What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-02-03 compared with 2025-11-12 · 83 added, 80 removed, 250 unchanged (39% of the section changed)

13 unchanged sentences

● our expectations with respect to revenue, cost of revenue, expenses and other financial metrics;

● our belief that contact centers offer a great opportunity within any business operation to automate using AI;

● our business plans, strategies, target, goals and outlook;

82 unchanged sentences

Three Months Ended

September 30,

Six Months Ended

(in thousands)

Professional services revenue

Total revenue

Total SaaS and professional services revenue:

Non-GAAP Operating Income

2 unchanged sentences

and (ii) such expenses can vary significantly between periods as a result of the timing of new stock-based awards.

The presentation of the non-GAAP financial measures is not intended to be considered in isolation, or as a substitute for, or superior to, the financial information prepared and presented in accordance with generally accepted accounting principles in the United States of America (GAAP).

The following table presents a reconciliation of GAAP income (loss) from operations to non-GAAP income from operations for each of the following periods:

Three Months Ended

September 30,

Six Months Ended

(in thousands)

Income from operations

3 unchanged sentences

Critical Accounting Policies and Estimates

Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our consolidated financial statements, which have been prepared in accordance with GAAP in the United States.

Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our consolidated financial statements, which have been prepared in accordance with GAAP.

The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.

8 unchanged sentences

Professional services include consulting, implementation, training, and managed services.

For our cloud delivery arrangements, our maintenance and support arrangements and our term license subscriptions that incorporate substantial cloud functionality, the combined performance obligation is recognized ratably over the contract

term as the obligation is delivered.

For contracts involving distinct software licenses, the license performance obligation is satisfied at a point in time when control is transferred to the customer.

20 unchanged sentences

The transaction price allocated to the remaining performance obligation is influenced by a variety of factors, including seasonality, timing of renewals, average contract terms and foreign currency exchange rates.

As of September 30, 2025, our remaining performance obligations were $86.9 million, of which we expect to recognize $58.4 million and $28.5 million as revenue within one year and beyond one year, respectively.

As of December 31, 2025, our remaining performance obligations were $84.9 million, of which we expect to recognize $53.0 million and $31.9 million as revenue within one year and beyond one year, respectively.

We expect our remaining performance obligations to change quarterly for several reasons including the timing of new contracts and renewals, duration and size of our subscription and support arrangements, variable billing cycles and foreign exchange rate fluctuation.

We typically issue renewal invoices in advance of the renewal service period.

Depending on timing, the initial invoice and subsequent renewal invoices may occur in different quarters.

timing, the initial invoice and subsequent renewal invoices may occur in different quarters.

This may result in an increase or decrease to our accounts receivable and deferred revenue.

3 unchanged sentences

The capitalized amounts consist primarily of sales commissions paid to our direct sales force.

Capitalized amounts also include (i) amounts paid to employees other than the direct sales force who

earn incentive payouts under annual compensation plans that are tied to the value of contracts acquired and (ii) the associated payroll taxes and fringe benefit costs associated with the payments to our employees.

Capitalized amounts also include (i) amounts paid to employees other than the direct sales force who earn incentive payouts under annual compensation plans that are tied to the value of contracts acquired and (ii) the associated payroll taxes and fringe benefit costs associated with the payments to our employees.

Costs capitalized related to new revenue contracts are generally deferred and amortized on a straight-line basis over a period of benefit that we estimate to be five years.

4 unchanged sentences

Three Months Ended

September 30,

Six Months Ended

Professional services

9 unchanged sentences

Income from operations

We classify our revenue into two categories:

SaaS and professional services revenue.

The following table presents our total revenue during the three months ended September 30, 2025 and 2024, respectively:

The following table presents our total revenue during the three and six months ended December 31, 2025 and 2024, respectively:

Three Months Ended

September 30,

Six Months Ended

(in thousands, except percentages)

1 unchanged sentence

Total revenue

Total revenue increased approximately $1.7 million during the three months ended September 30, 2025, compared to the same period in fiscal year 2025, due to an increase in SaaS revenue of $2.1 million;

partially offset by a decrease of $371,000 in professional services.

