What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-08 compared with 2024-11-07 · 175 added, 247 removed, 215 unchanged (66% of the section changed)

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BigCommerce is leading a new era of ecommerce.

Our SaaS platform simplifies the creation of online stores by delivering a unique combination of ease-of-use, enterprise functionality, composability and flexibility.

We allow merchants to build their ecommerce solution their way with the flexibility to fit their unique business and product offerings.

We power both our customers’ branded ecommerce stores and their cross-channel connections to popular online marketplaces, social networks, and offline point of sale systems.

Our strategy is to provide the world’s best combination of freedom of choice and flexibility in a multi-tenant SaaS platform.

We describe this strategy as “Open SaaS.” As of September 30, 2024 we served 5,892 accounts with at least one unique enterprise plan subscription or an enterprise-level feed management subscription (collectively “enterprise accounts”).

These accounts may have more than one Enterprise plan or a combination of Enterprise plans and Essentials plans.

We provide a comprehensive platform for launching and scaling an ecommerce operation, including store design, catalog management, hosting, checkout, order management, reporting, and pre-integration into third-party services like payments, shipping, and accounting.

All of our stores run on a single code base and share a global, multi-tenant architecture purpose built for security, high performance, and innovation.

Our platform serves stores in a wide variety of sizes, product categories, and purchase types, including B2C and B2B.

We offer access to our platform on a subscription basis.

We serve customers with subscription plans tailored to their size and feature needs.

For our larger customers, our Enterprise plan offers our full feature set at a subscription price tailored to each business.

For small and medium business ("SMBs"), we offer three retail plans:

Standard, Plus, and Pro, priced at $29, $79, and $299 per month (our “Essentials” plans) when pre-paid annually, or $39, $105, and $399 per month (our “Essentials plans”), when paid monthly, respectively.

Our Essentials plans include GMV thresholds with programmatic upgrades built in as merchants exceed each plan’s threshold.

Our differentiated Open SaaS technology approach combines the flexibility and customization potential of open source software with the performance, security, usability, and value benefits of multi-tenant SaaS.

This combination helps businesses turn digital transformation into competitive advantage.

While some software conglomerate providers attempt to lock customers into their proprietary suites, we focus on the configurability and flexibility of our open platform, enabling each business to optimize their ecommerce approach based on their specific needs.

Partners are essential to our open strategy.

We provide professional-grade commerce solutions that give businesses the power and agility to build for today with an eye toward tomorrow.

We offer three core owned products— our flagship commerce platform, BigCommerce;

our AI-based product data feed management platform, Feedonomics;

and our brand and commerce site builder and visual editor, Makeswift.

As of March 31, 2025 we served 5,825 accounts with at least one unique enterprise plan subscription or an enterprise-level feed management subscription (collectively "enterprise accounts").

Enterprise accounts may have more than one enterprise plan or a combination of enterprise plans and non-enterprise plans.

We provide our customers with the flexibility to combine the right tools for the right job with a seamless front-and back-end experience.

Our industry-leading team of experts partners with our customers to provide the speed and agility needed to grow on their own terms.

We provide software-as-a-service (“SaaS”) ecommerce platform for forward-thinking brands and retailers at all stages of ecommerce growth.

Our platform serves customers across a wide variety of sizes, industries, and product categories seeking to differentiate themselves in-market with more tailored commerce experiences.

We believe our sophisticated functionality and composable SaaS platform make ecommerce success at scale more economically and operationally achievable than the competition.

We lower the financial and operating cost of ecommerce by providing technology as a service, including product, hosting, security, bug fixing, and continuous innovation.

We believe no other SaaS platform offers comparable enterprise functionality and flexibility at our price point—an advantage increasingly recognized by the world’s most respected technology analysts.

Our partner ecosystem is also central to our business strategy.

We believe we possess one of the deepest and broadest ecosystems of integrated technology solutions in the ecommerce industry.

We strategically partner with, rather than compete against, the leading providers in adjacent categories, including payments, shipping, point of sale, content management system, customer relationship management, and enterprise resource planning.

We focus our research and development investments in our core product to create a best-of-breed ecommerce platform and co-market and co-sell with our strategic technology partners to our mutual prospects and customers.

As a result, we earn high-margin revenue share from a subset of our strategic technology partners, which complements the high gross margin of our core ecommerce platform.

Our business has achieved significant growth since our inception.

We plan to continue to invest in our “Open SaaS” strategy, building new partnerships and continuing to develop a platform that offers best-of-breed functionality with the cost-effectiveness of multi-tenant SaaS.

As we work to develop and deliver this platform for our customers, we will also invest and grow our business by acquiring additional customers to our platform, growing our revenue with existing customers, cross-selling owned and partner solutions to existing customers, expanding our presence in new markets and geographies, and considering targeted acquisitions that can enhance our service to customers.

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We strategically partner with, rather than compete against, the leading providers in adjacent categories, including payments, shipping, point of sale, content management systems, customer relationship management, enterprise resource planning, and omnichannel.

Our partner-centric strategy stands in contrast to our largest competitors, which operate complex software stacks that compete across categories.

We focus our research and development investments in our core product with an emphasis on composability, empowering our customers to grow and scale on their terms.

We plan to continue to invest in our strategic offerings of business-to-business ("B2B") business-to-consumer ("B2C") as well as building new partnerships and continuing to develop our portfolio of professional-grade commerce solutions for forward-focused businesses.

We will also invest in and grow our business by acquiring additional customers to our platform, growing our revenue with existing customers, and expanding our presence in new markets while maintaining a focus on profitability.

Key factors affecting our performance

Our operational and financial results have been, and will continue to be, affected by a number of factors that present significant opportunities as well as risks and challenges, including those discussed below and elsewhere in this quarterly report and in our Annual Report, particularly in Part I, Item 1A, “Risk Factors” The key factors discussed below impacted our 2023 results or are anticipated to impact our future results .

“Go-to-Market” Strategy

We reorganized our business teams and leadership structure to introduce clear and unified end to end ownership of the customer.

Sales, customer success, marketing, and our business development teams have congruent and clear targets that unify their efforts around customer success and growth.

We centralized end to end customer success ownership under our Company's Chief Executive Officer, Travis Hess.

Hess oversees all go-to-market efforts across the business, including the platform product, Feedonomics, and partner and services revenue.

Additionally, we appointed Ms.

Siminoff as Executive Chair of the Board to work with Mr.

Hess and other members of the Company's executive team to provide, among other things, strategic expertise, leadership, and direction to the Board and senior management.

We continue to advance efficient revenue growth by ensuring investments spent in our go-to-market strategy yield greater returns for our customers and for us.

We are focusing on brand architecture and integration and product strategy to shape our strategy moving forward:

• Brand architecture and integration - We are streamlining our brand architecture to focus on integrating the capabilities of our platform with Feedonomics and Makeswift to offer a more comprehensive solution for our customers.

• Product strategy - We remain committed to driving value and business growth serving our core customers:

mid-market and enterprise B2C and B2B customers, and sophisticated small business customers.

