What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-11 compared with 2025-11-06 · 153 added, 280 removed, 227 unchanged (66% of the section changed)

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Executive Overview

We are a global leader in biosimulation technology and solutions for using Model-Informed Drug Development (“MIDD”) in the global biopharmaceutical industry.

Biosimulation and MIDD can increase the probability of success in bringing a new drug to market and decrease the costs of drug development.

In addition, MIDD strategies are increasingly utilized to help predict commercial success, a critical part of the drug development process as new products must be both approved by regulators and adopted by the market.

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

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

We are a global leader in biosimulation science, technology and consulting services for using Model-Informed Drug Development (“MIDD”) in the global biopharmaceutical and biotech industry.

MIDD is an approach that utilizes biological and statistical models derived from preclinical, clinical, and evidence data to inform decision-making in drug research and development, and commercialization.

Biosimulation is a critical component of MIDD that uses computer-aided mathematical simulation of biological processes and systems to understand the action of a drug in a human body or a population of humans.

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

On average, the pharmaceutical industry spends more than $290 billion annually on research and development(“R&D”).

Generally, companies spend an average of $6.2 billion per FDA-approved drug to develop one new medicine, including the cost of failures, according to “Analysis of pharma R&D productivity - a new perspective needed” on Drug Discovery Today.

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

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

Our approach to AI is grounded in our long-standing expertise in mechanistic and empirical modeling.

We deploy AI capabilities within validated scientific frameworks and expert-led workflows, rather than as standalone automated systems.

This expert-in-the-loop model allows us to leverage native AI capabilities in a manner that is consistent with regulatory expectations for transparency, reproducibility, and explainability.

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

For over two decades, our scientists have developed and validated our biosimulation technology using data from scientific literature, laboratory research, preclinical and clinical studies.

To do this, we have developed solutions for the collection, standardization, validation, storage, and analysis of the preclinical and clinical data needed for MIDD.

These data solutions are used internally and by global life sciences companies.

The scientific principles underlying our work must be transparent and fully explainable during the regulatory process, so we have developed expertise in incorporating data and results into regulatory documents.

Our software and regulatory services streamline the creation of regulatory filings and speed regulatory data flow to maximize the chances of successful commercialization.

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

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

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

We deliver software and technology-enabled services.

Our strategy is to create and apply validated software applications that can be used broadly in the life science industry.

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

To do this, we have developed scientifically

based solutions for the collection, standardization, validation, storage, and analysis of the preclinical, clinical and evidence data needed for MIDD.

These data solutions are used internally and industry wide by life sciences companies.

The scientific principles underlying our work must be transparent and fully explainable during the regulatory process, so we have developed expertise in incorporating data, references and results into regulatory documents.

Our software and regulatory scientific services streamline the creation of regulatory filings and speed regulatory data flow to maximize the chances of successful commercialization.

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

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

We apply AI capabilities within established modeling environments and under the supervision of experienced scientists and regulatory experts.

Our modeling platforms, curated datasets, and regulatory experience position us to incorporate emerging AI techniques in a controlled and scientifically rigorous manner.

While AI can enhance productivity and insight generation, our solutions continue to rely on validated models and expert interpretation to support decision-making in regulated environments.

We leverage our validated software applications to deliver technology-enabled services.

Our services are delivered by scientists with extensive drug development experience who aid our customers in applying biosimulation and MIDD to their specific projects.

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

We have worked with more than 2,600 life sciences companies and academic institutions and have collaborated on more than 10,000 customer projects in the last decade across a wide variety of therapeutic areas ranging from cancer and hematology to diabetes and hundreds of rare diseases.

Our software products are licensed by more than 94,000 users and are also used by 23 global drug regulatory agencies, including the FDA and Japan’s Pharmaceuticals and Medical Devices Agency (the “PMDA”).

Our software products are licensed by more than 160,000 users and are also used by 20 global drug regulatory agencies, including the FDA, the UK’s MHRA, Japan's PMDA, and China’s NMPA.

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

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Our new bookings represent the estimated contract value of a signed contract or purchase order where there is sufficient or reasonable certainty about the customer’s ability and intent to fund and commence the software and/or services.

