Commerce.com, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. In addition to historical condensed consolidated financial information, the following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in “Risk Factors.” See “Special Note Regarding Forward-Looking Statements.” Investors and others should note that we announce material financial information to our investors using our investor relations website (investors.commerce.com), SEC filings, press releases, public conference calls and webcasts. We intend to use our investor relations website as a means of disclosing information about our business, our financial condition and results of operations and other matters and for complying with our disclosure obligations under Regulation FD. The information we post on our investor relations website, including information contained in investor presentations, may be deemed material. Accordingly, investors should monitor our investor relations website, in addition to following our press releases, SEC filings and public conference calls and webcasts. The information on our website, however, is not, and should not be deemed to be, a part of this Quarterly Report on Form 10-Q. Overview We believe we are well positioned to serve as a provider of an open, AI-driven commerce platform designed to support data-centric, distributed, and orchestrated commerce. Our platform is designed to extend the storefront across an expanding set of product discovery and shopping surfaces, enhancing merchant visibility and engagement, and to support how businesses operate, innovate, and grow as AI-driven and agent-enabled commerce continues to evolve. Our software-as-a-service platform enables merchants to orchestrate sophisticated digital commerce experiences across both owned and third-party channels, supporting a wide range of business-to-business ("B2B"), business-to-consumer ("B2C"), and small business ("SB") use cases. Our unified platform is anchored by three core products: BigCommerce, our transaction layer that executes transactions and commerce logic; Feedonomics, our product intelligence layer that creates a clean, enriched, structured understanding of products; and Makeswift, our experience layer that composes and governs what the customer sees across web, mobile, and emerging AI interfaces. Together, these products enable merchants to centralize product data, deliver dynamic shopping experiences, and improve visibility across a growing set of discovery and buying channels, including emerging agentic surfaces. Through this integrated platform, we deliver differentiated value to merchants operating across complex markets, industries, and commerce workflows. We are built around an open, partner-centric architecture. Rather than offering a closed technology stack, we prioritize flexibility and interoperability with a curated ecosystem of leading technology partners. Our platform integrates across payments, tax, shipping, order management, content management system ("CMS"), customer relationship management ("CRM"), and AI-enhanced marketing technology. Our strategy differentiates us from competitors that seek to control the full commerce technology stack; we instead focus our innovation and investment on core commerce capabilities, data orchestration, and platform extensibility, while enabling merchants to select best-of-breed solutions that meet their specific needs. Digital commerce continues to evolve as consumers discovery and purchasing behavior increasingly fragments across AI-driven and third-party surfaces. Buyers are more frequently beginning their purchase journeys in AI interfaces rather than directly on a merchant's owned storefront. We provide the structured product data, composable technology, and scalable infrastructure that help merchants remain discoverable, trustworthy, and capable of transacting wherever those journeys begin. Our rebrand reflects both who we are today and our view of where digital commerce is going as we operate as a connected platform spanning storefronts, product data, and commerce experiences. We plan to continue investing in our strategic B2B, B2C, and SB offerings, with an emphasis on simplifying our business, realigning investment toward our highest-value initiatives, and building scalable infrastructure to support AI-enabled and agentic commerce use cases. We expect to advance our growth strategy through continued product innovation, expansion of strategic partnerships, and development of AI-driven commerce solutions that address increasingly complex merchant needs. We also intend to grow our business by acquiring new customers, expanding adoption and usage among existing customers, mitigating churn, and selectively expanding our presence in new markets, while maintaining a disciplined focus on operating efficiency and profitability 26 Table of Contents Table of Content 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 . Strategic Brand Unification We completed a strategic rebranding initiative, unifying our three core owned products; BigCommerce, Feedonomics, and Makeswift under a single brand identity: Commerce. This rebranding reflects a broader structural integration of our platform designed to enable a more cohesive and scalable approach to AI-led composable commerce. While Commerce has historically been described as storefront-centric, we believe it is increasingly becoming more data-centric, distributed, and orchestrated. Product data must be structured and enriched, discovery and engagement occur across multiple surfaces, and systems must coordinate experience, pricing, inventory, and transaction execution. This unification has allowed us to further align internal operations across product development, sales and marketing, and customer success. Functionally, the