Total revenue for the three months ended December 31, 2025 increased by $590,000, compared to the same period in fiscal year 2025, due to an increase of SaaS revenue by $952,000, partially offset by a decrease of $362,000 in professional services revenue.

Total revenue for the six months ended December 31, 2025 increased by $2.3 million, compared to the same period in fiscal year 2025, due to an increase of SaaS revenue by $3.0 million, partially offset by a decrease of $733,000 in professional services revenue.

Our revenue was impacted by foreign exchange rate fluctuation between the U.S.

1 unchanged sentence

We recalculate our current period results using the comparable prior period exchange rates to exclude the impact of foreign exchange rate fluctuation.

Foreign exchange rate fluctuation resulted in an increase of $195,000 and $144,000 in total revenue during the three months ended September 30, 2025 and 2024, respectively.

Foreign exchange rate fluctuation resulted in an increase of $202,000 and $151,000 in total revenue during the three months ended December 31, 2025 and 2024, respectively.

Foreign exchange rate fluctuation resulted in an increase of $395,000 and an increase of $298,000 for the six months ended December 31, 2025 and 2024, respectively.

Three Months Ended

September 30,

Six Months Ended

(in thousands, except percentages)

1 unchanged sentence

SaaS revenue includes revenue from cloud delivery arrangements, term licenses and embedded OEM royalties and associated support.

Revenue from SaaS increased by $2.1 million during the three months ended September 30, 2025, compared to the same period in fiscal year 2025.

We expect our SaaS revenue to continue to increase steadily as we grow our business.

SaaS revenue represents 93% of total revenue for the three months ended September 30, 2025, compared to 91% during the same period in fiscal year 2025.

This represented an increase in SaaS revenue of 10% for the three months ended September 30, 2025, compared to the same period in fiscal year 2025.

Excluding an increase of $183,000 due to foreign exchange rate fluctuation, SaaS revenue increase by $1.9 million during the three months ended September 30, 2025, compared to the same period in fiscal year 2025.

Revenue from SaaS increased by $952,000 and $3.0 million during the three and six months ended December 31, 2025, respectively, compared to the same periods in fiscal year 2025.

This represented an increase in SaaS revenue of 5% and 7% for the three and six months ended December 31, 2025, respectively, compared to the same periods in fiscal year 2025.

SaaS revenue represents 95% and 94% of total revenue for the three and six months ended December 31, 2025, respectively, compared to 93% and 92% for the same periods in fiscal year 2025.

Excluding an increase of $190,000 and an increase of $372,000 due to foreign exchange rate fluctuation, SaaS revenue increased by $762,000 and $2.7 million during the three and six months ended December 31, 2025, respectively, compared to the same periods in fiscal year 2025.

Professional Services Revenue

Three Months Ended

September 30,

Six Months Ended

(in thousands, except percentages)

2 unchanged sentences

Professional services revenue includes consulting, implementation, training, and managed services.

Revenue from professional services decreased by $371,000 during the three months ended September 30, 2025, compared to the same period in fiscal year 2025.

Revenue from professional services decreased by $362,000 and $733,000 during the three and six months ended December 31, 2025, respectively, compared to the same periods in fiscal year 2025.

We expect professional revenue to vary dependent on the volume and timing of recognition.

Excluding an increase of $12,000 due to foreign exchange rate fluctuation, professional services revenue decreased by $383,000 during the three months ended September 30, 2025, compared to the same period in fiscal year 2025.

Excluding an increase of $12,000 and an increase of $23,000 due to foreign exchange rate fluctuation, professional services revenue decreased by $374,000 and $756,000 during the three and six months ended December 31, 2025, respectively, compared to the same periods in fiscal year 2025.

