Intapp, Inc. 10-Q

Item 1. Financial Statements Page Condensed Consolidated Balance Sheets 1 Condensed Consolidated Statements of Operations 2 Condensed Consolidated Statements of Comprehensive Loss 3 Condensed Consolidated Statements of Stockholders’ Equity 4 Condensed Consolidated Statements of Cash Flows 6 Notes to Condensed Consolidated Financial Statements 7 Note 1. Description of Business 7 Note 2. Summary of Significant Accounting Policies 7 Note 3. Revenues 9 Note 4. Business Combinations 9 Note 5. Goodwill and Intangible Assets 10 Note 6. Fair Value Measurements 11 Note 7. Internal-Use Software Costs 13 Note 8. Leases 13 Note 9. Commitments and Contingencies 14 Note 10. Debt 14 Note 11. Stockholders' Equity and Stock-Based Compensation 15 Note 12. Income Taxes 16 Note 13. Net Loss Per Share 17 Table of Contents CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q, particularly in the sections captioned “Risk Factors” under Part II, Item 1A, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under Part I, Item 2, contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans, potential acquisitions, market growth and trends, and our objectives for future operations, are forward-looking statements. You can identify these forward-looking statements by the use of forward-looking words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “objective,” “ongoing,” “plan,” “predict,” “project,” “potential,” “should,” “will,” or “would,” or the negative version of those words or other comparable words. Any forward-looking statements contained in this Quarterly Report on Form 10-Q are based upon our historical performance and on our current plans, estimates and expectations in light of information currently available to us. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business, prospects, growth strategy, and liquidity. Accordingly, there are, or will be, important factors that could cause our actual results to differ materially from those indicated in these statements. We believe that these factors include, but are not limited to: • our ability to continue our growth at or near historical rates; • our future financial performance and ability to be profitable; • the effect of global events on the United States (“U.S.”) and global economies, our business, our employees, our results of operations, our financial condition, demand for our products, sales and implementation cycles, and the health of our clients’ and partners’ businesses; • our ability to prevent and respond to data breaches, unauthorized access to client data or other disruptions of our solutions; • our ability to effectively manage U.S. and global market and economic conditions, including inflationary pressures, economic and market downturns and volatility in the financial services industry, particularly adverse to our targeted industries; • the length and variability of our sales cycle; • our ability to attract and retain clients; • our ability to attract and retain talent; • our ability to compete in highly competitive markets, including artificial intelligence (“AI”) products; • our ability to manage additional complexity, burdens, and volatility in connection with our international sales and operations; • the successful assimilation or integration of the businesses, technologies, services, products, personnel or operations of acquired companies; • our ability to incur indebtedness in the future and the effect of conditions in credit markets; • the sufficiency of our cash and cash equivalents to meet our liquidity needs; and • our ability to maintain, protect, and enhance our intellectual property rights. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. You should read the section titled “Risk Factors” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q and in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended June 30, 2024 for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. As a result of these factors, we cannot assure you that the forward-looking statements in this Quarterly Report on Form 10-Q will prove to be accurate. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise. You should read this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. ii Table of Contents PART I—FIN ANCIAL INFORMATION Item 1. Fi nancial Statements INTAPP, INC. CONDENSED CONSOLIDA TED BALANCE SHEETS (in thousands, except per share data) (unaudited) December 31, 2024 June 30, 2024 Assets Current assets: Cash and cash equivalents $ 285,631 $ 208,370 Restricted cash 200 200 Accounts receivable, net of allowance of $ 989 and $ 1,406 as of December 31, 2024 and June 30, 2024, respectively 87,596 95,103 Unbilled receivables, net 13,786 13,300 Other receivables, net 4,412 2,743 Prepaid expenses 11,284 9,031 Deferred commissions, current 14,232 13,907 Total current assets 417,141 342,654 Property and equipment, net 20,172 18,944 Operating lease right-of-use assets 18,426 21,382 Goodwill 285,907 285,969 Intangible assets, net 34,351 40,293 Deferred commissions, noncurrent 18,335 18,495 Other assets 6,255 5,262 Total assets $ 800,587 $ 732,999 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 16,631 $ 13,348 Accrued compensation 35,045 42,066 Accrued expenses 7,266 12,040 Deferred revenue, net 234,962 218,923 Other current liabilities 12,243 14,270 Total current liabilities 306,147 300,647 Deferred tax liabilities 1,255 1,336 Deferred revenue, noncurrent 3,033 3,563 Operating lease liabilities, noncurrent 17,409 19,605 Other liabilities 4,353 4,610 Total liabilities 332,197 329,761 Commitments and contingencies (Note 9) Stockholders’ equity: Preferred stock, $ 0.001 par value per share, 50,000 shares authorized; no shares issued or outstanding as of December 31, 2024 and June 30, 2024, respectively — — Common stock, $ 0.001 par value per share, 700,000 shares authorized; 79,234 and 74,624 shares issued and outstanding as of December 31, 2024 and June 30, 2024, respectively 79 75 Additional paid-in capital 971,631 891,681 Accumulated other comprehensive loss ( 1,401 ) ( 1,336 ) Accumulated deficit ( 501,919 ) ( 487,182 ) Total stockholders’ equity 468,390 403,238 Total liabilities and stockholders’ equity $ 800,587 $ 732,999 See accompanying notes to unaudited condensed consolidated financial statements. 