unified platform now operates as a multi-layered solution that includes storefront capabilities, embedded data services, and a growing network of curated partnerships. Our platform is organized across three integrated layers; product intelligence, experience, and transaction. Built on an unified, open, API-first framework, the platform enables us to operate as a full-stack solution or provide modular capabilities alongside third-party systems. We believe this flexibility is increasingly important as AI reshapes how commerce is designed, manage, and transacted across channels. Leveraging artificial intelligence to drive value AI has become a core component of our strategic and operational framework, supporting key initiatives across product development, customer experience, and go-to-market execution. Our AI strategy is focused on delivering practical, merchant-facing outcomes, including improved product discoverability, higher conversion, and more intelligent storefront and shopping experiences. These efforts are focused on improving usability and efficiency while seeking to limit incremental technical complexity for merchants. Our platform is designed to address these requirements through three integrated layers. Feedonomics serves as our product intelligence layer, enabling merchants to normalize, enrich, and syndicate product data across storefronts, marketplaces, advertising channels, and certain AI-enabled discovery surfaces. Makeswift serves as our experience layer, allowing merchants to create, manage, and govern digital experiences across web, mobile, and emerging interfaces, including those supported by AI technologies. BigCommerce serves as our transaction layer, providing core transaction functionality, including cart, checkout, order management, pricing, promotions, and related APIs. We believe the integration of these layers aligns with how commerce systems are evolving as AI adoption increases, with greater emphasis on structured data, governed experiences, and reliable transaction execution. Our open, API-first architecture allows merchants to deploy our platform as a full solution or alongside third-party systems as needed. We continue to focus on embedding AI across the commerce lifecycle in a practical and responsible manner as commerce evolves toward more distributed and AI-enabled models. Investment in core offerings We continue to invest in our core commerce offerings to support growth across enterprise B2B and B2C customer segments, as well as SB use cases. To support B2B customers, we continued to enhance our platform with features supporting complex organizational structures and workflows, including multi-company hierarchy support, roles based access controls, and configure-price-quote ("CPQ") tool. We also integrated "B2B Edition" capabilities into the BigCommerce core control panel to provide a more unified user experience across features. We believe these investments improve our customers' ability to manage complex organizational structures and workflows, streamline purchasing processes, and support more sophisticated pricing and quoting requirements. We continued to make strategic progress with our small and midsize businesses with the launch of Feedonomics Surface, a new self-service feed management solution. The solution delivers a streamlined, automated experience designed to support scalable multichannel commerce. This represents an extension of enterprise grade functionality to smaller merchants. Future enhancements are expected to include additional advertising, marketplace, social and agentic channel integrations as well as AI driven feed optimization to further improve merchant performance and retention. To support enterprise B2C customers, we introduced a series of AI-enabled enhancements across our platform, including 27 Table of Contents Table of Content improvements in product catalog categorization, attribute population, and schema mapping. We also made improvements to other "critical-to-quality" commerce capabilities including checkout, promotions, permissions, payments, storefront creation and editing, and catalog management. These investments are intended to reduce operational complexity and support product visibility, conversion, and transaction execution across both direct-to-consumer and third-party digital channels. As AI-enabled technologies and agent-based workflows continue to evolve, we believe the importance of structured product data, governed experience management, and reliable transaction infrastructure will continue to shape our product development priorities, as commerce expands across a broader set of channels, interfaces, and agent-driven environments. Expansion of growth initiatives We continue to evaluate and refine our pricing, packaging, and monetization models to better align value delivered with value captured across our product portfolio. These efforts may include expanding cross-sell and upsell opportunities, introducing bundled offerings, and developing additional monetization solutions, including payments-related offerings. In March 2026, we launched BigCommerce Payments, an integrated payment processing option designed primarily for small and mid-sized customers looking for a streamlined, integrated approach to activate payments, and simplify onboarding. We believe this approach may improve customer retention and increase monetization of GMV, while allowing us to scale payments in a capital-efficient manner. During the second quarter of fiscal 2026, we are updating our plan structure, including plan names, GMV thresholds, and support tiers, and introducing a fee on certain orders processed through non-embedded payment providers for self-service merchants. We will replace our prior Standard, Plus, Pro, and Enterprise