We will focus our investments and innovation to serve these customers, including through the continued rollout of Catalyst for our B2C customers, continuing integration of our B2B features into our platform, and the launching of a hosted Catalyst solution that offers our small business customers a more cost-effective, easy-to-use platform.

We have made strategic organizational changes that will allow us to scale efficiently to support these initiatives as described below in our results of operations.

Macroeconomic environment and customer spend

Consumer spending remains resilient across our major markets.

We are encouraged overall by the underlying consumption signals that we are seeing in our business.

2024 Restructure

As discussed in Note 7 to our condensed consolidated financial statements, on September 30, 2024, we committed to a restructuring plan (the "2024 Restructure") intended to reinvest in product delivery and increase sales capacity, reduce operating costs, improve operating margins and continue to advance our commitment to profitable growth.

The 2024 Restructure includes a reduction of our workforce, exits of certain office leases, impairment of certain software development projects and contract amendments and terminations to better align operating expenses with existing economic conditions and the Company’s strategic priorities.

Affected employees were notified on November 7, 2024, and are being provided severance arrangements.

We anticipate to incur additional expense related to the 2024 Restructure of approximately $3.5 million to $5.7 million through fiscal 2025 relating to severance benefits, contract terminations, accelerated depreciation, right-of-use asset impairments, software impairments, and professional services costs.

The additional expenses we expect to incur are subject to assumptions, and actual expenses may differ from the estimates disclosed above.

Investment in core offerings

We continue to prioritize investment in our core B2B and B2C product offerings to better meet evolving customer needs and strengthen our competitive position.

The rapid growth in ecommerce is prompting companies to adopt ecommerce platforms like

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BigCommerce to create branded ecommerce stores and power cross-channel connections to online marketplaces, social networks, and offline POS systems.

To meet the evolving needs of enterprise B2B businesses, we released product enhancements, including multi-company hierarchy support and an upgraded configure-price-quote (CPQ) tool.

These enhancements are designed to enable large enterprises to more efficiently manage organizational structures and quoting workflow.

In B2C, we continued to execute on our strategic customer segmentation strategy, targeting operationally complex and underserved verticals beyond the traditional fashion, beauty, and apparel sectors often prioritized by legacy platforms.

We believe that this strategic focus positions us to better address differentiated merchant needs and capture additional market share over time.

Expansion of growth initiatives

We are advancing initiatives to expand platform capabilities and support revenue growth.

We initiated a beta launch of Feedonomics self-serve and plan to broaden its availability with additional paid features.

As part of our bundling strategy, we announced our intention to partner with a performance and error monitoring platform to enhance the merchant experience, with additional bundled offerings under development.

These product bundles aim to simplify the commercial requirements of customers’ adoption of composable commerce architectures.

We believe this will build stronger relationships with our partners and create new revenue opportunities with customers.

Our new BigCommerce Payments offering remains on track for a 2026 launch, which will be an optional payments offering for small and medium-sized customers looking for a stream-lined, integrated offering with competitive processing rates.

This offering aims to improve our overall monetization and retention rates in the business.

Leveraging artificial intelligence to drive value

We are integrating artificial intelligence capabilities across our platform and operations to improve personalization, automation, and efficiency.

We expanded the application of AI across sales and marketing to identify high-value leads, personalize outreach, and optimize pipeline management.

We also deployed AI-driven initiatives across operational functions, including developer documentation automation and outbound call simulations to accelerate onboarding.

These initiatives, along with partnerships with OpenAI, Gemini, and Forethought, are supporting greater organizational agility, cost efficiency, and innovation.

Macroeconomic environment

While we are not directly involved in manufacturing or logistics, many of our customers operate across borders and within affected supply chains.

We are closely monitoring how shifting trade policies and increased tariffs may impact international sellers and brands sourcing from affected regions.

Although we have not observed a material impact on our performance to date, we remain cautious and continue to partner with our customers to provide flexible solutions that support their agility in a dynamic macroeconomic environment.

Business metrics

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Increases or decreases in our business metrics may not correspond with increases or decreases in our revenue.

As an example, some of our business metrics include annual revenue run-rate (“ARR”), subscription annual revenue run-rate (“Subscription ARR”), average revenue per account, lifetime value (“LTV”) to customer acquisition costs (“CAC”) and others are calculated as of the end of the last month of the reporting period.

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As an example, some of our business metrics include annual revenue run-rate ("ARR"), subscription annual revenue run-rate ("Subscription ARR") , average revenue per account ("ARPA"), and others are calculated as of the end of the last month of the reporting period.

Annual revenue run-rate

We calculate ARR at the end of each month as the sum of:

(1) contractual monthly recurring revenue at the end of the period, which includes platform subscription fees, invoiced growth adjustments, product feed management subscription fees, recurring professional services revenue, and other recurring revenue, multiplied by twelve to prospectively annualize recurring revenue, and (2) the sum of the trailing twelve-month non-recurring and variable revenue, which includes one-time partner integrations, one-time fees, payments revenue share, and any other revenue that is non-recurring and variable.

(1) contractual monthly recurring revenue at the end of the period, which includes platform subscription fees, invoiced growth adjustments, feed management subscription fees, recurring professional services revenue, and other recurring revenue, multiplied by twelve to prospectively annualize recurring revenue, and (2) the sum of the trailing twelve-month non-recurring and variable revenue, which includes one-time partner integrations, one-time fees, payments revenue share, and any other revenue that is non-recurring and variable.

Subscription annual revenue run-rate

We calculate Subscription ARR at the end of each month as the sum of contractual monthly recurring revenue at the end of the period, which includes platform subscription fees, invoiced growth adjustments, product feed management subscription fees, recurring professional services revenue, and other recurring revenue, multiplied by twelve to prospectively annualize recurring revenue.

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Average revenue per account

We calculate average revenue per account (“ARPA”) at the end of a period by including customer-billed revenue and an allocation of partner and services revenue, where applicable.

We calculate ARPA at the end of a period by including customer-billed revenue and an allocation of partner and services revenue, where applicable.

We bill customers for subscription solutions and professional services, and we include both in ARPA for the reported period.

For example, ARPA as of September 30, 2024, includes all subscription solutions and professional services billed between January 1, 2024, and September 30, 2024.

For example, ARPA as of March 31, 2025, includes all subscription solutions and professional services billed between January 1, 2024, and March 31, 2025.

We allocate partner revenue, where applicable, primarily based on each customer’s share of GMV processed through that partner’s solution.

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Enterprise Account metrics

To measure the effectiveness of our ability to execute against our growth strategy, particularly within the mid-market and enterprise lines of business, we calculate ARR attributable to Enterprise Accounts.

To measure the effectiveness of our ability to execute against our growth strategy, we calculate ARR attributable to Enterprise Accounts.

The chart below illustrates certain of our key business metrics as of the periods ended:

September 30,

ARR (in thousands)

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Average Revenue Per Account

Lifetime value to customer acquisition costs

We measure the efficiency of new customer acquisition by comparing the lifetime value of newly-acquired customers to the customer acquisition costs of the associated time period to get an “LTV:CAC ratio.” We calculate LTV as gross profit from new sales during the four quarters of any given year divided by the estimated future subscription churn rate.