Revenue by Geography

Three Months Ended

September 30,

Six Months Ended

(in thousands, except percentages)

2 unchanged sentences

Total revenue

Revenue from North America sales increased by 15% from $16.4 million during the three months ended September 30, 2024 to $19.0 million during the three months ended September 30, 2025 primarily due to an increase of $2.7 million in SaaS revenue;

partially offset by a decrease of $167,000 in professional services revenue.

Revenue from EMEA sales decreased by 15% from $5.4 million for the three months ended September 30, 2024 to $4.5 million during the three months ended September 30, 2025, due to decreases of (i) $626,000 in SaaS revenue and (ii) $204,000 in professional services revenue.

Revenue from North America sales increased by 6% from $17.3 million during the three months ended December 31, 2024 to $18.4 million during the three months ended December 31, 2025, due to an increase of $1.3 million in SaaS revenue, partially offset by a decrease of $285,000 in professional services revenue.

Revenue from North America sales increased by 11% from $33.8 million during the six months ended December 31, 2024 to $37.3 million during the six months ended December 31, 2025, due to an increase of $4.0 million in SaaS revenue, partially offset by a decrease of $451,000 in professional services revenue.

Revenue from EMEA sales decreased by 9% from $5.1 million for the three months ended December 31, 2024 to $4.6 million during the three months ended December 31, 2025, due to decreases of (i) $356,000 in SaaS revenue and (ii) $75,000 in professional services revenue.

Revenue from EMEA sales decreased by 12% from $10.4 million for the six months ended December 31, 2024 to $9.2 million during the six months ended December 31, 2025, due to decreases of (i) $981,000 in SaaS revenue and (ii) $282,000 in professional services revenue.

Cost of Revenue

Three Months Ended

September 30,

Six Months Ended

(in thousands, except percentages)

4 unchanged sentences

These expenses are comprised of cloud computing costs, personnel-related costs directly associated with cloud operations, and customer support, including salaries, benefits, bonuses and stock-based compensation and allocated overhead.

Cost of SaaS revenue decreased by $351,000 during the three months ended September 30, 2025, from the same period in fiscal year 2025.

This decrease was primarily due to decreases of (i) $360,000 in cloud-computing costs and (ii) $94,000 in outside consulting costs;

partially offset by an increase of $109,000 in personnel-related costs.

Excluding a decrease of $6,000 due to foreign exchange rate fluctuation, cost of SaaS revenue decreased by $345,000 during the three months ended September 30, 2025, from the same period in fiscal year 2025.

Cost of SaaS revenue decreased by $188,000 during the three months ended December 31, 2025, from the same period in fiscal year 2025.

This decrease was primarily due to decreases of (i) $369,000 in cloud-computing costs and (ii) $31,000 in outside consulting costs, partially offset by an increase of $224,000 in personnel-related costs.

Cost of SaaS revenue decreased by $539,000 during the six months ended December 31, 2025, from the same period in fiscal year 2025.

This decrease was primarily due to decreases of (i) $729,000 in cloud-computing costs and (ii) $126,000 in outside consulting costs, partially offset by an increase of $332,000 in personnel-related costs.

Excluding a decrease of $12,000 and $16,000 due to foreign exchange rate fluctuation, cost of SaaS revenue decreased by $176,000 and $523,000 during the three and six months ended December 31, 2025, respectively, from the same periods in fiscal year 2025.

Professional Services

Cost of professional services consists primarily of personnel-related costs directly associated with our professional services and training departments, including salaries, benefits, bonuses, and stock-based compensation and allocated overhead.

Cost of professional services decreased by $484,000 during the three months ended September 30, 2025, from the same period in fiscal year 2025.

This decrease was primarily due to decreases of (i) $486,000 in personnel-related costs and (ii) $7,000 in outside consulting cost.

Excluding an increase of $9,000 due to foreign exchange rate fluctuation, cost of professional services revenue decreased by $493,000 during the three months ended September 30, 2025, compared to the same period in fiscal year 2025.

Cost of professional services decreased by $320,000 during the three months ended December 31, 2025, from the same period in fiscal year 2025.