Bookings vary from period to period depending on numerous factors, including the overall health of the biopharmaceutical industry, regulatory developments, industry consolidation, and sales performance.

Bookings vary from period to period depending on numerous factors, including the overall health of the biopharmaceutical industry, regulatory

developments, industry consolidation, and sales performance.

Bookings have varied and will continue to vary significantly from quarter to quarter and from year to year.

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

Q1 Q2 Q3 Q1 Q2 Q3

(in millions except percentage)

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

and (v) complementary businesses.

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

and (v) complementary business.

Our Operating Environment

The acceptance of model-informed biopharmaceutical discovery and development by regulatory authorities affects the demand for our products and services.

Support for the use of biosimulation in discovery and development from regulatory bodies, such as the FDA and European Medicines Agency, has been critical to its rapid adoption by the biopharmaceutical industry.

There has been a steady increase in the recognition by regulatory and academic institutions of the role that modeling and simulation can play in the biopharmaceutical development and approval process, as demonstrated by new regulations and guidance documents describing and encouraging the use of modeling and simulation in the biopharmaceutical discovery, development, testing, and approval process, which has directly led to an increase in the demand for our products and services.

Support for the use of biosimulation in discovery and development from regulatory bodies, such as the FDA and EMA, has been critical to its rapid adoption by the biopharmaceutical industry.

Changes in government or regulatory policy, or a reversal in the trend toward increasing the acceptance of and reliance upon in silico data in the drug approval process, could decrease the demand for our products and services or lead regulatory authorities to cease use of, or recommend against the use of, our products and services.

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However, some changes in regulations, such as a relaxation in regulatory requirements or the introduction of streamlined or expedited approval procedures, or an increase in regulatory requirements that we have difficulty satisfying or that make our regulatory strategy services less competitive, could eliminate or substantially reduce the demand for our regulatory services.

Additionally, a new government administration may lead to either stricter or more relaxed regulatory environments.

Currently, the new U.S.

federal administration shows signs of reforming the pharmaceutical industry, particularly focusing on drug pricing and accelerated drug approval.

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.

This review could result in several potential directions for the business, which could potentially have a significant impact on our operations.

Additionally, changes in government leadership may also result in either stricter or more relaxed regulatory environments.

In the United States, recent executive actions and related government initiatives concerning

prescription drug pricing, together with existing statutes and implementing guidance, may create additional uncertainty in pricing frameworks.

For example, government-led initiatives to expand direct-to-consumer discount mechanisms and other pricing programs could alter market dynamics and may indirectly affect customer research and development investment levels and priorities.

Furthermore, in the past year, there has been a general pullback of government support and funding for drug development, particularly for public sector and academic organizations, dependent on outside funding to develop early-stage research.

Any material decrease or delay in demand for our technologies or services, or regulatory restrictions or requirements placed on them, may have a material adverse effect on our business, results of operations and financial condition.

The market for our biosimulation products and related services for the biopharmaceutical industry is competitive and highly fragmented.

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

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

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

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

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

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

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In addition, these measures are frequently used by analysts, investors, and other interested parties to evaluate and assess performance.

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.

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.

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 SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,

2025 2024 2025 2024

THREE MONTHS ENDED

(in thousands)

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Equity-based compensation expense(b) 7,320 7,070

Change in fair value of contingent consideration(d) 2,689 2,431 (3,212) 8,092

Change in contingent consideration(d) 7,230 (179)

Acquisition-related expenses(e) 18 876

Transaction-related expenses (f) — (128) — 2,625

Severance expense (g) — — — 183

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

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

Executive recruiting expense(j) — 222 661 645

Litigation and settlement expense(k) 246 — 246 —

Reorganization expense(f) 1,005 151

Loss (gain) on disposal of fixed assets(g) 10 6

Executive recruiting expense(h) 1,116 661

Adjusted EBITDA $ 31,720 $ 34,843

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

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

2025 2024 2025 2024

THREE MONTHS ENDED MARCH 31,

(in thousands)