Net revenue retention

We use net revenue retention (“NRR”) to evaluate our ability to maintain and expand our revenue with our account base of enterprise customers exceeding the ACV threshold over time.

We use net revenue retention (“NRR”) to evaluate our ability to maintain and expand our revenue with our account base of enterprise customers exceeding the annual contract value ("ACV") threshold over time.

The total billings and allocated partner revenue, where applicable, for the measured period are divided by the total billings and allocated partner revenue for such accounts, corresponding to the period one year prior.

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We update our reported NRR at the end of each fiscal year and do not report quarterly changes in NRR.

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Components of results of operations

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Subscription solutions revenue consists primarily of platform subscription fees from plans and recurring professional services.

Subscription solutions are charged monthly, quarterly, or annually for our customers to sell their products and process transactions on our platform.

Subscription solutions are typically charged annually for our customers to sell their products and process transactions on our platform.

Subscription solutions are generally charged per online store and are based on the store’s subscription plan.

Our Enterprise plan contracts are generally for a fixed term of 12 to 36 months and are non-cancelable.

Our pricing strategy provides enterprise merchants a discount for a period of time from their contractual monthly.

Our pricing strategy provides enterprise merchants a discount for a period of time from their contractual obligations.

Merchants have full access to the functionality of our platform upon contract execution, and revenue is recognized ratably over the contract life.

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both marketplaces and advertising) and are billed monthly in arrears.

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We generate partner revenue from our technology application ecosystem.

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Cost of revenue consists primarily of:

(1) personnel-related costs (including stock-based compensation expense and associated payroll costs) for our customer success teams, (2) costs that are directly related to hosting and maintaining our platform, (3) fees for processing customer payments such as credit card processing charges, (4) personnel and other costs related to feed management, and (5) allocated costs, such as, depreciation, technology and facility costs.

As a result of our growth plans and integration of our previously acquired businesses, we have incurred expenses for equity and amortization of purchased intangibles.

Sales and marketing

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We focus our sales and marketing efforts on creating sales leads and establishing and promoting our brand.

We plan to increase our investment in sales and marketing by executing our go-to-market strategy globally and building our brand awareness.

Incremental sales commissions for new customer contracts are deferred and amortized ratably over the estimated period of our relationship with such customers.

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Software development costs associated with internal use software which are incurred during the application development phase and meet other requirements are capitalized.

We believe delivering new functionality is critical to attracting new customers and enhancing the success of existing customers.

We expect to continue to make investments in research and development.

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General and administrative

General and administrative expenses consist primarily of:

(1) personnel-related expenses (including stock-based compensation expense and associated payroll costs) for finance, legal and compliance, and human resources, (2) external professional services, and (3) allocated overhead costs, such as technology and facility costs.

(1) personnel-related expenses (including stock-based compensation expense and associated payroll costs) for finance, legal and compliance, human resources, and certain members of our executive team, (2) external professional services, and (3) allocated overhead costs, such as technology and facility costs.

Acquisition related expenses

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Restructuring charges

Restructuring charges consist primarily of severance payments, right-of-use asset impairments, lease termination gain, software impairments, and professional services costs.

Restructuring charges consist primarily of severance benefits, right-of-use asset impairments, lease termination gain, software impairments, accelerated depreciation and amortization, and professional services costs.

Amortization of intangible assets

Amortization of intangible assets consist of amortization of acquired intangible assets which were recognized as a result of business combinations and are being amortized over their expected useful life.

Amortization of intangible assets consist of amortization of developed technology and acquired intangible assets which were recognized as a result of business combinations.

These assets are being amortized over their expected useful life.

Gain on convertible notes extinguishment

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Interest income is earned on our cash, cash equivalents and marketable securities.

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Interest expense

Interest expense consists primarily of the interest expense from the amortization of the debt issuance costs and coupon interest attributable to our 2028 and 2026 Convertible Notes with offsetting amortization of the debt premium related to the 2028 Convertible Notes, as well as interest associated with a financing agreement entered into in the first half of 2023.

Other expense

Other income (expense)

Other expense primarily consists of foreign currency translation adjustments.

Provision for income taxes

Our provision for income taxes consists primarily of deferred income taxes associated with amortization of tax deductible goodwill and current income taxes related to certain foreign and state jurisdictions in which we conduct business.

Our provision for income taxes consists primarily of current state and foreign jurisdictions in which we conduct business, deferred income taxes associated with amortization of tax deductible goodwill.

federal income tax purposes and in certain foreign and state jurisdictions, we have NOL carryforwards.

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Accordingly, our effective tax rate will vary depending on the relative proportion of foreign to domestic income, use of foreign tax credits, changes in the valuation of our deferred tax assets and liabilities, applicability of any valuation allowances, and changes in tax laws in jurisdictions in which we operate.

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Results of operations

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The period-to-period comparison of operating results is not necessarily indicative of results for future periods.

Three months ended September 30,

Nine months ended September 30,

(in thousands)

For the three months ended March 31,

Cost of revenue (1)

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Other expense

Loss before provision for income taxes

Income (loss) before provision for income taxes

Provision for income taxes

(1) Amounts include stock-based compensation expense and associated payroll tax costs, as follows:

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

(in thousands)

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General and administrative

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Revenue by geographic region

The composition of our revenue by geographic region during the three and nine months ended September 30, 2024 and September 30, 2023 were as follows:

Three months ended September 30,

Nine months ended September 30,

The composition of our revenue by geographic region during the three months ended March 31, 2025 and March 31, 2024 were as follows:

Three months ended March 31,

(dollars in thousands)

Americas – U.S.

Americas – other (1)

United States

Total Revenue

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(1) Americas-other revenue includes revenue from North and South America, other than the U.S.

Comparison of the three and nine months ended September 30, 2024 and 2023,

Comparison of the three months ended March 31, 2025 and March 31, 2024

The following table presents the components of our revenue for each of the periods indicated:

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

(dollars in thousands)

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Total revenue

Total revenue increased $5.7 million, or 7.3 percent, to $83.7 million for the three months ended September 30, 2024, from $78.0 million for the three months ended September 30, 2023, as a result of increases in both subscription solutions and partner and services revenue.

Subscription solutions revenue increased $4.1 million, or 7.0 percent, to $62.8 million for the three months ended September 30, 2024, from $58.7 million for the three months ended September 30, 2023, primarily due to increases in enterprise, mid-market, and Feedonomics activity.

Partner and services revenue increased $1.5 million, or 8.0 percent, to $20.9 million for the three months ended September 30, 2024, from $19.3 million for the three months ended September 30, 2023, primarily as a result of increases in revenue share offset by decreases in stand ready and integration activity.

Total revenue increased $20.7 million, or 9.2 percent, to $245.9 million for the nine months ended September 30, 2024 from $225.2 million for the nine months ended September 30, 2023, as a result of increases in both subscription solutions and partner and services revenue.

Subscription solutions revenue increased $16.9 million or 10.0 percent, to $185.6 million for the nine months ended September 30, 2024, from $168.7 million for the nine months ended September 30, 2023, primarily due to growth in enterprise, mid-market, and Feedonomics activity.

