Five9, Inc. 10-K

ITEM 8. Financial Statements and Supplementary Data. Report of Independent Registered Public Accounting Firm (PCAOB ID: 185 ) 72 Consolidated Balance Sheets 75 Consolidated Statements of Operations and Comprehensive I ncom e ( Loss ) 76 Consolidated Statements of Stockholders' Equity 77 Consolidated Statements of Cash Flows 78 Notes to Consolidated Financial Statements 79 71 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Five9, Inc.: Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting We have audited the accompanying consolidated balance sheets of Five9, Inc. 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. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective 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. Basis for Opinions The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. 72 Table of Contents Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters 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 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 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. The subscription fees are primarily based on the number of licenses, as on a consumption or capacity basis for the Company’s Artificial Intelligence solutions. Licenses are defined as the maximum number to named agents allowed to concurrently access the Intelligent CX Platform. 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 client interactions. There are high volumes of subscription and related usage transactions processed across multiple information technology (IT) systems. We identified the evaluation of the sufficiency of audit evidence over revenue from subscription services and related usage as a critical audit matter. Revenues from subscription services and related usage involved a high volume of automated transactions dependent on the Company’s IT systems. Therefore, our audit procedures required the involvement of IT professionals and auditor judgment was required to determine the nature and extent of audit evidence obtained and evaluate the results of the procedures. The following are the primary procedures we performed to address this critical audit matter. We involved IT professionals with specialized skills and knowledge, who assisted in evaluating the design and testing the operating effectiveness of certain internal controls related to the Company’s revenue process. This included controls related to the capture and flow of subscription and related usage transactional information through the Company’s IT systems. We placed test calls and observed that call attributes such as duration and type of service were captured in the relevant IT systems. We assessed the recorded revenue by comparing total cash received during the year, adjusted for reconciling items, to the revenue recognized. Such assessment also evaluated the relevance and reliability of reconciling items to underlying documentation, including the changes in accounts receivable and deferred revenue. 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. 73 Table of Contents /s/ KPMG LLP We have served as the Company’s auditor since 2012. Santa Clara, California February 19, 2026 74 Table of Contents FIVE9, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) December 31, 2025 2024 ASSETS Current assets: Cash and cash equivalents $ 232,084 $ 362,546 Marketable investments 464,835 643,410 Accounts receivable, net 130,984 115,172 Prepaid expenses and other current assets 43,107 50,840 Deferred contract acquisition costs, net 88,714 76,600 Total current assets 959,724 1,248,568 Property and equipment, net 164,635 144,888 Operating lease right-of-use assets 46,375 38,880 Finance lease right-of-use assets 14,216 19,269 Intangible assets, net 51,166 65,632 Goodwill 366,253 365,436 Other assets 10,725 13,384 Deferred contract acquisition costs, net — less current portion 176,976 155,157 Total assets $ 1,790,070 $ 2,051,214 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 29,973 $ 26,282 Accrued and other current liabilities 84,120 83,720 Operating lease liabilities 12,922 11,258 Finance lease liabilities 8,480 7,768 Deferred revenue 77,515 79,173 Convertible senior notes — 433,490 Total current liabilities 213,010 641,691 Convertible senior notes — less current portion 735,490 731,855 Operating lease liabilities — less current portion 42,116 37,071 Finance lease liabilities — less current portion 6,090 11,688 Other long-term liabilities 7,547 6,717 Total liabilities 1,004,253 1,429,022 Commitments and contingencies (Note 10) Stockholders’ equity: Preferred stock, $ 0.001 par value; 5,000 shares authorized, no shares issued and outstanding as of December 31, 2025 and 2024 — — Common stock, $ 0.001 par value; 450,000 shares authorized, 77,194 shares and 75,808 shares issued and outstanding as of December 31, 2025 and 2024, respectively 77 76 Additional paid-in capital 1,163,072 1,039,125 Accumulated other comprehensive income 897 636 Accumulated deficit ( 378,229 ) ( 417,645 ) Total stockholders’ equity 785,817 622,192 Total liabilities and stockholders’ equity $ 1,790,070 $ 2,051,214 See accompanying notes to the consolidated financial statements. 75 Table of Contents FIVE9, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (In thousands, except per share data) Year Ended December 31, 2025 2024 2023 Revenue $ 1,149,088 $ 1,041,938 $ 910,488 Cost of revenue 516,234 477,540 432,690 Gross profit 632,854 564,398 477,798 Operating expenses: Research and development 152,334 166,197 156,582 Sales and marketing 311,816 311,954 296,713 General and administrative 139,854 137,550 123,079 Total operating expenses 604,004 615,701 576,374 Income (loss) from operations 28,850 ( 51,303 ) ( 98,576 ) Other income (expense), net: Interest expense ( 14,076 ) ( 14,812 ) ( 7,646 ) Gain on early extinguishment of debt — 6,615 — Interest income and other 30,168 46,745 26,799 Total other income (expense), net 16,092 38,548 19,153 Income (loss) before income taxes 44,942 ( 12,755 ) ( 79,423 ) Provision for income taxes 5,526 40 2,341 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. 76 Table of Contents FIVE9, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands) Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders’ Equity Shares Amount Balance as of December 31, 2022 71,047 $ 71 $ 635,668 $ ( 2,688 ) $ ( 323,086 ) $ 309,965 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 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 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 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 ) — — — Issuance of common stock under ESPP 372 1 14,797 — — 14,798 Stock-based compensation — — 174,468 — — 174,468 Other comprehensive income — — — 54 — 54 Net loss — — — — ( 12,795 ) ( 12,795 ) Balance as of December 31, 2024 75,808 76 1,039,125 636 ( 417,645 ) 622,192 Share repurchases ( 1,927 ) ( 2 ) ( 49,998 ) — — ( 50,000 ) Issuance of common stock upon exercise of stock options 156 — 3,137 — — 3,137 Issuance of common stock upon vesting of restricted stock units 2,556 2 ( 3 ) — — ( 1 ) Issuance of common stock under ESPP 601 1 12,471 — — 12,472 Stock-based compensation — — 158,340 — — 158,340 Other comprehensive income — — — 261 — 261 Net income — — — — 39,416 39,416 Balance as of December 31, 2025 77,194 $ 77 $ 1,163,072 $ 897 $ ( 378,229 ) $ 785,817 See accompanying notes to the consolidated financial statements. 77 Table of Contents FIVE9, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (thousands) Year Ended December 31, 2025 2024 2023 Cash flows from 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 Reduction in the carrying amount of right-of-use assets 20,277 15,358 12,642 Amortization of deferred contract acquisition costs 86,006 71,483 55,384 Accretion of discount on marketable investments ( 7,892 ) ( 20,818 ) ( 11,351 ) Provision for credit losses 1,617 1,150 989 Stock-based compensation 148,068 166,315 206,292 Amortization of discount and issuance costs on convertible senior notes 4,550 5,478 3,749 Gain on early extinguishment of debt — ( 6,615 ) — Impairment charge of an equity investment — 1,250 — Impairment charge related to closure of operating lease facilities 835 2,202 — Interest on finance lease obligations 1,033 264 150 Deferred taxes - excluding tax benefit from acquisition 446 647 53 Deferred taxes - tax benefit from acquisition 524 ( 5,482 ) — Other 45 ( 1,051 ) 657 Changes in operating assets and liabilities: Accounts receivable ( 17,430 ) ( 14,645 ) ( 9,844 ) Prepaid expenses and other current assets 7,774 ( 12,148 ) ( 3,532 ) Deferred contract acquisition costs ( 119,940 ) ( 104,957 ) ( 91,544 ) Other assets 2,630 3,115 ( 3,988 ) Accounts payable 3,190 1,057 2,932 Accrued and other current liabilities ( 5,700 ) 2,839 ( 9,274 ) Deferred revenue ( 958 ) ( 425 ) 4,958 Other long-term liabilities (including non-current portions of operating and finance lease liabilities) ( 48 ) ( 1,959 ) 3,814 Net cash provided by operating activities 226,207 143,168 128,838 Cash flows from investing activities: Purchases of marketable investments ( 745,378 ) ( 1,289,357 ) ( 795,002 ) Proceeds from sales of marketable investments 127,976 122,138 1,211 Proceeds from maturities of marketable investments 804,091 1,132,332 655,588 Purchases of property and equipment ( 24,963 ) ( 42,388 ) ( 31,234 ) Capitalization of internal-use software development costs ( 39,135 ) ( 22,223 ) ( 9,537 ) Payments of initial direct lease costs ( 286 ) — — Cash paid to acquire Acqueon Inc. — ( 167,151 ) — Cash settlement to acquire Aceyus, Inc. — 99 ( 80,588 ) Net cash provided by (used in) investing activities 122,305 ( 266,550 ) ( 259,562 ) Cash flows from financing activities: Proceeds from issuance of 2029 convertible senior notes — 731,055 — Payment of debt issuance costs — ( 2,212 ) — Payments for capped call transactions associated with the 2029 convertible senior notes — ( 93,438 ) — Repurchase of a portion of 2025 convertible senior notes — ( 304,485 ) — Repayment of outstanding 2023 convertible senior notes at maturity — — ( 169 ) Cash received from the settlement at maturity of the outstanding capped calls associated with the 2023 convertible senior notes — — 74,453 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 Proceeds from sale of common stock under ESPP 12,472 14,797 15,927 Payment of employee taxes related to vested RSUs — — ( 3,270 ) 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 (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 period 364,185 144,842 180,987 End of period $ 234,131 $ 364,185 $ 144,842 Supplemental disclosures of cash flow data: Cash paid for interest $ 9,698 $ 6,593 $ 3,897 Cash paid for income taxes 4,843 3,751 1,589 Non-cash investing and financing activities: Equipment purchased and unpaid at period-end 6,428 11,890 11,243 Capitalization of leasehold improvement through non-cash lease incentive — 37 — Acquisition and related transaction costs accrued at period-end — 594 — Stock-based compensation included in capitalized software development costs 10,272 8,153 4,085 Reconciliation of Cash, Cash Equivalents and Restricted Cash to the Consolidated Balance Sheets - Beginning of Period: Cash and cash equivalents $ 362,546 $ 143,201 $ 180,520 Restricted cash in other assets 1,639 1,641 467 Total cash, cash equivalents and restricted cash $ 364,185 $ 144,842 $ 180,987 Reconciliation of Cash, Cash Equivalents and Restricted Cash to the Consolidated Balance Sheets - End of Period: Cash and cash equivalents $ 232,084 $ 362,546 $ 143,201 Restricted cash in other assets 2,047 1,639 1,641 Total cash, cash equivalents and restricted cash $ 234,131 $ 364,185 $ 144,842 See accompanying notes to the consolidated financial statements. 