plans with Core, Growth, Scale, and Performance plans. These changes are intended to align our platform with a defined set of integrated payment partners, where we are prioritizing investment to enhance checkout performance, expand localized payment methods, and improve merchant and buyer experience. We believe increased adoption may improve conversion, retention, and platform engagement, although the extent and timing remain uncertain. Acquisition of new customers The growth of our customer base remains important to our continued revenue growth. We believe we are positioned to grow through a combination of direct sales efforts, marketing initiatives, product-led growth channels, and referrals from our agency and technology partners. We are focused on driving capital-efficient customer acquisition by leveraging our partner ecosystem, optimizing inbound marketing strategies, and emphasizing scalable distribution channels. Our partner-centric strategy is intended to enable customers to compose solutions that integrate with adjacent technology providers, including payments, fulfillment, ERP, marketing, and other categories, and may support demand generation through ecosystem-led distribution. We continually evaluate our ideal customer profiles and resource allocation to prioritize customer segments and industries where our open, composable, and AI-enabled platform provides differentiated value. As part of our broader platform strategy, we have positioned Commerce as the parent brand unifying BigCommerce, Feedonomics, and Makeswift, reflecting an evolution toward an open, intelligent ecosystem designed to support modular commerce architectures and emerging AI-enabled and agentic commerce use cases. Our B2C customers include branded manufacturers, multi-brand online retailers, and store-based retailers. These customers may use our platform for storefront management, merchandising, and omnichannel selling, and often integrate third-party technologies across marketing, payments, content management, and fulfillment. We cater to a range of B2B businesses, including manufacturers, distributors, wholesalers, professional services, and hybrid B2B/B2C sellers. These customers may use capabilities such as account hierarchies, customer specific pricing, quoting workflows, and procurement-related functionality to support complex B2B use cases and digitize traditional sales motions. Small business customers are typically growth-oriented merchants that may initially adopt foundational commerce functionality and expand usage as their operations scale. We seek to serve the SB market through accessible onboarding, self-service capabilities, and integrations that allow them to add functionality over time. We serve these lines of business with professional-grade commerce solutions, high-touch experiences and seamless integration, providing dependable, customizable, and scalable tools that drive growth and enable business agility. With a synergistic combination 28 Table of Contents Table of Content of flexible platform capabilities, powerfully connected data, and visually captivating customer experiences, our unified platform helps businesses transform commerce operations, elevate customer experiences, and optimize revenue across all channels. Retention and growth of our existing customers We believe our long-term revenue growth is correlated with our ability to retain customers and expand their adoption of our platform. We continue to invest in product functionality to maximize customer success and retention, including investing in our technology to mitigate customer churn. Revenue from existing customers may increase through subscription plan upgrades, additional store deployments, expanded product utilization within Feedonomics, and the adoption of additional products, modules or bundled offerings across our portfolio. As customers grow their commerce operations, subscription revenue may increase through automated sales-based adjustments on certain plans and order-based adjustment on enterprise plans. In addition, partner and services revenue generated through revenue-sharing agreements with our strategic technology partners generally increases as customer transaction volumes grow and as customers adopt additional integrated solutions within our ecosystem. Our ability to retain and grow our customers’ commerce businesses often depends on the continued expansion of our platform and the capabilities of our strategic technology partners to provide revenue generating services to our customers. We continually evaluate prospective and existing partners’ abilities to enhance the capabilities of our customers’ commerce businesses. We add new partners and expand existing partner relationships to enhance the utility of our platform, while creating new opportunities to expand our revenue share in partner and services revenue. As we continue to grow as a platform, we believe our ability to realize more favorable and expansive revenue share agreements will grow as well. We also grow by selling additional stores to existing customers. Our larger customers will often first use our platform to build a single online store that serves a single brand within their portfolio. These customers can then expand their usage of our platform by launching additional stores to serve additional brands, geographies, or use cases (e.g., B2B in addition to B2C). We continue to invest in product innovation, platform functionality, and customer success initiatives to support retention and drive increased adoption across our unified Commerce platform. Our ability to offer more tailored solutions through a broader range of product offerings has allowed us to build stronger, more personalized relationships with customers, which in turn has contributed to reduced churn. Our ability to maintain and improve net revenue retention is influenced by product performance and innovation, pricing and packing, and the overall growth of our customers' commerce operations. Evolution of our technology partner ecosystem 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 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. Business metrics We review the following business metrics to measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions. 