Partner and services revenue increased $3.7 million, or 6.6 percent, to $60.3 million for the nine months ended September 30, 2024 , from $56.6 million for the nine months ended September 30, 2023, primarily as a result of increases in in revenue share offset by decreases in stand ready and integration activity.

Total revenue increased $2.0 million, or 2.5 percent, to $82.4 million for the three months ended March 31, 2025, from $80.4 million for the three months ended March 31, 2024, as a result of increases in both subscription solutions and partner and services revenue.

Subscription solutions revenue increased $1.2 million, or 1.9 percent, to $62.1 million for the three months ended March 31, 2025, from $61.0 million for the three months ended March 31, 2024, primarily due to increases in Feedonomics activity.

Partner and services revenue increased $0.9 million, or 4.4 percent, to $20.3 million for the three months ended March 31, 2025, from $19.4 million for the three months ended March 31, 2024, primarily as a result of increases in revenue share activity offset by decreases in stand ready and integration activity.

Cost of revenue, gross profit, and gross margin

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

(dollars in thousands)

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Gross margin percentage

Cost of revenue increased $0.8 million, or 4.2 percent, to $19.9 million for the three months ended September 30, 2024, from $19.1 million for the three months ended September 30, 2023, primarily as a result of higher software costs and credit card processing fees of $0.9 million driven by associated increased in revenue.

Gross margin increased to 76.3 percent from 75.6 percent, primarily as a result of cost cutting measures from the 2023 Restructure.

Cost of revenue increased $2.9 million, or 5.2 percent, to $58.1 million for the nine months ended September 30, 2024, from $55.3 million for the nine months ended September 30, 2023 primarily as a result of higher software costs and credit card processing fees of $3.0 million.

Gross margin increased to 76.4 percent from 75.5 percent, primarily as a result of cost cutting measures from the 2023 Restructure.

We expect that cost of revenue will likely decrease in the near term as a percentage of revenue due to reductions in headcount related costs as a result of the 2024 Restructure, leading to improved gross margins.

Cost of revenue decreased $1.5 million, or (7.9) percent, to $17.0 million for the three months ended March 31, 2025, from $18.4 million for the three months ended March 31, 2024, and gross margin increased to 79.4 percent from 77.1 percent.

The decrease in expense is primarily attributable to the Company recording certain expenses in sales and marketing in the first quarter of 2025 while prior years expenses of $1.4 million were recorded in cost of revenue as certain employees were moved from customer support roles to sales and marketing roles in connection with our restructuring initiatives.

The remaining change related to decreases in payroll costs and share-based compensation expense of $0.7 million partially offset by increased software and web hosting costs of $0.6 million, primarily as a result of increased efficiency in customer service staffing and spending and the 2024 Restructure.

We expect cost of revenue to increase in absolute dollars primarily driven by additional hosting costs, but anticipate that cost of revenue as a percentage of revenue will remain consistent for the remaining fiscal year 2025.

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Operating income (expenses)

Sales and marketing

Three months ended September 30,

Nine months ended September 30,

Operating expenses

The following tables present our operating expenses for each of the periods indicated:

Three months ended March 31,

As a % of Total Revenue

(dollars in thousands)

Sales and marketing

Percentage of revenue

Sales and marketing expenses decreased $3.1 million, or (8.6) percent, to $33.1 million for the three months ended September 30, 2024 from $36.3 million for the three months ended September 30, 2023, primarily due to decreased variable marketing costs of $1.9 million, decreased salaries and share-based compensation expense of $0.8 million driven by cost cutting measures from the 2023 Restructure, and decreased professional services fees of $0.3 million.

As a percentage of total revenue, sales and marketing expenses decreased to 39.6 percent from 46.5 percent, primarily as a result of cost cutting measures from the 2023 Restructure.

Sales and marketing expenses decreased $5.9 million or (5.6) percent, to $100.0 million for the nine months ended September 30, 2024 from $105.9 million for the nine months ended September 30, 2023, primarily due to lower variable marketing costs of $3.6 million, and decreased salaries and share-based compensation expense of $3.0 million driven by cost cutting measures from the 2023 Restructure.

These decreases were partially offset by a $0.7 million increase in other expenses, such as software costs, contract services, and professional fees.

As a percentage of total revenue, sales and marketing expenses decreased to 40.7 percent from 47.0 percent, primarily as a result of cost cutting measures from the 2023 Restructure.

We expect that sales and marketing expenses will slightly increase near term as we reinvest in sales resources as part of the 2024 Restructure, which we expect to be offset with anticipated future revenue growth.

Research and development

Three months ended September 30,

Nine months ended September 30,

(dollars in thousands)

Research and development

Percentage of revenue

Research and development decreased $0.9 million, or (4.0) percent, to $20.8 million for the three months ended September 30, 2024 from $21.7 million for the three months ended September 30, 2023, due to the cost cutting measures from the 2023 Restructure.

As a percentage of total revenue, research and development expenses decreased to 24.9 percent from 27.8 percent, primarily as a result of cost cutting measures from the 2023 Restructure.

Research and development decreased $2.8 million, or (4.4) percent, to $61.1 million for the nine months ended September 30, 2024 from $64.0 million for the nine months ended September 30, 2023, due to the cost cutting measures from the 2023 Restructure.

As a percentage of total revenue, research and development expenses decreased to 24.9 percent from 28.4 percent, primarily as a result of cost cutting measures from the 2023 Restructure.

We expect that research and development expenses will likely decrease as a percentage of revenue in the near term primarily due to reductions in headcount related costs relating to the 2024 Restructure.

General and administrative

Three months ended September 30,

Nine months ended September 30,

(dollars in thousands)

Amortization of intangible assets

Acquisition related expenses

Restructuring charges

Total operating expenses

Sales and marketing

Sales and marketing expenses decreased for the three months ended March 31, 2025 from March 31, 2024.

The period over period decrease was reduced due to the Company recording certain expenses in sales and marketing in the first quarter of 2025 while in the prior year these expenses of $1.9 million were recorded in cost of revenue and general and administrative as certain employees were moved from customer support and general and administrative roles to sales and marketing roles in connection with our restructuring initiatives.

Excluding the impact of these expenses, the period over period change of $4.0 million was primarily driven by reductions in variable marketing spend and professional services of $3.5 million, and $0.3 million decrease in stock-based compensation and associated payroll costs.

We expect that sales and marketing expenses will increase in absolute dollars and may slightly increase as a percentage of revenue near term as we reinvest in our go-to-market organization as part of the 2024 Restructure.

We do not expect sales and marketing in absolute dollars to increase as much as our revenue growth in future periods.

Research and development

Research and development expenses decreased for the three months ended March 31, 2025 from March 31, 2024, primarily due to a decrease in staffing costs of $0.6 million, including stock-based compensation and associated payroll costs.

We expect that research and development expenses as a percentage of revenue to remain consistent throughout the fiscal year 2025.