78 Table of Contents FIVE9, INC. Notes to Consolidated Financial Statements 1. Description of Business and Summary of Significant Accounting Policies Five9, Inc. and its wholly-owned subsidiaries (the “Company”) is a provider of cloud software for contact centers. The Company was incorporated in Delaware in 2001 and is headquartered in San Ramon, California. 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 The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding annual financial reporting. All intercompany transactions and balances have been eliminated in consolidation. 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, 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. Actual results could differ from those estimates. Foreign Currency The functional currency of the Company’s foreign subsidiaries is the U.S. dollar. 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 income (loss). Cash and Cash Equivalents The Company’s cash and cash equivalents consist of highly liquid investments with maturities of three months or less at the time of purchase. The Company’s cash equivalents consist of investments in money market funds and U.S. treasury securities. Marketable Investments The Company’s marketable investments consist of U.S. treasury securities, U.S. agency securities and government sponsored securities, certificates of deposit, corporate bonds, and commercial paper. The Company’s marketable investments are classified as available-for-sale and carried at fair value. The intent is that all marketable investments are available for use in the Company’s current operations, including marketable investments with maturity dates greater than one year from December 31, 2025. 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 and comprehensive income (loss). 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 income (loss). Non-credit related unrealized losses and unrealized gains on available-for-sale debt securities are included in accumulated other comprehensive income. 79 Table of Contents Concentration Risks Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist primarily of cash and cash equivalents, marketable investments and accounts receivable. A significant portion of the Company’s cash and cash equivalents is held at three large reputable financial institutions. Total cash and cash equivalents in excess of insured limits were $ 229.1 million and $ 360.2 million as of December 31, 2025 and 2024, respectively. 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. For the years ended December 31, 2025, 2024 and 2023, no single customer represented more than 10% of revenue. Provision for Credit Losses The Company uses an expected credit loss model, which requires it to consider historical loss rates and expectations of forward-looking losses to estimate its provision for credit losses on its trade accounts receivables, unbilled accounts receivables and contract assets. The following table presents the changes in the provision for credit losses (in thousands): Year Ended December 31, 2025 2024 Balance, beginning of period $ 341 $ 264 Add: bad debt expense 1,617 1,150 Less: write-offs, net of recoveries ( 1,523 ) ( 1,073 ) Balance, end of period $ 435 $ 341 Property and Equipment, Net Property and equipment is stated at cost less accumulated depreciation and amortization, and is depreciated using the straight-line method over the estimated useful lives of the assets as follows: Asset Category Estimated Useful Lives Computer and network equipment 3 to 5 years Computer software 3 years Internal-use software development costs 3 years Furniture and fixtures 7 years Leasehold improvements Shorter of useful life or lease term The Company capitalizes certain qualifying costs incurred during the development stage of internal-use software. Costs related to preliminary project activities and post-implementation activities are expensed in research and development as incurred. Preliminary project activities include conceptual formulation, evaluation and final selection of alternatives, planning, proof of concept and requirement analysis of the selected alternative. 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 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 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. Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets or asset groups are expected to generate. If such evaluation indicates that the carrying amount of the assets or asset groups is not recoverable, the carrying amount of such assets or asset groups is reduced to fair value. 80 Table of Contents 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 The Company uses its best estimates and assumptions to assign fair value to the tangible and intangible assets acquired and liabilities assumed as of the acquisition date. The Company’s estimates are inherently uncertain and subject to change. 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 and liabilities assumed, with the corresponding offset to goodwill. 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 income (loss). Goodwill and Intangible Assets The Company records goodwill when the consideration paid in a business combination exceeds the fair value of the net tangible assets and the identified intangible assets acquired. Goodwill is not amortized, but instead is required to be tested for impairment annually and whenever events or changes in circumstances indicate that the carrying value of goodwill may exceed its fair value. The Company performs testing for impairment of goodwill in its fourth quarter, or as events occur or circumstances change that would more likely than not reduce the fair value of the Company’s single reporting unit below its carrying amount. A qualitative assessment is first made to determine whether it is necessary to perform the quantitative goodwill impairment test. This initial qualitative assessment includes, among other things, consideration of: (i) market capitalization of the Company; (ii) past, current and projected future earnings and equity; (iii) recent trends and market conditions; and (iv) valuation metrics involving similar companies that are publicly-traded and acquisitions of similar companies, if available. If this initial qualitative assessment indicates that it is more likely than not that impairment exists, a second quantitative assessment will be performed, involving a comparison between the estimated fair values of the Company’s single reporting unit with its respective carrying amount including goodwill. If the carrying value exceeds estimated fair value, an impairment charge is recorded for the excess. The Company may elect to bypass the qualitative assessment and proceed to perform the quantitative goodwill impairment test. 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 8 years. Amortization expense related to developed technology is included in cost of revenue. Amortization expense related to customer relationships is included in sales and marketing expense. Amortization expense related to domain names is included in general and administrative expense. Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate an asset’s carrying value may not be recoverable. Revenue Recognition Revenue is recognized when control of the promised services is transferred to customers in an amount that reflects the consideration that the Company expects to receive in exchange for those services. The Company generates all of its revenue from contracts with customers. In contracts with multiple performance obligations, it identifies each performance obligation and evaluates whether the performance obligations are distinct within the context of the contract at contract inception. Performance obligations that are not distinct at contract inception are combined. The Company allocates the transaction price to each distinct performance obligation proportionately based on the estimated standalone selling price for each performance obligation. The Company then looks to how services are transferred to the customer in order to determine the timing of revenue recognition. Most services provided under the Company’s agreements result in the transfer of control over time. The Company’s revenue consists of subscription services and related usage as well as professional services. 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 81 Table of Contents the maximum number of named agents allowed to concurrently access the Intelligent CX Platform. Customers typically have more named agents than licenses. Multiple named agents may use a license, though not simultaneously. The majority of the Company’s customers purchase both subscriptions and related telephony usage. A growing number of the Company’s customers subscribe to its platform but purchase telephony usage directly from a wholesale telecommunications service provider. The Company does not sell telephony usage on a stand-alone basis to any customer. The related usage fees are generally based on the volume of minutes used for inbound and outbound client interactions. Revenue generated from telephony usage is presented in revenue and cost of sales on a gross basis, as the Company is the party that controls the service and is responsible for fulfilling the promise to provide the call service by diverting the calls to selected carriers. The Company also offers bundled plans, generally for smaller deployments, whereby the customer is charged a single monthly fixed fee per agent seat that includes both subscription and unlimited usage in the contiguous 48 states and, in some cases, Canada. Professional services revenue is derived primarily from Intelligent CX implementations, including application configuration, system integration, optimization, education and training services. Customers are not permitted to take possession of the Company’s software. The Company offers monthly, annual and multiple-year contracts to its customers, generally with 30 days’ notice required for limited reductions in the number of licenses