software products and technology-driven services to customers to efficiently carry out and realize the full benefits of biosimulation in drug discovery, preclinical and clinical research, regulatory submissions and market access. The Company is a global leader in biosimulation, and the Company’s biosimulation software and technology-driven services help optimize, streamline, or even waive certain clinical trials to accelerate programs, reduce costs, and increase the probability of success. The Company’s regulatory science and market access software and services are underpinned by technologies such as regulatory submissions software, natural language processing, and Bayesian analytics. When combined, these solutions allow the Company to offer customers end-to-end support across the entire product life cycle. The Company has operations in the United States, Australia, Canada, China, Egypt, France, Germany, Hungary, India, Italy, Japan, Luxembourg, Netherlands, Philippines, Poland, Portugal, Spain, Switzerland, and the United Kingdom. 2. Summary of Significant Accounting Policies There have been no changes other than what is discussed herein to the Company’s significant accounting policies as compared to the significant accounting policies described in Note 2. “Summary of Significant Accounting Policies” to the Company’s audited consolidated financial statements included in the Company’s 2024 Annual Report. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes as of and for the year ended December 31, 2024. (a) Basis of Presentation and Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include, among other estimates, assumptions used in the allocation of the transaction price to separate performance obligations, estimates towards the measure of progress of completion on fixed-price service contracts, the determination of fair values and useful lives of long-lived assets as well as intangible assets, goodwill, allowance for credit losses for accounts receivable, recoverability of deferred tax assets, recognition of deferred revenue, valuation of interest rate swaps, determination of fair value of equity-based awards, measurement of fair value of contingent consideration, and assumptions used in testing for impairment of long-lived assets. Actual results could differ from those estimates, and such differences may be material to the condensed consolidated financial statements. (b) Unaudited Interim Financial Statements The accompanying condensed consolidated balance sheet as of September 30, 2025, the condensed consolidated statements of operations and comprehensive income (loss) for the three and nine months ended September 30, 12 2025 and 2024, the condensed consolidated statements of stockholders’ equity for the three and nine months ended September 30, 2025 and 2024, the condensed consolidated statements of cash flows for the nine months ended September 30, 2025 and 2024, and the related interim disclosures are unaudited. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. These unaudited condensed consolidated financial statements include all adjustments necessary to fairly state the financial position and the results of the Company’s operations and cash flows for interim periods in accordance with U.S. GAAP. Certain amounts reported in prior periods have been reclassified to conform with the current presentation. Interim period results are not necessarily indicative of results of operations or cash flows for a full year or any subsequent interim period. The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s 2024 audited consolidated financial statements and notes thereto. The information as of December 31, 2024 in the Company’s condensed consolidated balance sheet included herein is derived from the Company’s audited consolidated financial statements included in the Company’s 2024 Annual Report. (c) Accounting Pronouncements Not Yet Adopted In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The ASU requires disclosure of specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold and further disaggregation of income taxes paid for individually significant jurisdictions. The ASU will be effective for public business entities for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of the ASU on the disclosures within our consolidated financial statements. In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses. This ASU seeks to improve of the disclosures about the types of expenses, including employee compensation, depreciation, and amortization, and costs incurred related to inventory and manufacturing activities. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. In January 2025, the FASB also issued ASU 2025-01 to clarify the effective date. The Company is currently evaluating the impact of the ASU on the disclosures within its consolidated financial statements. In July 2025, the FASB issued ASU 2025-05, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The ASU provides a practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606. In developing reasonable and supportable forecasts as part of estimating expected credit losses, all entities may elect a practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. The ASU also provides non public entities with an accounting policy election. The ASU will be effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of the ASU on the consolidated financial statements. In September 2025, the FASB issued ASU 2025-06, Intangibles-Goodwill and Other- Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The ASU removes all references to prescriptive and sequential software development stages and clarifies that the threshold for when an entity is required to start capitalizing software costs is when (1) management has authorized and committed to funding the software project and (2) it is probable that the project will be completed and the software will be used to perform the function intended. The amendments in this ASU are effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual 13 reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. The Company is currently evaluating the impact of the ASU on the consolidated financial statements. (d) Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. (e) Fair Value Measurements The Company follows FASB Accounting Standards Codification (“ASC”) 820-10, “Fair Value Measurements” (“ASC 820-10”), which defines fair value, establishes a framework for measuring fair value in U.S. GAAP, and requires certain disclosures about fair value measurements. ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the most advantageous market for the asset or liability in an orderly transaction. Fair value measurement is based on a hierarchy of observable or unobservable inputs. The standard describes three levels of inputs that may be used to measure fair value. Level 1 — Inputs to the valuation methodology are quoted prices available in active markets for identical securities as of the reporting date; Level 2 — Inputs to the valuation methodology are other significant observable inputs, including quoted prices for similar securities, interest rates, credit risk etc. as of the reporting date, and the fair value can be determined through the use of models or other valuation methodologies; and Level 3 — Inputs to the valuation methodology are unobservable inputs in situations where there is little or no market activity of the securities and the reporting entity makes estimates and assumptions relating to the pricing of the securities including assumptions regarding risk. If the inputs used to measure fair value fall at different levels of the fair value hierarchy, the hierarchy is based on the lowest level of input that is significant to the fair value measurement. For the acquisitions noted in Note 4, the fair value measurement methods used to estimate the fair value of the assets acquired and liabilities assumed at the acquisition dates utilized a number of significant unobservable inputs of Level 3 assumptions. These assumptions included, among other things, projections of future operating results, implied fair value of assets using an income approach by preparing a discounted cash flow analysis, and other subjective assumptions. Interest rate swaps are valued in the market using discounted cash flows techniques. These techniques incorporate Level 1 and Level 2 inputs. The market inputs are utilized in the discounted cash flows’ calculation considering the instrument’s term, notional amount, discount rate and credit risk. Significant inputs to the derivative instrument valuation model for interest rate swaps are observable in active markets and are classified as Level 2 in the hierarchy. Contingent liabilities related to acquisitions are measured at fair value using Level 3 unobservable inputs. The Company's estimates of fair value are based upon assumptions believed to be reasonable but that are uncertain and involve significant judgments by management. 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). 14 The Company utilizes Monte Carlo or a series of Black-Scholes-Merton options models to estimate the fair value of the contingent consideration liabilities of business acquisitions. Significant inputs used in the fair value measurement of contingent consideration include: expected eligible revenue for the acquired businesses over the relevant measurement periods, the risk-profile of the expected eligible revenue for the acquired businesses, the uncertainty regarding the expected eligible revenue for the acquired businesses, the risk-free rate of return, the expected timing at which settlement of the contingent liabilities may occur, and the credit-adjusted discount rate associated with the risk of the Company’s future liability payments. The following table sets forth the assets and liabilities that were measured at fair value on a recurring and non-recurring basis by their levels in the fair value hierarchy at September 30, 2025: LEVEL 1 LEVEL 2 LEVEL 3 TOTAL (In thousands) Assets Money market funds $ 81,697 $ — $ — $ 81,697 Total assets $ 81,697 $ — $ — $ 81,697 Liabilities Contingent liabilities $ — $ — $ 21,900 $ 21,900 Interest rate swap liabilities — 2,594 — 2,594 Total liabilities $ — $ 2,594 $ 21,900 $ 24,494 The following table sets forth the assets and liabilities that were measured at fair value on a recurring and non-recurring basis by their levels in the fair value hierarchy at December 31, 2024: LEVEL 1 LEVEL2 LEVEL 3 TOTAL (In thousands) Assets Money market funds $ 79,167 $ — $ — $ 79,167 Interest rate swap assets — 2,213 — 2,213 Total assets $ 79,167 $ 2,213 $ — $ 81,380 Liabilities Contingent liabilities $ — $ — $ 43,939 $ 43,939 Total liabilities $ — $ — $ 43,939 $ 43,939 For the nine month period ended September 30, 2025, there were no transfers between the levels within the fair value hierarchy. The Company’s Level 3 assets are interest swap assets and level 3 liabilities are acquisition related contingent consideration liabilities. 15 The following table summarizes the Level 3 activity of the changes in the contingent consideration liability. SEPTEMBER 30, 2025 (In thousands) Beginning balance at December 31, 2024 $ 43,939 Payments ( 18,900 ) Fair value remeasurement ( 3,139 ) Ending balance at September 30, 2025 $ 21,900 For more information regarding fair value measurements and the fair value hierarchy, see Note 2. “Summary of Significant Accounting Policies” in the notes to the consolidated financial statements in the Company’s 2024 Annual Report. (f) Cash and Cash Equivalents Cash equivalents include highly liquid investments with maturities of three months or less from the date purchased. The cash and cash equivalents was $ 172,711 and $ 179,183 at September 30, 2025 and December 31, 2024, respectively. (g) Accounts Receivable Accounts receivable include current outstanding invoices billed to customers. Invoices are typically issued with net 30 days to net 90 days terms upon delivery of the product or upon achievement of billable events for service-based contracts. Unbilled receivables relate to the Company’s rights to consideration for performance obligations satisfied but not billed at the reporting date on contracts. Unbilled receivables are billed and transferred to customer accounts receivable when the rights become unconditional. The carrying amount of accounts receivable is reduced by a valuation allowance. The Company estimates the expected credit losses for accounts receivable using historical loss data adjusted for current economic conditions, including reasonable and supportable forecasts to estimate the relative size of credit losses to be expected. The Company generally writes off a receivable or records a specific allowance for credit losses if it determines that the receivable is not collectible. Allowances for credit losses of $ 1,937 and $ 2,164 were provided in the accompanying condensed consolidated financial statements as of September 30, 2025 and December 31, 2024, respectively. Accounts receivable consists of the following: SEPTEMBER 30, 2025 DECEMBER 31, 2024 (In thousands) Trade receivables $ 76,934 $ 90,609 Unbilled receivables 13,677 13,454 Other receivables 377 290 Allowances for credit losses ( 1,937 ) ( 2,164 ) Accounts receivable, net $ 89,051 $ 102,189 16 The following table presents the information regarding the allowance for credit losses: SEPTEMBER 30, 2025 DECEMBER 31, 2024 (In thousands) Beginning balance $ 2,164 $ 1,312 Provision