General and administrative

Percentage of revenue

General and administrative expenses increased $2.1 million, or 14.6 percent, to $16.4 million for the three months ended September 30, 2024, from $14.3 million for the three months ended September 30, 2023, primarily due to an increase of $1.2 million

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in bad debt expense and an increase in professional service expenses of $0.9 million.

As a percentage of total revenue, general and administrative expenses increased to 19.6 percent from 18.4 percent, primarily as a result of the increase in bad debt expense due to focused collections efforts for the three months ended September 30, 2023.

General and administrative expenses increased $1.5 million, or 3.4 percent, to $46.8 million for the nine months ended September 30, 2024 from $45.3 million for the nine months ended September 30, 2023, primarily due to a $1.8 million increase in bad debt expense, $0.9 million increase in professional services, and a $0.4 million increase in variable spend partially offset by $1.2 million decrease in insurance expense due to lower renewal rates.

As a percentage of total revenue, general and administrative expenses decreased to 19.0 percent from 20.1 percent, primarily as a result of cost cutting measures from the 2023 Restructure.

We expect that general and administrative expenses will likely decrease as a percentage of revenue in the near term due to reductions in headcount related costs relating to the 2024 Restructure.

General and administrative expenses decreased for the three months ended March 31, 2025 from March 31, 2024.

A portion of the decrease is attributable to the Company recording certain expenses in sales and marketing in the first quarter of 2025 while in prior years expenses of $0.3 million were recorded in general and administrative due to changes in employee roles.

The remaining change was primarily due to a $2.7 million decrease in stock-based compensation associated with executives departure, offset by a $1.8 million increase in professional services.

We expect that general and administrative expenses as a percentage of revenue to remain consistent throughout the remaining fiscal year 2025.

Amortization of intangible assets

Amortization of intangible assets decreased for the three months ended March 31, 2025 from March 31, 2024.

The decrease was due to amortization of Makeswift intangible assets.

Acquisition related expenses

Acquisition related expense decreased $0.7 million, or (68.7) percent, to $0.3 million for the three months ended September 30, 2024, from $1.1 million for the three months ended September 30, 2023, and decreased $8.3 million, or 89.3 percent, to $1.0 million for the nine months ended September 30, 2024, from $9.3 million for the nine months ended September 30, 2023.

Acquisition costs recognized for the three and nine months ended September 30, 2024 represent the amortization of deferred compensation for the Makeswift acquisition.

Acquisition costs in prior years related to other transactions and acquisition costs for Feedonomics were recognized during the three and nine months ended September 30, 2023.

Acquisition related expense remained consistent for the three months ended March 31, 2025 from March 31, 2024.

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Restructuring charges

Restructuring charges were $9.9 million and $5.8 million for the three months ended September 30, 2024 and 2023, respectively, and were $12.5 million and $6.2 million for the nine months ended September 30, 2024 and 2023, respectively.

The $9.9 million is a result of $6.9 million of severance and related charges, $2.1 million of capitalized software related charges due to impairment of software due to change in market strategy, $1.1 million of real estate related charges, $0.6 million of professional services related to our change in market strategy as described above in relation to the 2024 Restructure, and $0.2 million of professional services related to our capital structure and various alternatives associated with inbound inquiries partially offset by a $1.0 million gain on real estate modification.

The charges for the three months and nine months ended September 30, 2023 were primarily related to charges from the 2023 Restructure which included a one time charge of $5.5 million resulting from severance and other related charges.

Restructuring charges increased for the three months ended March 31, 2025 from the three months ended March 31, 2024.

For the three months ended March 31, 2025, restructuring charges included severance and related charges for a reduction in workforce, consulting costs associated with changes in go-to-market approach, and accelerated depreciation of leasehold improvements associated with relocation of the Austin headquarters.

The following tables present our other income/(expenses) for each of the periods indicated:

Three months ended March 31,

(dollars in thousands)

Gain on convertible note extinguishment

Gain on convertible note extinguishment was $12.1 million for the three months ended September 30, 2024.

The $12.1 million consisted of a $10.4 million gain on the repurchase of 2026 Convertible Notes and $1.7 million gain on the exchange of 2028 Convertible Notes.

Interest income

Interest income decreased $0.7 million, or 20.5 percent, to $2.4 million for the three months ended September 30, 2024, from $3.1 million for the three months ended September 30, 2023.

This decrease was primarily a result of lower cash, cash equivalents and marketable securities balance during the three months ended September 30, 2024 due to cash outflows for financing activities.

Interest income increased $0.5 million, or 6.0 percent to $8.8 million for the nine months ended September 30, 2024 from $8.3 million for the nine months ended September 30, 2023.

This increase was primarily a result of higher cash, cash equivalents and marketable securities balances for the nine months ended September 30, 2024

Interest expense

Interest expense was $1.9 million and $0.7 million for the three months ended September 30, 2024 and 2023, respectively, and was $3.3 million and $2.2 million for the nine months ended September 30, 2024 and 2023.

The increase in interest expense for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023 was primarily a result of the issuance of the 2028 Convertible Notes that have a higher effective interest rate than the 2026 Convertible Notes.

Liquidity and capital resources

We are committed to cash flow generation and cash management by focusing on operational discipline, and we continue to evaluate all of our spending to look for opportunities to drive improvements in cash flow.

Our success in transitioning our customer base from legacy month-to-month contracts to annual contracts has continued to result in better cash flow as these efforts have increased the timing of our cash receipts and reduced our overall subscription churn rate.

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Our operational short-term liquidity needs primarily include working capital for sales and marketing, research and development, and continued innovation.

Our future capital requirements will depend on many factors, including our growth rate, levels of revenue, the expansion of sales and marketing activities, market acceptance of our platform, the results of business initiatives including our efforts in transitioning our customers to annual billings, continued reduction in churn, the timing of new product introductions, the continued impact of the inflation on the global economy, market risk due to elevated interest rates, our business, financial condition, and results of operations.

We believe that our existing cash and cash equivalents and our cash flows from operating activities will be sufficient to meet our working capital and capital expenditure needs for at least the next twelve months.

In the future, we may attempt to raise additional capital through the sale of additional equity or debt financing.

Additionally, with our convertible notes restructuring, there was a reduction in liquidity.

However, we believe as a result of the renegotiation and extension of the remaining obligation, we have decreased our overall debt leverage and better optimized our maturities.

The restructuring of the convertible notes requires semi-annual interest payments and increases our contractual interest rate to 7.50 percent.

From time to time, we may seek to repurchase, redeem or otherwise retire our convertible notes through cash repurchases and/or exchanges for equity securities, in open market repurchases, privately negotiated transactions, tender offers or otherwise.

Such repurchases, redemptions or other transactions, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors.

The amounts involved may be material.

We do not have any material off-balance sheet arrangements that we expect would materially affect our liquidity and capital resources .

Other expenses

Total Other income

Gain on convertible note extinguishment increased for the three months ended March 31, 2025 from March 31, 2024.

The increase consisted of a $3.9 million gain on the repurchase of 2026 Convertible Notes.

Interest income decreased for the three months ended March 31, 2025 from March 31, 2024.

This decrease was due to lower yields on our cash equivalents and marketable securities in 2024 primarily as a result of less cash, cash equivalents, and marketable securities during the period.