or the level of consumption or capacity. Increases in the number of licenses or the level of consumption or capacity can be provisioned almost immediately. The Company’s customers, therefore, are able to adjust the number of licenses used to meet their changing contact center needs. The Company’s larger customers typically choose annual contracts, which generally include an implementation and ramp period of several months. Subscription fees, including bundled plans, are generally billed monthly in advance, while related usage fees are billed in arrears. Support activities include technical assistance for the Company’s solution and upgrades and enhancements to the Intelligent CX Platform on a when-and-if-available basis, which are not billed separately. The Company generally requires advance deposits from its customers based on estimated usage when such usage is not billed as part of a bundled plan. Any unused portion of the deposit is refundable to the customer upon termination of the arrangement, provided all amounts due have been paid. All fees, except usage deposits, are non-refundable. Professional services are primarily billed on a fixed-fee basis and are performed by us directly. However, our customers can choose to perform these services themselves, use one of the Company’s certified professional service providers, or engage their own third-party service providers. Revenue for professional services is recognized over time, as services are performed. The estimation of variable consideration for each performance obligation requires the Company to make subjective judgments resulting in estimated variable consideration that is included in the transaction fee. This is done to the extent that it is probable, in the Company’s judgment, that a significant reversal in the amount of cumulative revenue recognized under the contract will not occur. The Company estimates the variable consideration in order to allocate the overall transaction fee on a relative stand-alone selling price basis to its multiple performance obligations. When services are included in the contract with the customer and are not sold at their stand-alone selling price, the Company is required to estimate the number of agents the customer will use, especially during the initial ramp period of the contract, during which the Company bills under an ‘actual usage’ model for subscription-related services. To date, variable consideration has not had a material impact on the allocation of transaction fees to multiple performance obligations. The Company recognizes revenue on fixed fee professional services performance obligations based on the proportion of labor hours expended compared to the total hours expected to complete the related performance obligation. The determination of the total labor hours expected to complete the performance obligations involves judgment, which influences the initial stand-alone selling price estimate as well as the timing of professional services revenue recognition, although this is typically resolved in a short time frame. When a contract with a customer is signed, the Company assesses whether collection of the fees under the arrangement is probable. The Company assesses collection based on a number of factors, including past transaction history and the creditworthiness of the client. The Company maintains a revenue reserve for potential credits to be issued in accordance with service level agreements or for other revenue adjustments. 82 Table of Contents Deferred Revenue Deferred revenue consists of billings or payments received from customers for subscription services, usage and professional services in advance of revenue recognition and is recognized in accordance with the Company’s revenue recognition policy discussed above. The Company generally invoices its customers monthly in advance for subscription services. Accordingly, the deferred revenue balance does not represent the total contract value of sales arrangements. Cost of Revenue Cost of revenue consists primarily of personnel costs, including stock-based compensation, fees that the Company pays to telecommunications providers for usage, USF contributions and other regulatory costs, depreciation and related expenses of servers and equipment, costs to build out and maintain co-location data centers, costs of public cloud-based data centers, cost of third party software that the Company resells, allocated office and facility costs, amortization of acquired technology and amortization of internal-use software costs. Personnel costs include those associated with support of the Company’s solution, customers and data center operations, as well as with providing professional services. Data center costs include costs for servers and equipment to build out and setup, as well as co-location fees for the right to place the Company’s servers in data centers owned by third parties. Research and Development Research and development expenses consist primarily of salary and related expenses, including stock-based compensation, for personnel related to the development of improvements and expanded features for the Company’s solution, as well as quality assurance, testing, product management and allocated overhead. Research and development costs are expensed as incurred except for internal use software development costs that qualify for capitalization. The Company reviews development costs incurred for internal-use software in the application development stage and assesses costs for capitalization. Advertising Costs The Company primarily advertises its services through the internet and in conjunction with partners. Advertising costs are expensed as incurred and were $ 29.4 million, $ 25.4 million and $ 31.3 million for the years ended December 31, 2025, 2024 and 2023, respectively. Commissions Commissions consist of variable compensation earned by sales personnel and referral fees the Company pays to third parties. The Company defers all incremental commission costs to obtain the contract, and amortizes these costs over a period of benefit determined to be five years . Commission expense was $ 91.3 million, $ 77.0 million and $ 61.5 million for the years ended December 31, 2025, 2024 and 2023, respectively. Stock-Based Compensation All stock-based compensation granted to employees and non-employee directors is measured at the grant date fair value of the award. The Company estimates the fair value of stock options under the Company’s Equity Incentive Plans and purchase rights under the Company’s 2014 Employee Stock Purchase Plan (“2014 ESPP Plan” or “ESPP”) using the Black-Scholes option-pricing model. 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. Compensation expense is recognized net of actual forfeitures over the service period, which is generally the vesting period. Income Taxes The Company accounts for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in operations in the period that includes the enactment date. 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 83 Table of Contents 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. The Company classifies interest and penalties on unrecognized tax benefits as income tax expense. 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. Indemnification The Company, in the ordinary course of business, enters into agreements of varying scope and terms pursuant to which it agrees to indemnify customers, vendors, lessors, business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements, including breach of security, services to be provided by the Company or from intellectual property infringement claims made by third parties. To date, the Company has not incurred any material costs as a result of such indemnification provisions and the Company has not accrued any liabilities related to such obligations in the consolidated financial statements as of December 31, 2025 and 2024. Recently Adopted Accounting Pronouncements In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures . This ASU requires disclosure of specific categories in the effective tax rate reconciliation and additional information on income taxes paid. This ASU is effective for the Company’s fiscal years beginning after December 15, 2024. Early adoption is permitted and may be adopted on a prospective or retrospective basis. 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 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. In November 2024, the FASB issued ASU 2024-04, Debt with Conversion and Other Options (Subtopic 470-20) , which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. The ASU is effective for annual and interim reporting periods beginning after December 15, 2025. Early adoption is permitted for entities that have implemented 84 Table of Contents 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. 85 Table of Contents 2. Revenue Contract Balances The following table provides information about accounts receivable, net, deferred contract acquisition costs, net, contract assets and contract liabilities from contracts with customers (in thousands): December 31, 2025 December 31, 2024 Accounts receivable, net $ 130,984 $ 115,172 Deferred contract acquisition costs, net: Current $ 88,714 $ 76,600 Non-current 176,976 155,157 Total deferred contract acquisition costs, net $ 265,690 $ 231,757 Contract assets and contract liabilities: Contract assets (included in prepaid expenses and other current assets) $ 4,101 $ 7,206 Contract liabilities (deferred revenue) ( 77,515 ) ( 79,173 ) Noncurrent contract liabilities (deferred revenue) (included in other long term liabilities) ( 1,545 ) ( 865 ) Net contract liabilities $ ( 74,959 ) $ ( 72,832 ) The Company receives payments from customers based upon billing cycles. Invoice payment terms are usually 30 days or less. Accounts receivable are recorded when the right to consideration becomes unconditional. Deferred contract acquisition costs are recorded when incurred and are amortized over an estimated customer benefit period of five years . The Company’s contract assets consist of unbilled amounts typically resulting from professional services where revenue is recognized in excess of total amounts billed to the customer. The Company’s contract liabilities consist of advance payments and billings in excess of revenue recognized. In the year ended December 31, 2025, the Company recognized revenue of $ 68.8 million related to its contract liabilities at December 31, 2024. Remaining Performance Obligations As of December 31, 2025, the aggregate amount of the total transaction price allocated in contracts with original duration of greater than one year to the remaining performance obligations was $ 1,190.5 million. The Company expects to recognize revenue on approximately three-fourths of the remaining performance obligations over the next 24 months, with the balance recognized thereafter. The Company excludes amounts for remaining performance obligations that are part of contracts with an original expected duration of one year or less. Such remaining performance obligations represent unsatisfied or partially unsatisfied performance obligations. 