for credit losses 688 1,464 Charge-offs, net of recoveries ( 915 ) ( 612 ) Ending balance of allowances for credit losses $ 1,937 $ 2,164 (h) Derivative Instruments In the normal course of business, the Company is subject to risk from adverse fluctuations in interest rates. The Company has chosen to manage this risk through the use of derivative financial instruments that consist of interest rate swap contracts. Counterparties to these contracts are major financial institutions. The Company is exposed to credit loss in the event of nonperformance by these counterparties. The Company does not use derivative instruments for trading or speculative purposes. The objective of managing exposure to market risk is to limit its impact on cash flows. To qualify for hedge accounting, the interest rate swaps must effectively reduce the risk exposure that they are designed to hedge. In addition, at the inception of a qualifying cash flow hedging relationship, the underlying transaction or transactions must be, and be expected to remain, probable of occurring in accordance with the related assertions. FASB ASC 815, “Derivatives and Hedging,” requires the Company to recognize all derivatives on the balance sheet at fair value. The Company may enter into derivative contracts such as interest rate swap contracts that effectively convert portions of the Company’s floating rate debt to a fixed rate, which serves to mitigate interest rate risk. The Company’s objectives in using interest rate swaps are to add stability to interest expense and to manage its exposure to interest rate movements. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The Company entered into an interest rate swap agreement in May 2022 that pays a fixed interest rate and receives a variable interest rate to modify the interest rate characteristics of term loan debt from variable to fixed in order to reduce the impact of changes in future cash flows due to market interest rate changes. The swap agreement had a notional amount of $ 230,000 , a fixed rate of 2.8 % and a termination date of August 31, 2025. During the quarter ended September 30, 2023, the Company and the counter party amended the floating rate of the swap agreement from term LIBOR to term SOFR due to LIBOR cessation. As the swap approached maturity, the Company entered into two additional interest rate swap agreements in the second quarter of 2025, each with a notional amount of $ 115,000 , to continue hedging the interest rate risk associated with the term loan debt. These new swaps also pay fixed interest rates and receive variable rates. The fixed interest rates are 3.62 % and 3.64 %. respectively. Both contracts became effective on August 31, 2025, and will mature on August 31, 2029. The Company designates these swaps as cash flow hedges at hedge inception. At September 30, 2025 and December 31, 2024, the interest swap had a fair value of $ 0 and $ 2,213 for the swap matured in August 2025, respectively. The interest swap had total fair value of $( 2,594 ) for new swaps at September 30, 2025. The gross fair value recognized in accumulated other comprehensive income (loss) was $( 2,594 ) and $ 2,213 at September 30, 2025 and December 31, 2024, respectively. The Company uses derivatives to manage certain interest exposures and designated all the derivatives as cash flow hedges. The Company records derivatives at fair value on its condensed consolidated balance sheets. Changes in the fair value of derivatives designated as cash flow hedges are recorded as a component of accumulated other comprehensive income (loss). Those amounts are reclassified into interest expenses in the same period during which the hedged transactions impact earnings. The amount of derivative gains reclassified from accumulated other comprehensive income on derivative instruments recognized in the Company’s 17 condensed consolidated statements of operations and comprehensive income (loss) was $ 761 , $ 1,529 , $ 2,645 , and $ 4,580 for the three and nine months ended September 30, 2025 and 2024, respectively. The notional amounts, fair values, and classification of derivative instruments in the condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024 were as follows: Interest rate swap derivative designated as cash flow hedging instrument: SEPTEMBER 30, 2025 DECEMBER 31, 2024 (In thousands) Notional amounts $ 230,000 $ 230,000 Prepaid expenses and other current assets $ — $ 2,213 Other current liabilities $ 76 $ — Other long-term liabilities $ 2,518 $ — The net amount of deferred loss related to derivative instruments designated as cash flow hedges that is expected to be reclassified from accumulated other comprehensive gain (loss) into earnings over the next twelve month s is $ 76 . (i) Revenue Recognition In accordance with ASC Topic 606, “Revenue from Contracts with Customers”, the Company determines revenue recognition through the following steps: i. Identification of the contract, or contracts, with a customer ii. Identification of the performance obligations in the contract iii. Determination of the transaction price iv. Allocation of the transaction price to the performance obligations in the contract v. Recognition of revenue when, or as, the Company satisfies a performance obligation The Company’s revenue consists of fees for perpetual and term licenses for its software products, post-contract customer support (referred to as maintenance), software as a service (“SaaS”), and professional services including training and other revenue. Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for promised goods or services. The following describes the nature of the Company’s primary types of revenues and the revenue recognition policies as they pertain to the types of transactions the Company enters into with its customers. Software Licenses Software license revenue consists primarily of sales of software licenses downloaded and installed by our customers on their own hardware. The license period is generally one year or less and includes an insignificant amount of customer support to assist the customer with the software. Software license performance obligations are generally recognized upfront at the point in time when the software license has been delivered. 