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 ("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, 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. Annual revenue run-rate (ARR) as of the periods ended: March 31, 2026 December 31, 2025 September 30, 2025 June 30, 2025 March 31, 2025 Total ARR (in thousands) $ 359,827 $ 359,136 $ 355,716 $ 354,608 $ 350,835 29 Table of Contents Table of Content Gross Merchandise Volume (GMV) Gross Merchandise Volume (“GMV”) represents the total dollar value of completed checkout transactions facilitated through the Commerce platform during the reporting period, including shipping and taxes. GMV is reported on a gross basis before deducting refunds or discounts. GMV is not a measure of revenue. Gross Merchandise Volume for the three months ended: (in millions) Three months ended Sequential % Change March 31, 2026 $ 8,257 (6.7 ) % December 31, 2025 8,852 12.0 September 30, 2025 7,901 2.6 June 30, 2025 7,700 6.3 March 31, 2025 7,242 (10.9 ) Net Revenue Retention (NRR) Net Revenue Retention (“NRR”) measures our ability to retain and expand revenue from existing customers over time. NRR is calculated by dividing total billings and allocated partner revenue from a cohort of customers during the trailing twelve-month period by the total billings and allocated partner revenue from the same customer cohort in the corresponding prior-year period. NRR reflects the impact of customer expansion and contraction and excludes revenue from customers added after the prior twelve-month period. Net Revenue Retention for the twelve months trailing as of: Trailing twelve months as of Sequential % Change March 31, 2026 95.4 % 0.2 % December 31, 2025 95.2 0.7 September 30, 2025 94.5 0.0 June 30, 2025 94.5 (0.5 ) March 31, 2025 95.0 (0.0 ) 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, feed management subscription fees, recurring professional services revenue, and other recurring revenue, multiplied by twelve to prospectively annualize recurring revenue. Subscription annual revenue run-rate as of the periods ended: March 31, 2026 December 31, 2025 September 30, 2025 June 30, 2025 March 31, 2025 Subscription ARR (in thousands) $ 270,191 $ 272,411 $ 268,617 $ 267,951 $ 264,922 Components of results of operations Revenue We generate revenue from two sources: (1) subscription solutions revenue and (2) partner and services revenue. Subscription solutions revenue consists primarily of platform subscription fees from plans and recurring professional services. 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 obligations. Merchants have full access to the functionality of our platform upon contract execution, and revenue is recognized ratably over the contract life. Our retail plans are generally month-to-month contracts. Monthly subscription fees for Enterprise plans are adjusted if a customer’s GMV or orders processed are outside of specified plan thresholds on a trailing twelve-month basis. Fixed monthly fees and any transaction charges related to subscription solutions are recognized as revenue in the month they are earned. 30 Table of Contents Table of Content Through Feedonomics, we provide feed management solutions under service contracts which are generally one year or less and, in many cases, month-to-month. These service types may be sold stand-alone or as part of a multi-service bundle (e.g. both marketplaces and advertising) and are billed monthly in arrears. We also generate partner revenue from our technology application ecosystem. Customers tailor their stores to meet their feature needs by integrating applications developed by our strategic technology partners. We enter into contracts with our strategic technology partners that are generally for one year or longer. We generate revenue from these contracts in three ways: (1) revenue-sharing arrangements, (2) technology integrations, and (3) partner marketing and promotion. We recognize revenue on a net basis from revenue-sharing arrangements when the underlying transaction occurs. We also generate revenue from non-recurring professional services that we provide to complement the capabilities of our customers and their agency partners. Our services help improve customers’ time-to-market and the success of their businesses. Our non-recurring services include education packages, launch services, solutions architecting, implementation consulting, and catalog transfer services. Cost of revenue Cost of revenue consists primarily of: (1) personnel-related expenses (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 overhead costs, such as technology and facility costs. Sales and marketing Sales and marketing expenses consist primarily of: (1) personnel-related expenses (including stock-based compensation expense and associated payroll costs), (2) sales commissions, (3) marketing programs, (4) travel-related expenses, and (5) allocated overhead costs, such as technology and facility costs. We focus our sales and marketing efforts on creating sales leads and establishing and promoting our brand. Incremental sales commissions for new customer contracts are deferred and amortized ratably over the estimated period of our relationship with such customers which approximates three years. Research and development Research and development expenses consist primarily of personnel-related expenses (including stock-based compensation expense and associated payroll costs) incurred in maintaining and developing enhancements to our ecommerce platform, optimization of AI-powered data and flexible storefront creation, and allocated overhead costs, such as technology and facility costs. Software development costs associated with internal use software which are incurred during the application development phase and meet other requirements are capitalized. 