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Amortization of acquisition-related intangible assets(c) 13,855 14,052

Change in fair value of contingent consideration(d) 2,689 2,431 (3,212) 8,092

Change in contingent consideration(d) 7,230 (179)

Acquisition-related expenses(e) 18 876

Transaction-related expenses (f) — (128) — 2,625

Severance expense (g) — — — 183

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

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

Executive recruiting expense(j) — 222 661 645

Litigation and settlement expense(k) 246 — 246 —

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

Reorganization expense(f) 1,005 151

Loss (gain) on disposal of fixed assets(g) 10 6

Executive recruiting expense(h) 1,116 661

Income tax expense impact of adjustments(i) (7,349) (5,071)

Adjusted net income $ 14,502 $ 22,247

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

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

2025 2024 2025 2024

THREE MONTHS ENDED MARCH 31,

Diluted earnings per share(a) (0.06) 0.03

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Amortization of acquisition-related intangible assets(c) 0.08 0.09

Change in fair value of contingent consideration(d) 0.02 0.02 (0.02) 0.05

Change in contingent consideration(d) 0.05 —

Acquisition-related expenses(e) — 0.01

Transaction-related expenses (f) — — — 0.02

Severance expense (g) — — — —

Reorganization expense(h) — 0.01 0.01 0.02

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

Executive recruiting expense(j) — — — —

Litigation and settlement expense(k) — — — —

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

Reorganization expense(f) 0.01 —

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

Executive recruiting expense(h) 0.01 —

Income tax expense impact of adjustments(i) (0.05) (0.03)

Adjusted diluted earnings per share $ 0.09 $ 0.14

Basic weighted average common shares outstanding 157,754,647 160,996,258

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

Effect of potentially dilutive shares outstanding (j) 269,516 354,034

Adjusted diluted weighted average common shares outstanding 158,024,163 161,350,292

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(d) Represents expense associated with remeasuring fair value of contingent consideration of business acquisitions.

(d) Represents expense associated with fair value adjustment or adjustment of contingent consideration of business acquisitions.

(e) Represents costs associated with mergers and acquisitions and any retention bonuses pursuant to the acquisitions.

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

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

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

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

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

(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.

Our definition of organic revenue may not be comparable to similarly titled measures used by other companies and is not a measure of performance presented in accordance with GAAP.

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

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

(in thousands except percentage)

Total revenues $ 315,190 11 %

Revenue related to acquisition (17,013) 6 %

Organic revenue $ 298,177 5 %

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

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

(h) Represents recruiting, relocation expenses, and retention costs related to senior executives.

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

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

Components of Results of Operations

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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 :

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Cost of Revenues

Cost of revenues consists primarily of employee-related expenses, equity-based compensation, the costs of third-party subcontractors, travel costs, distributor fees, amortization of capitalized software, and allocated overhead.

We may add or expand computing infrastructure service providers, make additional investments in the availability and security of our solutions, or add resources to support our growth.

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• Research and Development .

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

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

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

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Intangible asset amortization consists primarily of amortization expense related to intangible assets recorded in connection with acquisitions and amortization of capitalized software development costs.

• Depreciation and Amortization Expense .

• Depreciation and Amortization .

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

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

Business Combinations

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.

We continually seek and assess a range of highly focused opportunities in our immediately addressable market and in related adjacent markets, whether through acquisitions, licenses, or partnerships.

Chemaxon, Kft.

On October 1, 2024, we completed the acquisition of 100% of the equity of Chemaxon, a software company that develops leading software products for chemical structure drawing, property prediction, search, and analysis, for a total cash consideration of $96.4 million.

Based on our purchase price allocation, approximately $36.0 million, $11.0 million, $2.9 million, $0.3 million, and $49.4 million of the purchase price was assigned to developed technology, customer relationships, trademark, non-compete agreement, and goodwill, respectively.

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

For more information about our acquisitions, see Note 4.

“Business Combinations” in the notes to the condensed consolidated financial statements.