18 Software as a Service (SaaS) Revenues SaaS revenues consist of subscription fees for access to, and related support for, the Company’s cloud-based solutions. The Company typically invoices subscription fees in advance in annual installments. The invoice is initially deferred and revenue is recognized ratably over the life of the contract. The Company’s software contracts do not typically include variable consideration or options for future purchases that would not be similar to the original goods. Software Service Maintenance services agreements on perpetual software consist of fees for providing software updates and for providing technical support for software products for a specified term. Revenue allocated to maintenance services is recognized ratably over the contract term beginning on the delivery date of each offering. Maintenance contracts generally have a term of one year . While the transfer of control of the software training and implementation performance obligations are over time, the services are typically started and completed within a few days. Due to the quick nature of the performance obligation from start to finish and the insignificant amounts, the Company recognizes any software training or implementation revenue at the completion of the service. Any unrecognized portion of amounts paid in advance for licenses and services is recorded as deferred revenue. Consulting Service Revenues The Company’s primary professional services offering includes consulting services, which may be either strategic consulting services, reporting and analysis services, regulatory writing services, or any combination of the three. The Company’s professional services contracts are either time-and-materials or fixed fee. Service revenues are generally recognized over time as the services are performed. Generally, these services are delivered to customers electronically. Revenue from time-and-material contracts is recognized on an output basis as labor hours are delivered and/or direct expenses are incurred. Revenues for fixed-price services are generally recognized over time by applying input methods to estimate progress to completion. Accordingly, the number of resources being paid for and the varying lengths of time they are being paid for determine the measure of progress. Arrangements with Multiple Performance Obligations For contracts with multiple performance obligations, such as a software license plus software training, implementation, and/or maintenance/support, or in contracts where there are multiple software licenses, the Company determines if the products or services are distinct and allocates the consideration to each distinct performance obligation on a relative standalone selling price basis. The delivery of a particular type of software and each of the user licenses would be one performance obligation. Additionally, any training, implementation, or support and maintenance promises sold as part of the software license agreement would be considered separate performance obligations, as those promises are distinct and separately identifiable from the software licenses. The payment terms in these arrangements are less than one year such that there is no significant financing component. Contract Balances The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (deferred revenue, contract liabilities) on the condensed consolidated balance sheets. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., quarterly or monthly) or upon achievement of contractual milestones. Contract assets relate to the Company’s rights to consideration for performance obligations satisfied but not billed at the reporting date on contracts (i.e., unbilled revenue, a component of accounts receivable in the condensed consolidated balance sheets). Contract assets are billed and transferred to customer accounts 19 receivable when the rights become unconditional. The Company typically invoices customers for term licenses, subscriptions, maintenance and support fees in advance with payment due before the start of the subscription term, ranging from one to three years . The Company records the amounts collected in advance of the satisfaction of performance obligations, usually over time, as a contract liability or deferred revenue. Invoiced amounts for non-cancelable services starting in future periods are included in contract assets and deferred revenue. The portion of deferred revenue that will be recognized within 12 months is recorded as current deferred revenue, and the remaining portion is recorded as deferred revenue in the condensed consolidated balance sheets. Contract balances at September 30, 2025, December 31, 2024 and 2023 were as follows: SEPTEMBER 30, 2025 DECEMBER 31, 2024 DECEMBER 31, 2023 (In thousands) Contract assets $ 13,677 $ 13,454 $ 10,405 Contract liabilities $ 65,880 $ 78,878 $ 61,748 During the nine months ended September 30, 2025, the Company recognized revenue of $ 69,368 related to contract liabilities at December 31, 2024. The unsatisfied performance obligations as of September 30, 2025 were $ 147,586 . We expect to recognize approximately $ 118,576 or 80.3 % of this revenue over the next 12 months and the remainder thereafter. Deferred Contract Acquisition Costs Under ASC Topic 606, sales commissions paid to the sales force and the related employer payroll taxes, collectively deferred contract acquisition costs, are considered incremental and recoverable costs of obtaining a contract with a customer. The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if it expects the benefit of those costs to be longer than one year. The Company has determined that certain sales incentive programs meet the requirements to be capitalized. The costs capitalized are primarily sales commissions for our sales force personnel. Capitalized costs to obtain a contract are amortized on a straight-line basis over the expected period of benefit. Amortization of capitalized costs is included in sales and marketing expenses in our condensed consolidated statements of operations and comprehensive income (loss). Capitalized contract acquisition costs were $ 1,064 and $ 873 as of September 30, 2025 and December 31, 2024, respectively, and were included in prepaid expenses and other current assets in the condensed consolidated balance sheets. Grant Revenue The Company receives grant funding for certain specific projects from time to time. These grants specify the funds provided are to be used exclusively to satisfy the deliverables outlined in the grant agreements. If, under these agreements, both involved parties receive and sacrifice approximately commensurate value, they are accounted for as exchange transactions, and revenue is recognized according to ASC Topic 606. The grant funding is generally provided near contract inception, so a contract liability is initially recorded and revenue is recognized as the performance obligations are satisfied over time. If these agreements involve one party nonreciprocally transferring value to another, and any benefit to the transferor is incidental to the potential public benefits, they are accounted for as contribution transactions, and revenue is recognized in accordance with ASC Topic 958. 