3. Investments and Fair Value Measurements Marketable Investments 86 Table of Contents The Company’s marketable investments have been classified and accounted for as available-for-sale. The Company’s intent is that all marketable investments are available for use in its current operations, including marketable investments with maturity dates greater than one year from December 31, 2025. The Company’s marketable investments as of December 31, 2025 and 2024 were as follows (in thousands): December 31, 2025 Short-Term Marketable Investments Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Certificates of deposit $ 1,066 $ 1 $ — $ 1,067 U.S. treasury securities 266,671 459 — 267,130 U.S. agency and government-sponsored securities 166,170 81 ( 14 ) 166,237 Commercial paper 7,867 6 — 7,873 Corporate bonds 22,511 17 — 22,528 Total $ 464,285 $ 564 $ ( 14 ) $ 464,835 December 31, 2024 Short-Term Marketable Investments Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Certificates of deposit $ 802 $ — $ — $ 802 U.S. treasury securities 442,353 442 ( 223 ) 442,572 U.S. agency and government-sponsored securities 146,762 16 ( 18 ) 146,760 Commercial paper 9,600 8 — 9,608 Corporate bonds 43,550 124 ( 6 ) 43,668 Total $ 643,067 $ 590 $ ( 247 ) $ 643,410 The following table presents the gross unrealized losses and the fair value for those marketable investments that were in an unrealized loss position for less than 12 months as of December 31, 2025 and 2024 (in thousands): December 31, 2025 December 31, 2024 Less than 12 months Less than 12 months Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value U.S. treasury securities $ — $ — $ ( 223 ) $ 104,716 U.S. agency and government-sponsored securities ( 14 ) 33,935 ( 18 ) 76,484 Corporate bonds — — ( 6 ) 4,219 Total $ ( 14 ) $ 33,935 $ ( 247 ) $ 185,419 Although the Company had certain available-for-sale debt securities in an unrealized loss position as of December 31, 2025, no impairment loss was recorded since it did not intend to sell them, did not anticipate a need to sell them, and the decline in fair value was not due to any credit-related factors. The amortized cost and fair value of the Company’s marketable investments by contractual maturity as of December 31, 2025 were as follows (in thousands): Cost Fair Value Due within one year $ 271,187 $ 271,619 Due after one year through two years 193,098 193,216 Total $ 464,285 $ 464,835 Fair Value Measurements 87 Table of Contents The Company carries cash equivalents and marketable investments at fair value. Fair value is based on the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1 — Observable inputs, which include unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 — Observable inputs other than Level 1 inputs, such as quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 — Unobservable inputs that are supported by little or no market activity and that are based on management’s assumptions, including fair value measurements determined by using pricing models, discounted cash flow methodologies or similar techniques. The Company determined the fair value of its Level 1 financial instruments, which are traded in active markets, using quoted market prices for identical instruments. Marketable investments classified within Level 2 of the fair value hierarchy are valued based on other observable inputs, including broker or dealer quotations or alternative pricing sources. When quoted prices in active markets for identical assets or liabilities are not available, the Company relies on non-binding quotes from its investment managers, which are based on proprietary valuation models of independent pricing services. These models generally use inputs such as observable market data, quoted market prices for similar instruments, historical pricing trends of a security as relative to its peers. To validate the fair value determination provided by its investment managers, the Company reviews the pricing movement in the context of overall market trends and trading information from its investment managers. The Company performs routine procedures such as comparing prices obtained from independent sources to ensure that appropriate fair values are recorded. 88 Table of Contents The following tables set forth the Company’s assets measured at fair value by level within the fair value hierarchy (in thousands): December 31, 2025 Level 1 Level 2 Level 3 Total Assets Cash equivalents Money market funds $ 103,637 $ — $ — $ 103,637 Certificates of deposit — 747 — 747 Total cash equivalents $ 103,637 $ 747 $ — $ 104,384 Marketable investments Certificates of deposit $ — $ 1,067 $ — $ 1,067 U.S. treasury securities 267,130 — — 267,130 U.S. agency and government-sponsored securities — 166,237 — 166,237 Commercial paper — 7,873 — 7,873 Corporate bonds — 22,528 — 22,528 Total marketable investments $ 267,130 $ 197,705 $ — $ 464,835 December 31, 2024 Level 1 Level 2 Level 3 Total Assets Cash equivalents Money market funds $ 114,370 $ — $ — $ 114,370 Certificates of deposit — 496 — 496 U.S. treasury securities 42,946 — — 42,946 U.S. agency and government-sponsored securities — 41,832 — 41,832 Commercial paper — — — — Total cash equivalents $ 157,316 $ 42,328 $ — $ 199,644 Marketable investments Certificates of deposit $ — $ 802 $ — $ 802 U.S. treasury securities 442,572 — — 442,572 U.S. agency and government-sponsored securities — 146,760 — 146,760 Commercial paper — 9,608 — 9,608 Corporate bonds — 43,668 — 43,668 Total marketable investments $ 442,572 $ 200,838 $ — $ 643,410 In March 2024, the Company issued $ 747.5 million aggregate principal amount of 1.00 % convertible senior notes due 2029 (the "2029 convertible senior notes") in a private offering. 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, 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. See Note 6 for further information on the Company’s convertible senior notes. 89 Table of Contents In February 2022, the Company made a $ 2.0 million equity investment in a privately-held company that the Company does not have the ability to exercise significant influence over. The Company elected to utilize the measurement alternative for an equity security without a readily determinable fair value. Accordingly, this investment is accounted for at its cost minus impairment, if any, and is classified within Level 3. If the Company identifies observable price changes in orderly transactions for such investment or a similar investment, it will measure the investment at fair value as of the date that the observable transactions or events occurred. 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. The fair value of the Company’s other financial instruments, including accounts receivable, accounts payable and other current liabilities, approximate their carrying value due to the relatively short maturity of those instruments. The carrying amounts of the Company’s operating and finance leases approximate their fair value, which is the present value of expected future cash payments based on assumptions about current interest rates and the creditworthiness of the Company. 4. Financial Statement Components Cash and cash equivalents consisted of the following (in thousands): December 31, 2025 2024 Cash $ 127,700 $ 162,902 Money market funds 103,637 114,370 Certificates of deposit 747 496 U.S. treasury securities — 42,946 U.S. agency and government-sponsored securities — 41,832 Total cash and cash equivalents $ 232,084 $ 362,546 Accounts receivable, net consisted of the following (in thousands): December 31, 2025 2024 Trade accounts receivable $ 112,918 $ 99,551 Unbilled trade accounts receivable, net of advance customer deposits 18,501 15,962 Provision for credit losses ( 435 ) ( 341 ) Accounts receivable, net $ 130,984 $ 115,172 Prepaid expenses and other current assets consisted of the following (in thousands): December 31, 2025 2024 Prepaid expenses $ 24,209 $ 27,988 Other current assets 14,797 15,646 Contract assets 4,101 7,206 Prepaid expenses and other current assets $ 43,107 $ 50,840 90 Table of Contents Property and equipment, net consisted of the following (in thousands): December 31, 2025 2024 Computer and network equipment $ 178,485 $ 173,671 Computer software 63,547 66,455 Internal-use software development costs 98,542 49,340 Furniture and fixtures 4,561 5,127 Leasehold improvements 6,757 6,736 Property and equipment 351,892 301,329 Accumulated depreciation and amortization ( 187,257 ) ( 156,441 ) Property and equipment, net $ 164,635 $ 144,888 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): December 31, 2025 2024 Other assets $ 7,136 $ 8,984 Equity investment in a privately-held company 750 750 Deferred tax assets 2,839 3,650 Other assets $ 10,725 $ 13,384 Accrued and other current liabilities consisted of the following (in thousands): December 31, 2025 2024 Accrued expenses $ 24,550 $ 30,822 Accrued compensation and benefits 52,387 44,002 Accrued federal fees 3,911 4,913 Sales and other tax liabilities 3,272 3,983 Accrued and other current liabilities $ 84,120 $ 83,720 Other long-term liabilities consisted of the following (in thousands): December 31, 2025 2024 Deferred revenue $ 1,545 $ 865 Deferred tax liabilities 56 186 Sales and other tax liabilities 1,357 244 Other long-term liabilities 4,589 5,422 Other long-term liabilities $ 7,547 $ 6,717 91 Table of Contents 5. Goodwill and Intangible Assets In 2024, goodwill and intangible assets were recorded as a result of the Company's acquisition of Acqueon, Inc. (“Acqueon”). See Note 14 for further details. The following table summarizes the activity in the Company's goodwill and intangible asset balances during the years ended December 31, 2025 and 2024 (in thousands): Goodwill Intangible Assets Beginning of the period, January 1, 2024 $ 227,412 $ 38,323 Addition (Acqueon) 138,181 39,900 Measurement period adjustment (Acqueon) ( 14 ) — Measurement period adjustment (Aceyus) ( 143 ) — Amortization — ( 12,591 ) 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. Based on the Company’s assessment, it concluded that it is more likely than not that the fair values were more than their carrying values. Accordingly, there was no indication of impairment of goodwill, and further quantitative testing was not required. Subsequent to the 2025 annual impairment test, the Company believes there have been no significant events or circumstances negatively affecting the valuation of goodwill. As of December 31, 2025 and 2024, there was no impairment to the carrying value of the Company’s goodwill. The components of intangible assets were as follows (in thousands): December 31, 2025 December 31, 2024 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Remaining Amortization Period (Years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Remaining Amortization Period (Years) Developed technology $ 105,714 $ ( 62,794 ) $ 42,920 5.8 $ 105,714 $ ( 51,230 ) $ 54,484 6.0 Acquired workforce 470 ( 470 ) — 0.0 470 ( 470 ) — 0.0 Customer relationships 12,850 ( 5,150 ) 7,700 3.5 12,850 ( 2,681 ) 10,169 4.4 Trademarks 1,300 ( 754 ) 546 1.5 1,300 ( 321 ) 979 2.4 Total $ 120,334 $ ( 69,168 ) $ 51,166 5.4 $ 120,334 $ ( 54,702 ) $ 65,632 5.7 Amortization expense related to intangible assets was $ 14.5 million, $ 12.6 million and $ 12.0 million for the years ended December 31, 2025, 2024 and 2023, respectively. 