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 complementary layers that together enable merchants to manage commerce across increasingly fragmented digital environments. BigCommerce serves as our transaction layer, executing transactions and commerce logic. Feedonomics serves as our product intelligence layer, helping merchants structure, enrich, optimize and distribute product data across marketplaces, advertising channels, and emerging AI-powered discovery surfaces. Makeswift serves as our experience layer, enabling merchants to compose and govern digital experiences 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 while supporting increasingly complex 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 platform is designed to serve as merchant's complete commerce solution or integrate alongside existing commerce technologies, enabling customers to adopt the solutions that best meet their business needs. We believe this approach differentiates us from competitors that seek to control the full commerce technology stack by allowing us to 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 consumer discovery and purchasing behavior increasingly occur across AI-powered and third-party digital surfaces rather than exclusively through merchants' owned storefronts. 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. We believe our integrated platform helps merchants address these evolving requirements by connecting product intelligence, digital experiences, and transaction capabilities across an expanding ecosystem of commerce channels. 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 intend to prioritize initiatives and strategic partnerships that we believe deliver the greatest long-term value for merchants while simplifying execution and strengthening our platform. 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, profitability, and cash flows. 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 . 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 complementary 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-powered 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 positions merchants to participate in the continued evolution of digital commerce as AI adoption increases and product discovery, customer engagement, and transaction execution become increasingly distributed across AI-enabled channels. 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 embed AI capabilities across the commerce lifecycle in a practical and responsible manner while supporting merchants as commerce evolves toward more AI-enabled and agent-driven models. Investment in core offerings We continue to invest in our core commerce offerings to support growth across enterprise B2B and B2C customers, as well as SB use cases, with a disciplined focus on initiatives that we believe deliver the greatest long-term value for merchants and strengthen our platform. For enterprise B2B customers, we continue to enhance our platform with features supporting complex commerce operations, including improvements to organizational management, purchasing workflows, pricing, and transaction execution. We also continue to expand B2B capabilities, including deeper integration within the BigCommerce platform, to provide a more unified user experience. We believe these investments help manufacturers, distributors, and other enterprise merchants streamline operations while supporting increasingly sophisticated commerce requirements. We also continue to expand Feedonomics Surface, our self-service feed management solution for small and midsize businesses. We expanded Surface's channel availability, providing merchants with additional opportunities to syndicate optimized product data across advertising, marketplace, social, and emerging AI-powered discovery channels. We believe these enhancements simplify multichannel commerce, improve product visibility, and extend enterprise-grade product intelligence capabilities to a broader base of merchants. Across our platform, we continue to invest in AI-enabled capabilities designed to improve in product discovery, automate merchant workflows, and support emerging agent-enabled commerce experiences. We also continue to enhance core commerce functionality, including checkout, promotions, storefront management, and catalog capabilities, while expanding BigCommerce Payments to provide merchants with a more integrated payments experience. We believe these investments reduce operational complexity, improve merchant outcomes, and position our platform to support the continued evolution of digital commerce as AI adoption, distributed product discovery, and agent-enabled commerce increasingly reshape how merchants engage with customers. 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. As part of these efforts, we continue to invest in strategic growth initiatives including, BigCommerce Payments, AI-enabled commerce capabilities, B2B solutions, Feedonomics Surface, and other platform enhancements that we believe strengthen merchant outcomes and support long-term monetization. During the fiscal year 2026, we launched BigCommerce Payments, our 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 27 Table of Contents Table of Content have continued to expand adoption of BigCommerce Payments and believe it strengthens merchant relationships and enhances the merchant experience. We also updated our plan structure, including plan names, GMV thresholds, and support tiers, and introduced a fee on certain orders processed through non-embedded payment providers for self-service merchants. We replaced our prior Standard, Plus, Pro, and Enterprise plans with Core, Growth, Scale, and Performance plans. These changes reflect our strategic decision to prioritize a more focused group of strategically aligned payment partners while maintaining merchant choice through our open and composable platform. We believe this approach improves merchant outcomes, strengthens alignment with key partners, and supports more durable long-term monetization, and enhances the long-term economics of our platform. 