This decrease was primarily due to a decrease of $351,000 in personnel-related costs, partially offset by other professional services costs.

Excluding an increase of $16,000 due to foreign exchange rate fluctuation, cost of professional services revenue decreased by $336,000 during the three months ended December 31, 2025, compared to the same period in fiscal year 2025.

Cost of professional services decreased by $804,000 during the six months ended December 31, 2025, from the same period in fiscal year 2025.

This decrease was primarily due to a decrease of $837,000 in personnel-related costs, partially offset by other professional services costs.

Excluding an increase of $26,000 due to foreign exchange rate fluctuation, cost of professional services revenue decreased by $830,000 during the six months ended December 31, 2025, compared to the same period in fiscal year 2025.

Operating Expenses

1 unchanged sentence

Three Months Ended

September 30,

Six Months Ended

(in thousands, except percentages)

4 unchanged sentences

Research and development expense also includes outside consulting services contracted for research and development.

Research and development expense decreased by $106,000 during the three months ended September 30, 2025, from the same period in fiscal year 2025.

This decrease was primarily due to a decrease of $241,000 in personnel-related costs;

partially offset by an increase of $147,000 in outside consulting costs.

Excluding a decrease of $13,000 due to foreign exchange rate fluctuation, research and development expense decreased by $93,000 during the three months ended September 30, 2025, compared to the same period in fiscal year 2025.

Research and development expense decreased by 6% to $7.3 million for the three months ended December 31, 2025, from $7.7 million in the same period in fiscal year 2025.

Excluding a decrease of $18,000 due to foreign exchange rate fluctuation, research and development expense decreased primarily due to decreases of (i) $296,000 in personnel-related costs and (ii) $117,000 in outside consulting costs.

Research and development expense decreased by 4% to $14.6 million for the six months ended December 31, 2025, from $15.1 million in the same period in fiscal year 2025.

Excluding a decrease of $30,000 due to foreign exchange rate fluctuation, research and development expense decreased primarily due to a decrease of $537,000 in personnel-related costs.

Sales and Marketing

Three Months Ended

September 30,

Six Months Ended

(in thousands, except percentages)

4 unchanged sentences

Sales and marketing expenses also include amortization of commissions paid to our sales staff, lead generation activities, advertising, trade show and other promotional costs, and, to a lesser extent, occupancy costs and related overhead.

Sales and marketing expenses decreased by $731,000 during three months ended September 30, 2025, from the same period in fiscal year 2025.

The decrease was primarily due to decreases of (i) $866,000 in personnel-related expenses and (ii) $105,000 in outside consulting expenses;

partially offset by an increase of $197,000 in lead generation expenses.

Excluding an increase of $42,000 due to foreign exchange rate fluctuation, sales and marketing expense decreased by $773,000 during the three months ended September 30, 2025, compared to the same period in fiscal year 2025.

Sales and marketing expenses decreased by 1% to $5.2 million for the three months ended December 31, 2025, from $5.3 million in the same period in fiscal year 2025.

Excluding an increase of $47,000 due to foreign exchange rate fluctuation, sales and marketing expense decreased primarily due to decreases of (i) $100,000 in personnel-related costs and (ii) $56,000 in outside consulting costs.

Sales and marketing expenses decreased by 8% to $9.2 million for the six months ended December 31, 2025, from $10.0 million in the same period in fiscal year 2025.

Excluding an increase of $89,000 due to foreign exchange rate fluctuation, sales and marketing expense decreased primarily due to decreases of (i) $727,000 in personnel-related costs and (ii) $161,000 in outside consulting costs.

General and Administrative

Three Months Ended

September 30,

Six Months Ended

(in thousands, except percentages)

2 unchanged sentences

General and administrative expense primarily consists of personnel-related expenses directly associated with our finance, human resources, administrative and legal personnel.

Included in these costs are salaries, benefits, bonuses, warrants, and stock-based compensation and allocated overhead.

General and administrative expenses also include fees for professional services, provision for credit losses and, to a lesser extent, occupancy costs and related overhead.