20 Sources and Timing of Revenue The Company’s performance obligations are satisfied either over time or at a point in time. The following table presents the Company’s revenue by timing of revenue recognition to understand the risks of timing of transfer of control and cash flows: THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, 2025 2024 2025 2024 (In thousands) Software licenses transferred at a point in time $ 15,435 $ 10,202 $ 54,012 $ 39,031 Software licenses transferred over time 28,395 25,710 82,882 74,395 Service revenues earned over time 60,786 58,908 178,296 171,361 Total $ 104,616 $ 94,820 $ 315,190 $ 284,787 (j) Earnings per Share Basic earnings per common share is computed by dividing the net earnings by the weighted-average number of shares outstanding during the reporting period, without consideration for potentially dilutive securities. Diluted shares are calculated under the treasury stock method. Diluted earnings per share is calculated by dividing the net earnings attributable to stockholders by the weighted-average number of shares and dilutive securities outstanding during the period. 3. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk have consisted principally of cash and cash equivalent investments and trade receivables. The Company invests available cash in bank deposits, investment-grade securities, and short-term interest-producing investments, including government obligations and other money market instruments. At September 30, 2025 and December 31, 2024, the investments were bank deposits, overnight sweep accounts, and money market funds. The Company has adopted credit policies and standards to evaluate the risk associated with sales that require collateral, such as letters of credit or bank guarantees, whenever deemed necessary. Management believes that any risk of loss is significantly reduced due to the nature of the customers and distributors with which the Company does business. As of September 30, 2025 and December 31, 2024, no single customer accounted for more than 10% of the Company’s accounts receivable. No single customer accounted for more than 10% of the Company’s revenues during the nine months ended September 30, 2025 and 2024. 4. Business Combinations Acquisitions have been accounted for by using the acquisition method of accounting pursuant to FASB ASC 805, “Business Combinations.” Amounts allocated to the purchased assets and liabilities assumed are based upon the total purchase price and the estimated fair values of such assets and liabilities on the effective date of the purchase as determined by an independent third party. The results of operations for the acquisitions have been included in the Company’s results of operations prospectively from the date of acquisition. Since 2013, and as of September 30, 2025, the Company has 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. 21 Chemaxon, Kft. ("Chemaxon") On October 1, 2024, the Company acquired 100 % of the equity of Chemaxon, a leading cheminformatics company that provides platforms, applications, and solutions to handle chemical entities in life sciences, biotechnology, agrochemicals, new materials, education, and other research industries, for total estimated consideration of $ 96,401 . The acquisition strategically positions Certara in the drug discovery biosimulation market at scale. It complements Certara’s existing biosimulation portfolio which is widely used in later phases of drug development. The business combination was not material to the Company’s consolidated financial statements. During the first half of 2025, the Company recorded a $ 2,947 adjustment to goodwill and deferred tax balances related to the Chemaxon acquisition, reflecting updates to the purchase price allocation. Based on the Company’s purchase price allocation, approximately $ 36,000 , $ 11,000 , $ 2,900 , $ 330 and $ 49,430 of the purchase price were assigned to developed technology, customer relationship, trademark, non-compete agreements, and goodwill, respectively. The Company does not expect goodwill to be deductible due to the fact the Company treated the acquisition as a stock acquisition under the relevant sections of the Internal Revenue Code. The results of operations of the acquired businesses and the fair value of the acquired assets and liabilities assumed are included in the Company’s condensed consolidated financial statements with effect from the date of the acquisitions. 5. Prepaid Expenses and Other Current Assets and Other Long-Term Assets Prepaid expense and other current assets at September 30, 2025 and December 31, 2024 consisted of the following: SEPTEMBER 30, 2025 DECEMBER 31, 2024 (In thousands) Prepaid expenses $ 9,201 $ 8,315 Income tax receivable 2,500 9,341 Research and development tax credit receivable 6,924 7,554 Current portion of interest rate swap asset — 2,213 Other current assets 2,916 2,057 Prepaid expenses and other current assets $ 21,541 $ 29,480 Other long-term assets at September 30, 2025 and December 31, 2024 consisted of the following: SEPTEMBER 30, 2025 DECEMBER 31, 2024 (In thousands) Long-term deposits $ 1,289 $ 1,457 Deferred financing cost 507 574 Total other long-term assets $ 1,796 $ 2,031 22 6. Long-Term Debt and Revolving Line of Credit The Company has 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, the Company entered into the Fifth Amendment to its Credit Agreement (the "Amendment"), which primarily (1) amended the principal amount of the term loan to $ 300,000 and its maturity date to June 26, 2031; and (2) extended the termination date associated with the $ 100,000 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. The Credit Agreement is collateralized by substantially all U.S. assets and stock pledges for the non-U.S. subsidiaries and contains various financial and nonfinancial covenants. As multiple lenders syndicated funds under the credit agreements, the Company assessed whether existing debt was modified, extinguished, or if new debt was issued under GAAP guidelines. This evaluation was conducted separately for each lender's portion of the loans and commitments in the syndication, treating each lender's participation as if separate debt instruments existed. The Company either deferred and amortize debt issuance costs or recognized expenses or losses, according to the applicable accounting guidance for each category. 