Business Combinations or Divestiture

On May 8, 2026, we completed the sale of our global medical writing and related regulatory services business to Veristat, LLC for cash consideration of $85.0 million, as well as an additional $15.0 million placed in escrow, which would be released to the Company upon satisfaction of certain post‑closing conditions.

We are also eligible to receive cash earn-out of up to $35.0 million based on the financial performance of such business for a specified period following closing.

Net proceeds from the transaction are expected to be used for general corporate purposes, including funding our ongoing operations.

We expect the transaction to strengthen our focus on core operations and further our commitment to accelerating AI-integrated modeling and simulation across the entire drug development lifecycle.

In connection with the transaction, we entered into a transition services agreement pursuant to which we will provide certain services, including information technology and other administrative functions, for a defined period following closing.

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 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

We have included the results of operations of acquired companies in our condensed consolidated results of operations from the date of their respective acquisitions, which impacts the comparability of our results of operations when comparing results for the three months ended March 31, 2026 to the three months ended March 31, 2025, respectively.

Three Months Ended March 31, 2026 Versus Three Months Ended March 31, 2025

The following table summarizes our unaudited statements of operations data for the three months ended at March 31, 2026 and 2025:

THREE MONTHS ENDED MARCH 31, CHANGE

2026 2025 $ %

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Total revenues $ 106,915 $ 106,004 $ 911 1 %

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.

Total revenues increased by $0.9 million, or 1%, to $106.9 million for the three months ended March 31, 2026 as compared to the same period in 2025.

Overall revenue growth was primarily driven by our software product offerings, supported by strong demand from existing customers, expansion of relationships with existing customers and new customers.

Software revenues increased by $3.4 million, or 7%, to $49.7 million for the three months ended March 31, 2026 as compared to the same period in 2025, primarily driven by increased demand from existing customers, expanded relationships with existing customers, and new customers.

Services revenues decreased by $2.4 million, or 4%, to $57.2 million for the three months ended March 31, 2026 as compared to the same period in 2025, primarily due to lower revenue from a previously acquired business.

Cost of Revenues

THREE MONTHS ENDED SEPTEMBER 30, CHANGE

THREE MONTHS ENDED MARCH 31, CHANGE

2026 2025 $ %

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% of total revenues 39 % 39 %

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.

Cost of revenues increased $0.1 million, or 0%, to $41.6 million for the three months ended March 31, 2026 as compared to the same period in 2025, and remained essentially flat compared with the same quarter in the prior year.

Sales and Marketing Expenses

THREE MONTHS ENDED SEPTEMBER 30, CHANGE

THREE MONTHS ENDED MARCH 31, CHANGE

2026 2025 $ %

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% of total revenues 12 % 12 %

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.

Sales and marketing expenses increased by $0.6 million, or 5%, to $13.4 million for the three months ended March 31, 2026 as compared to the same period in 2025.

Sales and marketing expenses increased primarily due to a $0.3 million increase in employee-related costs, a $0.2 million increase in stock-based compensation costs, a $0.2 million increase in marketing expense, and a $0.2 million increase in travel expense, partially offset by a $0.1million decrease in professional and consulting expense and a $0.1 million decrease in other miscellaneous expense.

Research and Development Expenses

THREE MONTHS ENDED SEPTEMBER 30, CHANGE

THREE MONTHS ENDED MARCH 31, CHANGE

2026 2025 $ %

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% of total revenues 11 % 10 %

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.

Research and development expenses increased by $1.8 million, or 17%, to $12.3 million for the three months ended March 31, 2026 as compared to the same period in 2025.

The increase in research and development expenses was primarily due to a $2.2 million increase in employee-related costs mainly resulting from head count growth associated with investments in software development, including AI integration across our product portfolio, a $0.2 million increase in professional and consulting expense, a $0.2 million increase in miscellaneous expense, and a $0.1 million increase in stock-based compensation costs, partially offset by a $1.1 million increase in capitalized cost in R&D.

General and Administrative Expenses

THREE MONTHS ENDED SEPTEMBER 30, CHANGE

THREE MONTHS ENDED MARCH 31, CHANGE

2026 2025 $ %

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% of total revenues 27 % 19 %

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 SEPTEMBER 30, CHANGE

2025 2024 $ %

(in thousands)

General and administrative expenses increased by $9.7 million, or 49%, to $29.4 million for the three months ended March 31, 2026 as compared to the same period in 2025.