Interest expense increased for the three months ended March 31, 2025 from March 31, 2024.

This increase was the due to the exchange of 2026 Convertible Notes for 2028 Convertible Notes in the third quarter of 2024 at a higher effective interest rate.

Other expenses decreased for the three months ended March 31, 2025 from March 31, 2024.

This decrease was due to the impact of foreign currency exchange rates.

Provision for income taxes

Our provision for income taxes increased approximately $0.2 million for the three months ended March 31, 2025 from March 31, 2024.

This increase was primarily due to changes in the Company's tax reserves.

The following table sets forth a summary of our cash flows for the periods indicated.

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

(in thousands)

Net cash provided by (used in) operating activities

Net cash provided by investing activities

Net cash provided by (used in) financing activities

Net cash provided by (used in) investing activities

Net cash used in financing activities

Net decrease in cash, cash equivalents and restricted cash

As of September 30, 2024, we had approximately $37.0 million in cash, cash equivalents, and restricted cash, a decrease of $33.9 million compared to $70.9 million as of September 30, 2023.

As of March 31, 2025, we had $53.2 million in cash, cash equivalents, and restricted cash, a decrease of $8.8 million compared to $62.0 million as of March 31, 2024.

Cash and cash equivalents consist of highly-liquid investments with original maturities of less than three months.

Our restricted cash balance of $1.5 million and $1.1 million at September 30, 2024 and 2023, respectively, consisted of security deposits for future chargebacks and amounts on deposit with certain financial institutions.

Our marketable securities balance of $133.0 million and $195.6 million at September 30, 2024 and 2023 respectively, consisted of investments in corporate and US treasury securities.

Our restricted cash balance of $1.2 million and $1.1 million at March 31, 2025 and 2024 respectively, consists of security deposits for future chargebacks and amounts on deposit with certain financial institutions.

Our marketable securities balance of $68.6 million and $204.3 million at March 31, 2025 and 2024 respectively, consists of investments in corporate and US treasury securities .

We maintain cash account balances in excess of Federal Deposit Insurance Corporation (FDIC) insured limits.

Operating activities

Net cash provided by (used in) operating activities for the three months ended September 30, 2024 and 2023 was $5.6 million and ($31.4) million, respectively.

This consisted primarily of our net losses adjusted for certain non-cash items including depreciation, amortization of intangible assets, convertible note premium and convertible note issuance costs amortization, stock-based compensation, bad debt expense, impairment losses, gains on settlement of lease liabilities, gain on extinguishment of convertible notes, and the effect of changes in working capital.

The increase in cash flows provided by operating activities for the three months ended September 30, 2024 was driven by cost reductions associated with the 2023 Restructure and focus on reduction of variable spend.

Net cash provided by (used in) operating activities for the nine months ended September 30, 2024 and 2023 was $13.9 million and ($37.5) million respectively.

The increase in cash flows provided by operating activities for the nine months ended September 30, 2024 was driven by cost reductions associated with the 2023 Restructure and focus on reduction of variable spend.

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Net cash provided by (used in) operating activities for the three months ended March 31, 2025 and 2024 was $0.4 million and $(3.4) million, respectively.

This consisted primarily of our net losses adjusted for certain non-cash items including depreciation, stock-based compensation, debt discount amortization, amortization of intangible assets, bad debt expense, gain on convertible note extinguishment, and the effect of changes in working capital.

Investing activities

Net cash provided by investing activities during the three months ended September 30, 2024 and 2023 was $9.3 million and $26.4 million, respectively.

For the three months ended September 30, 2024, this consisted primarily of the sale and maturity of marketable securities of $59.7 million offset by the purchase of property and equipment of $1.1 million and the purchase of marketable securities of $49.4 million.

In the three months ended September 30, 2023, this consists primarily of the sale and maturity of marketable securities of $83.1 million and the purchases of property and equipment of $1.1 million and the purchase of marketable securities of $55.7 million.

Net cash provided by investing activities during the nine months ended September 30, 2024 and 2023 was $62.6 million and $14.0 million, respectively.

In the nine months ended September 30, 2024, this consists primarily of the sale and maturity of marketable securities of $151.6 million offset by the purchase of property and equipment of $2.9 million and the purchase of marketable securities of $86.0 million.

In the nine months ended September 30, 2023, this consists primarily of the sale and maturity of marketable securities of $206.2 million and the purchase of property and equipment of $3.1 million and the purchase of marketable securities of $189.1 million.

Net cash provided by (used in) investing activities during the three months ended March 31, 2025 and 2024 was $17.4 million and $(6.9) million, respectively.

In the three months ended March 31, 2025, this consists primarily of the sale and maturity of marketable securities of $28.6 million offset by the purchase of marketable securities of $7.9 million and the cash paid for the website domain name of $2.4 million.

In the three months ended March 31, 2024, this consists primarily of the sale and maturity of marketable securities of $29.4 million offset by the purchase of property and equipment of $0.8 million and the purchase of marketable securities of $35.5 million.

Financing activities

Net cash provided by (used in) financing activities during the three months ended September 30, 2024 and 2023 was ($112.1) million and $0.3 million, respectively.

In the three months ended September 30, 2024, this was attributable to repayment of convertible notes and financing obligations of $108.7 million, payments of convertible note issuance and related third party costs of $2.5 million, and taxes paid related to the settlement of stock options and restricted stock units of $1.1 million, partially offset by proceeds from exercise of stock options of $0.2 million.

In the three months ended September 30, 2023, this was attributable to proceeds from exercise of stock options of $1.5 million offset by withholdings from the issuance of shares of common stock pursuant to the exercise of stock options and vesting of restricted stock units of $1.0 million and repayments of financing obligations of $0.1 million.

Net cash provided by (used in) financing activities during the nine months ended September 30, 2024 and 2023 was ($112.4) million and $1.4 million, respectively.

In the nine months ended September 30, 2024, this was attributable to $109.0 million of payments related to the repurchase and repayment of convertible notes and refinancing obligations, $2.5 million of payments for convertible note issuance and related third-party costs, and $1.5 million of taxes paid related to the settlement of stock options and restricted stock units, partially offset by proceeds from exercise of stock options of $1.5 million.

In the nine months ended September 30, 2023, this was attributable to proceeds from the exercise of stock options of $3.7 million and proceeds from the issuance of convertible note of $1.1 million offset by withholdings from the issuance of shares of common stock pursuant to the exercise of stock options and vesting of restricted stock units of $3.3 million and repayment of financing obligations of $0.1 million.

Net cash used in financing activities during the three months ended March 31, 2025 and 2024 was $54.9 million and $0.5 million, respectively.

In the three months ended March 31, 2025, this was attributable to the repayment of convertible notes of $54.5 million and taxes paid related to net share settlement of stock options of $1.2 million offset by the proceeds from exercise of stock options of $1.1 million.

In the three months ended March 31, 2024, this was attributable to proceeds from exercise of stock options of $1.0 million offset by withholdings from the issuance of shares of common stock pursuant to the exercise of stock options and vesting of restricted stock units of $1.3 million and repayments of debt of $0.1 million.