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 2.75 % and 3.50 % 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 1.75 % and 2.50 % 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 (c) the Term SOFR rate plus 1.00 %. Additionally, the Company is obligated to pay a commitment fee of the unused amount and other customary fees. Moreover, in October 2025, the Company entered into a Sixth Amendment to its Credit Agreement, which, among other changes, reduced the applicable rate for existing term loans. For further details on the Sixth Amendment, see Note 14, “Subsequent Event”. As of each of September 30, 2025 and December 31, 2024, available borrowings under the revolving lines of credit were $ 100,000 . The effective interest rate was 7.39 % and 8.96 % for the nine months ended September 30, 2025 and 2024, respectively, for the term loan debt. As discussed previously, the Company entered into interest rate swap agreements and continues to use the swap to mitigate the interest risk for the Company's debt obligations under the Credit Agreement. Interest incurred on the Credit Agreement with respect to the term loan amounted to $ 5,535 , $ 6,366 , $ 16,499 and $ 19,900 for the three and nine months ended September 30, 2025 and 2024, respectively. Accrued interest payable on the Credit Agreement with respect to the term loan amounted to $ 58 and $ 61 at September 30, 2025 and December 31, 2024, respectively, and is included in accrued expenses. Commitment fees incurred for the undrawn balance of the revolving line of credit was $ 64 , $ 81 , $ 231 and $ 207 for the three and nine months ended September 30, 2025 and 2024, respectively. There was $ 1 accrued interest payable on the revolving line of credit as of each of September 30, 2025 and December 31, 2024. 23 Long-term debt consists of the following: SEPTEMBER 30, 2025 DECEMBER 31, 2024 (In thousands) Term loans $ 296,250 $ 298,500 Revolving line of credit — — Less: debt issuance costs ( 2,709 ) ( 3,075 ) Total 293,541 295,425 Current portion of long-term debt ( 3,000 ) ( 3,000 ) Long-term debt, net of current portion and debt issuance costs $ 290,541 $ 292,425 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 (In thousands) Maturities $ 750 $ 3,000 $ 3,000 $ 3,000 $ 3,000 $ 283,500 $ 296,250 The Credit Agreements require the Company to make an annual mandatory prepayment as it relates to the Company’s Excess Cash Flow calculation. For the year ended December 31, 2024, the Company was not required to make a mandatory prepayment on the term loan. Under the Credit Agreement (as amended by the Amendment), the Company is required to make a quarterly principal payment of $ 750 on the term loans starting September 30, 2024. The fair values of the Company’s variable interest term loan and revolving line of credit are not significantly different than their carrying value because the interest rates on these instruments are subject to change with market interest rates. 7. Leases The Company leases certain office facilities and equipment under non-cancelable operating leases with remaining terms ranging from less than one to nine years . Operating lease ROU assets are included in other assets. With respect to operating lease liabilities, current operating lease liabilities are included in current liabilities and non-current operating lease liabilities are included in long-term liabilities in the condensed consolidated balance sheets. At September 30, 2025, the weighted average remaining lease terms were 5.8 years for operating leases, and the weighted average discount rate was 5.7 % for operating leases. For additional information on the Company's leases, see Note 13. “Leases” to the consolidated financial statements included in the Company’s 2024 Annual Report. 24 The following table summarizes the lease-related assets and liabilities recorded in the condensed consolidated balance sheets at September 30, 2025 and December 31, 2024: Lease Position Balance Sheet Classification SEPTEMBER 30, 2025 DECEMBER 31, 2024 (In thousands) Assets Operating lease assets Operating lease right-of-use assets $ 12,371 $ 13,841 Total lease assets $ 12,371 $ 13,841 Liabilities Current Operating Other current liabilities $ 4,099 $ 5,306 Noncurrent Operating Operating lease liabilities, net of current portion 8,965 11,166 Total lease liabilities $ 13,064 $ 16,472 The following table summarizes by year the maturities of our minimum lease payments as of September 30, 2025: OPERATING LEASES (In thousands) Remainder of 2025 $ 1,581 2026 4,040 2027 2,946 2028 1,214 2029 1,179 Thereafter 5,206 Total future lease payments 16,166 Less: imputed interest ( 3,102 ) Total $ 13,064 25 8. Accrued Expenses and Other Liabilities Accrued expenses consist of the following: SEPTEMBER 30, 2025 DECEMBER 31, 2024 (In thousands) Accrued compensation $ 29,319 $ 31,045 Legal and professional accruals 3,974 2,886 Interest payable 58 51 Income taxes payable 2,515 430 Short-term contingent consideration liabilities 22,364 20,887 Other 1,635 1,152 Total accrued expenses $ 59,865 $ 56,451 Other long-term liabilities consist of the following: SEPTEMBER 30, 2025 DECEMBER 31, 2024 (In thousands) Uncertain tax position liability $ 1,800 $ 1,718 Derivative Liabilities - Long-term 2,518 — Contingent consideration - long term — 23,581 Total other long-term liabilities $ 4,318 $ 25,299 9. Equity-Based Compensation The Company’s equity-based compensation programs are intended to attract, retain and provide incentives for employees, officers, and directors. The Company has the following stock-based compensation plans and programs. Restricted Stock The majority of the Company’s restricted stock awarded to its employees was originally issued on December 10, 2020 in exchange for the Class B Profits Interest Unit (the “Class B Units”) of EQT Avatar Parent LP, which was the former parent of the Company. Share-based compensation for the restricted stock exchanged for the time-based Class B Units is recognized on a straight-line basis over the requisite service period of the award, which is generally five years . Share-based compensation for the restricted stock exchanged for the performance-based Class B Units is recognized using 26 the accelerated attribution approach. As of September 30, 2025, all of the Company’s restricted stock had fully vested, and no restricted stock remained outstanding. SHARES WEIGHTED- AVERAGE GRANT DATE FAIR VALUE Non-vested restricted stock as of December 31, 2024 157,486 $ 22.94 Granted — — Vested ( 157,486 ) 22.94 Forfeited — — Non-vested restricted stock as of September 30, 2025 — $ — Equity-based compensation expenses related to the restricted stock exchanged for performance-based Class B Units were $ 39 , $ 173 , $ 160 , and $ 579 for the three and nine months ended September 30, 2025 and 2024, respectively. As of September 30, 2025, all compensation expense related to the awards had been fully recognized. Equity-based compensation expenses related to the restricted stock exchanged for time-based Class B Units were $ 80 , $ 196 , $ 321 and $ 794 for the three and nine months ended September 