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, 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 Acquisition related expenses consists of cash payments for third-party acquisition costs and other acquisition related expenses, including contingent compensation arrangements entered into in connection with acquisitions. Restructuring charges Restructuring charges consist primarily of severance payments, professional services, contract costs, accelerated depreciation of internal use software, exits of certain office leases, and other related costs. Amortization of intangible assets 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 31 Table of Contents Table of Content Gains recorded net of proportionate share of unamortized debt issuance costs and certain third party transaction costs relate to the repurchase transactions of the 2026 Convertible Notes and exchange transaction of the 2026 Convertible Notes for the 2028 Convertible Notes. Interest income Interest income is earned on our cash, cash equivalents and marketable securities. 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. Other income (expense) Other expense primarily consists of foreign currency translation adjustments. Provision for income taxes 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. For U.S. federal income tax purposes and in certain foreign and state jurisdictions, we have NOL carryforwards. The foreign jurisdictions in which we operate have different statutory tax rates than those of the United States. Additionally, certain of our foreign earnings may also be currently taxable in the United States. 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. Results of operations The following table summarizes our historical consolidated statement of operations data. The period-to-period comparison of operating results is not necessarily indicative of results for future periods. For the three months ended March 31, 2026 2025 Revenue $ 86,842 $ 82,370 Cost of revenue (1) 20,191 16,984 Gross profit 66,651 65,386 Operating expenses: Sales and marketing (1) 26,196 30,366 Research and development (1) 18,033 19,206 General and administrative (1) 14,215 13,644 Amortization of intangible assets 1,529 2,335 Acquisition related costs 0 333 Restructuring charges 910 1,912 Total operating expenses 60,883 67,796 Income (loss) from operations 5,768 (2,410 ) Gain on convertible note extinguishment 0 3,931 Interest income 1,170 1,300 Interest expense (2,483 ) (2,543 ) Other expense (274 ) (107 ) Income before provision for income taxes 4,181 171 Provision for income taxes (452 ) (524 ) Net income (loss) $ 3,729 $ (353 ) 32 Table of Contents Table of Content (1) Amounts include stock-based compensation expense and associated payroll tax costs, as follows: Three months ended March 31, 2026 2025 (in thousands) Cost of revenue $ 534 $ 746 Sales and marketing 204 1,775 Research and development 1,502 3,042 General and administrative 1,994 (144 ) Revenue by geographic region The composition of our revenue by geographic region during the three months ended March 31, 2026 and March 31, 2025 were as follows: Three months ended March 31, Change 2026 2025 Amount Percent (dollars in thousands) Revenue: United States $ 65,755 $ 62,621 $ 3,134 5.0 % EMEA 11,344 9,965 1,379 13.8 APAC 5,946 5,925 21 0.4 Rest of World 3,797 3,859 (62 ) (1.6 ) Total Revenue $ 86,842 $ 82,370 $ 4,472 5.4 % Comparison of the three months ended March 31, 2026 and March 31, 2025 Revenue The following table presents the components of our revenue for each of the periods indicated: Three months ended March 31, Change 2026 2025 Amount Percent (dollars in thousands) Revenue Subscription solutions $ 63,675 $ 62,114 $ 1,561 2.5 % Partner and services 23,167 20,256 2,911 14.4 Total revenue $ 86,842 $ 82,370 $ 4,472 5.4 % Total revenue increased for the three months ended March 31, 2026, from the three months ended March 31, 2025, as a result of increases in both subscription solutions and partner and services revenue. Subscription solutions revenue increased primarily due to increases in small business, enterprise, and Feedonomics customers. Partner and services revenue increased primarily as a result of revenue attributed to partner integrations. Cost of revenue, gross profit, and gross margin Three months ended March 31, Change 2026 2025 Amount Percent (dollars in thousands) Cost of revenue $ 20,191 $ 16,984 $ 3,207 18.9 % Gross profit 66,651 65,386 1,265 1.9 Gross margin percentage 76.7 % 79.4 % 33 Table of Contents Table of Content Cost of revenue increased for the three months ended March 31, 2026, from the three months ended March 31, 2025, and gross margin decreased to 76.7 percent from 79.4 percent. The increase in expense is primarily attributable to increases in software and web hosting costs of $2.6 million, $0.4 million of IT related costs, and depreciation of $0.2 million. 