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 curated ecosystem of technology partners and prioritizing strategic partner relationships that deliver the best merchant outcomes while creating long-term, aligned economic value for Commerce. Our partner 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, strategic priorities, and resource allocation to focus our investments on customers, industries, and use cases where we can deliver the greatest long-term value. Our unified platform supports enterprise B2B and B2C customers, as well as small businesses, through integrated commerce, product intelligence, and digital experiences capabilities designed to address increasingly complex and AI-enabled commerce environments. 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 innovation, platform functionality, and customer success initiatives to maximize customer retention and long-term merchant success. Revenue from existing customers may increase through subscription plan upgrades, additional store deployments, expanded adoption of BigCommerce Payments, Feedonomics, B2B capabilities, AI-enabled solutions, and broader utilization of our platform. As customers grow their commerce operations, subscription revenue may also increase through automated sales-based adjustments on certain plans and order-based adjustment on enterprise plans. Partner and services revenue generated through our strategic technology partners generally increases 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. As our platform evolves, we believe our partner ecosystem will continue to support customer adoption and engagement while creating opportunities for sustainable growth. 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 technology partner ecosystem remains central to our business strategy and long-term growth. We are built around an open, partner-centric architecture that enables merchants to integrate technologies across a broad range of commerce capabilities while allowing us to focus our investments on our core commerce platform, AI-enabled solutions, and platform extensibility. As our business has evolved, we have adopted a more disciplined approach to our partner ecosystem by prioritizing investment in a more focused group of strategically aligned technology partners where we believe we can deliver the greatest long-term value for merchants and strengthen our platform. We continue to concentrate our efforts on deeper strategic partner relationships that we believe 28 Table of Contents Table of Content improve merchant outcomes and support more durable long-term economics, while maintaining merchant choice through our open and composable architecture. 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: (in thousands) June 30, 2026 March 31, 2026 December 31, 2025 September 30, 2025 June 30, 2025 Total ARR $ 360,525 $ 359,827 $ 359,136 $ 355,716 $ 354,608 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 June 30, 2026 $ 8,779 6.3 % 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 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 June 30, 2026 95.8 % 0.4 % 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 ) 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. 29 Table of Contents Table of Content Subscription annual revenue run-rate as of the periods ended: (in thousands) June 30, 2026 March 31, 2026 December 31, 2025 September 30, 2025 June 30, 2025 Subscription ARR $ 270,284 $ 270,191 $ 272,411 $ 268,617 $ 267,951 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. 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. 30 Table of Contents Table of Content 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 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 and capitalization of interest 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 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 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. 31 Table of Contents Table of Content 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. Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 (in thousands) Revenue $ 84,511 $ 84,433 $ 171,353 $ 166,803 Cost of revenue (1) 20,982 17,739 41,173 34,723 Gross profit 63,529 66,694 130,180 132,080 Operating expenses: Sales and marketing (1) 27,510 35,071 53,706 65,437 Research and development (1) 17,674 18,310 35,707 37,516 General and administrative (1) 14,183 15,855 28,398 29,499 Amortization of intangible assets 1,453 2,520 2,982 4,855 Acquisition related costs 0 111 0 444 Restructuring charges 5 1,614 915 3,526 Total operating expenses 60,825 73,481 121,708 141,277 Income (loss) from operations 2,704 (6,787 ) 8,472 (9,197 ) Gain on convertible note extinguishment 0 0 0 3,931 Interest income 1,231 1,171 2,401 2,471 Interest expense (2,490 ) (2,522 ) (4,973 ) (5,065 ) Other expense (139 ) (23 ) (413 ) (130 ) Income (loss) before provision for