General and administrative expenses increased by $1.1 million during the three months ended September 30, 2025, from the same period in fiscal year 2025.

The increase was primarily due to increases of (i) $1.4 million in warrant expense, (ii) $131,000 in legal expenses, and (iii) $20,000 in accounting, audit, and administrative expenses;

partially offset by decreases of (i) $211,000 in outside-consulting expenses, (ii) $169,000 in personnel-related expenses, and (iii) $69,000 in bad debt expenses.

Excluding an increase of $5,000 due to foreign exchange rate fluctuation, general and administrative expense increased by $1.1 million during the three months ended September 30, 2025, compared to the same period in fiscal year 2025.

Included in these costs are salaries, benefits, bonuses, and stock-based compensation and allocated overhead.

General and administrative expenses also include fees for professional services, warrants, provision for credit losses and, to a lesser extent, occupancy costs and related overhead.

General and administrative expenses increased by 10% to $2.3 million for the three months ended December 31, 2025, from $2.1 million in the same period in fiscal year 2025.

Excluding an increase of $8,000 due to foreign exchange rate fluctuation, general and administrative expense increased primarily due to an increase of $246,000 in legal related costs.

General and administrative expenses increased by 28% to $5.8 million for the six months ended December 31, 2025, from $4.5 million in the same period in fiscal year 2025.

Excluding an increase of $14,000 due to foreign exchange rate fluctuation, general and administrative expense increased primarily due to increases of (i) $1.4 million in warrant expense and (ii) $376,000 in legal related costs, partially offset by decreases of (i) 275,000 in outside-consulting costs and (ii) $77,000 in credit loss expense.

Income from Operations

Three Months Ended

September 30,

Six Months Ended

(in thousands, except percentages)

1 unchanged sentence

Operating margin

Income from operations was $2.8 million with an operating profit margin of 12% during the three months ended September 30, 2025.

Income from operations was $509,000 with an operating profit margin of 2% during the three months ended

September 30, 2024.

This is primarily driven by the increase in total revenue of $1.7 million and reduction in cost of revenue of $835,000 compared to the same period in fiscal year 2025.

Income from operations was $2.0 million and $650,000 with an operating margin of 9% and 3% during the three months ended December 31, 2025 and 2024, respectively.

This is primarily due to an increase in gross margin.

Income from operations was $4.9 million and $1.2 million with an operating margin of 10% and 3% during the six months ended December 31, 2025 and 2024, respectively.

This is primarily due to an increase in gross margin.

Interest Income

Interest income primarily consists of interest earned on money market accounts.

Interest income was $462,000 and $771,000 during the three months ended September 30, 2025 and 2024, respectively, due to lower interest rates and reduced funding in money market accounts.

Interest income primarily consists of interest earned on money market accounts which have decreased rates compared to prior years.

Interest income was $624,000 and $661,000 during the three months ended December 31, 2025 and 2024, respectively.

Interest income was $1.1 million and $1.4 million during the six months ended December 31, 2025 and 2024, respectively.

Other Income (Expense), Net

Other income (expense), net was income of $455,000 and expense of $140,000 during the three months ended September 30, 2025 and 2024, respectively.

Other income (expense), net was an expense of $32,000 and $431,000 during the three months ended December 31, 2025 and 2024, respectively.

Other income (expense), net was income of $423,000 and expense of $571,000 during the six months ended December 31, 2025 and 2024, respectively.

Other income (expense), net primarily included foreign exchange rate fluctuations on international trade receivables, net of transactions.

1 unchanged sentence

Provision for income taxes consists of federal, state, and foreign income taxes.

We recorded income tax provision of $930,000 and $488,000 for the three months ended September 30, 2025 and 2024, respectively.

We recorded income tax provision of $302,000 and $1,232,000 for the three and six months ended December 31, 2025, respectively.

We recorded income tax provision of $209,000 and $697,000 for the three and six months ended December 31, 2024, respectively.