The increase in general and administrative expenses was primarily due to a $7.4 million increase in business acquisition contingent consideration expense, a $1.0 million increase in equipment and software expense, a $0.9 million increase in executive recruiting and retention expenses, a $0.8 million increase in lease abandonment expense, primarily due to the absence of a non-recurring gain recognized in the prior year that reduced expenses in that period, and a $0.5 million increase in professional and consulting expense, partially offset by a $0.5 million decrease in merger and acquisition expense and a $0.3 million aggregate decrease in license costs and facility lease related expenses.

Depreciation and Amortization

$ 13,982 $ 13,389 $ 593 4 %

% of total revenues 13 % 14 %

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 computer equipment and furniture and fixture.

Interest Expense

THREE MONTHS ENDED SEPTEMBER 30, CHANGE

2025 2024 $ %

(in thousands)

Interest expense $ 5,011 $ 5,187 $ (176) (3) %

% of total revenues 5 % 5 %

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 SEPTEMBER 30, CHANGE

2025 2024 $ %

(in thousands)

Net other (income) expense $ (1,739) $ (932) $ (807) 87 %

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

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)

Benefits from income taxes

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

Effective income tax rate 671 % 17 %

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.

Net Income (Loss)

THREE MONTHS ENDED SEPTEMBER 30, CHANGE

2025 2024 $ %

(in thousands)

Net income (loss)

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

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 $ %

(in thousands)

Software $ 136,894 $ 113,426 $ 23,468 21 %

Services 178,296 171,361 6,935 4 %

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

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

NINE MONTHS ENDED SEPTEMBER 30, CHANGE

2025 2024 $ %

(in thousands)

Cost of revenues $ 121,955 $ 116,253 $ 5,702 5 %

% of total revenues 39 % 41 %

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

NINE MONTHS ENDED SEPTEMBER 30, CHANGE

2025 2024 $ %

(in thousands)

Sales and marketing $ 39,704 $ 34,247 $ 5,457 16 %

% of total revenues 13 % 12 %

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

NINE MONTHS ENDED SEPTEMBER 30, CHANGE

2025 2024 $ %

(in thousands)

Research and development $ 29,760 $ 29,333 $ 427 1 %

% of total revenues 9 % 10 %

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

NINE MONTHS ENDED SEPTEMBER 30, CHANGE

THREE MONTHS ENDED MARCH 31, CHANGE

2026 2025 $ %

(in thousands)

General and administrative $ 61,487 $ 73,080 $ (11,593) (16) %

% of total revenues 20 % 26 %

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

NINE MONTHS ENDED SEPTEMBER 30, CHANGE

$ 14,582 $ 13,967 $ 615 4 %

(in thousands)

Depreciation and amortization $ 42,104 $ 39,608 $ 2,496 6 %

% of total revenues 14 % 13 %

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 $0.2 million, primarily due to a $0.2 million decrease in depreciation of furniture and fixture, as well as leasehold improvements.

Depreciation and amortization expense increased by $0.6 million, or 4%, to $14.6 million for the three months ended March 31, 2026 as compared to the same period in 2025.

The increase in depreciation and amortization expense was primarily due to a $0.8 million net increase in amortization of intangible assets, primarily related to a $0.9 million increase in amortization of capitalized software.

In addition, depreciation expense for fixed assets decreased $0.2 million, primarily due to a $0.2 million decrease in depreciation of computer equipment.

Interest Expense

NINE MONTHS ENDED SEPTEMBER 30, CHANGE

THREE MONTHS ENDED MARCH 31, CHANGE

2026 2025 $ %

2 unchanged sentences

% of total revenues 5 % 5 %

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.

Interest expense increased by $0.1 million, or 3%, to $4.9 million for the three months ended March 31, 2026, as compared to the same period in 2025.

The change in interest expense was primarily due to a $0.9 million decrease in gain from our interest swap hedge activities, partially offset by a $0.7 million decrease in interest expense 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.