92 Table of Contents As of December 31, 2025, the expected future amortization expense for intangible assets was as follows (in thousands): Period Expected Future Amortization Expense 2026 $ 13,008 2027 8,612 2028 8,246 2029 7,328 2030 6,188 Thereafter 7,784 Total $ 51,166 Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate an asset’s carrying value may not be recoverable. The Company concluded that there were no indicators of impairment of its intangible assets as of December 31, 2025 and 2024. 6. Debt Repurchase Transaction In connection with the issuance of the 2029 convertible senior notes on March 1, 2024, the Company used part of the net proceeds from the issuance to repurchase approximately $ 313.1 million aggregate principal amount of the outstanding 2025 convertible senior notes in privately-negotiated transactions for aggregate cash consideration of approximately $ 304.9 million (the “Repurchase Transaction”). 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 income (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”). The Company received approximately $ 0.5 million in cash in connection with these partial terminations, representing the fair value at the date of settlement of the unwound 2025 Capped Calls. 2029 Convertible Senior Notes and Related Capped Call Transactions In March 2024, the Company issued $ 747.5 million aggregate principal amount of 2029 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 2029 convertible senior notes. The 2029 convertible senior notes mature on March 15, 2029 and bear interest at a fixed rate of 1.00 % per annum, payable semiannually in arrears on March 15 and September 15 of each year, beginning on September 15, 2024. The total net proceeds from the issuance of the 2029 convertible senior notes, after deducting initial purchasers' discounts and commissions and estimated debt issuance costs, were approximately $ 728.8 million. Each $1,000 principal amount of the 2029 convertible senior notes is initially convertible into 12.5918 shares of the Company’s common stock (the “2029 Conversion Option”), which is equivalent to an initial conversion price of approximately $ 79.42 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 $ 61.09 per share closing price of the Company’s common stock on The Nasdaq Global Market on February 27, 2024. There have been no changes to the initial conversion price of the 2029 convertible senior notes since issuance. The 2029 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 December 15, 2028, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2024 (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 93 Table of Contents trading day; (2) during the five business day period after any five consecutive trading day period (the “2029 Measurement Period”) in which the trading price (as defined in the 2029 Indenture governing the 2029 convertible senior notes) per $1,000 principal amount of the 2029 convertible senior notes for each trading day of the 2029 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 2029 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 December 15, 2028 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 2029 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 2029 convertible senior notes), subject to certain conditions, holders may require the Company to repurchase for cash all or any portion of their 2029 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 2029 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 $ 20.05 per share on December 31, 2025, the last trading day during the three months ended December 31, 2025, was below $ 103.24 per share, which represents 130 % of the initial conversion price of $ 79.42 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, 2025, was not greater than or equal to 130 % of the initial conversion price. As such, during the three months ended December 31, 2025, the conditions allowing holders of the 2029 convertible senior notes to convert were not met. The 2029 convertible senior notes are therefore not convertible during the three months ending March 31, 2026. The Company may not redeem the 2029 convertible senior notes prior to March 22, 2027. The Company may redeem for cash all or any portion of the 2029 convertible senior notes, at its option, on or after March 22, 2027 and prior to December 15, 2028, 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 on, and including, the trading day 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 2029 convertible senior notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. However, the Company may not redeem less than all of the outstanding 2029 convertible senior notes unless at least $ 100.0 million aggregate principal amount of 2029 convertible senior notes are outstanding and not called for redemption at the time the redemption notice is sent. No sinking fund is provided for the 2029 convertible senior notes. The 2029 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 2029 convertible senior notes; equal in right of payment to any of the Company’s unsecured indebtedness that is not so subordinated (including the 2025 convertible senior notes); 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. 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 Unamortized issuance costs ( 12,010 ) ( 15,645 ) Net carrying amount $ 735,490 $ 731,855 Interest expense related to the 2029 convertible senior notes was as follows (in thousands): 94 Table of Contents Year Ended December 31, 2025 December 31, 2024 Contractual interest expense $ 7,475 $ 6,229 Amortization of issuance costs 3,635 3,013 Total interest expense $ 11,110 $ 9,242 The debt issuance costs are amortized into interest expense over the term of the 2029 convertible senior notes at an effective interest rate of 1.49 %. In connection with the issuance of the 2029 convertible senior notes, the Company entered into privately negotiated capped call transactions (each a “2029 Capped Call,” and collectively the "2029 Capped Calls") with certain financial institutions. The 2029 Capped Call has an initial strike price of approximately $ 79.42 , subject to certain adjustments, which corresponds to the initial conversion price of the 2029 convertible senior notes. The 2029 Capped Calls have an initial cap price of $ 122.18 per share, subject to certain adjustments. The 2029 Capped Calls are expected to partially offset the potential dilution to the Company’s common stock upon any conversion of the 2029 convertible senior notes, with such offset subject to a cap based on the cap price. Each 2029 Capped Call covers, subject to anti-dilution adjustments, approximately 9.4 million shares of the Company’s common stock. The 2029 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 2029 Capped Call is subject to certain specified additional disruption events that may give rise to a termination of the 2029 Capped Calls, including nationalization, insolvency or delisting, changes in law, failures to deliver, insolvency filings, and hedging disruptions. For accounting purposes, each 2029 Capped Call is treated as a separate transaction from, and not part of the terms of the 2029 convertible senior notes. As these transactions meet certain accounting criteria, the 2029 Capped Calls are recorded in stockholders' equity and are not accounted for as derivatives. The 2029 Capped Calls will not be remeasured as long as they continue to meet the conditions for equity classification. 2025 Convertible Senior Notes and Related Capped Call Transactions 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 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. 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): Year Ended December 31, 2025 December 31, 2024 December 31, 2023 Contractual interest expense $ 905 $ 2,433 $ 3,737 Amortization of issuance costs 915 2,465 3,749 Total interest expense $ 1,820 $ 4,898 $ 7,486 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 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 95 Table of Contents Repurchase Transaction, the Company unwound a portion of the 2025 Capped Calls. Refer to the Repurchase Transaction section above for further information. 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. 7. Stockholders’ Equity Capital Structure Common Stock The Company is authorized to issue 450,000,000 shares of common stock with a par value of $ 0.001 per share. 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. Holders of the Company’s common stock are entitled to dividends, if and when declared by the board of directors. In the event of liquidation, dissolution or winding up, subject to the rights of the holders of any then outstanding shares of preferred stock, holders of common stock will be entitled to receive the assets and funds of the Company that are legally available for distribution. Preferred Stock The Company is authorized to designate and issue up to 5,000,000 shares of preferred stock with a par value of $ 0.001 per share in one or more series without stockholder approval and to fix the rights, preferences, privileges and restrictions thereof. 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. 96 Table of Contents Common Stock Reserved for Future Issuance Shares of common stock reserved for future issuance related to outstanding equity awards and employee equity incentive plans as of December 31, 2025, were as follows (in thousands): Common Stock Reserved Stock options outstanding 390 RSUs (including PRSUs) outstanding 6,029 Shares available for future grant under 2014 Plan 13,061 Shares available for future issuance under ESPP 3,697 Total shares of common stock reserved 23,177 Equity Incentive Plans 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. 