income taxes 1,306 (8,161 ) 5,487 (7,990 ) Provision for income taxes (204 ) (221 ) (656 ) (745 ) Net income (loss) $ 1,102 $ (8,382 ) $ 4,831 $ (8,735 ) (1) Amounts include stock-based compensation expense and associated payroll tax costs, as follows: Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 (in thousands) Cost of revenue $ 412 $ 720 $ 946 $ 1,466 Sales and marketing 602 1,820 806 3,595 Research and development 1,367 2,740 2,869 5,782 General and administrative 1,572 2,045 3,566 1,901 Revenue by geographic region The composition of our revenue by geographic region during the three and six months ended June 30, 2026 and June 30, 2025 were as follows: Three months ended June 30, Change Six months ended June 30, Change 2026 2025 Amount Percent 2026 2025 Amount Percent (dollars in thousands) Revenue: United States $ 63,755 $ 64,405 $ (650 ) (1.0 ) % $ 129,510 $ 127,026 $ 2,484 2.0 % EMEA 11,103 9,889 1,214 12.3 22,447 19,854 2,593 13.1 APAC 5,869 6,118 (249 ) (4.1 ) 11,815 12,043 (228 ) (1.9 ) Rest of World 3,784 4,021 (237 ) (5.9 ) 7,581 7,880 (299 ) (3.8 ) Total Revenue $ 84,511 $ 84,433 $ 78 0.1 % $ 171,353 $ 166,803 $ 4,550 2.7 % 32 Table of Contents Table of Content Comparison of the three and six months ended June 30, 2026 and June 30, 2025 Revenue The following table presents the components of our revenue for each of the periods indicated: Three months ended June 30, Change Six months ended June 30, Change 2026 2025 Amount Percent 2026 2025 Amount Percent (dollars in thousands) Revenue Subscription solutions $ 63,129 $ 63,656 $ (527 ) (0.8 ) % $ 126,804 $ 125,769 $ 1,035 0.8 % Partner and services 21,382 20,777 605 2.9 44,549 41,034 3,515 8.6 Total revenue $ 84,511 $ 84,433 $ 78 0.1 % $ 171,353 $ 166,803 $ 4,550 2.7 % Total revenue increased for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The change related to an increase in partner and services revenue of $0.6 million driven primarily by increases in stand ready revenue of $0.3 million and sponsorship revenue of $0.3 million. These increases were offset by a decrease in subscription solutions revenue of $0.5 million as a result of a contract termination fee that was recognized in the prior period. Total revenue increased for the six months ended June 30, 2026, from the six months ended June 30, 2025, as a result of an increase in subscription solutions revenue of $1.0 million primarily driven by new customers and upgrades, and an increase in partner and services revenue of $3.5 million which was attributed to an increase partner integrations of $4.1 million offset by a decrease in professional services revenue of $0.6 million. Cost of revenue, gross profit, and gross margin Three months ended June 30, Change Six months ended June 30, Change 2026 2025 Amount Percent 2026 2025 Amount Percent (dollars in thousands) Cost of revenue $ 20,982 $ 17,739 $ 3,243 18.3 % $ 41,173 $ 34,723 $ 6,450 18.6 % Gross profit 63,529 66,694 (3,165 ) (4.7 ) 130,180 132,080 (1,900 ) (1.4 ) Gross margin percentage 75.2 % 79.0 % 76.0 % 79.2 % Cost of revenue increased for the three months ended June 30, 2026, from the three months ended June 30, 2025. The change related to an increase of $2.9 million in web hosting costs from increased activity in the current year and the expiration of usage credits in the prior period and an increase in allocated overhead costs of $0.3 million. Cost of revenue increased for the six months ended June 30, 2026, from the six months ended June 30, 2025. The change was due to an increase of $5.5 million in web hosting costs from increased activity in the current year and the expiration of usage credits utilized in the prior period, as well as increased allocated overhead costs of $1.0 million. We expect cost of revenue to remain consistent in the near term in both absolute dollars and as a percentage of revenue. 33 Table of Contents Table of Content Operating expenses The following tables present our operating expenses for each of the periods indicated: Three months ended June 30, Change 2026 As a % of Total Revenue 2025 As a % of Total Revenue Amount Percent (dollars in thousands) Sales and marketing $ 27,510 32.6 % $ 35,071 41.5 % $ (7,561 ) (21.6 ) % Research and development 17,674 20.9 18,310 21.7 (636 ) (3.5 ) General and administrative 14,183 16.8 15,855 18.8 (1,672 ) (10.5 ) Amortization of intangible assets 1,453 1.7 2,520 3.0 (1,067 ) (42.3 ) Acquisition related expenses 0 0.0 111 0.1 (111 ) (100.0 ) Restructuring charges 5 0.0 1,614 1.9 (1,609 ) (99.7 ) Total operating expenses $ 60,825 72.0 % $ 73,481 87.0 % $ (12,656 ) (17.2 ) % Six months ended June 30, Change 2026 As a % of Total Revenue 2025 As a % of Total Revenue Amount Percent (dollars in thousands) Sales and marketing $ 53,706 31.3 % $ 65,437 39.2 % $ (11,731 ) (17.9 ) % Research and development 35,707 20.8 37,516 22.5 (1,809 ) (4.8 ) General and administrative 28,398 16.6 29,499 17.7 (1,101 ) (3.7 ) Amortization of intangible assets 2,982 1.7 4,855 2.9 (1,873 ) (38.6 ) Acquisition related expenses 0 0.0 444 0.3 (444 ) (100.0 ) Restructuring charges 915 0.5 3,526 2.1 (2,611 ) (74.0 ) Total operating expenses $ 121,708 71.0 % $ 141,277 84.7 % $ (19,569 ) (13.9 ) % Sales and marketing Sales and marketing expenses decreased for the three months ended June 30, 2026 from the three months ended June 30, 2025. The decrease of $7.6 million was primarily related to actions implemented by the Company's in prior periods to optimize operational costs and efficiencies. These