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 in future periods. We expect gross margin percentage to remain consistent in future periods. Operating expenses The following tables present our operating expenses for each of the periods indicated: Three months ended March 31, Change 2026 As a % of Total Revenue 2025 As a % of Total Revenue Amount Percent (dollars in thousands) Sales and marketing $ 26,196 30.2 % $ 30,366 36.9 % $ (4,170 ) (13.7 ) % Research and development 18,033 20.8 19,206 23.3 (1,173 ) (6.1 ) General and administrative 14,215 16.4 13,644 16.6 571 4.2 Amortization of intangible assets 1,529 1.8 2,335 2.8 (806 ) (34.5 ) Acquisition related expenses 0 0.0 333 0.4 (333 ) (100.0 ) Restructuring charges 910 1.0 1,912 2.3 (1,002 ) (52.4 ) Total operating expenses $ 60,883 70.1 % $ 67,796 82.3 % $ (6,913 ) (10.2 ) % Sales and marketing Sales and marketing expenses decreased for the three months ended March 31, 2026 from March 31, 2025. The period over period change of $4.2 million was primarily driven by reductions in payroll costs and share-based compensation expense of $3.5 million, $1.0 million of variable marketing spend and $0.7 million of IT related costs, partially offset by increases in amortization of cloud computing arrangements of $0.6 million, and $0.4 million of other expenses such as professional services, depreciation, and capitalized internal costs. We expect sales and marketing expenses to decrease, both in absolute dollars and as a percentage of revenue, in the near term, primarily as a result of initiatives implemented to optimize operational costs and efficiencies in connection with the 2025 Restructure. Research and development Research and development expenses decreased for the three months ended March 31, 2026 from March 31, 2025, primarily due to a decrease in staffing costs of $2.1 million, including stock-based compensation and associated payroll costs, $1.2 million reduction in capitalized internal costs, offset by increases in professional services and other variable spend of $1.4 million, and increases in other expenses such as IT related costs and depreciation of $0.7 million. We expect that research and development expenses as a percentage of revenue to increase as we continue to prioritize investment in our core offerings throughout fiscal year 2026. General and administrative General and administrative expenses increased for the three months ended March 31, 2026 from March 31, 2025, primarily due to a $2.1 million decrease in stock-based compensation associated with executive departures, offset by a $0.7 million decrease in bad debt expense and other expenses such as professional services and depreciation of $0.9 million. We expect that general and administrative expenses as a percentage of revenue to decrease in the near term primarily as a result of initiatives implemented to optimize operational costs and efficiencies in connection with the 2025 Restructure. Amortization of intangible assets Amortization of intangible assets decreased for the three months ended March 31, 2026 from March 31, 2025. The decrease was due to certain acquired assets being fully amortized in the prior year. 34 Table of Contents Table of Content Acquisition related expenses Acquisition related expense decreased for the three months ended March 31, 2026 from March 31, 2025. The decrease was due to the amortization of deferred compensation for the Makeswift acquisition which was fully amortized for the year ended December 31, 2025. Restructuring charges Restructuring charges decreased for the three months ended March 31, 2026 from the three months ended March 31, 2025. For the three months ended March 31, 2026, restructuring charges included severance payments, professional services, and other related costs. We expect to incur additional costs relating to the 2025 Restructure of approximately $2.0 million to $4.6 million through fiscal 2026 relating to retention benefits and professional services costs. Other income The following tables present our other income/(expenses) for each of the periods indicated: Three months ended March 31, Change 2026 2025 Amount Percent (dollars in thousands) Gain on convertible note extinguishment $ 0 $ 3,931 $ (3,931 ) (100.0 ) % Interest income 1,170 1,300 (130 ) (10.0 ) Interest expense (2,483 ) (2,543 ) 60 (2.4 ) Other expenses (274 ) (107 ) (167 ) 156.1 Total Other income $ (1,587 ) $ 2,581 $ (4,168 ) (161.5 ) % Gain on convertible note extinguishment decreased for the three months ended March 31, 2026 from March 31, 2025 as a result of the repurchase transaction that occurred in 2025. Interest income decreased for the three months ended March 31, 2026 from March 31, 2025. This decrease was due to lower yield percentages on our cash equivalents and marketable securities in 2026. Interest expense remained consistent for the three months ended March 31, 2026 from March 31, 2025. Other expenses increased for the three months ended March 31, 2026 from March 31, 2025. This increase was due to the impact of foreign currency exchange rates. Provision for income taxes Our provision for income taxes increased approximately $0.1 million for the three months ended March 31, 2026 from March 31, 2025. For purposes of calculating income tax expense, we continued to maintain a full valuation allowance on our U.S. federal and state net deferred tax assets as it was more likely than not that those deferred tax assets will not be realized. However, given our recent net income, we believe that there is a reasonable possibility that, in the near term, sufficient positive evidence may become available that supports the release of a portion of our valuation allowance, which would result in the recognition of certain U.S. deferred tax assets and a decrease to income tax expense for the period in which the release is recorded. The exact timing and amount of the valuation allowance release would be subject to change based on the level of profitability that we can achieve. Cash flows The following table sets forth a summary of our cash flows for the periods indicated. Three months ended March 31, 2026 2025 (in thousands) Net cash provided by operating activities $ 18,374 $ 401 Net cash provided by (used in) investing activities (5,392 ) 17,365 Net cash used in financing activities (54 ) (54,874 ) Net increase (decrease) in cash, cash equivalents and restricted cash $ 12,928 $ (37,108 ) 35 Table of Contents Table of Content As of March 31, 2026, we had $157.0 million in cash, cash equivalents, restricted cash, and marketable securities, an increase of $14.0 million compared to $143.0 million as of March 31, 2025. Cash and cash equivalents consist of highly-liquid investments with original maturities of less than three months. Our restricted cash balance of $1.9 million and $1.2 million at March 31, 2026 and 2025 respectively, consists of security deposits for future chargebacks and amounts on deposit with certain financial institutions. Our marketable securities balance of $97.9 million and $68.6 million at March 31, 2026 and 2025 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 operating activities for the three months ended March 31, 2026 and 2025 was $18.4 million and $0.4 million respectively. This consisted primarily of our net income (losses) adjusted for certain non-cash items including depreciation, stock-based compensation, debt discount and premium amortization, amortization of intangible assets, accretion of marketable securities, provision for expected credit losses, and the effect of changes in working capital. Investing activities Net cash provided by (used in) investing activities during the three months ended March 31, 2026 and 2025 was $(5.4) million and $17.4 million, respectively. In the three months ended March 31, 2026, this consists primarily of the purchases of marketable securities of $25.1 million and purchases of capitalized internal-use software, leasehold improvements, and property and equipment of $4.3 million, offset by the sale and maturity of marketable securities of $24.0 million. 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. Financing activities Net cash used in financing activities during the three months ended March 31, 2026 and 2025 was $(0.1) million and $(54.9) million, respectively. In the three months ended March 31, 2026, this was attributable to the taxes paid related to net share settlement of stock options of $0.6 million offset by the proceeds from exercise of stock options of $0.5 million. 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. Liquidity and capital resources We are committed to cash flow generation and cash management by focusing on operational efficiency and organization simplification, 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. Our operational short-term liquidity needs primarily include working capital for sales and marketing, research and development, interest payments on our 2028 Convertible Notes, repayment of our 2026 Convertible Notes at maturity, and continued innovation. Our future capital requirements will depend on many factors, including our growth rate, levels of revenue, 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. 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. Indebtedness 2028 Convertible Notes In August 2024, we issued $150.0 million in aggregate principal amount of the Company’s new 7.50 percent convertible senior notes due 2028 (the “2028 Convertible Notes”). The 2028 Convertible Notes were issued pursuant to, and are governed by, an 36 Table of Contents Table of Content indenture (the “2028 Convertible Notes Indenture”), dated as of August 7, 2024, between the Company and U.S. Bank Trust Company, National Association, as trustee. 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. Before July 3, 2028, noteholders will have the right to convert their 2028 Convertible Notes only upon the occurrence of certain events. 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. 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. The conversion rate and conversion price will be 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 2028 Convertible Notes Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time. 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, 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. The definition of Fundamental Change includes certain business combination transactions involving the Company and certain de-listing events with respect to the Company’s common stock. The 2028 Convertible Notes have customary provisions relating to the occurrence of “Events of Default” (as defined in the 2028 Convertible Notes Indenture), which include the following: (i) certain payment defaults on the 2028 Convertible Notes (which, in the case of a default in the payment of interest on the 2028 Convertible Notes, will be subject to a 30-day cure period); (ii) the Company’s failure to send certain notices under the 2028 Convertible Notes Indenture within specified periods of time; (iii) the Company’s failure to comply with certain covenants in the 2028 Convertible Notes Indenture relating to the Company’s 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 the Company and its subsidiaries, taken as a whole, to another person; (iv) a default by the Company in its other obligations or agreements under the 2028 Convertible Notes Indenture or the 2028 Convertible Notes if such default is not cured or waived within 60 days after notice is given in accordance with the 2028 Convertible Notes Indenture; (v) certain payment defaults on the Company’s credit facility if the Company has entered into the Security Documents (as defined in the 2028 Convertible Notes Indenture), (vi) certain defaults by the Company or any of its significant subsidiaries with respect to indebtedness for borrowed money of at least $20,000,000; and (vii) certain events of bankruptcy, insolvency