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. Additionally, any forfeited or expired shares that would have otherwise returned to the 2004 Plan, instead return to the 2014 Plan. The 2014 Plan allows the Company to grant stock options, RSUs, restricted stock awards, performance stock awards, stock appreciation rights, performance cash awards, and other stock awards. To date, the Company has granted stock options and RSUs (including PRSUs) under the 2014 Plan. Stock options granted under the 2014 Plan are in general at a price equal to the fair market value of the common stock on the date of grant and vest over four years . The Company’s stock options expire 10 years from the date of grant. Each RSU granted under the 2014 Plan represents a right to receive one share of the Company’s common stock when the RSU vests. RSUs generally vest over one to four years . Vested options generally expire three months 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 connection with the Company’s acquisition of Inference in 2020, the Company assumed unvested stock options that had been granted under the Inference Technologies Group Inc. 2018 Equity Incentive Plan. Each of the assumed stock options are subject to substantially the same terms and conditions as applied to the assumed stock options immediately prior to the acquisition date, except that the number of shares of the Company’s common stock subject to each assumed stock option and the exercise price has been adjusted in accordance with the terms of the acquisition agreement. If these assumed stock options are cancelled, forfeited or expire unexercised, the underlying shares do not become available for future grant. 97 Table of Contents Stock Options A summary of the Company’s stock option activity during the year ended December 31, 2025 is as follows (in thousands, except years and per share data): Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value (1) Outstanding as of December 31, 2024 860 $ 55.34 Options granted 0 0.00 Options exercised ( 156 ) 20.00 Options forfeited or expired ( 314 ) 77.72 Outstanding as of December 31, 2025 390 51.62 2.4 $ 1,355 Vested and expected to vest as of December 31, 2025 390 51.62 2.4 1,355 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 $ 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): Year Ended December 31, 2025 2024 2023 Weighted average grant date fair value per share of options granted $ — $ — $ — Intrinsic value of options exercised (1) 1,008 901 26,943 Total fair value of options vested during the period 1,095 3,249 5,602 Cash received from options exercised 3,137 481 9,127 (1) Intrinsic value of options exercised is the difference between the fair market value of the Company’s common stock at the time of exercise and the exercise price paid. Restricted Stock Units (including PRSUs) A summary of RSU activity (including PRSUs) during the year ended December 31, 2025 is as follows (in thousands, except per share data): Number of Shares Weighted Average Grant Date Fair Value Per Share Outstanding as of December 31, 2024 5,829 $ 57.27 RSUs granted 4,476 34.22 RSUs vested and released ( 2,556 ) 56.92 RSUs forfeited or cancelled ( 1,720 ) 51.63 Outstanding as of December 31, 2025 6,029 43.50 (1) Includes 324,165 PRSUs granted during 2025. PRSUs with Market and Service Conditions . 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. 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 98 Table of Contents (“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. 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 99 Table of Contents 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): Year Ended December 31, 2025 2024 2023 Weighted average grant date fair value per share of RSUs granted $ 34.22 $ 46.32 $ 69.84 Total fair value of RSUs vested during the period 145,500 167,115 184,443 Employee Stock Purchase Plan In March 2014, the Company’s board of directors and stockholders adopted the 2014 ESPP and the shares authorized for issuance thereunder. The 2014 ESPP became effective on April 3, 2014. The 2014 ESPP permits eligible employees to purchase shares of the Company’s common stock through payroll deductions with up to 15 % of their pre-tax earnings subject to certain Internal Revenue Code limitations. The purchase price of the shares is 85 % of the lower of the fair market value of the Company’s common stock on the first day of a six month offering period, except for the initial offering period, or the relevant purchase date. In addition, no participant may purchase more than 1,500 shares of common stock in each purchase period. The number of shares of common stock originally reserved for issuance under the 2014 ESPP was 880,000 shares, which increases automatically each year, beginning on January 1, 2015 and continuing through January 1, 2024, by the lesser of (i) 1 % of the total number of shares of the Company’s common stock outstanding on December 31 of the preceding calendar year; (ii) 1,000,000 shares of common stock (subject to adjustment to reflect any split or combination of its common stock); or (iii) such lesser number as determined by its board of directors. During 2025 and 2024, 600,877 and 372,046 shares were purchased by employees under the 2014 ESPP at a weighted average price of $ 20.76 and $ 39.77 per share, respectively. Stock-Based Compensation Stock-based compensation expenses for the years ended December 31, 2025, 2024 and 2023 were as follows (in thousands): Year Ended December 31, 2025 2024 2023 Cost of revenue $ 27,836 $ 29,825 $ 38,259 Research and development 31,764 37,260 50,430 Sales and marketing 42,209 51,214 66,229 General and administrative 46,259 48,016 51,374 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). Stock Option RSU (excluding PRSUs) PRSU ESPP Unrecognized stock-based compensation expense $ 1,096 $ 216,132 $ 9,721 $ 2,018 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. All stock-based compensation for equity awards granted to employees and non-employee directors is measured based on the grant date fair value of the award. 100 Table of Contents 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 PRSUs subject to market conditions using a Monte Carlo Simulation model using the assumptions disclosed in the table below. Expected volatility is based upon the weighting of the Company’s historical volatility. The expected term of options granted is estimated using the simplified method by taking the average of the vesting term and the contractual term of the option. The expected volatility assumption for purchase rights under the 2014 ESPP is based on the historical volatility of the Company’s common stock. The risk-free rate for the expected term of the awards is based on U.S. Treasury zero-coupon issues at the time of grant. The Company has not paid, and does not anticipate paying, cash dividends on its shares of common stock. Accordingly, the expected dividend yield is zero . The weighted average assumptions used to value PRSUs with market conditions granted during the periods presented were as follows: PRSUs (Market Conditions) Year Ended December 31, 2025 2024 2023 Expected term (years) 2.8 2.9 2.8 Volatility 55.2 % 49.4 % 51.1 % Risk-free interest rate 4.0 % 4.5 % 4.5 % Dividend yield — — — The weighted average assumptions used to value purchase rights under the 2014 ESPP granted during the periods presented were as follows: ESPP Granted In November 2025 May 2025 November 2024 May 2024 November 2023 May 2023 Expected term (years) 0.5 0.5 0.5 0.5 0.5 0.5 Volatility 51 % 47 % 63 % 41 % 48 % 75 % Risk-free interest rate 4.1 % 3.7 % 4.3 % 5.1 % 4.8 % 4.6 % Dividend yield — — — — — — 8. 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 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. 101 Table of Contents 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 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): December 31, 2025 2024 2023 Stock options — 860 918 RSUs (including PRSUs) — 5,829 4,076 Convertible senior notes — 11,466 5,566 Total — 18,155 10,560 The Company used the if-converted method for calculating any potential dilutive effect of its convertible senior notes for the years ended December 31, 2025, 2024 and 2023. Under this method, the Company calculates diluted earnings per share under both the cash and share settlement assumptions to determine which is more dilutive. 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 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. 102 Table of Contents 9. Income Taxes The following table presents components of loss before income taxes for the periods presented (in thousands): Year Ended December 31, 2025 2024 2023 United States $ 34,312 $ ( 22,903 ) $ ( 80,348 ) International 10,630 10,148 925 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): Year Ended December 31, 2025 2024 2023 Current: U.S. federal $ 16 $ 519 $ — U.S. state 1,866 2,728 2,531 Foreign 2,674 1,628 ( 243 ) Total provision for income taxes - Current 4,556 4,875 2,288 Deferred: U.S. federal 191 ( 4,308 ) — U.S. state 92 ( 1,174 ) — Foreign 687 647 53 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. 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): 103 Table of Contents 2025 2024 2023 U.S. federal tax at statutory rate $ 9,438 21 % $ ( 2,679 ) 21 % $ ( 16,676 ) 21 % Domestic federal reconciling items: Tax credits 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 ) % 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 % Domestic state and local income taxes, net of federal effect (1) 1,601 4 % 252 ( 2 ) % 1,386 ( 2 ) % Foreign Reconciling Items: Australia 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 ) % India 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): 104 Table of Contents 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 Foreign: 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. 105 Table of Contents 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): December 31, 2025 2024 Deferred tax assets: Net operating loss and credit carryforwards $ 97,816 $ 91,826 Capitalized R&D costs 40,223 78,961 Accrued liabilities 1,781 872 Provision for credit losses 1,381 671 Property and equipment 103 35 Amortizable intangibles — — Deferred revenue 3,148 3,687 Accrued compensation 6,396 5,797 Long-term lease liabilities 18,169 15,928 Stock-based compensation 6,697 10,224 Deferred interest expense — 349 Other 1,259 755 Gross deferred tax assets 176,973 209,105 Valuation allowance ( 75,701 ) ( 123,141 ) Net deferred tax assets 101,272 85,964 Deferred tax liabilities: Property and equipment ( 11,637 ) ( 8,647 ) Amortizable intangibles ( 5,399 ) ( 7,697 ) Right of use assets ( 15,663 ) ( 13,493 ) Deferred contract acquisition costs ( 65,576 ) ( 52,663 ) Other ( 214 ) — Gross deferred tax liabilities ( 98,489 ) ( 82,500 ) Net deferred taxes $ 2,783 $ 3,464 With the exception of Russia, the Company has not provided for U.S. income taxes on undistributed earnings of its foreign subsidiaries because it intends to permanently re-invest those earnings outside the United States. The Company has plans to liquidate its Russian subsidiary. As such, the Company no longer asserts an intention to permanently re-invest those earnings. A valuation allowance is provided for deferred tax assets where the recoverability of the assets is uncertain. The determination to provide a valuation allowance is dependent upon the assessment of whether it is more likely than not that sufficient future taxable income will be generated to utilize the deferred tax assets. Based on the weight of the available evidence, which includes the Company’s historical operating losses, lack of taxable income and the accumulated deficit for the year ended December 31, 2025, the Company has provided a valuation allowance against its U.S. net deferred tax assets. 