Net Other Income

NINE MONTHS ENDED SEPTEMBER 30, CHANGE

THREE MONTHS ENDED MARCH 31, CHANGE

2026 2025 $ %

2 unchanged sentences

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

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

NINE MONTHS ENDED SEPTEMBER 30, CHANGE

Net other income decreased by $0.4 million to $1.3 million for the three months ended March 31, 2026 as compared to the same period in 2025.

The decrease in net other income was primarily due to a $0.5 million decrease in interest income, partially offset by a $0.1 million increase in gain from remeasurement related to the fluctuation of the foreign currency rate.

Provision (Benefits) from Income Taxes

THREE MONTHS ENDED MARCH 31, CHANGE

2026 2025 $ %

(in thousands)

Provision (Benefit) for income taxes

$ 6,226 $ (736) $ 6,962 (946) %

Provision (Benefits) from Income Taxes

$ 820 $ (201) $ 1,021 nm

Effective income tax rate (10) % (4) %

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.

Our income tax expense was $0.8 million, resulting in an effective income tax rate of (10)% for the three months ended March 31, 2026 as compared to income tax benefit of $0.2 million, or an effective income tax rate of (4)%, for the same period in 2025.

Our income tax expense for the three months ended March 31, 2026 and 2025 was primarily due to the tax effects of U.S.

pre-tax income (loss), 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.

Net Income (Loss)

NINE MONTHS ENDED SEPTEMBER 30, CHANGE

THREE MONTHS ENDED MARCH 31, CHANGE

2026 2025 $ %

2 unchanged sentences

$ (8,763) $ 4,743 $ (13,506) (285) %

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.

Net loss was $8.8 million, representing a $13.5 million decrease in net income for the three months ended March 31, 2026 as compared to a net income of $4.7 million for the same period of 2025.

The decrease in net income was primarily due to a $12.7 million increase in operating expenses, a $1.0 million increase in tax expense, and a $0.6 million increase in total other expense, partially offset by a $0.9 million increase in revenue.

Liquidity and Capital Resources

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.

We have consistently generated positive cash flow from operations, providing $11.7 million and $17.4 million as a source of funds for the three months ended March 31, 2026 and 2025, 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 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,

The following table provides a summary of the major sources of liquidity for the three- and 12-month periods ended at March 31, 2026 and December 31, 2025 and as of March 31, 2026 and December 31, 2025.

MARCH 31, 2026 DECEMBER 31,

(dollars in thousands)

6 unchanged sentences

___________________________________

(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.

(a) Net cash from operating activities for the three months ended March 31, 2026 and twelve months ended December 31, 2025.

(b) Cash balances as of March 31, 2026 and December 31, 2025 included $78.9 million and $76.2 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 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.

For the three months ended March 31, 2026, we repurchased 5,814,484 shares of our common stock for an aggregate purchase price and fees of $40.0 million under the authorized share repurchase program.

These repurchases resulted in an increase in treasury stock and reduced weighted-average diluted shares outstanding, As of March 31, 2026, approximately $17.4 million remained available under the Company's existing share repurchase authorization 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 $14.2 million for lease contracts, which have remaining terms of one to nine years.

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

The principal amount of long-term debt outstanding as of March 31, 2026 matures in the following years:

Remainder of 2026 2027 2028 2029 2030 Thereafter TOTAL

3 unchanged sentences

We believe our existing sources of liquidity will be sufficient to meet our working capital, capital expenditures, and contractual obligations for the foreseeable future.

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

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

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

While we believe we have, and will be able to generate, sufficient liquidity to fund our operations

for the foreseeable future, our sources of liquidity could be affected by factors described under “Risk Factors” in our 2024 Annual Report.

Our future capital requirements, however, will depend on many factors, including funding for potential acquisitions, investments, common stock repurchase, and other growth and strategic opportunities, which could

increase our cash requirements.

While we believe we have, and will be able to generate, sufficient liquidity to fund our operations for the foreseeable future, our sources of liquidity could be affected by factors described under “Risk Factors” in our 2025 Annual Report.