We released a majority of our valuation allowance against U.S.

deferred tax assets on June 30, 2025 and recorded higher income before tax provision in the three months ended September 30, 2025.

deferred tax assets on June 30, 2025 and recorded higher income before tax provision in the three and six months ended December 31, 2025.

Liquidity and Capital Resources

As of September 30, 2025 and June 30, 2025, our principal sources of liquidity were cash and cash equivalents, restricted cash, and accounts receivable totaling $94.3 million and $95.7 million, respectively.

Our cash, cash equivalents and restricted cash were $70.9 million and $62.9 million as of September 30, 2025 and June 30, 2025, respectively.

As of December 31, 2025 and June 30, 2025, our principal sources of liquidity were cash and cash equivalents, restricted cash, and accounts receivable totaling $96.8 million and $95.7 million, respectively.

Our cash, cash equivalents and restricted cash were $83.1 million and $62.9 million as of December 31, 2025 and June 30, 2025, respectively.

Based upon our current business plan, we believe that existing capital resources will enable us to maintain current and planned operations for at least the next 12 months.

2 unchanged sentences

Our expectations as to our future cash flows and our future cash balances are subject to a number of assumptions, including assumptions regarding anticipated increases in our revenue, our ability to retain existing customers and customer purchasing and payment patterns, many of which are beyond our control.

For the three months ended September 30, 2025 and 2024, our cash flows were as follows (in thousands):

Three Months Ended

September 30,

For the six months ended December 31, 2025 and 2024, our cash flows were as follows (in thousands):

Six Months Ended

Net cash provided by operating activities

Net cash used in investing activities

Net cash used in financing activities

Net cash provided by (used in) financing activities

Cash provided by operating activities mainly consists of net income adjusted for non-cash expense items such as depreciation and amortization, expense associated with stock-based awards and warrants, the timing of employee related costs including commissions and bonus payments, and changes in operating assets and liabilities during the year.

Net cash provided by operating activities increased by $9.5 million during the three months ended September 30, 2025, from the same period in fiscal year 2025, driven primarily by the non-cash expense items adjusted to net income, timing of payments of accounts payable, and recognition of deferred revenue.

Net cash used in investing activities increased by $115,000 during the three months ended September 30, 2025, from the same period in fiscal year 2025, driven primarily by activities related to the purchase of equipment for employees and facility expenditures.

Net cash provided by operating activities increased by $13.2 million during the six months ended December 31, 2025, from the same period in fiscal year 2025, driven primarily by the change in net income, the timing of collections for accounts receivable, the timing of payments for accrued liabilities, and recognition of deferred revenue.

Net cash used in investing activities increased by $210,000 during the six months ended December 31, 2025, from the same period in fiscal year 2025, driven primarily by activities related to the purchase of equipment for employees and facility expenditures.

Historically, cash used in investing activities has been used to purchase equipment and software to support our business and growth.

Net cash used in financing activities decreased by $3.2 million during the three months ended September 30, 2025, from the same period in fiscal year 2025.

Net cash provided by (used in) financing activities increased by $7.2 million during the six months ended December 31, 2025, from the same period in fiscal year 2025.

Our current proceeds consist primarily of the exercise of employee stock options, our employee stock purchase plan, and funds used for repurchases of our common stock.

Funds used were $1.5 million and $4.6 million during the three months ended September 30, 2025 and 2024, respectively.

Funds used for repurchases of our common stock was $1.4 million and $7.0 million during the six months ended December 31, 2025 and 2024, respectively.

Our principal commitments consist of obligations under leases for office space.

Lease agreements are evaluated to determine whether an arrangement is or contains a lease in accordance with ASC 842, Leases .

As of September 30, 2025, the future non-cancelable minimum payments under these commitments were approximately $4.3 million.

As of December 31, 2025, the future non-cancelable minimum payments under these commitments were approximately $4.4 million.

Off-Balance Sheet Arrangements

As of September 30, 2025, we had no significant off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.

As of December 31, 2025, we had no significant off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.

New Accounting Pronouncements

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis