What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-02-20 compared with 2025-02-21 · 298 added, 288 removed, 1096 unchanged (35% of the section changed)

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Consolidated Balance Sheets

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Operations and Comprehensive I ncom e ( Loss )

Consolidated Statements of Stockholders' Equity

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We have audited the accompanying consolidated balance sheets of Five9, Inc.

and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes (collectively, the consolidated financial statements).

and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively, the consolidated financial statements).

We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

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Critical Audit Matters

The critical audit matter communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Sufficiency of audit evidence over revenues from subscription services and related usage

As discussed in Note 1 to the consolidated financial statements, the Company charges customers subscription fees, usually billed on a monthly basis, for access to the Company’s Intelligent CX Platform.

As discussed in Note 1 to the consolidated financial statements, the Company charges customers monthly subscription fees, for access to the Company’s Intelligent CX Platform.

For the year ended December 31, 2025, the Company recorded $1,149.1 million of revenue.

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The majority of the Company’s customers purchase both subscriptions and related telephony usage.

The related usage fees are based on the volume of minutes used for inbound and outbound customer interactions.

The related usage fees are based on the volume of minutes used for inbound and outbound client interactions.

There are high volumes of subscription and related usage transactions processed across multiple information technology (IT) systems.

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We evaluated the sufficiency of audit evidence obtained by assessing the results of procedures performed, including the appropriateness of the nature and extent of such evidence.

Accounting for the repurchase of 2025 convertible senior notes

As discussed in Note 6 to the consolidated financial statements, on March 1, 2024, the Company used part of the net proceeds from the issuance of the 2029 convertible senior notes to repurchase approximately $313.1 million aggregate principal amount of the outstanding 2025 convertible senior notes (the Repurchase Transaction).

The Repurchase Transaction was accounted for as a debt extinguishment.

As a result, the Company recorded an extinguishment gain of approximately $6.6 million in Other income (expense), net in the Company’s consolidated statements of operations and comprehensive loss.

We identified the evaluation of the accounting for the Repurchase Transaction as a critical audit matter.

A high degree of subjective auditor judgment was required to evaluate the appropriate accounting guidance for the Repurchase Transaction, specifically the technical assessment of the accounting for the debt extinguishment.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s debt process, including a control related to the Company’s evaluation of the appropriate accounting guidance and technical accounting assessment.

We evaluated the technical accounting assessment of the debt extinguishment by (1) obtaining and inspecting the underlying agreements, (2) evaluating the settlement price of the 2025 convertible senior notes on the date of the Repurchase Transaction by comparing the settlement price to the conversion price of the 2025 convertible senior notes, the conversion price to the trading price of the 2025 convertible senior notes, and the conversion price to the Company’s stock price, and (3) assessing whether there were any changes to conversion privileges.

We have served as the Company’s auditor since 2012.

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See accompanying notes to the consolidated financial statements.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(In thousands, except per share data)

9 unchanged sentences

Total operating expenses 604,004 615,701 576,374

Loss from operations ( 51,303 ) ( 98,576 ) ( 87,582 )

Income (loss) from operations 28,850 ( 51,303 ) ( 98,576 )

Other income (expense), net:

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Total other income (expense), net 16,092 38,548 19,153

Loss before income taxes ( 12,755 ) ( 79,423 ) ( 90,262 )

Income (loss) before income taxes 44,942 ( 12,755 ) ( 79,423 )

Provision for income taxes 5,526 40 2,341

Net loss $ ( 12,795 ) $ ( 81,764 ) $ ( 94,650 )

Net loss per share:

Basic and diluted $ ( 0.17 ) $ ( 1.13 ) $ ( 1.35 )

Shares used in computing net loss per share:

Basic and diluted 74,503 72,048 69,920

Comprehensive Loss:

Net loss $ ( 12,795 ) $ ( 81,764 ) $ ( 94,650 )

Other comprehensive income (loss) 54 3,270 ( 2,401 )

Comprehensive loss $ ( 12,741 ) $ ( 78,494 ) $ ( 97,051 )

Net income (loss) $ 39,416 $ ( 12,795 ) $ ( 81,764 )

Net income (loss) per share:

Basic $ 0.51 $ ( 0.17 ) $ ( 1.13 )

Diluted $ 0.45 $ ( 0.17 ) $ ( 1.13 )

Shares used in computing net income (loss) per share:

Basic 76,916 74,503 72,048

Diluted 88,002 74,503 72,048

Comprehensive Income (Loss):

Net income (loss) $ 39,416 $ ( 12,795 ) $ ( 81,764 )

Other comprehensive income 261 54 3,270

Comprehensive income (loss) $ 39,677 $ ( 12,741 ) $ ( 78,494 )

See accompanying notes to the consolidated financial statements.

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Issuance of common stock upon partial conversion of the 2023 convertible senior notes 2 — — — — —

Partial unwind of capped calls and retirement of common stock related to the 2023 convertible senior notes ( 119 ) — 10 — — 10

Settlement at maturity of the outstanding capped calls and retirement of common stock related to the 2023 convertible senior notes ( 371 ) — 74,453 — — 74,453

Issuance of common stock upon exercise of stock options 491 — 9,127 — — 9,127

Issuance of common stock upon vesting of restricted stock units 1,844 2 ( 2 ) — — —

Shares held for tax withholdings ( 40 ) — ( 3,270 ) — — ( 3,270 )

Issuance of common stock under ESPP 344 — 15,927 — — 15,927

Stock-based compensation — — 210,377 — — 210,377

Other comprehensive loss — — — ( 2,401 ) — ( 2,401 )

Other comprehensive income — — — 3,270 — 3,270

Net loss — — — — ( 81,764 ) ( 81,764 )

Balance as of December 31, 2023 73,317 73 942,280 582 ( 404,850 ) 538,085

Issuance of common stock upon partial conversion of the 2023 convertible senior notes 2 — — — — —

Settlement at maturity of the outstanding capped calls and retirement of common stock related to the 2023 convertible senior notes ( 371 ) — 74,453 — — 74,453

Issuance of new capped calls associated with the 2029 convertible senior notes — — ( 93,438 ) — — ( 93,438 )

Partial termination of existing capped calls associated with the 2025 convertible senior notes — — 539 — — 539

Issuance of common stock upon exercise of stock options 26 — 481 — — 481

Issuance of common stock upon vesting of restricted stock units 2,093 2 ( 2 ) — — —

Shares held for tax withholdings ( 40 ) — ( 3,270 ) — — ( 3,270 )

Issuance of common stock under ESPP 372 1 14,797 — — 14,798

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Balance as of December 31, 2024 75,808 76 1,039,125 636 ( 417,645 ) 622,192

Issuance of new capped calls associated with the 2029 convertible senior notes — — ( 93,438 ) — — ( 93,438 )

Partial termination of existing capped calls associated with the 2025 convertible senior notes — — 539 — — 539

Share repurchases ( 1,927 ) ( 2 ) ( 49,998 ) — — ( 50,000 )

Issuance of common stock upon exercise of stock options 156 — 3,137 — — 3,137

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Other comprehensive income — — — 261 — 261

Net loss — — — — ( 12,795 ) ( 12,795 )

Net income — — — — 39,416 39,416

Balance as of December 31, 2025 77,194 $ 77 $ 1,163,072 $ 897 $ ( 378,229 ) $ 785,817

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Cash flows from operating activities:

Net loss $ ( 12,795 ) $ ( 81,764 ) $ ( 94,650 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Net income (loss) $ 39,416 $ ( 12,795 ) $ ( 81,764 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization 61,764 52,905 48,515

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Deferred taxes - tax benefit from acquisition 524 ( 5,482 ) —

Change in fair value of contingent consideration — — 260

Payment of contingent consideration liability in excess of acquisition-date fair value — — ( 5,900 )

Other 45 ( 1,051 ) 657

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Capitalization of internal-use software development costs ( 39,135 ) ( 22,223 ) ( 9,537 )

Payments of initial direct costs — — ( 266 )

Cash paid for an equity investment in a privately-held company — — ( 2,000 )

Payments of initial direct lease costs ( 286 ) — —

Cash paid to acquire Acqueon Inc.

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— 99 ( 80,588 )

Net cash (used in) provided by investing activities ( 266,550 ) ( 259,562 ) 30,963

Net cash provided by (used in) investing activities 122,305 ( 266,550 ) ( 259,562 )

Cash flows from financing activities:

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Repurchase of a portion of 2025 convertible senior notes — ( 304,485 ) —

Repurchase of a portion of 2023 convertible senior notes — — ( 34,067 )

Repayment of outstanding 2023 convertible senior notes at maturity — — ( 169 )

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Cash received from partial termination of capped calls associated with the 2025 convertible senior notes — 539 —

Repayment of outstanding 2025 convertible senior notes at maturity ( 434,405 ) — —

Proceeds from exercise of common stock options 3,137 481 9,127

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Payment of employee taxes related to vested RSUs — — ( 3,270 )

Payment of contingent consideration liability up to acquisition-date fair value — — ( 18,100 )

Cash paid for repurchase of the Company's common stock ( 50,000 ) — —

Payment of holdbacks related to acquisitions — — ( 500 )

Payments of finance leases ( 9,770 ) ( 4,012 ) ( 989 )

Net cash provided by (used in) financing activities 342,725 94,579 ( 30,232 )

Net increase (decrease) in cash, cash equivalents and restricted cash 219,343 ( 36,145 ) 89,596

Net cash (used in) provided by financing activities ( 478,566 ) 342,725 94,579

Net (decrease) increase in cash, cash equivalents and restricted cash ( 130,054 ) 219,343 ( 36,145 )

Cash, cash equivalents and restricted cash:

Beginning of year 144,842 180,987 91,391

End of year $ 364,185 $ 144,842 $ 180,987

Beginning of period 364,185 144,842 180,987

End of period $ 234,131 $ 364,185 $ 144,842

Supplemental disclosures of cash flow data:

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The Company was incorporated in Delaware in 2001 and is headquartered in San Ramon, California.

The Company has offices in Europe, Asia and Australia, which primarily provide research, development, sales, marketing, and customer support services.

In addition to the United States, the Company has offices in Europe, Asia and Australia, which primarily provide research, development, sales, marketing, and customer support services.

Basis of Presentation

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Use of Estimates

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

The significant estimates made by management affect revenue and related reserves, as well as the fair value of assets acquired and liabilities assumed through business combinations.

The preparation of consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, including accompanying notes and the reported amounts of revenue and expenses during the reporting period.

The significant estimates made by management affect revenue and related reserves, as well as the fair value of assets acquired and liabilities assumed through business combinations and the fair value of the performance-based restricted stock units (“PRSUs”).

Management periodically evaluates such estimates and they are adjusted prospectively based upon such periodic evaluation.

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For these subsidiaries, the monetary assets and liabilities resulting from foreign currency transactions are adjusted to reflect the exchange rate as of the balance sheet date.

Foreign currency transaction gains and losses were not significant in any period and are reported in “Other income (expense), net” in the consolidated statements of operations and comprehensive loss.

Cash and Cash Equivalents

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The Company monitors its available-for-sale debt securities for potential impairment on a quarterly basis.

If the Company intends to sell a debt security or it is more likely than not that the Company will be required to sell the security before recovery, then a decline in fair value below cost is recorded as an impairment charge in interest income and other in the consolidated statements of operations.

In other cases, the Company further assesses whether the decline in fair value below cost is due to credit or non-credit related factors.

Any credit-related unrealized losses are recognized as an allowance on the consolidated balance sheets with a corresponding charge in interest income and other in the consolidated statements of operations and comprehensive loss.

Non-credit related unrealized losses and unrealized gains on available-for-sale debt securities are included in accumulated other comprehensive income.

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The Company has not experienced any losses in such accounts.

As of December 31, 2025, there was one customer that represented 11 % of accounts receivable.

As of December 31, 2024, there was no customer that represented more than 10% of accounts receivable.

As of December 31, 2023, there was one customer which represented 11 % of accounts receivable.

For the years ended December 31, 2025, 2024 and 2023, no single customer represented more than 10% of revenue.

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Preliminary project activities include conceptual formulation, evaluation and final selection of alternatives, planning, proof of concept and requirement analysis of the selected alternative.

implementation stage begins when the internal-use software is ready for its intended use, and includes all internal and external training and application maintenance activities.

The post-implementation stage begins when the internal-use software is ready for its intended use, and includes all internal and external training and application maintenance activities.

Capitalized internal-use software development costs are included within property and equipment, net on the consolidated balance sheets, and are amortized over the estimated useful life of the software, which is three years .

The related amortization expense is recognized in cost of revenue in the consolidated statements of operations and comprehensive loss.

The related amortization expense is recognized in cost of revenue in the consolidated statements of operations and comprehensive income (loss).

Maintenance and repairs of property and equipment are charged to expense as incurred, and improvements and betterments are capitalized.

When assets are retired or otherwise disposed of, the cost and accumulated depreciation and amortization are removed from the consolidated balance sheet and any resulting gain or loss is reflected in the consolidated statements of operations and comprehensive loss in the period realized.

When assets are retired or otherwise disposed of, the cost and accumulated depreciation and amortization are removed from the consolidated balance sheets and any resulting gain or loss is reflected in the consolidated statements of operations and comprehensive income (loss) in the period realized.

The Company evaluates the recoverability of property and equipment for possible impairment whenever events or circumstances indicate that the carrying amount of such assets or asset groups may not be recoverable.

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During 2024, the Company recognized impairment losses recorded in general and administrative expenses of $ 1.9 million as a result of its commitment to close two operating lease facilities and $ 0.3 million related to the associated leasehold improvements and property and equipment.

During 2025, the Company recorded impairment charges of property and equipment in the amount of $ 0.8 million.

Business Combinations

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In addition, uncertain tax positions and tax-related valuation allowances are initially established in connection with a business combination as of the acquisition date.

Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated statements of operations and comprehensive loss.

Goodwill and Intangible Assets

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Intangible assets, consisting of acquired developed technology, trademarks and customer relationships, are carried at cost less accumulated amortization.

All intangible assets have been determined to have definite lives and are amortized on a straight-line basis over their estimated remaining economic lives, ranging from three to eight years .

All intangible assets have been determined to have definite lives and are amortized on a straight-line basis over their estimated remaining economic lives, ranging from three to 8 years.

Amortization expense related to developed technology is included in cost of revenue.

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The Company charges customers monthly subscription fees for access to its Intelligent CX Platform, primarily based on the number of licenses, as well as on a consumption or capacity basis for its AI solutions.

Licenses are defined as the maximum number of named agents allowed to concurrently access the Intelligent CX Platform.

Licenses are defined as

the maximum number of named agents allowed to concurrently access the Intelligent CX Platform.

Customers typically have more named agents than licenses.

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The fair value of restricted stock units (“RSUs”), including performance-based restricted stock units (“PRSUs”) subject to performance conditions, is equal to the fair value of the Company’s common stock on the date of grant.

The fair value of PRSUs subject to market conditions

are determined using a Monte Carlo Simulation model.

The fair value of PRSUs subject to market conditions are determined using a Monte Carlo Simulation model.

Compensation expense is recognized net of actual forfeitures over the service period, which is generally the vesting period.

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The Company records a valuation allowance to reduce its deferred tax assets to the amount of future tax benefit that is more likely than not to be realized.

As of December 31, 2024 and 2023, the Company recorded a full valuation allowance against the U.S.

December 31, 2025 and 2024, the Company recorded a full valuation allowance against the U.S.

net deferred tax assets because of its history of operating losses in the United States.

As of December 31, 2025, the Company recognized a net deferred tax asset balance of $ 2.7 million related to its operations in Australia, Germany, India and the U.K.

As of December 31, 2024, the Company recognized a net deferred tax asset balance of $ 3.5 million related to its operations in Australia, Germany, India, Portugal and the U.K.

As of December 31, 2023, the Company recognized a net deferred tax asset balance of $ 3.8 million related to its operations in Australia and Portugal, and placed a valuation allowance against its U.K.

net deferred tax asset balance.

The Company classifies interest and penalties on unrecognized tax benefits as income tax expense.

Comprehensive loss

Comprehensive loss consists of net loss, and unrealized gains or losses on available-for-sale marketable investments.

The Company presents comprehensive loss as part of the consolidated statements of operations and comprehensive loss.

The changes in the accumulated balances of the components of other comprehensive loss were not material for the periods presented.

Net Loss Per Share

Basic net loss per share is calculated by dividing net loss by the weighted average number of shares of common stock outstanding during the period, and excludes any dilutive effects of employee stock-based awards and potential shares issuable upon conversion of the convertible senior notes.

Diluted net loss per share is computed giving effect to all potentially dilutive shares of common stock, including common stock issuable upon exercise of stock options, vesting of RSUs and PRSUs, and shares of common stock issuable upon conversion of convertible senior notes.

Comprehensive income (loss)

Comprehensive income (loss) consists of net income (loss), and unrealized gains or losses on available-for-sale marketable investments.

The Company presents comprehensive income (loss) as part of the consolidated statements of operations and comprehensive income (loss).

The changes in the accumulated balances of the components of other comprehensive income (loss) were not material for the periods presented.

Net income (loss) per share

Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period, and excludes any dilutive effects of employee stock-based awards and potential shares issuable upon conversion of the convertible senior notes.

Diluted net income (loss) per share is computed giving effect to all potentially dilutive shares of common stock, including common stock issuable upon exercise of stock options, vesting of RSUs and PRSUs, and shares of common stock issuable upon conversion of convertible senior notes.

In periods of net loss, all potentially issuable shares of common stock are excluded from the diluted net loss per share computation because they are anti-dilutive.

Therefore, basic and diluted net loss per share are the same for all years presented in the Company’s consolidated statements of operations and comprehensive loss.

Indemnification

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Recently Adopted Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standard Update (“ ASU”) No.

2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures , which provides updates to qualitative and quantitative reportable segment disclosure requirements, including enhanced disclosures about significant segment expenses and increased interim disclosure requirements, among others.

This ASU is effective for the Company’s fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted, and the amendments should be applied retrospectively.

The Company’s adoption of ASU 2023-07 did not have a material impact on its financial

position and results of operations but did result in incremental disclosures.

See Note 11 for further information on the impact of this adoption.

Recent Accounting Pronouncements Not Yet Effective

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

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Early adoption is permitted and may be adopted on a prospective or retrospective basis.

The Company is currently evaluating the impact of this ASU on its consolidated financial statement disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) .

The Company’s adoption of ASU 2023-09 did not have a material impact on its financial position and results of operations but did result in incremental disclosures.

See Note 9 for further information on the impact of this adoption.

Recent Accounting Pronouncements Not Yet Effective

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) , and in January 2025, the FASB issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Clarifying the Effective Date , which clarified the effective date of ASU 2024-03.

This ASU is intended to improve the decision-usefulness of expense information on public companies’ income statements through disaggregation of relevant expense captions in the notes to the financial statements.

The ASU is effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted.

The guidance, as clarified by ASU 2025-01, is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted.

The Company is currently assessing the impact of this ASU on its consolidated financial statements and related disclosures.

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The ASU is effective for annual and interim reporting periods beginning after December 15, 2025.

Early adoption is permitted for entities that have implemented ASU 2020-06, with the option to apply the guidance prospectively or retrospectively.

The Company is currently assessing the impact of this ASU on its consolidated financial statements.

Early adoption is permitted for entities that have implemented

ASU 2020-06, with the option to apply the guidance prospectively or retrospectively.

The Company will adopt this standard in the first quarter of 2026 on a prospective basis and will apply it to any future settlements of convertible debt instruments, if applicable.

The Company does not expect this standard to have a material impact on its consolidated financial statements.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets.

The ASU provides a practical expedient to assume that conditions as of the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606.

This guidance is effective for reporting periods beginning after December 15, 2025, with early adoption permitted.

The Company will adopt this standard in the first quarter of 2026 and will elect the practical expedient.

The Company does not expect this standard to have a material impact on its consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06 , Intangibles - Goodwill and Other-Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software.

The amendments are intended to modernize the recognition and capitalization framework to reflect current software development practices, including iterative and agile methodologies, by removing references to development project stages.

It requires that an entity capitalize software costs when both of the following occur:

(1) management has authorized and committed to funding the software project and (2) it is probable that the project will be completed and the software will be used to perform the function intended.

The amendments in ASU 2025-06 are effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods.

Early adoption is permitted as of the beginning of an annual reporting period.

The Company is currently assessing the impact of this ASU on its consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270) Narrow Scope Improvements , which is intended to improve the navigability of the guidance in ASC 270 and clarity when it applies.

Under the amendments, an entity is subject to ASC 270 if it provides interim financial statements and notes in accordance with GAAP.

ASU 2025-11 also addresses the form and content of such financial statements, adds lists to ASC 270 of the interim disclosures required by all other codification topics, and establishes a principle under which an entity must disclose events since the end of the last annual reporting period that have a material impact on the entity.

ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027.

Early adoption is permitted.

The Company is currently assessing the impact of this ASU on its consolidated financial statements and related disclosures.

Contract Balances

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Commercial paper 9,600 8 — 9,608

Municipal bonds 927 1 — 928

Corporate bonds 43,550 124 ( 6 ) 43,668

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Certificates of deposit — 747 — 747

treasury securities 42,946 — — 42,946

agency and government-sponsored securities — 41,832 — 41,832

Commercial paper — — — —

Total cash equivalents $ 103,637 $ 747 $ — $ 104,384

12 unchanged sentences

treasury securities 42,946 — — 42,946

agency and government-sponsored securities — 41,832 — 41,832

Commercial paper — — — —

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Commercial paper — 9,608 — 9,608

Municipal bonds — 928 — 928

Corporate bonds — 43,668 — 43,668

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In connection with the issuance of the 2029 convertible senior notes, the Company used part of the net proceeds from the issuance to repurchase approximately $ 313.1 million aggregate principal amount of its 0.50 % convertible senior notes due 2025 (the "2025 convertible senior notes").

As of December 31, 2024 and December 31, 2023, the estimated fair value of the outstanding 2025 convertible senior notes was $ 423.2 million and $ 718.3 million, respectively.

As of December 31, 2024, the estimated fair value of the outstanding 2025 convertible senior notes was $ 423.2 million.

The 2025 convertible senior notes matured on June 1, 2025, and the Company settled its obligations with respect to the 2025 convertible senior notes in cash in connection therewith.

As of December 31, 2025 and December 31, 2024, the estimated fair value of the outstanding 2029 convertible senior notes was $ 674.1 million and $ 674.8 million, respectively.

The fair values were determined based on the quoted price of the convertible senior notes in an inactive market on the last trading day of the reporting period and have been classified as Level 2 in the fair value hierarchy.

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During 2024, the Company noted an indicator of impairment of this investment and recorded a $ 1.3 million impairment charge.

The Company concluded that there was no further indicator of impairment of this investment as of December 31, 2025.

Except for the equity investment described above, there were no assets or liabilities measured at fair value on a non-recurring basis as of December 31, 2025 and 2024.

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agency and government-sponsored securities — 41,832

Commercial paper — 1,498

Total cash and cash equivalents $ 232,084 $ 362,546

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Depreciation and amortization expense associated with property and equipment was $ 47.3 million, $ 40.3 million and $ 36.5 million for the years ended December 31, 2025, 2024 and 2023, respectively.

During the years ended December 31, 2025 and 2024, the Company recorded impairment charges of property and equipment in the amount of $ 0.8 million and $ 0.3 million, respectively.

Other assets consisted of the following (in thousands):

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Accrued federal fees 3,911 4,913

Sales tax liabilities 3,983 3,756

Sales and other tax liabilities 3,272 3,983

Accrued and other current liabilities $ 84,120 $ 83,720

2 unchanged sentences

Deferred tax liabilities 56 186

Sales tax liabilities 244 926

Sales and other tax liabilities 1,357 244

Other long-term liabilities 4,589 5,422

1 unchanged sentence

Goodwill and Intangible Assets

In 2024, goodwill of $ 138.2 million and intangible assets of $ 39.9 million were recorded as a result of the Company's acquisition of Acqueon, Inc.

In 2023, goodwill of $ 62.0 million and intangible assets of $ 22.1 million were recorded as a result of the Company’s acquisition of Aceyus, Inc.

In 2024, goodwill and intangible assets were recorded as a result of the Company's acquisition of Acqueon, Inc.

See Note 14 for further details.

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Beginning of the period, January 1, 2024 $ 227,412 $ 38,323

Addition (Aceyus) 61,992 22,150

Amortization — ( 12,019 )

End of the period, December 31, 2023 227,412 38,323

Addition (Acqueon) 138,181 39,900

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End of the period, December 31, 2024 365,436 65,632

Measurement period adjustment (Acqueon) 817 —

Amortization — ( 14,466 )

End of the period, December 31, 2025 $ 366,253 $ 51,166

During the fourth quarter of 2025, the Company completed its annual goodwill impairment test.

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The Repurchase Transaction was accounted for as a debt extinguishment.

The difference between the consideration used to extinguish the 2025 convertible senior notes and the carrying value of the 2025 convertible senior notes (including unamortized debt discount and issuance costs) resulted in an extinguishment gain of approximately $ 6.6 million recorded in Other income (expense), net on the Company’s consolidated statements of operations and comprehensive loss.

In connection with the Repurchase Transaction, the Company also entered into a partial termination agreement with each bank counterparty and unwound a corresponding portion of the previously purchased capped call instruments entered into in connection with the issuance of the 2025 convertible senior notes (the “2025 Capped Calls”).

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and structurally junior to all indebtedness and other liabilities.

The net carrying amount of the 2029 convertible senior notes as of December 31, 2024 was as follows (in thousands):

December 31, 2024

The net carrying amount of the 2029 convertible senior notes as of December 31, 2025 and 2024 was as follows (in thousands):

December 31, 2025 December 31, 2024

Principal $ 747,500 $ 747,500

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Interest expense related to the 2029 convertible senior notes was as follows (in thousands):

December 31, 2024

December 31, 2025 December 31, 2024

Contractual interest expense $ 7,475 $ 6,229

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In May and June 2020, the Company issued $ 747.5 million aggregate principal amount of 2025 convertible senior notes in a private offering, which aggregate principal amount included the exercise in full of the initial purchasers’ option to purchase up to an additional $ 97.5 million principal amount of the 2025 convertible senior notes.

The 2025 convertible senior notes mature on June 1, 2025 and bear interest at a fixed rate of 0.500 % per annum, payable semiannually in arrears on June 1 and December 1 of each year, beginning on December 1, 2020.

The total net proceeds from the issuance of the 2025 convertible senior notes, after deducting initial purchasers' discounts and commissions and estimated debt issuance costs, were approximately $ 728.8 million.

In March 2024, the Company used part of the net proceeds from the issuance of the 2029 convertible senior notes to repurchase $ 313.1 million aggregate principal amount of the 2025 convertible senior notes in privately-negotiated transactions.

As of December 31, 2024, after giving effect to the Repurchase Transaction, approximately $ 434.4 million aggregate principal amount of 2025 convertible senior notes remained outstanding.

Each $1,000 principal amount of the 2025 convertible senior notes is initially convertible into 7.4437 shares of the Company’s common stock (the “2025 Conversion Option”), which is equivalent to an initial conversion price of approximately $ 134.34 per share of common stock, subject to adjustment upon the occurrence of specified events.

The initial conversion price represents a premium of approximately 30 % to the $ 103.34 per share closing price of the Company’s common stock on The Nasdaq Global Market on May 21, 2020.

There have been no changes to the initial conversion price of the 2025 convertible senior notes since issuance.

The 2025 convertible senior notes are convertible, in multiples of $1,000 principal amount, at the option of the holders prior to the close of business on the business day immediately preceding March 1, 2025, only under the following circumstances:

(1) during any calendar quarter commencing after the calendar quarter ending on September 30, 2020 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the conversion price on each applicable trading day;

(2) during the five business day period after any five consecutive trading day period (the “2025 Measurement Period”) in which the trading price (as defined in the 2025 Indenture governing the 2025 convertible senior notes) per $1,000 principal amount of the 2025 convertible senior notes for each trading day of the 2025 Measurement Period was less than 98 % of the product of the last reported sale price of the Company’s common stock and the conversion rate in effect on each such trading day;

(3) if the Company calls any or all of the 2025 convertible senior notes for redemption, at any time prior to the close of business on the second scheduled

trading day immediately preceding the redemption date;

or (4) upon the occurrence of specified corporate events.

On or after March 1, 2025 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their 2025 convertible senior notes, in multiples of $1,000 principal amount, at the option of the holder regardless of the foregoing circumstances.

Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election.

If the Company undergoes a fundamental change (as defined in the indenture governing the 2025 convertible senior notes), subject to certain conditions, holders may require the Company to repurchase for cash all or any portion of their 2025 convertible senior notes, in principal amounts of $1,000 or a multiple thereof, at a fundamental change repurchase price equal to 100 % of the principal amount of the 2025 convertible senior notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date.

In addition, following certain corporate events or if the Company issues a notice of redemption, it will, under certain circumstances, increase the conversion rate for holders who elect to convert their notes in connection with such corporate event or during the relevant redemption period.

The closing market price of the Company's common stock of $ 40.64 per share as of December 31, 2024, the last trading day during the three months ended December 31, 2024, was below $ 174.64 per share, which represents 130 % of the initial conversion price of $ 134.34 per share.

Additionally, the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day, December 31, 2024, was not greater than or equal to 130 % of the initial conversion price.

As such, during the three months ended December 31, 2024, the conditions allowing holders of the 2025 convertible senior notes to convert were not met.

The 2025 convertible senior notes are therefore not convertible during the three months ending March 31, 2025 under this conditional conversion feature.

However, on or after March 1, 2025 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their 2025 convertible senior notes, in multiples of $1,000 principal amount, at the option of the holder regardless of the foregoing circumstances.

The 2025 convertible senior notes became redeemable at the Company’s option on June 6, 2023.

The Company may redeem for cash all or any portion of the 2025 convertible senior notes, at its option, prior to March 1, 2025, if the last reported sale price of its common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending not more than two trading days immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100 % of the principal amount of the 2025 convertible senior notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

No sinking fund is provided for the 2025 convertible senior notes.

During the three months ended December 31, 2024, the conditions allowing the Company to redeem for cash all or any portion of the 2025 convertible senior notes were not met.

The 2025 convertible senior notes are the Company’s senior unsecured obligations and rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the 2025 convertible senior notes;

equal in right of payment to any of the Company’s unsecured indebtedness that is not so subordinated;

effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness;

and structurally junior to all indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries.

The net carrying amount of the 2025 convertible senior notes as of December 31, 2024 and 2023 was as follows (in thousands):

December 31, 2024 December 31, 2023

Principal $ 747,500 $ 747,500

Unamortized issuance costs ( 915 ) ( 5,375 )

Principal repaid ( 313,095 ) —

Net carrying amount $ 433,490 $ 742,125

The 2025 convertible senior notes matured on June 1, 2025, and the Company settled its obligations with respect to the 2025 convertible senior notes in cash in connection therewith.

Prior to maturity, the 2025 convertible senior notes bore interest at a fixed rate of 0.500 % per annum, payable semiannually in arrears on June 1 and December 1 of each year.

The net carrying amount of the 2025 convertible senior notes as of December 31, 2024 was $ 433.5 million.

There were no 2025 convertible senior notes outstanding as of December 31, 2025.

Interest expense related to the 2025 convertible senior notes was as follows (in thousands):

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Total interest expense $ 1,820 $ 4,898 $ 7,486

The debt issuance costs are amortized into interest expense over the term of the 2025 convertible senior notes at an effective interest rate of 1.00 %.

In connection with the issuance of the 2025 convertible senior notes, the Company entered into privately negotiated capped call transactions (each a “2025 Capped Call,” and collectively the "2025 Capped Calls") with certain financial institutions.

The 2025 Capped Calls each have an initial strike price of approximately $ 134.34 , which corresponds to the initial conversion price of the 2025 convertible senior notes.

The initial cap price of the 2025 Capped Calls was $ 206.68 per share and is subject to certain adjustments under the terms of the 2025 Capped Calls.

In connection with the Repurchase Transaction, the Company unwound a portion of the 2025 Capped Calls.

The 2025 Capped Calls each had an initial strike price of approximately $ 134.34 , which corresponded to the initial conversion price of the 2025 convertible senior notes.

In connection with the

Repurchase Transaction, the Company unwound a portion of the 2025 Capped Calls.

Refer to the Repurchase Transaction section above for further information.

There are no changes or amendments made to the remaining 2025 Capped Calls.

The remaining 2025 Capped Calls cover, subject to anti-dilution adjustments, approximately 3.2 million shares of the Company’s common stock.

Each 2025 Capped Call is subject to adjustment upon the occurrence of specified extraordinary events affecting the Company, including merger events, tender offers, and announcement events.

In addition, each 2025 Capped Call is subject to certain specified additional disruption events that may give rise to a termination of each 2025 Capped Call, including nationalization, insolvency or delisting, changes in law, failures to deliver, insolvency filings, and hedging disruptions.

For accounting purposes, each 2025 Capped Call is a separate transaction from, and not part of the terms of the 2025 convertible senior notes.

As these transactions meet certain accounting criteria, the 2025 Capped Calls are recorded in stockholders' equity and are not accounted for as derivatives.

The 2025 Capped Calls will not be remeasured as long as they continue to meet the conditions for equity classification.

The remaining 2025 Capped Calls covered, subject to anti-dilution adjustments, approximately 3.2 million shares of the Company’s common stock.

For accounting purposes, each 2025 Capped Call was a separate transaction from, and not part of the terms of the 2025 convertible senior notes.

As these transactions met certain accounting criteria, the 2025 Capped Calls were recorded in stockholders' equity and were not accounted for as derivatives.

Upon maturity, the outstanding 2025 Capped Calls associated with the 2025 convertible senior notes were settled with no consideration received since their strike prices were in excess of the Company's stock price at that time.

Stockholders’ Equity

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As of December 31, 2025 and 2024, the Company had 77,194,499 and 75,807,505 shares of common stock issued and outstanding, respectively.

During 2023, the Company issued 1,445 shares of common stock in connection with 2023 convertible senior note settlements.

During 2023, the Company also received 370,877 shares from the partial unwind and settlement of capped calls resulting from the settlement of its 2023 convertible senior notes.

The receipt of the 370,877 shares reduced the number of shares of common stock outstanding.

Holders of the Company’s common stock are entitled to dividends, if and when declared by the board of directors.

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As of December 31, 2025 and 2024, there were no shares of preferred stock issued and outstanding.

Share Repurchase Program

In October 2025, the Company’s Board of Directors approved the 2025 Repurchase Program, which authorized the repurchase of up to $ 150.0 million of the Company’s common stock through December 31, 2027.

The shares may be repurchased at management’s discretion, either on the open market or in privately negotiated block transactions.

Management’s decision to repurchase shares will depend on price, blackout periods and other corporate developments.

Purchases may occur from time to time and no maximum purchase price has been set.

As part of the Company’s Share Repurchase Program, on November 11, 2025, the Company entered into the ASR program with JPM.

Under the terms of the ASR program, on November 12, 2025, the Company made an aggregate payment of $ 50 million and received an initial delivery of 1,926,782 shares of the Company’s common at an initial price of $ 20.76 per share, representing approximately 80 % of the total number of shares of the Company’s common stock expected to be purchased under the ASR program.

The shares received were immediately retired and recorded as a reduction to additional paid-in-capital within stockholders’ equity.

Given the Company’s ability to settle in shares, as described below, the remaining prepaid forward contract amount was classified as a reduction to additional-paid-in-capital upon issuance and as of December 31, 2025.

Under the ASR program, upon settlement, the Company either receives additional shares of common stock from JPM or is required to deliver additional shares of common stock or cash to JPM, at the Company’s election.

The final number of shares the Company repurchased was based on the average of the daily volume-weighted average prices of the Company’s common stock during the term of the ASR program, less a discount and subject to adjustments pursuant to the terms and conditions of the ASR program.

Cash settlement is not mandatory pursuant to the terms of the ASR program.

The ASR program was completed on February 2, 2026, which resulted in delivery of 701,517 additional shares.

The final share settlement was based on the average daily volume-weighted average price of our shares, netted against the initial delivery.

As of December 31, 2025, approximately $ 100.0 million remained available under the Share Repurchase Program.

Common Stock Reserved for Future Issuance

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Equity Incentive Plans

Prior to the Company’s initial public offering (“IPO”) in April 2014, the Company granted stock options under its Amended and Restated 2004 Equity Incentive Plan, as amended (“2004 Plan”).

Under the terms of the 2004 Plan, the Company had the ability to grant incentive and nonstatutory stock options.

Incentive stock options could only be granted to Company employees.

Nonstatutory stock options could be granted to Company employees, directors and consultants.

Such options are exercisable at prices, as determined by the board of directors, generally equal to the fair value of the Company’s common stock at the date of grant.

Options granted to employees generally vest over a four-year period, with an initial vesting period of 12 months for 25 % of the shares, and the remaining 75 % of the shares vesting monthly on a ratable basis over the remaining 36 months.

Options generally expire 10 years after the grant date and are generally exercisable upon vesting.

Vested options generally expire 90 days after termination of the optionee’s employment or relationship as a consultant or director, unless otherwise extended by the terms of the stock option agreement.

In March 2014, the Company’s board of directors and stockholders approved the 2014 Equity Incentive Plan (“2014 Plan”) and 5,300,000 shares of common stock were authorized for issuance under the 2014 Plan.

In addition, on the first day of each year beginning in 2015 and ending in 2024, the 2014 Plan provides for an annual automatic increase to the shares reserved for issuance in an amount equal to 5 % of the total number of shares outstanding on December 31st of the preceding calendar year or a lesser number as determined by the Company’s board of directors.

No further grants were made under the 2004 Plan once the 2014 Plan became effective on April 3, 2014.

The 2014 Plan replaced the Amended and Restated 2004 Equity Incentive Plan, as amended (“2004 Plan”), and no further grants were made under the 2004 Plan once the 2014 Plan became effective on April 3, 2014.

Upon the effectiveness of the 2014 Plan, all shares reserved for future issuance under the 2004 Plan became available for issuance under the 2014 Plan.

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If these assumed stock options are cancelled, forfeited or expire unexercised, the underlying shares do not become available for future grant.

As of the acquisition date, the estimated fair value of the assumed unvested options was $ 7.6 million, of which $ 0.2 million was recognized as goodwill and the balance of $ 7.4 million is being recognized as stock-based compensation expense over the remaining service period of the assumed unvested stock options.

Stock Options

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Exercisable as of December 31, 2025 389 51.42 2.4 1,355

(1) The aggregate intrinsic value amounts are computed based on the difference between the exercise price of the

stock options and the fair market value of the Company’s common stock of $ 40.64 per share as of December 31, 2024 for all in-the-money stock options outstanding.

(1) The aggregate intrinsic value amounts are computed based on the difference between the exercise price of the stock options and the fair market value of the Company’s common stock of $ 20.05 per share as of December 31, 2025 for all in-the-money stock options outstanding.

Following is additional information pertaining to the Company’s stock option activity (in thousands, except per share data):

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PRSUs with Market and Service Conditions .

In 2022, the Company granted 284,282 PRSUs subject to market and service conditions (“market-based PRSUs”) with a grant date fair value of $ 30.6 million as part of its annual grant of equity incentive awards to certain executives and in connection with the appointment of Michael Burkland as its new Chief Executive Officer.

In 2022, the Company granted 284,282 market-based PRSUs subject to market and service conditions (“market-based PRSUs”) with a grant date fair value of $ 30.6 million as part of its annual grant of equity incentive awards to certain executives and in connection with the appointment of Michael Burkland as its Chief Executive Officer in 2022.

In 2023, the Company granted 35,921 market-based PRSUs with a grant date fair value of $ 3.1 million.

In 2024, the Company granted an additional 159,016 market-based PRSUs with a grant

date fair value of $ 9.6 million.

The amount that may be earned pursuant to the market-based PRSUs ranges from 0 % to 200 % of the target number based on the Company’s relative total shareholder return (“RTSR”) performance as compared to the companies in the S&P Software and Services Select Index during three one -year performance periods.

One-third of the total market-based PRSUs may be earned and settled in shares following the end of each -year performance period based on RTSR performance and subject to continued employment through the payment date.

If the Company’s absolute total shareholder return for any performance period is negative, then no more than 100 % of the target amount of market-based PRSUs for such period may be earned.

If an executive's employment with the Company terminates before the end of the final one -year performance period due to death or disability, 100 % (if due to death) or 50 % (if due to disability) of the unvested market-based PRSUs may be earned subject to ultimate RTSR performance in each remaining performance period.

Upon a qualifying termination of employment in connection with a change in control of the Company, the unvested market-based PRSUs will vest on a double-trigger basis (i) at the target level for the market-based PRSUs subject to the 2022-2024 performance period, (ii) for the market-based PRSUs subject to the 2023-2025 performance period, and (iii) for the market-based PRSUs subject to the 2024-2026 performance period, (a) at the target level for the uncompleted portions of the performance periods and (b) at the actual level of performance measured through the date of the change in control of the Company, based on the price per share paid in such change in control.

In 2024, the Company granted an additional 159,016 market-based PRSUs with a grant date fair value of $ 9.6 million.

In 2025, the Company granted 324,165 market-based PRSUs with a grant date fair value of $ 15.0 million.

The amount that may be earned pursuant to the market-based PRSUs ranges from 0 % to 200 % of the target number based on the Company’s relative total shareholder return

(“RTSR”) performance as compared to the companies in the S&P Software and Services Select Index during the performance period.

The 2024-2026 and 2025-2027 performance periods contain three overlapping measurement periods—a one-year period, a two-year period, and a three-year period.

The 2022-2024 and 2023-2025 performance periods contain three one-year measurement periods.

One-third of the total market-based PRSUs may be earned and settled in shares following the end of each measurement period based on RTSR performance and subject to continued employment through the payment date.

If the Company’s absolute total shareholder return for any measurement period is negative, then no more than 100 % of the target amount of market-based PRSUs for such period may be earned.

If an executive's employment with the Company terminates before the end of the final measurement period due to death or disability, 100 % (if due to death) or 50 % (if due to disability) of the unvested market-based PRSUs may be earned subject to ultimate RTSR performance in each remaining performance period.

Upon a qualifying termination of employment in connection with a change in control of the Company, the unvested market-based PRSUs subject to the 2023-2025, 2024-2026 and 2025-2027 performance periods will vest on a double-trigger basis (i) at the target level for the uncompleted portions of the performance periods and (ii) at the actual level of performance measured through the date of the change in control of the Company, based on the price per share paid in such change in control.

The fair value of the market-based PRSUs is determined on their grant date using a Monte Carlo Simulation model based upon assumptions presented below.

The Company recognizes the fair value of the market-based PRSUs ratably over their requisite service period.

During the first quarter of 2023, the Company certified the performance results for the 2022 measurement period for the market-based PRSUs subject to the 2022-2024 performance period.

Under the market-based PRSU agreements, the TSR payout percentage ranges from 0 % to 200 %, with a 50 % payout at the 25th TSR percentile (threshold), 100 % payout at the 55th TSR percentile (target), 200 % payout at the 90th percentile or greater (maximum) and no payout below the threshold performance level.

The Company determined that its actual total shareholder return was - 52.64 % for 2022, and that its relative total shareholder return ranking was in the 30.2 percentile relative to companies in the S&P Software & Services Select Index, which resulted in a payout percentage of 58.7 % of target.

During the first quarter of 2024, the Company certified the performance results for the 2023 measurement period for the market-based PRSUs subject to the 2022-2024 performance period.

The Company determined that its actual total shareholder return was 19.95 % for 2023, and that its relative total shareholder return ranking was in the 53.8 percentile relative to companies in the S&P Software & Services Select Index, which resulted in a payout percentage of 98.0 % of target.

During the first quarter of 2024, the Company also certified the performance results for the 2023 measurement period for the market-based PRSUs subject to the 2023-2025 performance period.

The Company determined that its actual total shareholder return was 19.95 % for 2023, and that its relative total shareholder return ranking was in the 50.5 percentile relative to companies in the S&P Software & Services Select Index, which resulted in a payout percentage of 92.5 % of target.

During the first quarter of 2025, the Company certified the performance results for the 2024 measurement period for the market-based PRSUs subject to the 2022-2024 performance period.

The Company determined that its actual total shareholder return was ( 47.25 )% for 2024, and that its relative total shareholder return ranking was in the 3.7 percentile relative to companies in the S&P Software & Services Select Index, which resulted in a payout percentage of 0.00 % of target.

During the first quarter of 2025, the Company certified the performance results for the 2024 measurement period for the market-based PRSUs subject to the 2023-2025 performance period.

The Company determined that its actual total shareholder return was ( 47.25 )% for 2024, and that its relative total shareholder return ranking was in the 2.9 percentile relative to companies in the S&P Software & Services Select Index, which resulted in a payout percentage of 0.0% of target.

During the first quarter of 2025, the Company also certified the performance results for the 2024 measurement period for the market-based PRSUs subject to the 2024-2026 performance period.

The Company determined that its actual total shareholder return was ( 47.25 )% for 2024, and that its relative total shareholder return ranking was in the 1.5 percentile relative to companies in the S&P Software & Services Select Index, which resulted in a payout percentage of 0.0 % of target.

PRSUs with Revenue and Service Conditions .

In 2022, the Company granted 66,167 PRSUs subject to revenue-based performance and service conditions (“revenue-based PRSUs”) with a grant date fair value of $ 6.6 million.

The amount of revenue-based PRSUs that may be earned will be determined based on achievement of two quarterly revenue goals.

One third of the revenue-based PRSUs may be earned based on achievement of the first revenue target and, if achieved, will vest in four quarterly installments, with the first installment occurring on the date such achievement is certified, subject to the executive's continuous service through the applicable vesting dates.

Two thirds of the revenue-based PRSUs may be earned based on achievement of the second revenue target and, if achieved, will vest in eight quarterly installments, with the first installment occurring on the date such achievement is certified, subject to the executive's continuous service through the applicable vesting dates.

The revenue-based PRSUs are otherwise on the Company's standard award terms for its market-based PRSUs.

During 2023, the Company certified that the first revenue target was achieved, and thus recognized the related stock-based compensation expense for this first revenue target.

However, the Company certified during the first quarter of 2024

that, as of December 31, 2023, the second revenue target was not achieved, and thus did not recognize the related stock-based compensation expense and cancelled the shares associated with this target.

Under the market-based PRSU agreements for the 2022-2024 performance period, the TSR payout percentage ranges from — % to 200 %, with a 50 % payout at the 25th TSR percentile (threshold), 100 % payout at the 55th TSR percentile (target), 200 % payout at the 90th percentile or greater (maximum) and no payout below the threshold performance level.

Under the market-based PRSU agreements for the 2023-2025, 2024-2026 and 2025-2027 performance periods, the TSR payout percentage ranges from — % to 200 %, with a 50 % payout at the 25th TSR percentile (threshold), 100 % payout at the 55th TSR percentile (target), 200 % payout at the 75th percentile or greater (maximum) and no payout below the threshold performance level.

During the first quarter of 2023, the Company certified the performance results for the first measurement period for the market-based PRSUs subject to the 2022-2024 performance period.

The Company determined that its actual total shareholder return for such measurement period was ( 52.64 )%, and that its relative total shareholder return ranking was in the 30.2 percentile relative to companies in the S&P Software & Services Select Index, which resulted in a payout percentage of 58.7 % of target.

During the first quarter of 2024, the Company certified the performance results for the second measurement period for the market-based PRSUs subject to the 2022-2024 performance period.

The Company determined that its actual total shareholder return for such performance period was 19.95 %, and that its relative total shareholder return ranking was in the 53.8 percentile relative to companies in the S&P Software & Services Select Index, which resulted in a payout percentage of 98.0 % of target.

During the first quarter of 2024, the Company also certified the performance results for the first measurement period for the market-based PRSUs subject to the 2023-2025 performance period.

The Company determined that its actual total shareholder return for such performance period was 19.95 %, and that its relative total shareholder return ranking was in the 50.5 percentile relative to companies in the S&P Software & Services Select Index, which resulted in a payout percentage of 92.5 % of target.

During the first quarter of 2025, the Company certified the performance results for the final measurement period for the market-based PRSUs subject to the 2022-2024 performance period.

The Company determined that its actual total shareholder return for such measurement period was ( 47.25 )%, and that its relative total shareholder return ranking was in the 3.7 percentile relative to companies in the S&P Software & Services Select Index, which resulted in a payout percentage of 0.00 % of target.

During the first quarter of 2025, the Company also certified the performance results for the second measurement period for the market-based PRSUs subject to the 2023-2025 performance period.

The Company determined that its actual total shareholder return for such measurement period was ( 47.25 )%, and that its relative total shareholder return ranking was in the 2.9 percentile relative to companies in the S&P Software & Services Select Index, which resulted in a payout percentage of 0.0 % of target.

During the first quarter of 2025, the Company also certified the performance results for the first measurement period for the market-based PRSUs subject to the 2024-2026 performance period.

The Company determined that its actual total shareholder return for such measurement period was ( 47.25 )%, and that its relative total shareholder return ranking was in the 1.5 percentile relative to companies in the S&P Software & Services Select Index, which resulted in a payout percentage of 0.0 % of target.

During the first quarter of 2026, the Company certified the performance results for the final measurement period for the market-based PRSUs subject to the 2023-2025 performance period.

The Company determined that its actual total shareholder return for such measurement period was ( 51.28 )%, and that its relative total shareholder return ranking was in the 10.0 percentile relative to companies in the S&P Software & Services Select Index, which resulted in a payout percentage of 0.0 % of target.

During the first quarter of 2026, the Company also certified the performance results for the second measurement period for the market-based PRSUs subject to the 2024-2026 performance period.

The Company determined that its actual total shareholder return for such measurement period was ( 78.31 )%, and that its relative total shareholder return ranking was in the 1.0 percentile relative to companies in the S&P Software & Services

Select Index, which resulted in a payout percentage of 0.0 % of target.

During the first quarter of 2026, the Company also certified the performance results for the first measurement period for the market-based PRSUs subject to the 2025-2027 performance period.

The Company determined that its actual total shareholder return for such measurement period was ( 51.28 )%, and that its relative total shareholder return ranking was in the 9.0 % percentile relative to companies in the S&P Software & Services Select Index, which resulted in a payout percentage of 0.0 % of target.

Following is additional information pertaining to the Company’s RSU activity (including PRSUs) (in thousands, except per share data):

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Research and development 31,764 37,260 50,430

37,260 50,430 44,367

Sales and marketing 42,209 51,214 66,229

General and administrative 46,259 48,016 51,374

48,016 51,374 35,543

Total stock-based compensation $ 166,315 $ 206,292 $ 172,507

Total $ 148,068 $ 166,315 $ 206,292

As of December 31, 2025, unrecognized stock-based compensation expense by award type and their expected weighted-average recognition periods are summarized in the following table (in thousands, except years).

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Unrecognized stock-based compensation expense $ 1,096 $ 216,132 $ 9,721 $ 2,018

Weighted-average amortization period 0.9 years 2.8 years 1.4 years 0.4 years

Weighted-average amortization period (in years) 0.2 years 2.4 years 1.4 years 0.4 years

The Company recognizes stock-based compensation expense that is calculated based upon awards that have vested, reduced for actual forfeitures.

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The Company values RSUs, including PRSUs subject to performance conditions, at the closing market price of its common stock on the date of grant.

The Company estimates the fair value of each stock option and purchase right under the 2014 ESPP granted to employees on the date of grant using the Black-Scholes option-pricing model using the

assumptions disclosed in the table below.

The Company estimates the fair value of each stock option and purchase right under the 2014 ESPP granted to employees on the date of grant using the Black-Scholes option-pricing model using the assumptions disclosed in the table below.

The Company estimates the fair value of PRSUs subject to market conditions using a Monte Carlo Simulation model using the assumptions disclosed in the table below.

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Accordingly, the expected dividend yield is zero .

The weighted average assumptions used to value stock options granted during the periods presented were as follows:

Stock Options

Year Ended December 31,

2024 2023 2022

Expected term (years) — — 6.0

Volatility — — 46 %

Risk-free interest rate — — 1.8 %

Dividend yield — — —

The weighted average assumptions used to value PRSUs with market conditions granted during the periods presented were as follows:

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Dividend yield — — — — — —

Net Loss Per Share

As the Company had net losses for the years ended December 31, 2024, 2023 and 2022, all potentially issuable shares of common stock were determined to be anti-dilutive.

The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share data):

Net Income (Loss) Per Share

The following table presents the calculation of basic and diluted net income (loss) per share (in thousands, except per share data):

Year Ended December 31,

2025 2024 2023

Net loss $ ( 12,795 ) $ ( 81,764 ) $ ( 94,650 )

Weighted-average shares used in computing basic and diluted net loss per share 74,503 72,048 69,920

Basic and diluted net loss per share $ ( 0.17 ) $ ( 1.13 ) $ ( 1.35 )

The following securities were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive (in thousands):

Net income (loss) $ 39,416 $ ( 12,795 ) $ ( 81,764 )

Weighted-average shares used in computing basic and diluted net income (loss) per share:

Basic 76,916 74,503 72,048

Diluted 88,002 74,503 72,048

Basic and diluted net income (loss) per share:

Basic $ 0.51 $ ( 0.17 ) $ ( 1.13 )

Diluted $ 0.45 $ ( 0.17 ) $ ( 1.13 )

The following securities were excluded from the calculation of diluted net income (loss) per share because their effect would have been anti-dilutive (in thousands):

2025 2024 2023

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If share settlement is more dilutive, the Company calculates diluted earnings per share assuming that all of the convertible senior notes were converted solely into shares of common stock at the beginning of the reporting period.

The potential impact upon the conversion of the convertible senior notes were excluded from the calculation of diluted net loss per share for the years ended December 31, 2024, 2023 and 2022 because the effect would have been anti-dilutive.

The potential impact upon the conversion of the convertible senior notes were included in the calculation of diluted net income per share for the year ended December 31, 2025 and were excluded in the calculation of diluted net loss per share for the years ended December 31, 2024 and 2023 because the effect would have been anti-dilutive.

The following table presents components of loss before income taxes for the periods presented (in thousands):

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International 10,630 10,148 925

Loss before income taxes $ ( 12,755 ) $ ( 79,423 ) $ ( 90,262 )

Income (loss) before income taxes $ 44,942 $ ( 12,755 ) $ ( 79,423 )

Provision for (benefit from) income taxes for the periods presented consisted of (in thousands):

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Foreign 687 647 53

Total (benefit from) provision for income taxes - Deferred ( 4,835 ) 53 3,088

Total provision for (benefit from) income taxes - Deferred 970 ( 4,835 ) 53

Total provision for income taxes $ 5,526 $ 40 $ 2,341

The Company recorded current income tax expense during 2025 principally due to U.S.

taxable income as a result of IRC Section 174 research and experimental capitalization requirements.

The Company offset federal taxable income through the utilization of available net operating loss carryforward attributes.

However, the Company was subject to net operating loss utilization limitations in some U.S.

federal and state jurisdictions.

These considerations were partially offset by the Company's acquisition of Acqueon, which carried a U.S.

net deferred tax liability balance and provided the Company with a source of taxable income to release a portion of the consolidated U.S.

valuation allowance.

Income tax expense differed from the amount computed by applying the U.S.

federal statutory income tax rate of 21% to pre-tax (loss) income for the periods presented as a result of the following (in thousands):

Year Ended December 31,

state tax attribute utilization limitations and foreign income produced by the Company’s intercompany operating model.

As a result of adopting ASU 2023-09 retroactively, the Company has revised certain disclosures to align with enacted requirements and has conformed prior year disclosures for comparability.

Income tax expense (benefit) differed from the amount computed by applying the U.S.

federal statutory income tax rate of 21% to pre-tax income (loss) for the periods presented as a result of the following (in thousands):

2025 2024 2023

federal tax at statutory rate $ 9,438 21 % $ ( 2,679 ) 21 % $ ( 16,676 ) 21 %

state income taxes 1,553 2,531 576

Section 162(m) 4,474 6,417 3,851

Global intangible low-taxed income — ( 4,002 ) 4,127

Effect of waived tax deductions - Base Erosion and Anti-Abuse Tax ( 7,751 ) 7,751 —

Miscellaneous permanent tax adjustments 26 230 78

Research and development credit ( 1,383 ) ( 943 ) ( 1,194 )

Domestic federal reconciling items:

Research and Development tax credit ( 224 ) — % ( 2,766 ) 22 % ( 1,681 ) 2 %

Nontaxable and Nondeductible Items:

Stock-based compensation 21,476 48 % 17,905 ( 140 ) % 11,359 ( 14 ) %

Officers’ compensation 2,196 5 % 4,473 ( 35 ) % 6,417 ( 8 ) %

Transaction costs 19 — % 862 ( 7 ) % 415 ( 1 ) %

Tax benefit from acquisition/reorganizations ( 4,308 ) — ( 3,852 )

Foreign tax rate differential 525 ( 383 ) 6,749

Adjustments related to tax positions taken during prior years ( 2,083 ) 249 —

State taxes deduction ( 509 ) ( 1 ) % ( 277 ) 2 % ( 94 ) — %

Other ( 170 ) — % 303 ( 2 ) % 322 — %

Cross-Border Tax Laws:

Base Erosion Anti-Abuse Tax — — % ( 7,752 ) 61 % 7,752 ( 10 ) %

Net Controlled Foreign Corporations Tested Income Exclusion 507 1 % — — % ( 3,831 ) 5 %

US Branch tax impact 898 2 % 381 ( 3 ) % 132 — %

Other Adjustments:

Tax expense (benefit) from acquisition / reorganizations 207 — % ( 4,308 ) 34 % — — %

Net Operating Loss Carryforward adjustment — — % ( 1,241 ) 10 % — — %

Fixed Assets deferred adjustments 158 — % ( 788 ) 6 % ( 72 ) — %

Miscellaneous deferred adjustments 225 1 % ( 1,013 ) 8 % ( 525 ) 1 %

Return-to-Provision adjustments ( 317 ) ( 1 ) % 35 — % ( 170 ) — %

Change in valuation allowance ( 31,565 ) ( 70 ) % ( 6,176 ) 48 % ( 4,077 ) 5 %

Total provision for income taxes $ 40 $ 2,341 $ 4,388

Domestic state and local income taxes, net of federal effect (1)

1,601 4 % 252 ( 2 ) % 1,386 ( 2 ) %

Foreign Reconciling Items:

Return-to-Provision Adjustments 548 1 % ( 161 ) 1 % 44 — %

Other 57 — % 185 ( 1 ) % ( 76 ) — %

United Kingdom

Stock-based compensation, net 716 2 % 593 ( 5 ) % ( 963 ) 1 %

Other ( 274 ) ( 1 ) % 828 ( 6 ) % 639 ( 1 ) %

Write-off of Income Tax Receivables 831 2 % — — % — — %

Other ( 385 ) ( 1 ) % ( 580 ) 5 % — — %

Other Foreign Jurisdictions ( 1,228 ) ( 3 ) % ( 530 ) 4 % 306 — %

Foreign Withholding Taxes 866 2 % — — % — — %

Changes in Unrecognized Tax Benefits:

455 1 % 2,494 ( 20 ) % 1,734 ( 2 ) %

Tax provision for income taxes 5,526 12 % 40 — % 2,341 ( 3 ) %

(1) State taxes in Illinois, Texas, New Hampshire and Oregon made up the majority (greater than 50%) of the current tax effect in this category.

Cash paid for income taxes, net of refunds received, by jurisdiction pursuant to the disclosure requirements of ASU 2023-09 is as follows (in thousands):

Year Ended December 31,

2025 2024 2023

US Federal * $ 740 $ 745 $ —

US State and Local:

Illinois 560 978 380

Pennsylvania * — 368 200

Texas 247 295 205

New York * — — 114

Other states 1,282 765 251

Total State and Local 2,089 2,406 1,150

United Kingdom * 1,460 — —

Canada * — 317 178

Philippines * — — 118

Other foreign 554 283 143

Total Foreign 2,014 600 439

Total Worldwide $ 4,843 $ 3,751 $ 1,589

* Jurisdiction did not incur tax payments which exceeded the disclosure threshold for years with no payments shown.

The tax effects of temporary differences that give rise to significant portions of the Company’s deferred tax assets and liabilities as of December 31, 2025 and 2024 related to the following (in thousands):

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Deferred interest expense — 349

Other 1,259 755

Gross deferred tax assets 176,973 209,105

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Net deferred taxes $ 2,783 $ 3,464

To enhance clarity, the Company has revised certain disclosures in its effective tax rate reconciliation and disclosure of its deferred tax assets and liabilities, and has conformed prior year disclosures to ensure comparability with the current year.

With the exception of Russia, the Company has not provided for U.S.

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As such, the Company no longer asserts an intention to permanently re-invest those earnings.

The undistributed earnings of the Company’s foreign subsidiaries were immaterial as of December 31, 2024 and 2023 and no U.S.

income taxes have been accrued.

A valuation allowance is provided for deferred tax assets where the recoverability of the assets is uncertain.

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net deferred tax assets.

The Company has recorded net foreign deferred tax assets associated with its Australia, Germany, India, Portugal and the U.K.

The Company has recorded net foreign deferred tax assets associated with its Australia, Germany, India and the U.K.

operations totaling $ 2.8 million since management has assessed it is more likely than not that the results of future operations within these jurisdictions will generate sufficient taxable income to realize the deferred tax assets.

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The net change in the valuation allowance for the years ended December 31, 2025 and 2024 were decreases of $ 47.4 million and $ 11.7 million, respectively.

The decrease of the valuation allowance in the current year was primarily attributed to the Company’s acquisition of Acqueon, which provided a source of future U.S.

taxable income to support a reduction in the consolidated U.S.

valuation allowance.

The decrease of the valuation allowance in the current year was primarily attributed to the acceleration of domestic research and development expenditures under H.R.

1 (“OBBBA”), historically capitalized under Section 174.

As of December 31, 2025, the Company had net operating loss carryforwards for federal, state and foreign income tax purposes of $ 344.1 million, $ 247.1 million and $ 5.5 million, respectively, available to reduce future income subject to income taxes.

If not utilized, various amounts of significant state net operating loss carryforwards will begin to expire in 2028, while $ 310.1 million of federal net operating losses, as well as the foreign net operating losses, do not expire.

As of December 31, 2024, the Company also had gross research credit carryforwards for federal and California state tax purposes of $ 14.1 million and $ 8.6 million, available to reduce future income subject to income taxes.

If not utilized, various amounts of state net operating loss carryforwards will begin to expire in 2026.

The federal and foreign net operating losses will not expire.

As of December 31, 2025, the

Company also had gross research credit carryforwards for federal and California state tax purposes of $ 14.3 million and $ 8.2 million, available to reduce future income subject to income taxes.

The federal research credit carryforwards will expire between 2026 and 2045.

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Unrecognized benefit — end of period $ 13,982 $ 13,575 $ 11,124

As of each of December 31, 2024 and 2023, the Company had unrecognized tax benefits that, if recognized, would impact its effective tax rate by $ 1.0 million and $ 0.5 million, respectively.

As of each of December 31, 2025 and 2024, the Company had unrecognized tax benefits that, if recognized, would impact its effective tax rate by $ 1.0 million.

The Company recognizes interest and penalties related to uncertain tax positions as income tax expense, which has cumulatively been immaterial to the financial statements.

The Company does not anticipate its total unrecognized tax benefits as of December 31, 2024 will significantly change due to settlement of examination or the expiration of statutes of limitation during the next 12 months.

The Company is currently unaware of any uncertain tax positions that could result in significant additional payments, accruals or other material deviation in this estimate over the next 12 months.

The Company is subject to taxation in the United States, various states and several foreign jurisdictions.

Due to the Company’s recently utilized and net carryover of unused operating losses, all years from 2004 forward remain subject to future examination by the U.S.

Due to the Company’s net carryover of unused tax attributes, all years from 2003 forward remain subject to future examination by the U.S.

federal and state tax authorities.

The Company’s foreign tax returns are open to audit under the statutes of limitation of the respective foreign countries in which the subsidiaries are located.

With the exception of Russia, the Company considers all undistributed earnings of its foreign subsidiaries indefinitely reinvested.

Commitments and Contingencies

As of December 31, 2024, (i) $ 434.4 million of aggregate principal of the 2025 convertible senior notes was outstanding and is due on June 1, 2025, and (ii) $ 747.5 million of aggregate principal of the 2029 convertible senior notes was outstanding and is due on March 15, 2029.

As of December 31, 2025, (i) no 2025 convertible senior notes were outstanding since they matured on June 1, 2025 and the Company settled its obligations with respect to the 2025 convertible senior notes in cash in connection therewith, and (ii) $ 747.5 million of aggregate principal of the 2029 convertible senior notes was outstanding, which 2029 convertible senior notes have a maturity date of March 15, 2029.

See Note 6 for more information concerning the convertible senior notes.

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See Note 13 for further details.

As of December 31, 2024, the Company also had outstanding cloud services and software and maintenance agreement commitments totaling $ 38.1 million, of which $ 20.0 million is expected to be purchased in 2025 and $ 18.1 million is expected to be

purchased in 2026.

During 2024, the Company entered into equipment finance lease arrangements that resulted in a $ 8.8 million additional reduction of its outstanding cloud services commitment.

As of December 31, 2025, the Company also had outstanding cloud services and software and maintenance agreement commitments totaling $ 167.0 million, of which $ 55.4 million is expected to be purchased in 2026, $ 56.2 million is expected to be purchased in 2027, $ 51.9 million is expected to be purchased in 2028, and $ 3.5 million is expected to be purchased in 2029.

The Company entered into equipment finance lease arrangements that resulted in a $ 13.7 million additional reduction of its outstanding cloud services commitment as of December 31, 2025.

Hosting and Telecommunication Usage Services

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As of December 31, 2025, future minimum payments under these arrangements were as follows in thousands):

Year Ending December 31, Hosting Services Telecommunication Usage Services

2025 $ 4 $ 6,712

Thereafter — —

Year Ending December 31, Telecommunication Usage Services

Total future minimum payment $ 12,514

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The Company is involved in various legal and regulatory matters arising in the normal course of business.

In management’s opinion, resolution of these matters is not expected to have a material impact on the Company’s

consolidated results of operations, cash flows, or its financial position.

In management’s opinion, resolution of these matters is not expected to have a material impact on the Company’s consolidated results of operations, cash flows, or its financial position.

However, due to the uncertain nature of legal matters, an unfavorable resolution of a matter could materially affect the Company’s future consolidated results of operations, cash flows or financial position in a particular period.

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The Company is currently party to the following action:

On December 4, 2024, a purported holder of the Company’s securities filed a putative class action complaint against the Company, its Chief Executive Officer, and its Chief Financial Officer in the United States District Court for the Northern District of California alleging violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5, promulgated thereunder, based on alleged false and/or misleading statements or omissions regarding the Company and its business and seeking unspecified damages on behalf of all persons and entities (subject to specified exceptions) that purchased or otherwise acquired the Company’s securities, including call options, from June 4, 2024, through the close of trading on August 8, 2024.

On December 4, 2024, a purported holder of the Company’s securities filed a putative class action complaint against the Company, its then-current Chief Executive Officer, and its then-current Chief Financial Officer in the United States District Court for the Northern District of California alleging violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5, promulgated thereunder, based on alleged false and/or

misleading statements or omissions regarding the Company and its business and seeking unspecified damages on behalf of all persons and entities (subject to specified exceptions) that purchased or otherwise acquired the Company’s securities, including call options, from June 4, 2024, through the close of trading on August 8, 2024.

On February 3, 2025, Lucid Alternative Fund, LP moved to be appointed lead plaintiff of this action pursuant to the Private Securities Litigation Reform Act of 1995.

On March 18, 2025, the court appointed Lucid Alternative Fund, LP as lead plaintiff and approved lead plaintiff’s selection of lead counsel.

Per the court’s subsequent order on March 27, 2025, Lucid Alternative Fund, LP filed an amended complaint on May 30, 2025.

The Company moved to dismiss the amended complaint on July 29, 2025, and the court took the motion under submission after oral argument on December 18, 2025.

The Company cannot predict the duration or outcome of this lawsuit at this time.

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The Company intends to vigorously defend this lawsuit.

On March 18, 2025, a related shareholder derivative action was filed in the United States District Court for the Northern District of California on behalf of nominal defendant Five9, Inc.

and against its directors and certain of its officers seeking to assert claims for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets, and for contribution under Sections 10(b) and 21D of the Securities Exchange Act of 1934.

The Company was served with the complaint on March 20, 2025.

On April 4, 2025, the parties to the derivative action jointly filed a stipulation with the court to stay the derivative action until the resolution of the motion to dismiss in the securities action, as well as any subsequent motion to dismiss any further amended complaint in the securities action.

On April 8, 2025, the court approved the stay stipulation.

Indemnification Agreements

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In addition, the Company has entered into indemnification agreements with its directors, officers and certain employees that requires it, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or employees.

There are no claims that the Company is aware of that could have a material effect on the consolidated balance sheets, consolidated statements of operations and comprehensive loss, or consolidated statements of cash flows.

There are no claims that the Company is aware of that could have a material effect on the consolidated balance sheets, consolidated statements of operations and comprehensive income (loss), or consolidated statements of cash flows.

Segment and Geographical Information

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The Company’s chief operating decision maker (“CODM”) is its chief executive officer.

is also reported on its consolidated statements of operations and comprehensive loss as consolidated net income (loss).

The Company’s CODM reviews financial information presented on a consolidated basis for purposes of assessing financial performance and making operating decisions on how to allocate resources based on net income (loss) that is also reported on its consolidated statements of operations and comprehensive income (loss) as consolidated net

income (loss).

The measure of segment assets is reported on its consolidated balance sheets as total consolidated assets.

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Total purchases of property and equipment for the years ended December 31, 2025, 2024 and 2023 are disclosed in the Company’s Consolidated Statements of Cash Flows.

Segment Information - Consolidated Statement of Operations

Segment Information - Consolidated Statements of Operations

Year Ended December 31,

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Provision for income taxes (6)

Net loss $ ( 12,795 ) $ ( 81,764 ) $ ( 94,650 )

( 5,526 ) ( 40 ) ( 2,341 )

(1) Adjusted cost of revenue includes cost of revenue in accordance with GAAP adjusted for depreciation and amortization, stock-based compensation, exit costs related to the closure and relocation of the Company’s Russian operations, acquisition and related transaction costs and one-time integration costs, lease amortization for finance leases, costs related to a reduction in force plan, and refund for prior year overpayment of USF fees.

(2) Adjusted research and development includes research and development in accordance with GAAP adjusted for depreciation and amortization, stock-based compensation, exit costs related to the closure and relocation of the

Company’s Russian operations, acquisition and related transaction costs and one-time integration costs, and costs related to a reduction in force plan.

(3) Adjusted sales and marketing includes sales and marketing expense in accordance with GAAP adjusted for depreciation and amortization, stock-based compensation, acquisition and related transaction costs and one-time integration costs, and costs related to a reduction in force plan.

(4) Adjusted general and administrative included general and administrative expense in accordance with GAAP adjusted for depreciation and amortization, stock-based compensation, exit costs related to the closure and relocation of the Company’s Russian operations, acquisition and related transaction costs and one-time integration costs, costs related to a reduction in force plan, impairment charge related to closure of operating lease facilities, and contingent consideration expense.

(5) Other segment items included in segment net loss includes stock-based compensation, exit costs related to the closure and relocation of our Russian operations, acquisition and related transaction costs and one-time integration costs, lease amortization for finance leases, costs related to a reduction in force plan, and impairment charge related to closure of operating lease facilities.

Net income (loss) $ 39,416 $ ( 12,795 ) $ ( 81,764 )

___________________________

(1) Adjusted cost of revenue includes cost of revenue in accordance with GAAP, adjusted for depreciation and amortization, stock-based compensation, acquisition and related transaction costs and one-time integration costs, lease amortization for finance leases, and costs related to reduction in force plans.

(2) Adjusted research and development includes research and development in accordance with GAAP, adjusted for depreciation and amortization, stock-based compensation, exit costs related to the closure and relocation of the Company’s Russian operations, acquisition and related transaction costs and one-time integration costs, lease amortization for finance leases, and costs related to reduction in force plans.

(3) Adjusted sales and marketing includes sales and marketing expense in accordance with GAAP, adjusted for depreciation and amortization, stock-based compensation, and costs related to reduction in force plans.

(4) Adjusted general and administrative included general and administrative expense in accordance with GAAP, adjusted for depreciation and amortization, stock-based compensation, exit costs related to the closure and relocation of the Company’s Russian operations, acquisition and related transaction costs and one-time integration costs, one-time expenses related to strategic consulting services for operational review, other

cost-reduction and productivity initiatives, legal fees related to the securities class action, costs related to reduction in force plans, and office closure lease termination costs.

(5) Other segment items included in segment net income (loss) includes stock-based compensation, exit costs related to the closure and relocation of the Company’s Russian operations, acquisition and related transaction costs and one-time integration costs, lease amortization for finance leases, one-time expenses related to strategic consulting services for operational review, other cost-reduction and productivity initiatives, legal fees related to the securities class action, costs related to reduction in force plans, and office closure lease termination costs.

(6) Non-GAAP adjustments do not have a material impact on our worldwide income tax provision due to the tax treatment of the non-GAAP adjustments reported, and our domestic valuation allowance position.

Retirement Plans

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As a result, the Company also recognized short-term lease liabilities of $ 5.9 million within Finance lease liabilities and long-term lease liabilities of $ 12.7 million within Finance lease liabilities - less current portion on the consolidated balance sheets for the year ended December 31, 2024.

The Company also entered into additional three-year equipment finance lease agreements and recognized $ 3.9 million right of use assets during 2025, which were reported within Finance lease right-of-use assets and are being depreciated on a straight-line basis over the lease term.

As a result, the Company also recognized short-term lease liabilities of $ 1.3 million within Finance lease liabilities and long-term lease liabilities of $ 2.6 million within Finance lease liabilities - less current portion for the year ended December 31, 2025.

The components of lease expenses were as follows (in thousands):

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2028 10,851 319

2029 10,602 —

2030 10,262 —

Thereafter 1,669 —

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The excess of the purchase price over identifiable intangible assets and net tangible assets in the amount of $ 139.0 million was allocated to goodwill, which is not deductible for tax purposes.

The fair values assigned to assets acquired and liabilities assumed are based on management’s best estimates and assumptions as of the acquisition date and are considered preliminary pending finalization of valuation analyses pertaining to intangible assets acquired, liabilities assumed and tax liabilities assumed.

During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed, with the corresponding offset to goodwill.

The Company recorded an adjustment of less than $ 0.1 million during the one year from acquisition date measurement period for the year ended December 31, 2024.

The following table presents the preliminary allocation of the purchase price at the acquisition date (in thousands):

The fair values assigned to assets acquired and liabilities assumed are based on management’s best estimates and assumptions as of the acquisition date and are considered final.

The Company recorded adjustments of less than $ 0.1 million and $ 0.8 million within the one year from acquisition date measurement period for 2024 and for the year ended December 31, 2025, respectively.

The following table presents the final allocation of the purchase price at the acquisition date (in thousands):

Tangible assets acquired 3,559

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The Company used the income approach to estimate the fair value of intangible assets acquired.

In connection with this acquisition, the Company incurred total acquisition-related transaction costs of $ 7.9 million during the year ended December 31, 2024, which were expensed as incurred and included in general and administrative expenses in the consolidated statements of operations and comprehensive loss.

The results of operations of this acquisition are included in the accompanying consolidated statements of operations and comprehensive loss from the date of acquisition and are not material to the Company's consolidated financial statements.

In connection with this acquisition, the Company incurred total acquisition-related transaction costs of $ 7.9 million during 2024, and incurred no additional costs during the year ended December 31, 2025, that have been expensed as incurred and included in general and administrative expenses in the consolidated statements of operations and comprehensive income (loss).

The results of operations of this acquisition are included in the accompanying consolidated statements of operations and comprehensive income (loss) from the date of acquisition and are not material to the Company's consolidated financial statements.

On August 14, 2023, the Company acquired all of the issued and outstanding shares of capital stock of Aceyus for total cash consideration of approximately $ 82.0 million.

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The Company used the income approach to estimate the fair value of intangible assets acquired.

In connection with this acquisition, the Company incurred total acquisition-related transaction costs of $ 2.2 million during the year ended December 31, 2023, and incurred no additional costs during the year ended December 31, 2024, which were expensed as incurred and included in general and administrative expenses in the consolidated statements of operations and comprehensive loss.

In connection with this acquisition, the Company incurred no additional costs during the years ended December 31, 2024 and 2025, which were expensed as incurred and included in general and administrative expenses in the consolidated statements of operations and comprehensive income (loss).

Restructuring

On August 20, 2024, the Company announced a reduction in force plan (the “Plan”) as part of its broader efforts to drive balanced, profitable growth, further supporting its positive, long-term outlook and focus on increasing shareholder value.

On August 20, 2024, the Company announced a reduction in force plan (the “2024 Plan”) as part of its broader efforts to drive balanced, profitable growth, further supporting its positive, long-term outlook and focus on increasing stockholder value.

The 2024 Plan reduced the Company’s global full-time employees by approximately 6 %.

For the year ended December 31, 2024, the Company incurred a total of $ 9.6 million in restructuring costs under the Plan, primarily consisting of notice period payments, severance payments, employee benefits and related costs, all of which are cash expenditures, of which $ 2.1 million was recorded in cost of revenue , $ 1.9 million was recorded in research and development expenses , $ 4.4 million was recorded in sales and marketing expenses , and $ 1.2 million was recorded in general and administrative expenses on the consolidated statements of operations and comprehensive loss.

As of December 31, 2024, $ 9.3 million had been paid and the remaining $ 0.3 million was recorded within Accrued and other current liabilities in the consolidated balance sheets and is mostly expected to be paid by the first quarter of 2025.

Other than as set forth herein, the Company does not expect to incur any additional costs under the Plan.

For the year ended December 31, 2024, the Company incurred a total of $ 9.6 million in restructuring costs under the 2024 Plan, primarily consisting of notice period payments, severance payments, employee benefits and related costs, all of which are cash expenditures, of which $ 2.1 million was recorded in cost of revenue , $ 1.9 million was recorded in research and development expenses , $ 4.4 million was recorded in sales and marketing expenses , and $ 1.2 million was recorded in general and administrative expenses on the consolidated statements of operations and comprehensive income (loss).

As of December 31, 2025, $ 9.6 million in total restructuring costs under the 2024 Plan had been paid.

The Company does not expect to incur any additional costs under the 2024 Plan.

On March 31, 2025, the Board of Directors of the Company approved a reduction in force plan (the “2025 Plan”) as part of its broader efforts to prioritize investments in key strategic areas, including artificial intelligence, as well as to drive profitable growth in supporting its positive, long-term outlook and increasing stockholder value.

On April 3, 2025, the Company commenced execution of the 2025 Plan, which resulted in the reduction of the Company’s global full-time employees by approximately 4 %.

During the year ended December 31, 2025, the Company incurred a total of $ 7.9 million in restructuring costs under the 2025 Plan, primarily consisting of notice period payments, severance payments, employee benefits and related costs, all of which are cash expenditures, of which $ 1.6 million was recorded in cost of revenue , $ 1.9 million was recorded in research and development expenses , $ 3.4 million was recorded in sales and marketing expenses , and $ 1.0 million was recorded in general and administrative expenses on the consolidated statements of operations and comprehensive income (loss).

As of December 31, 2025, $ 7.8 million had been paid and the remaining $ 0.1 million was recorded within accrued and other current liabilities in the consolidated balance sheets and was paid in the first quarter of 2026.

During the year ended December 31, 2025, the Company also incurred an additional $ 2.1 million in stock-based compensation costs related to the 2025 Plan due to additional vesting of share-based awards, of which $ 0.3 million was recorded in cost of revenue, $ 0.5 million was recorded in research and development expenses, $ 1.1 million was recorded in sales and marketing expenses, and $ 0.2 million was recorded in general and administrative expenses on the consolidated statements of operations and comprehensive income (loss).

The Company does not expect to incur any additional costs under the 2025 Plan.

Selected Quarterly Financial Data (Unaudited)

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data