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

NINE MONTHS ENDED SEPTEMBER 30,

THREE MONTHS ENDED MARCH 31,

(in thousands)

2 unchanged sentences

Net cash used in financing activities (43,741) (13,996)

Effect of foreign exchange rate changes on cash and cash equivalents, and restricted cash 4,720 1,887

Net increase (decrease) in cash and cash equivalents, and restricted cash $ (6,472) $ (1,928)

Effect of foreign exchange rate changes on cash and cash equivalents (1,080) 2,321

Net increase (decrease) in cash and cash equivalents $ (39,908) $ (97)

Cash paid for interest $ 4,872 $ 4,648

2 unchanged sentences

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

Net cash provided by operating activities in the first 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.

Net cash provided by operating activities in the first three months of 2026 was $11.7 million, compared to $17.4 million in the same period of 2025.

The $5.7 million decrease in cash from operating activities was primarily driven by lower cash-adjusted net income, an increase in cash used for prepaid and other assets and a decrease in cash collected on accounts receivable, partially offset by lower cash outflows to settle liabilities and increased cash inflows from deferred revenues.

Investing Activities

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.

Net cash used in investing activities in the first three months of 2026 was $6.8 million, an increase of $1.0 million, compared to $5.8 million in the same period of 2025.

The change in investing activities was primarily due to a $1.0 million increase in cash utilized in capitalized software development costs to support our growth.

Financing Activities

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;

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

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

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

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

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

Net cash used in financing activities in the first three months of 2026 was $43.7 million, compared to $14.0 million in the same period of 2025.

The $29.7 million increase in cash used in financing activities was primarily due to a $40.0 million increase in cash used in connection with repurchasing the Company's common stock, partially offset by a $10.2 million decrease in cash payments related to contingent consideration for business acquisitions.

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

The Credit Agreement has been amended several times.

Most recently, on October 16, 2025, we entered into the Sixth Amendment to the Credit Agreement to refinance our existing debt.

Following the refinancing, as of October

16, 2025, the Term Loan had an aggregate principal amount of $296.3 million and matures on June 26, 2031.

We also maintain a $100.0 million revolving credit facility under the Credit Agreement, which matures on June 26, 2029.

Borrowings under the Credit Agreement bear interest at a rate per annum equal to, at the election of the borrowers, either (i) the Term Secured Overnight Financing Rate (“SOFR”) rate, with a floor of 0.00% plus an applicable margin rate of 2.75% for the Term Loans and between 3.50% and 2.75% for loan 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 1.75% for the Term Loan or between 2.50% and 1.75% for loan 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.

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

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 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.

As of March 31, 2026, we were in compliance with the covenants of the Credit Agreement.

As of March 31, 2026, we had $294.8 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 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.

There have been no material changes to our contractual obligations during the three months ended March 31, 2026 from those disclosed in our 2025 Annual Report, except for payments made in the ordinary course of business.

We recorded income tax expense of $0.8 million for the three months ended March 31, 2026 and income tax benefit of $0.2 million for the three months ended March 31, 2025.

As of March 31, 2026, we had federal and state NOLs of approximately $4.2 million and $3.5 million, respectively, which are available to reduce future taxable income, some of which expire between 2035 and 2036 and 2030 and 2041, respectively.

We had federal and state R&D tax credit carryforwards of approximately $0.1 million and $0.02 million, respectively, to offset future income taxes, which expire between 2027 and 2040.

We also had foreign tax credits of approximately $14.6 million, which will start to expire in 2027.

5 unchanged sentences

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 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.

As a result, a

valuation allowance of $29 million is recorded at December 31, 2025.

As of March 31, 2026, the valuation allowance remained unchanged from December 31, 2025.

Off-Balance Sheet Arrangements

6 unchanged sentences

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 2025 Annual Report.

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

There were no significant changes to our critical accounting estimates during the three months ended March 31, 2026.

Recently Adopted and Issued Accounting Standards

2 unchanged sentences

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 2025 Annual Report.

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

There were no material changes to the Company’s market risk exposure during the three months ended March 31, 2026.

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