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. The foreign deferred tax assets cannot increase its U.S. valuation allowance. 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 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 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 106 Table of Contents 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. The California state research credits do not expire. The IRC imposes restrictions on the utilization of net operating losses and credits in the event of an “ownership change” of a corporation. Accordingly, a company’s ability to use net operating losses and credits may be subject to substantial limitation as prescribed under the IRC Sections 382 and 383 and similar state provisions. Events that may cause limitations in the amount of the net operating losses and credits that the Company may use in any one year include, but are not limited to, a cumulative ownership change of more than 50 % over a three-year period. In the event the Company has changes in ownership, net operating losses and research and development credit carryforwards, which are fully reserved by the deferred tax asset valuation allowance, could be limited and may expire unutilized. Unrecognized Tax Benefits The table below shows the changes in the gross amount of unrecognized tax benefits for the periods presented (in thousands): Year Ended December 31, 2025 2024 2023 Unrecognized benefit — beginning of period $ 13,575 $ 11,124 $ 9,415 Gross increases — current year tax positions 490 2,502 1,413 Gross increases — prior year tax positions — 40 299 Gross decreases — prior year tax positions ( 83 ) ( 91 ) ( 3 ) Settlements with tax authorities — — — Unrecognized benefit — end of period $ 13,982 $ 13,575 $ 11,124 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 is subject to taxation in the United States, various states and several foreign jurisdictions. 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. 10. Commitments and Contingencies Commitments 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. The Company had outstanding operating lease and finance lease obligations of $ 61.0 million and $ 15.3 million, respectively, as of December 31, 2025. See Note 13 for further details. 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 The Company has agreements with third parties to provide co-location hosting and telecommunication usage services. The agreements require payments per month for a fixed period of time in exchange for certain guarantees of network and telecommunication availability. 107 Table of Contents As of December 31, 2025, future minimum payments under these arrangements were as follows in thousands): Year Ending December 31, Telecommunication Usage Services 2026 $ 5,813 2027 3,332 2028 1,869 2029 998 2030 502 Thereafter — Total future minimum payment $ 12,514 Universal Services Fund Liability The Company is classified as a telecommunications service provider for regulatory purposes and is required to make contributions to the USF based on the revenue the Company receives from the resale of interstate and some international telecommunications services. In order to comply with the obligation to make direct contributions, the Company is registered with the USAC, which is charged by the FCC with administering the USF, and has been remitting the required contributions to USAC since its registration with the USAC in April 2013. The Company also made retroactive USF contributions based on its revenues for the period from 2008 to 2012. The Company, however, has an unresolved and arguably dormant dispute with the FCC regarding whether the Company is liable for USF contributions related to the period from 2003 through 2007. As of December 31, 2025, the Company had accrued $ 0.1 million in interest related to the disputed assessments for the period of 2003 through 2007. State and Local Taxes and Surcharges The Company, based on analysis of its activities, has determined that it is obligated to collect and remit U.S. state or local sales, use, gross receipts, excise and utility user taxes, as well as fees or surcharges as a communications service provider in certain U.S. states, municipalities or local tax jurisdictions. The Company is registered for, collecting and remitting applicable taxes where such a determination has been made. Prior to the Company’s making such determination, the Company neither collected nor remitted these taxes, fees or surcharges to applicable local, municipal or state jurisdictions. The Company continues to analyze its activities to determine if it is subject to these taxes in additional jurisdictions and based on the Company’s ongoing assessment of its U.S. state and local tax collection and remittance obligations, the Company registers for tax and regulatory purposes in such jurisdictions and commences collecting and remitting applicable state and local taxes and surcharges to these jurisdictions. As of December 31, 2025 and 2024, the Company had total accrued liabilities of $ 1.7 million and $ 1.1 million, respectively, for such contingent sales taxes and surcharges that were not being collected from its customers but may be imposed by various taxing authorities, of which $ 0.4 million and $ 0.9 million, respectively, were included in Accrued and other current liabilities on the consolidated balance sheets, and the remaining were included in Other long-term liabilities on the consolidated balance sheets. The Company’s estimate of the probable loss incurred under this contingency is based on its analysis of the source location of its usage-based fees and the regulations and rules in each tax jurisdiction. Legal Matters 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. 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. The Company expenses legal fees as incurred. 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 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 108 Table of Contents 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. As a result, the Company is unable to estimate the reasonably possible loss or range of reasonably possible losses arising from this lawsuit. 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 In the ordinary course of business, the Company enters into agreements of varying scope and terms pursuant to which it agrees to indemnify customers, vendors, lessors, business partners and other parties with respect to certain matters, including losses arising out of breach of such agreements, including breach of security, services to be provided by the Company or from intellectual property infringement claims made by third parties. The Company has received indemnification demands, and will likely continue to receive demands, from customers regarding its intellectual property indemnification obligations under these contracts. 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 income (loss), or consolidated statements of cash flows. 11. Segment and Geographical Information The Company has a single operating and reportable segment and manages its business activities on a consolidated basis. The Company’s single segment provides its solution through a SaaS business model. The Company generates subscription revenue from its Intelligent CX Platform, and also generates usage-based telephony revenue. The Company charges its customers monthly subscription fees for access to its solution, primarily based on the number of licenses. The Company’s AI solutions are sold to its customers on a consumption or capacity basis. The Company’s reliable, secure, and scalable Intelligent CX Platform, powered by Five9 Genius AI, delivers a comprehensive suite of easy-to-use applications that enable the breadth of customer service, sales, and marketing related functions. The Company’s chief operating decision maker (“CODM”) is its chief executive officer. 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 109 Table of Contents income (loss). The measure of segment assets is reported on its consolidated balance sheets as total consolidated assets. Revenue by Geographic Areas The following table summarizes revenues by geographic region based on customer billing address (in thousands): Year Ended December 31, 2025 2024 2023 United States $ 1,017,415 $ 927,788 $ 812,708 International 131,673 114,150 97,780 Total revenue $ 1,149,088 $ 1,041,938 $ 910,488 Long-Lived Assets, Net by Geographic Areas The following table summarizes total property and equipment, net in the respective locations (in thousands): December 31, 2025 2024 United States $ 154,855 $ 136,382 International 9,780 8,506 Property and equipment, net $ 164,635 $ 144,888 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 Statements of Operations Year Ended December 31, 2025 2024 2023 Revenue $ 1,149,088 $ 1,041,938 $ 910,488 Adjusted cost of revenue (1) ( 426,892 ) ( 399,197 ) ( 354,729 ) Adjusted research and development (2) ( 110,950 ) ( 122,053 ) ( 99,418 ) Adjusted sales and marketing (3) ( 266,037 ) ( 256,193 ) ( 230,419 ) Adjusted general and administrative (4) ( 75,514 ) ( 68,513 ) ( 59,657 ) Other segment items (5) ( 179,081 ) ( 194,380 ) ( 216,326 ) Depreciation and amortization ( 61,764 ) ( 52,905 ) ( 48,515 ) Interest expense ( 14,076 ) ( 14,812 ) ( 7,646 ) Gain on early extinguishment of debt — 6,615 — Interest income and other 30,168 46,745 26,799 Provision for income taxes (6) ( 5,526 ) ( 40 ) ( 2,341 ) 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 110 Table of Contents 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. 12. Retirement Plans The Company has a 401(k) plan to provide tax deferred salary deductions for all eligible employees. Participants may make voluntary contributions to the 401(k) plan, limited by certain Internal Revenue Service restrictions. The Company is responsible for the administrative costs of the 401(k) plan. The Company began matching employee contributions in cash in the fourth quarter of 2019. The contribution expense for the years ended December 31, 2025, 2024, and 2023 was $ 2.5 million,$ 2.7 million and $ 2.4 million, respectively. The Company complies with the requirement of maintaining a retirement plan for employees in the Philippines. This plan is a non-contributory and defined benefit plan that provides retirement to employees equal to approximately one month salary for every year of credited service for employees who attain the normal retirement age of 60 with at least five years of service. The benefits are paid in a lump sum amount upon retirement from the Company. Total defined benefit liability under this plan was $ 1.3 million and $ 1.1 million as of each of December 31, 2025 and 2024, respectively. Total retirement expense for this plan were $ 0.4 million, $ 0.3 million, and $ 0.3 million for the years ended December 31, 2025, 2024, and 2023, respectively. 