Liquidity and capital resources

Our success in transitioning our customer base from legacy month-to-month contracts to annual contracts has continued to result in improved cash flow as these efforts have increased the timing of our cash receipts and reduced our overall subscription churn rate.

Our operational short-term liquidity needs are primarily driven by working capital requirements to support sales and marketing, research and development, and on-going innovation.

In particular, we are focused on the continued improvement of our platform architecture, transformation initiatives, and the launch of new products, such as BigCommerce Payments.

Our future capital requirements will depend on many factors, including our growth rate, levels of revenue, the expansion of sales and marketing activities, market acceptance of our platform, the results of business initiatives including our efforts in transitioning our customers to annual billings, continued reduction in churn, the timing of new product introductions, the continued impact of shifting trade policies and increased tariffs as well as inflation on the global economy, market risk due to elevated interest rates, our business, financial condition, and results of operations.

With our repurchases of the 2026 Convertible Notes, there was a reduction in our cash and cash equivalents and marketable securities.

However, we believe as a result of the repurchases and extension of the remaining obligation, we have decreased our overall debt leverage and better optimized our maturities.

The restructuring of the convertible notes requires semi-annual interest payments and increases our contractual interest rate to 7.50 percent.

From time to time, we may seek to repurchase, redeem or otherwise retire our Convertible Notes through cash repurchases and/or exchanges for equity securities, in open market repurchases, privately negotiated transactions, tender offers or otherwise.

Such repurchases, redemptions or other transactions, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors.

The amounts involved may be material.

We do not have any material off-balance sheet arrangements that we expect would materially affect our liquidity and capital resources.

2028 Convertible Notes

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Bank Trust Company, National Association, as trustee.

The 2028 Convertible Notes are the Company’s senior, initially unsecured obligations and will accrue interest at a rate of 7.50 percent per annum, payable semi-annually in arrears on April 1 and October 1 of each year, beginning on October 1, 2024.

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The 2028 Convertible Notes are our senior, initially unsecured obligations and will accrue interest at a rate of 7.50 percent per annum, payable semi-annually in arrears on April 1 and October 1 of each year.

The 2028 Convertible Notes will mature on October 1, 2028, unless earlier converted, redeemed or repurchased.

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From and after July 3, 2028, noteholders may convert their 2028 Convertible Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date.

The Company will settle conversions by paying or delivering, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election.

We will settle conversions by paying or delivering, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election.

The initial conversion rate is 62.5000 shares of common stock per $1,000 principal amount of 2028 Convertible Notes, which represents an initial conversion price of $16.00 per share of common stock.

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In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the 2028 Convertible Notes Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time.

The Company may not redeem the 2028 Convertible Notes at its option at any time before October 7, 2026.

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scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of the Company’s common stock exceeds 130 percent of the conversion price for a specified period of time and certain other conditions are satisfied.

We may not redeem the 2028 Convertible Notes at its option at any time before October 7, 2026.

The 2028 Convertible Notes will be redeemable, in whole or in part (subject to the “Partial Redemption Limitation” (as defined in the 2028 Convertible Notes Indenture)), at the Company’s option at any time, and from time to time, on or after October 7, 2026 and on or before the 25th scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of the Company’s common stock exceeds 130 percent of the conversion price for a specified period of time and certain other conditions are satisfied.

The redemption price will be equal to the principal amount of the 2028 Convertible Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

In addition, calling any 2028 Convertible Note for redemption will constitute a Make-Whole Fundamental Change with respect to that 2028 Convertible Note, in which case the conversion rate applicable to the conversion of that 2028 Convertible Note will be increased in certain circumstances if it is converted after it is called for redemption.

Pursuant to the Partial Redemption Limitation, the Company may not elect to redeem less than all of the outstanding 2028 Convertible Notes unless at least $100.0 million aggregate principal amount of 2028 Convertible Notes are outstanding and not subject to redemption as of the time the Company sends the related redemption notice.

Pursuant to the Partial Redemption Limitation, we may not elect to redeem less than all of the outstanding 2028 Convertible Notes unless at least $100.0 million aggregate principal amount of 2028 Convertible Notes are outstanding and not subject to redemption as of the time the Company sends the related redemption notice.

If certain corporate events that constitute a “Fundamental Change” (as defined in the 2028 Convertible Notes Indenture) occur, then, subject to a limited exception for certain cash mergers, noteholders may require the Company to repurchase their 2028 Convertible Notes at a cash repurchase price equal to the principal amount of the 2028 Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date.

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In addition, to the extent the Company incurs subordinated indebtedness pursuant to the terms of the Indenture, it will be required to secure the 2028 Convertible Notes, subject only to prior security interests in favor of lenders under any senior secured revolving credit facility, if then outstanding.

2026 Convertible Notes

In September 2021, we issued $345.0 million principal amount of 0.25 percent convertible notes due 2026 (the “2026 Convertible Notes”).

The 2026 Convertible Notes were issued pursuant to, and are governed by, an indenture (the “2026 Convertible Notes Indenture”), dated as of September 14, 2021, between us and U.S.

Bank National Association, as trustee.

The 2026 Convertible Notes accrue interest at a rate of 0.25 percent per annum, payable semi-annually in arrears on April 1 and October 1 of each year, beginning on April 1, 2022.

In August 2024, in addition to the Exchange Agreement, the Company entered into separate, privately negotiated repurchase agreements with a limited number of holders of its outstanding 2026 Convertible Notes to repurchase (the "Repurchase Transactions") approximately $120.6 million aggregate principal amount of the 2026 Convertible Notes for aggregate cash consideration of approximately $108.7 million, including accrued but unpaid interest of approximately $0.2 million on such 2026 Convertible Notes.

The Repurchase Transactions settled in August 2024.

Following the Repurchase Transactions, approximately $63.1 million principal amount of 2026 Convertible Notes remain outstanding.

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The 2026 Convertible Notes are our senior, unsecured obligations and are (i) equal in right of payment with our future senior, unsecured indebtedness;

(ii) senior in right of payment to our future indebtedness that is expressly subordinated to the 2026 Convertible Notes in right of payment;

(iii) effectively subordinated to our future secured indebtedness, to the extent of the value of the collateral securing that indebtedness;

and (iv) structurally subordinated to all future indebtedness and other liabilities, including trade payables, and (to the extent we are not a holder thereof) preferred equity, if any, of our subsidiaries.

The remaining outstanding 2026 Convertible Notes will mature on October 1, 2026, unless earlier repurchased, redeemed or converted.

Before July 1, 2026, noteholders have the right to convert the remaining outstanding 2026 Convertible Notes only upon the occurrence of certain events.

From and after July 1, 2026, noteholders may convert their 2026 Convertible Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date.

We will settle conversions by paying or delivering, as applicable, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election.

The initial conversion rate of the remaining outstanding 2026 Convertible Notes was 13.6783 shares of common stock per $1,000 principal amount of 2026 Convertible Notes, which represents an initial conversion price of approximately $73.11 per share of common stock.

The conversion rate and conversion price are subject to customary adjustments upon the occurrence of certain events.