30, 2025 and 2024, respectively. As of September 30, 2025, all compensation expense related to the awards had been fully recognized. In order to align the Company’s equity compensation program with public company practices, the Company’s Board of Directors adopted and stockholders approved the 2020 Incentive Plan. The 2020 Incentive Plan allows for grants of non-qualified stock options, incentive stock options, restricted stock, restricted stock units (“RSUs”), and performance stock units (“PSUs”) to employees, directors, officers, and consultants or advisors of the Company. The 2020 Incentive Plan allows for 20,000,000 shares (the “plan share reserve”) of common stock to be issued. No more than the number of shares of common stock equal to the plan share reserve may be issued in aggregate pursuant to the exercise of incentive stock options. The maximum number of shares of common stock granted during a single fiscal year to any non-employee director, taken together with any cash fees paid to such non-employee director during the fiscal year, may not exceed $ 1,000,000 in total value, except for certain awards made to a non-executive chair of our Board of Directors. Restricted Stock Units RSUs represent the right to receive shares of the Company’s common stock at a specified date in the future. The fair value of the RSUs is based on the fair value of the underlying shares on the date of grant. 27 A summary of the Company’s RSU activity is as follows: UNITS WEIGHTED- AVERAGE GRANT DATE FAIR VALUE Non-vested RSUs as of December 31, 2024 3,204,589 $ 19.61 Granted 2,164,196 11.23 Vested* ( 1,362,259 ) 20.55 Forfeited ( 232,564 ) 18.54 Non-vested RSUs as of September 30, 2025 3,773,962 $ 14.53 ___________________________________ * The number of the RSUs vested included 484,483 shares that were withheld on behalf of employees to satisfy the statutory tax withholding requirements. Equity-based compensation expenses related to the RSUs were $ 7,496 , $ 8,069 , $ 19,736 and $ 24,388 for three and nine months ended September 30, 2025 and 2024, respectively. At September 30, 2025, the total unrecognized equity-based compensation expense related to outstanding RSUs was $ 41,355 , which is expected to be recognized over a weighted-average period of 22.8 months. Performance Stock Units PSUs are issued under the 2020 Incentive Plan and represent the right to receive shares of the Company’s common stock at a specified date in the future based on the satisfaction of various service conditions and the achievement of certain performance thresholds, including year over year revenue growth, unlevered free cash flow growth, annual revenue, and annual EBITDA. The PSUs granted in 2023, 2024, and 2025 also contain market conditions. Share-based compensation for the PSUs is only recognized to the extent a threshold is probable of being achieved and is recognized using the accelerated attribution approach. The Company will continue to assess the probability of each condition being achieved at each reporting period to determine whether and when to recognize compensation costs. A summary of the Company’s PSU activity for the period ended September 30, 2025 is as follows: UNITS WEIGHTED- AVERAGE GRANT DATE FAIR VALUE Non-vested PSUs as of December 31, 2024 645,377 $ 20.95 Granted 1,168,442 10.09 Vested — — Forfeited ( 3,322 ) 23.24 Cancelled* ( 201,138 ) 22.13 Non-vested PSUs as of September 30, 2025 1,609,359 $ 12.91 __________________________________ * During the first nine months of 2025, the Company cancelled 201,138 PSU shares that did not meet the required performance conditions for vesting. 28 Equity-based compensation expenses (income) related to the PSUs were $ 1,959 , $( 358 ), $ 4,672 and $ 964 for the three and nine months ended September 30, 2025 and 2024, respectively. At September 30, 2025, the total unrecognized equity-based compensation expense related to outstanding PSUs was $ 7,439 , which is expected to be recognized over a weighted-average period of 18.15 months. The following table summarizes the components of total equity-based compensation expense included in the condensed consolidated statements of operations and comprehensive income (loss) for each period presented: THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, 2025 2024 2025 2024 (In thousands) Cost of revenues $ 3,251 $ 3,235 $ 8,849 $ 10,095 Sales and marketing 1,213 865 3,103 2,546 Research and development 1,072 1,302 2,673 4,306 General and administrative 4,038 2,785 10,264 10,096 Total $ 9,574 $ 8,187 $ 24,889 $ 27,043 10. Commitments and Contingencies Contingent consideration In connection with certain of the Company's business acquisitions, the Company is required to pay additional consideration if the acquired businesses achieve certain eligible revenue thresholds for certain periods. Furthermore, the Company agreed to pay additional contingent consideration related to a business acquisition, contingent on the resolution of certain tax-related contingencies. For the nine months ended September 30, 2025, the Company paid contingent consideration of $ 18,900 , consisting of $ 13,230 in cash and $ 5,670 in Company stock. The total contingent liabilities were $ 22,364 and $ 44,468 at September 30, 2025 and December 31, 2024, respectively. The contingent liabilities are included in accrued expenses and other long-term liabilities in the Company's condensed consolidated balance sheet. Legal proceedings The Company does not have any pending or threatened litigation which, individually or in the aggregate, would have a material adverse effect on its condensed consolidated financial statements as of September 30, 2025. Assurance-type warranty The Company includes an assurance commitment warranting that the application software products will perform in accordance with written user documentation and the agreements negotiated with customers. Since the Company does not customize its application software, warranty costs have historically been insignificant and expensed as incurred. For information related to commitments for future minimum lease payments, please see Note 7. "Leases" . 29 11. Segment Data Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. The Company has determined that its chief executive officer (“CEO”) is its CODM. The Company manages its operations as a single segment for the purpose of assessing and making operating decisions. The Company’s CODM allocates resources and assesses performance based upon financial information at the consolidated level. The accounting policies of the Company's single segment are the same as those described in the summary of significant accounting policies. The inter-companies balances and transactions are eliminated. As the Company operates and reports in a single reportable segment, the Company's CODM assesses performance for the segment and decides how to allocate resources based on net income that also is reported on the income statement as consolidated net income. The measure of segment assets is reported on the balance sheet as total consolidated assets. The CODM uses net income and other performance indicators to evaluate income generated from segment assets (return on assets) in deciding whether to reinvest profits into the segment or into other parts of the entity, such as for acquisitions. Net income is also used to monitor budget versus actual results. The Company manages the business activities on a consolidated basis. The Company's operating segment provides technology-enabled services and software products to its customers. The Company’s revenue consists of fees for its software products and services. The revenue is primarily generated from Americas. See item (i) - Revenue recognition under Note 2. “Summary of Significant Accounting Policies", for a description of the Company’s revenue categories. The following table summarizes revenue by geographic area for the three and nine months ended September 30, 2025 and 2024: THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, 2025 2024 2025 2024 (In thousands) Revenue(1): Americas $ 73,997 $ 69,906 $ 218,945 $ 208,690 EMEA 21,915 18,117 71,067 56,205 Asia Pacific 8,704 6,797 25,178 19,892 Total $ 104,616 $ 94,820 $ 315,190 $ 284,787 ___________________________________ (1) Revenue is attributable to the countries based on the location of the customer. 30 The following table presents information about reported segment revenue, segment profit or loss, and significant segment expenses. THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, 2025 2024 2025 2024 (In thousands) Revenues $ 104,616 $ 94,820 $ 315,190 $ 284,787 Less: Employee expense-non equity 58,703 53,763 178,227 167,421 Equity-based compensation expense 9,574 8,187 24,889 27,043 Equipment and software expense 4,261 3,227 12,595 10,194 Direct cost of revenues 1,647 1,262 5,336 3,564 Professional services expense 6,886 6,216 21,477 18,815 Change in fair value of contingent consideration 2,689 2,431 ( 3,212 ) 8,092 Depreciation and amortization 18,626 16,792 56,058 49,817 Other segment expense (income)* ( 2,514 ) ( 584 ) ( 5,325 ) 2,689 Interest expense 5,011 5,187 14,619 16,516 Income tax expense (benefit) ( 1,792 ) ( 290 ) 6,226 ( 736 ) Segment net income (loss) $ 1,525 $ ( 1,371 ) $ 4,300 $ ( 18,628 ) Reconciliation of profit or loss Adjustments and reconciling items — — — — Consolidated net income (loss) $ 1,525 $ ( 1,371 ) $ 4,300 $ ( 18,628 ) * Other segment expense (income) items included in segment net income include facilities related expense, marketing, travel, insurance, foreign currency exchange gains and losses, and other overhead expense. 12. Income Taxes The Company generally records its interim tax provision based upon a projection of the Company's estimated annual effective tax rate ("EAETR"). This EAETR is applied to the year-to-date consolidated pre-tax income to determine the interim provision for income taxes before discrete items. The effective tax rate ("ETR") each period is impacted by a number of factors, including the relative mix of domestic and international earnings, permanent differences, adjustments to the valuation allowances, and discrete items. The currently forecasted ETR may vary from the actual year-end due to the changes in these factors. The Company's global ETR for the three and nine months ended September 30, 2025 and 2024 were 671 %, 17 %, 59 %, and 4 %, respectively, including discrete tax items. The current year increase in the ETR was principally due to the combined effect of the overall increase in pre-tax book income, the impact of non-deductible items, and the tax effect of certain discrete items. 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.The Company is in the process of evaluating the impact of the OBBBA. 31 13. Earnings per Share Basic earnings per share is computed by dividing net income (loss) attributable to common stockholders by the weighted-average common shares outstanding for the period. Diluted earnings per share is computed by dividing the net income (loss) attributable to stockholders by the weighted-average number of shares and dilutive potential common shares during the period. THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, 2025 2024 2025 2024 (In thousands, except per share and share data) Net income (loss) available to common shareholders $ 1,525 $ ( 1,371 ) $ 4,300 $ ( 18,628 ) Basic weighted-average common shares outstanding 160,403,011 160,642,052 160,769,603 160,225,375 Basic earnings per common share $ 0.01 $ ( 0.01 ) $ 0.03 $ ( 0.12 ) Diluted earnings per share Net income (loss) available to common shares $ 1,525 $ ( 1,371 ) $ 4,300 $ ( 18,628 ) Basic weighted-average common shares outstanding 160,403,011 160,642,052 160,769,603 160,225,375 Dilutive potential common shares 197,559 — 494,273 — Diluted weighted-average common shares outstanding 160,600,570 160,642,052 161,263,876 160,225,375 Diluted earnings per common share $ 0.01 $ ( 0.01 ) $ 0.03 $ ( 0.12 ) __________________________________ (a) For the three- and nine-months ended September 30, 2025, the Company repurchased 1,230,398 and 3,023,677 shares of its common stock, respectively, under the stock repurchase program authorized by the Company's Board of Directors on April 11, 2025. The program authorizes the Company to repurchase up to $ 100,000 of its common stock. (b) For the three- and nine-months ended September 30, 2024, the Company excluded potentially dilutive securities from the calculation of diluted earnings per share that could potentially dilute earnings per share in the future because of the anti-dilutive effect of the reported net loss. 14. Subsequent Event On October 16, 2025, the Company entered into a Sixth Amendment (“Amendment”) to its Credit Agreement, originally dated August 15, 2017. This Amendment provides for, among other changes, a reduction in the applicable rate for term loans. Such modifications were implemented through the establishment of Replacement Term Loans under the Credit Agreement. The Replacement Term Loans 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 2.75 % or (ii) an Alternate Base Rate (“ABR”), with a floor of 1.00 %, plus an applicable margin rate of 1.75 %. 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 %. The Replacement Term Loans are subject to substantially similar terms currently relating to guarantees, collateral, mandatory prepayments and covenants that were applicable to the Company’s Existing Term Loans prior to giving effect to the Amendment. 32