and reorganization involving the Company or any of its significant subsidiaries. If an Event of Default involving bankruptcy, insolvency or reorganization events with respect to the Company (and not solely with respect to a significant subsidiary of the Company) occurs, then the principal amount of, and all accrued and unpaid interest on, all of the 2028 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 the Company, or noteholders of at least 25 percent of the aggregate principal amount of 2028 Convertible Notes then outstanding, by notice to the Company and the trustee, may declare the principal amount of, and all accrued and unpaid interest on, all of the 2028 Convertible Notes then outstanding to become due and payable immediately. However, notwithstanding the foregoing, the Company may elect, at its option, that the sole remedy for an Event of Default relating to certain failures by the Company to comply with certain reporting covenants in the Indenture consists exclusively of the right of the noteholders to receive special interest on the 2028 Convertible Notes for up to 180 days at a specified rate per annum not exceeding 0.50 percent on the principal amount of the 2028 Convertible Notes. 37 Table of Contents Table of Content The 2028 Convertible Notes Indenture contains a number of restrictive covenants and limitations, including restrictions on the Company’s ability to incur certain indebtedness, as further described in the Indenture. 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. Off-balance sheet arrangements We did not have any off-balance sheet arrangements as of March 31, 2026 or as of December 31, 2025. Critical accounting policies and estimates Our condensed consolidated financial statements have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. We also make estimates and assumptions on the reported revenue generated and reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth in our Annual Report. Recent accounting pronouncements 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. 38 Table of Contents Item 3. Quantitative and Qualitati ve Disclosures About Market Risk. Interest rate risk Our cash, cash equivalents and restricted cash, consist primarily of interest-bearing accounts. Such interest-earning instruments carry a degree of interest rate risk. To minimize interest rate risk in the future, we intend to maintain our portfolio of cash equivalents in a variety of investment-grade securities, which may include commercial paper, money market funds, and government and non-government debt securities. 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 March 31, 2026 could result in a $1.0 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, 2026. The 2028 Convertible Notes have a fixed interest rate of 7.50 percent; we do not face variable interest rate risk with respect to the 2028 Convertible Notes. The fair value of the 2028 Convertible Notes changes when the market price of our stock fluctuates or market interest rates change. Foreign currency exchange risk All of our revenue and a majority of our expense and capital purchasing activities for the three months ended March 31, 2026 were transacted in U.S. dollars. As we continue our sales and operations internationally, we will be more exposed to changes in foreign exchange rates. A majority of our international revenue is currently collected in U.S. dollars. In the future, we expect that our international sales will be primarily denominated in U.S. dollars. If we decide in the future to denominate international sales in currencies other than the U.S. dollar, unfavorable movement in the exchange rates between the U.S. dollar and the currencies in which we conduct foreign sales could have an adverse impact on our revenue. A portion of our operating expenses are incurred outside the United States and are denominated in foreign currencies, which are subject to fluctuations due to changes in foreign currency exchange rates. In particular, in our Mexico, Australia and UK-based operations, we pay a majority of payroll and other expenses in Mexican pesos, Australian dollars and British pounds sterling, respectively. Our operating results and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates. However, we believe that the exposure to foreign currency fluctuation from operating expenses is relatively small at this time as the related costs do not constitute a significant portion of our total expenses. We currently do not hedge foreign currency exposure. We may in the future hedge our foreign currency exposure and may use currency forward contracts, currency options, and/or other common derivative financial instruments to reduce foreign currency risk. It is difficult to predict the effect future hedging activities would have on our operating results. Credit risk Financial instruments that potentially subject us to concentrations of credit risk consist of cash and cash equivalents, restricted cash, and accounts receivable. Our investment policy limits investments to high credit quality securities issued by the U.S. government, U.S. government-sponsored agencies, and highly rated corporate securities, subject to certain concentration limits and restrictions on maturities. Our cash and cash equivalents and restricted cash are held by financial institutions that management believes are of high credit quality. Amounts on deposit may at times exceed FDIC insured limits. We have not experienced any losses on our deposits of cash and cash equivalents, and accounts are monitored by management to mitigate risk. We are exposed to credit risk in the event of default by the financial institutions holding our cash and cash equivalents or an event of default by the issuers of the corporate debt securities we hold.