initiatives resulted in reductions in salaries and share-based compensation expense of $6.6 million, $0.6 million of variable marketing spend, and $0.4 million of allocated overhead costs. Sales and marketing expenses decreased for the six months ended June 30, 2026, from the six months ended June 30, 2025. The decrease was primarily related to a reduction in salaries and share-based compensation expenses of $10.1 million, variable marketing costs of $1.1 million, and $0.5 million reduction of allocated overhead costs as a result of the actions taken by the Company as described above. We expect sales and marketing expenses to remain consistent, both in absolute dollars and as a percentage of revenue, in the near term. Research and development Research and development expenses decreased for the three months ended June 30, 2026 from the three months ended June 30, 2025, primarily related to decreases in share-based compensation expense of $1.4 million, increased compensation costs capitalized related to our go to market products of $2.0 million, offset by increases of $1.4 million in professional services costs and allocated overhead costs of $1.4 million. Research and development expenses decreased for the six months ended June 30, 2026, from the six months ended June 30, 2025, primarily due to a decrease in salaries and share-based compensation expense of $3.4 million, increases in compensation costs capitalized related to our go to market products of $3.2 million, offset by increases in professional services costs of $2.5 million and allocated overhead costs of $2.3 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. 34 Table of Contents Table of Content General and administrative General and administrative expenses decreased for the three months ended June 30, 2026 from the three months ended June 30, 2025, primarily due to actions implemented by the Company's in prior periods to optimize operational costs and efficiencies. These initiatives resulted in reductions in professional services of $1.2 million, salaries and share-based compensation expense of $0.7 million, and bad debt expense of $0.5 million. The decrease was offset by increases in allocated overhead costs of $0.7 million. General and administrative expenses decreased for the six months ended June 30, 2026, from the six months ended June 30, 2025, primarily related to a $1.7 million decrease in professional services costs and $1.2 million decrease in bad debt expense. These decreased were offset by increases in salaries and share-based compensation expense of $1.4 million and allocated overhead costs of $0.4 million as a result of the actions taken by the Company as described above. We expect that general and administrative expenses as a percentage of revenue to remain consistent in the near term, reflecting operational costs efficiencies. Amortization of intangible assets Amortization of intangible assets decreased for the three and six months ended June 30, 2026 from the three and six months ended June 30, 2025 as a result of certain acquired assets being fully amortized in the prior year. Acquisition related expenses Acquisition related expense decreased for the three and six months ended June 30, 2026 from the three and six months ended June 30, 2025 primarily attributable 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 and six months ended June 30, 2026 from the three and six months ended June 30, 2025. For the three and six months ended June 30, 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 $1.0 million to $3.0 million through the first half of fiscal 2027 relating to retention benefits and professional services costs. Other income (expense) The following tables present our other income/(expenses) for each of the periods indicated: Three months ended June 30, Change Six months ended June 30, Change 2026 2025 Amount Percent 2026 2025 Amount Percent (dollars in thousands) Gain on convertible note extinguishment $ 0 $ 0 $ 0 0 % $ 0 $ 3,931 $ (3,931 ) (100.0 ) % Interest income 1,231 1,171 60 5.1 2,401 2,471 (70 ) (2.8 ) Interest expense (2,490 ) (2,522 ) 32 1.3 (4,973 ) (5,065 ) 92 1.8 Other expenses (139 ) (23 ) (116 ) (504.3 ) (413 ) (130 ) (283 ) (217.7 ) Total Other income (expense) $ (1,398 ) $ (1,374 ) $ (24 ) (1.7 ) % $ (2,985 ) $ 1,207 $ (4,192 ) (347.3 ) % Gain on convertible note extinguishment decreased for the six months ended June 30, 2026, as a result of the repurchase transaction that occurred in 2025. Interest income remained consistent for the three and six months ended June 30, 2026 from the three and six months ended June 30, 2025. Interest expense remained consistent for the three and six months ended June 30, 2026 from the three and six months ended June 30, 2025. Other expenses increased for the three and six months ended June 30, 2026 from the three and six months ended June 30, 2025. This increase was due to the impact of foreign currency exchange rates. 35 Table of Contents Table of Content Provision for income taxes Our provision for income taxes decreased for the three and six months ended June 30, 2026 from the three and six months ended June 30, 2025. This decrease was primarily due to decreases in state taxes. 