13. Leases The Company has leases for offices, data centers and computer and networking equipment that expire at various dates through 2031. The Company’s leases have remaining terms of one to seven years , some of the leases include a Company option to extend the leases for up to one to five years , and some of the leases include the option to terminate the leases upon 30 -days’ notice. The Company does not separate lease and non-lease components for real estate operating leases. As the Company’s leases do not provide an implicit rate, the net present value of future minimum lease payments is determined using the Company’s incremental borrowing rate. Operating leases with a duration of 12 months or less are excluded from right-of-use assets and operating lease liabilities, and related lease payments are generally recognized on a straight-line basis over the lease term and variable lease payments are recognized as incurred. The Company entered into three-year equipment finance lease agreements and recognized $ 18.6 million right of use assets during 2024, which were reported within Finance lease right-of-use assets on the consolidated balance sheets 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 $ 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. 111 Table of Contents The components of lease expenses were as follows (in thousands): Year Ended December 31, 2025 2024 2023 Operating lease cost $ 12,974 $ 13,270 $ 13,544 Finance lease cost: Amortization of right-of-use assets $ 8,911 $ 3,857 $ 940 Interest on finance lease liabilities 1,033 552 155 Total finance lease cost $ 9,944 $ 4,409 $ 1,095 Supplemental cash flow information related to leases was as follows (in thousands): Year Ended December 31, 2025 2024 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash used in operating leases $ ( 12,130 ) $ ( 12,259 ) $ ( 10,966 ) Financing cash used in finance leases ( 9,770 ) ( 4,012 ) ( 989 ) Right of use assets obtained in exchange for lease obligations: Operating leases 19,121 9,448 6,454 Finance leases 3,853 18,559 5,505 Supplemental balance sheet information related to leases was as follows (in thousands): December 31, 2025 2024 Operating leases Operating lease right-of-use assets $ 46,375 $ 38,880 Operating lease liabilities $ 12,922 $ 11,258 Operating lease liabilities — less current portion 42,116 37,071 Total operating lease liabilities $ 55,038 $ 48,329 Finance leases Finance lease right-of-use assets $ 14,216 $ 19,269 Property and equipment, gross $ 14,354 $ 21,708 Less: accumulated depreciation and amortization ( 14,354 ) ( 21,708 ) Property and equipment, net $ — $ — Finance lease liabilities $ 8,480 $ 7,768 Finance lease liabilities — less current portion 6,090 11,688 Total finance lease liabilities $ 14,570 $ 19,456 During 2024, the Company recognized a $ 1.9 million impairment loss as a result of its commitment to close two operating lease facilities and a $ 0.3 million impairment loss related to the associated leasehold improvements and property and equipment. 112 Table of Contents Weighted average remaining terms were as follows (in years): December 31, 2025 2024 Weighted average remaining lease term Operating leases 4.6 years 5.0 years Finance leases 1.7 years 2.5 years Weighted average discount rates were as follows: December 31, 2025 2024 Weighted average discount rate Operating leases 4.7 % 4.2 % Finance leases 5.8 % 5.8 % Maturities of lease liabilities were as follows (in thousands): Year Ending December 31, Operating Leases Finance Leases 2026 $ 15,092 $ 9,050 2027 12,520 5,906 2028 10,851 319 2029 10,602 — 2030 10,262 — Thereafter 1,669 — Total future minimum lease payments 60,996 15,275 Less: imputed interest ( 5,958 ) ( 705 ) Total $ 55,038 $ 14,570 14. Acquisitions Acqueon On August 27, 2024, the Company acquired all of the issued and outstanding shares of capital stock of Acqueon for total consideration of approximately $ 173.8 million. This acquisition, which was accounted for as a business combination, is intended to build on the pre-existing partnership between the companies, and to extend the Company's AI-powered CX platform by adding omnichannel proactive customer engagement to expand the Company’s outbound capabilities. 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 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. 113 Table of Contents The following table presents the final allocation of the purchase price at the acquisition date (in thousands): Cash $ 6,661 Tangible assets acquired 3,559 Other assets acquired 7,382 Acquired technology 30,400 Customer relationships 8,700 Trademarks 800 Goodwill 138,984 Total assets acquired 196,486 Deferred tax liability ( 4,534 ) Liabilities assumed ( 18,125 ) Total $ 173,827 The acquired technology, customer relationships, and trademarks will be amortized on a straight-line basis over their estimated useful lives of eight years , five years , and three years , respectively. 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 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. Aceyus 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. This acquisition, which was accounted for as a business combination, is intended to accelerate the Company's ability to capitalize on two business opportunities, namely facilitating the migration of large enterprise customers from on-premises to cloud and leveraging contextual data to deliver personalized experiences throughout the customer journey, including using this contextual data in the Company's AI & Automation solutions. The excess of the purchase price over identifiable intangible assets and net tangible assets in the amount of $ 61.8 million was allocated to goodwill, which is not deductible for tax purposes. The fair values assigned to assets acquired and liabilities assumed were based on management’s best estimates and assumptions as of the reporting date and are considered final. The Company recorded an adjustment of $ 0.1 million during the one year from acquisition date measurement period for the year ended December 31, 2024. The following table presents the final allocation of the purchase price at the acquisition date (in thousands): Cash $ 1,523 Tangible assets acquired 383 Other assets acquired 3,002 Acquired technology 19,100 Customer relationships 2,550 Trademarks 500 Goodwill 61,849 Total assets acquired 88,907 Liabilities assumed ( 6,895 ) Total $ 82,012 114 Table of Contents The acquired technology, customer relationships, and trademarks will be amortized on a straight-line basis over their estimated useful lives of eight years , five years , and three years , respectively. The Company used the income approach to estimate the fair value of intangible assets acquired. 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). 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. 15. Restructuring 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 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. 115 Table of Contents 16. Selected Quarterly Financial Data (Unaudited) Selected quarterly financial information for 2025 and 2024 is as follows: Quarter Ended Dec. 31, 2025 Sept. 30, 2025 Jun. 30, 2025 Mar. 31, 2025 Dec. 31, 2024 Sept. 30, 2024 Jun. 30, 2024 Mar. 31, 2024 (unaudited, in thousands, except per share data) Revenue $ 300,282 $ 285,832 $ 283,269 $ 279,705 $ 278,660 $ 264,182 $ 252,086 $ 247,010 Cost of revenue (1)(2) 133,844 128,552 127,865 125,973 122,663 121,933 118,414 114,530 Gross profit 166,438 157,280 155,404 153,732 155,997 142,249 133,672 132,480 Operating expenses: Research and development (1)(2) 36,104 35,218 39,912 41,100 41,480 42,482 40,717 41,518 Sales and marketing (1)(2) 76,636 71,657 80,668 82,855 73,898 78,615 78,332 81,109 General and administrative (1)(2) 33,902 34,362 36,385 35,205 36,439 36,575 33,988 30,548 Total operating expenses 146,642 141,237 156,965 159,160 151,817 157,672 153,037 153,175 Income (loss) from operations 19,796 16,043 ( 1,561 ) ( 5,428 ) 4,180 ( 15,423 ) ( 19,365 ) ( 20,695 ) Other (expense) income, net: Interest expense ( 3,054 ) ( 3,087 ) ( 3,820 ) ( 4,115 ) ( 4,271 ) ( 4,068 ) ( 3,906 ) ( 2,567 ) Gain on early extinguishment of debt — — — — — — — 6,615 Interest income and other 6,288 5,660 7,917 10,303 11,242 11,144 13,800 10,559 Total other income (expense), net 3,234 2,573 4,097 6,188 6,971 7,076 9,894 14,607 Income (loss) before income taxes 23,030 18,616 2,536 760 11,151 ( 8,347 ) ( 9,471 ) ( 6,088 ) Provision for (benefit from) income taxes 3,317 643 1,382 184 ( 426 ) ( 3,868 ) 3,345 989 Net income (loss) $ 19,713 $ 17,973 $ 1,154 $ 576 $ 11,577 $ ( 4,479 ) $ ( 12,816 ) $ ( 7,077 ) Net income (loss) per share: Basic $ 0.25 $ 0.23 $ 0.02 $ 0.01 $ 0.15 $ ( 0.06 ) $ ( 0.17 ) $ ( 0.10 ) Diluted $ 0.23 $ 0.21 $ 0.01 $ 0.01 $ 0.13 $ ( 0.06 ) $ ( 0.17 ) $ ( 0.10 ) Shares used in computing net income (loss) per share: Basic 77,509 77,528 76,654 75,949 75,430 74,876 74,203 73,488 Diluted 87,037 87,295 88,523 89,275 88,645 74,876 74,203 73,488 (1) Included stock-based compensation as follows: Quarter Ended Dec. 31, 2025 Sept. 30, 2025 Jun. 30, 2025 Mar. 31, 2025 Dec. 31, 2024 Sept. 30, 2024 Jun. 30, 2024 Mar. 31, 2024 (unaudited, in thousands) Cost of revenue $ 6,504 $ 6,852 $ 7,296 $ 7,184 $ 6,921 $ 7,512 $ 7,789 $ 7,603 Research and development 7,349 6,896 8,829 8,690 8,259 8,244 9,827 10,930 Sales and marketing 8,879 8,401 13,355 11,574 10,880 12,490 13,824 14,020 General and administrative 10,893 11,190 12,379 11,797 12,383 11,310 12,192 12,131 Total stock-based compensation $ 33,625 $ 33,339 $ 41,859 $ 39,245 $ 38,443 $ 39,556 $ 43,632 $ 44,684 116 Table of Contents (2) Included depreciation and amortization expenses as follows: Quarter Ended Dec. 31, 2025 Sept. 30, 2025 Jun. 30, 2025 Mar. 31, 2025 Dec. 31, 2024 Sept. 30, 2024 Jun. 30, 2024 Mar. 31, 2024 (unaudited, in thousands) Cost of revenue $ 14,421 $ 13,381 $ 12,161 $ 11,883 $ 12,087 $ 10,414 $ 10,421 $ 9,613 Research and development 833 731 799 680 620 721 741 890 Sales and marketing 10 11 27 36 38 32 26 27 General and administrative 1,589 1,649 1,662 1,891 1,895 1,977 1,750 1,653 Total depreciation and amortization $ 16,853 $ 15,772 $ 14,649 $ 14,490 $ 14,640 $ 13,144 $ 12,938 $ 12,183 117 Table of Contents ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.