In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the 2026 Convertible Notes Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time.

The remaining outstanding 2026 Convertible Notes are redeemable, in whole or in part (subject to the “Partial Redemption Limitation” (as defined in the 2026 Convertible Notes Indenture)), at our option at any time, and from time to time, on or after October 7, 2024 and on or before the 25th scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of our common stock exceeds 130 percent of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date we send the related redemption notice;

and (ii) the trading day immediately before the date we send such notice.

The redemption price will be a cash amount equal to the principal amount of the 2026 Convertible Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

In addition, calling any 2026 Convertible Note for redemption will constitute a Make-Whole Fundamental Change with respect to that 2026 Convertible Note, in which case the conversion rate applicable to the conversion of that 2026 Convertible Note will be increased in certain circumstances if it is converted after it is called for redemption.

Pursuant to the Partial Redemption Limitation, we may not elect to redeem less than all of the outstanding 2026 Convertible Notes unless at least $150.0 million aggregate principal amount of 2026 Convertible Notes are outstanding and not subject to redemption as of the time we send the related redemption notice.

If certain corporate events that constitute a “Fundamental Change” (as defined in the 2026 Convertible Notes Indenture) occur, then, subject to a limited exception for certain cash mergers, noteholders may require us to repurchase their Notes at a cash repurchase price equal to the principal amount of the remaining outstanding 2026 Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date.

The definition of Fundamental Change includes certain business combination transactions involving us and certain de-listing events with respect to our common stock.

The 2026 Convertible Notes have customary provisions relating to the occurrence of “Events of Default” (as defined in the Convertible Notes Indenture), which include the following:

(i) certain payment defaults on the 2026 Convertible Notes (which, in the case of a default in the payment of interest on the 2026 Convertible Notes, will be subject to a 30-day cure period);

(ii) our failure to send certain notices under the 2026 Convertible Notes Indenture within specified periods of time;

(iii) our failure to comply with certain covenants in the 2026 Convertible Notes Indenture relating to our ability to consolidate with or merge with or into, or sell, lease or otherwise transfer, in one transaction or a series of transactions, all or substantially all of the assets of us and our subsidiaries, taken as a whole, to another person;

(iv) a default by us in our other obligations or agreements under the 2026 Convertible Notes Indenture or the 2026 Convertible Notes if such default is not cured or waived within 60 days after notice is given in accordance with the 2026 Convertible Notes Indenture;

(v) certain defaults by us or any of our significant subsidiaries with respect to indebtedness for borrowed money of at least $65.0 million;

and (vi) certain events of bankruptcy, insolvency and reorganization involving us or any of our significant subsidiaries.

If an Event of Default involving bankruptcy, insolvency or reorganization events with respect to us (and not solely with respect to a significant subsidiary of us) occurs, then the principal amount of, and all accrued and unpaid interest on, all of the 2026 Convertible Notes then outstanding will immediately become due and payable without any further action or notice by any person.

If any other Event of Default occurs and is continuing, then, the trustee, by notice to us, or noteholders of at least 25 percent of the aggregate principal amount of 2026 Convertible Notes then outstanding, by notice to us and the trustee, may declare the principal amount of, and all accrued and unpaid interest on, all of the 2026 Convertible Notes then outstanding to become due and payable immediately.

However, notwithstanding the foregoing, we may elect, at our option, that the sole remedy for an Event of Default relating to certain failures by us to comply with certain reporting covenants in the 2026 Convertible Notes Indenture consists exclusively of the right of the noteholders to receive special interest on the 2026 Convertible Notes for up to 180 days at a specified rate per annum not exceeding 0.50 percent on the principal amount of the 2026 Convertible Notes.

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2026 Convertible Notes

In September 2021, the Company issued $345.0 million aggregate principal amount of its 2026 Convertible Notes.

The 2026 Convertible Notes were issued in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”).

The net proceeds from the sales of the 2026 Convertible Notes was approximately $335.0 million after deducting offering and issuance costs related to the 2026 Convertible Notes and before the 2021 Capped Call transactions.

Interest on the 2026 Convertible Notes accrues at a rate of 0.25 percent per annum, payable semi-annually in arrerars on April 1 and October 1 of each year, beginning on April 1, 2022.

In February 2025, the Company entered into separate, privately negotiated repurchase agreements with a limited number of holders of its outstanding 2026 Convertible Notes to repurchase approximately $59.1 million aggregate principal amount of its 2026 Convertible Notes for aggregate cash consideration of approximately $54.4 million, including accrued but unpaid interest.

This transaction resulted in a net gain on repurchases of debt of approximately $3.9 million, net $0.6 million write-off of unamortized debt issuance costs.

As of March 31, 2025, approximately $4.0 million principal amount of 2026 Convertible Notes remain outstanding.

Off-balance sheet arrangements

We did not have any off-balance sheet arrangements as of September 30, 2024 or as of December 31, 2023.

We did not have any off-balance sheet arrangements as of March 31, 2025 or as of December 31, 2024.

Critical accounting policies and estimates

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A discussion of recent accounting pronouncements is included in Note 2 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

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Quantitative and Qualitati ve Disclosures About Market Risk.

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Because of the short-term maturities of our cash, cash equivalents, restricted cash, and marketable securities, we do not believe that an increase in market rates would have any significant negative impact on the realized value of our investments.

An immediate increase or decrease in interest rates of 100 basis points at September 30, 2024 could result in a $1.3 million market value reduction or increase of the same amount.

In September 2021, we issued the 2026 Convertible Notes with an aggregate principal amount of $345.0 million, of which $63.1 million remains outstanding as of September 30, 2024.

The 2026 Convertible Notes have a fixed interest rate of 0.25 percent;

we do not face variable interest rate risk with respect to the 2026 Convertible Notes.

The fair value of the 2026 Convertible Notes changes when the market price of our stock fluctuates or market interest rates change.

In August 2024, we issued the 2028 Convertible Notes with an aggregate principal amount of $150.0 million, the full amount of which is outstanding as of September 30, 2024.

An immediate increase or decrease in interest rates of 100 basis points at March 31, 2025 could result in a $0.8 million market value reduction or increase of the same amount.

In August 2024, we issued the 2028 Convertible Notes with an aggregate principal amount of $150.0 million, the full amount of which is outstanding as of March 31, 2025.

The 2028 Convertible Notes have a fixed interest rate of 7.50 percent;

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Foreign currency exchange risk

All of our revenue and a majority of our expense and capital purchasing activities for the three months ended September 30, 2024 were transacted in U.S.

As we expand our sales and operations internationally, we will be more exposed to changes in foreign exchange rates.

All of our revenue and a majority of our expense and capital purchasing activities for the three months ended March 31, 2025 were transacted in U.S.

As we continue our sales and operations internationally, we will be more exposed to changes in foreign exchange rates.

Our international revenue is currently collected in U.S.

In the future, as we expand into additional international jurisdictions, we expect that our international sales will be primarily denominated in U.S.

In the future, we expect that our international sales will be primarily denominated in U.S.

If we decide in the future to denominate international sales in currencies other than the U.S.

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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