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 June 30, Six months ended June 30, 2026 2025 2026 2025 (in thousands) Net cash provided by operating activities $ 5,092 $ 13,557 $ 23,466 $ 13,958 Net cash used in investing activities (5,700 ) (21,223 ) (11,092 ) (3,858 ) Net cash provided by (used in) financing activities (154 ) 1,847 (208 ) (53,027 ) Net increase (decrease) in cash, cash equivalents and restricted cash $ (762 ) $ (5,819 ) $ 12,166 $ (42,927 ) As of June 30, 2026, we had $157.5 million in cash, cash equivalents, restricted cash, and marketable securities, an increase of $21.9 million compared to $135.6 million as of June 30, 2025. Cash and cash equivalents consist of highly-liquid investments with original maturities of less than ninety days. Our restricted cash balance of $1.2 million at June 30, 2026 and 2025, consists of security deposits for future chargebacks and amounts on deposit with certain financial institutions. Our marketable securities balance of $99.2 million and $88.2 million at June 30, 2026 and 2025 respectively, consists of investments in 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 June 30, 2026 and 2025 was $5.1 million and $13.6 million, respectively. This consisted primarily of our net income (loss) adjusted for certain non-cash items including depreciation, stock-based compensation, debt discount amortization, debt premium amortization, amortization of intangible assets, bad debt expense, and the effect of changes in our working capital accounts. Net cash provided by operating activities for the six months ended June 30, 2026 and 2025 was $23.5 million and $14.0 million, respectively. This consisted primarily of our net income (loss) adjusted for certain non-cash items including depreciation, stock-based compensation, debt discount amortization, debt premium amortization, amortization of intangible assets, bad debt expense, gain on convertible note extinguishment, and the effect of changes in our working capital accounts. Investing activities Net cash used in investing activities during the three months ended June 30, 2026 and 2025 was $5.7 million and $21.2 million, respectively. In the three months ended June 30, 2026, this consists primarily of the purchase of marketable securities of $19.7 million and the cash paid for the purchase of property, equipment, leasehold improvements and capitalized internal-use software of $5.0 million offset by the sale and maturity of marketable securities of $19.0 million. In the three months ended June 30, 2025, this consists primarily of the purchase of marketable securities of $32.6 million and the cash paid for the purchase of property, equipment, leasehold improvements and capitalized internal-use software of $1.7 million offset by the sale and maturity of marketable securities of $13.0 million. Net cash used in investing activities during the six months ended June 30, 2026 and 2025 was $11.1 million and $3.9 million, respectively. In the six months ended June 30, 2026, this consists primarily of the purchase of marketable securities of $44.8 million, and purchase of property, equipment, leasehold improvements and capitalized internal-use software of 9.3 million, offset by the sale and maturity of marketable securities of $43.0 million. In the six months ended June 30, 2025, this consists primarily of the purchase of marketable securities of $40.5 million, the cash paid for the website domain name of $2.4 million, and purchase of property, equipment, leasehold improvements and capitalized internal-use software of $2.5 million offset by the sale and maturity of marketable securities of $41.6 million. 36 Table of Contents Table of Content Financing activities Net cash provided by (used in) financing activities during the three months ended June 30, 2026 and 2025 was ($0.2) million and $1.8 million respectively. In the three months ended June 30, 2026, this was attributable to the taxes paid related to net share settlement of equity awards of $0.2 million. In the three months ended June 30, 2025, this was attributable to the proceeds from exercise of stock options of $1.9 million offset by the taxes paid related to net share settlement of equity awards of $0.1 million Net cash used in financing activities during the six months ended June 30, 2026 and 2025 was $0.2 million and $53.0 million, respectively. In the six months ended June 30, 2026, this consists primarily of taxes paid related to net share settlement of equity awards of $0.8 million offset by the proceeds from exercise of stock options of $0.6 million. In the six months ended June 30, 2025, consists primarily of repayment of convertible notes of $54.5 million and taxes paid related to net share settlement of equity awards of $1.4 million offset by the proceeds from exercise of stock options of $3.1 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, including repayment of the approximately $4.1 million principal amount of our 2026 Convertible Notes at their maturity on October 1, 2026, 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 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 37 Table of Contents Table of Content 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. 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 June 30, 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 38 Table of Contents Table of Content 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. 39 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 June 30, 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 June 30, 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 June 30, 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. 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 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.