1 Table of Contents INTAPP, INC. CONDENSED CONSOLIDATED S TATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited) Three Months Ended December 31, Six Months Ended December 31, 2024 2023 2024 2023 Revenues SaaS $ 79,976 $ 63,117 $ 156,852 $ 122,030 License 28,017 28,135 56,509 56,186 Professional services 13,216 12,681 26,653 27,292 Total revenues 121,209 103,933 240,014 205,508 Cost of revenues SaaS 16,292 12,810 31,610 25,521 License 1,630 1,606 3,382 3,308 Professional services 14,549 16,353 29,413 33,513 Total cost of revenues 32,471 30,769 64,405 62,342 Gross profit 88,738 73,164 175,609 143,166 Operating expenses: Research and development 33,325 27,981 65,752 56,477 Sales and marketing 40,791 35,269 78,551 69,688 General and administrative 24,808 20,996 48,746 42,048 Total operating expenses 98,924 84,246 193,049 168,213 Operating loss ( 10,186 ) ( 11,082 ) ( 17,440 ) ( 25,047 ) Interest and other income (expense), net ( 202 ) 2,057 3,220 1,114 Net loss before income taxes ( 10,388 ) ( 9,025 ) ( 14,220 ) ( 23,933 ) Income tax benefit (expense) 171 ( 188 ) ( 517 ) ( 601 ) Net loss $ ( 10,217 ) $ ( 9,213 ) $ ( 14,737 ) $ ( 24,534 ) Net loss per share, basic and diluted $ ( 0.13 ) $ ( 0.13 ) $ ( 0.19 ) $ ( 0.35 ) Weighted-average shares used to compute net loss per share, basic and diluted 78,118 70,521 76,861 69,729 See accompanying notes to unaudited condensed consolidated financial statements. 2 Table of Contents INTAPP, INC. CONDENSED CONSOLIDATED STATE MENTS OF COMPREHENSIVE LOSS (in thousands) (unaudited) Three Months Ended December 31, Six Months Ended December 31, 2024 2023 2024 2023 Net loss $ ( 10,217 ) $ ( 9,213 ) $ ( 14,737 ) $ ( 24,534 ) Other comprehensive income (loss): Foreign currency translation adjustments ( 560 ) 352 ( 65 ) 61 Other comprehensive income (loss): ( 560 ) 352 ( 65 ) 61 Comprehensive loss $ ( 10,777 ) $ ( 8,861 ) $ ( 14,802 ) $ ( 24,473 ) See accompanying notes to unaudited condensed consolidated financial statements. 3 Table of Contents INTAPP, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands) (unaudited) Three Months Ended December 31, 2024 Common Stock Additional Paid-in Accumulated Other Comprehensive Accumulated Total Stockholders' Shares Amount Capital Loss Deficit Equity Balance as of September 30, 2024 77,285 $ 78 $ 934,585 $ ( 841 ) $ ( 491,702 ) $ 442,120 Issuance of common stock upon exercise of stock options 1,123 1 9,665 — — 9,666 Vesting of performance stock units and restricted stock units 759 — — — — — Issuance of common stock under employee stock purchase plan 67 — 1,970 — — 1,970 Stock-based compensation — — 25,411 — — 25,411 Foreign currency translation adjustments — — — ( 560 ) — ( 560 ) Net loss — — — — ( 10,217 ) ( 10,217 ) Balance as of December 31, 2024 79,234 $ 79 $ 971,631 $ ( 1,401 ) $ ( 501,919 ) $ 468,390 Three Months Ended December 31, 2023 Common Stock Additional Paid-in Accumulated Other Comprehensive Accumulated Total Stockholders' Shares Amount Capital Loss Deficit Equity Balance as of September 30, 2023 69,378 $ 69 $ 818,716 $ ( 1,630 ) $ ( 470,482 ) $ 346,673 Issuance of common stock upon exercise of stock options 1,412 2 15,610 — — 15,612 Vesting of performance stock units and restricted stock units 1,070 1 ( 1 ) — — — Issuance of common stock under employee stock purchase plan 81 — 1,725 — — 1,725 Stock-based compensation — — 16,508 — — 16,508 Foreign currency translation adjustments — — — 352 — 352 Net loss — — — — ( 9,213 ) ( 9,213 ) Balance as of December 31, 2023 71,941 $ 72 $ 852,558 $ ( 1,278 ) $ ( 479,695 ) $ 371,657 See accompanying notes to unaudited condensed consolidated financial statements. 4 Table of Contents INTAPP, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands) (unaudited) Six Months Ended December 31, 2024 Common stock Additional Paid-in Accumulated Other Comprehensive Accumulated Total Stockholders' Shares Amount Capital Loss Deficit Equity Balance as of June 30, 2024 74,624 $ 75 $ 891,681 $ ( 1,336 ) $ ( 487,182 ) $ 403,238 Issuance of common stock upon exercise of stock options 3,161 3 32,581 — — 32,584 Vesting of performance stock units and restricted stock units 1,382 1 ( 1 ) — — — Issuance of common stock under employee stock purchase plan 67 — 1,970 — — 1,970 Stock-based compensation — — 45,400 — — 45,400 Foreign currency translation adjustments — — — ( 65 ) — ( 65 ) Net loss — — — — ( 14,737 ) ( 14,737 ) Balance as of December 31, 2024 79,234 $ 79 $ 971,631 $ ( 1,401 ) $ ( 501,919 ) $ 468,390 Six Months Ended December 31, 2023 Common Stock Additional Paid-in Accumulated Other Comprehensive Accumulated Total Stockholders' Shares Amount Capital Loss Deficit Equity Balance as of June 30, 2023 68,574 $ 69 $ 797,639 $ ( 1,339 ) $ ( 455,161 ) $ 341,208 Issuance of common stock upon exercise of stock options 1,641 2 17,934 — — 17,936 Vesting of performance stock units and restricted stock units 1,645 1 ( 1 ) — — — Issuance of common stock under employee stock purchase plan 81 — 1,725 — — 1,725 Stock-based compensation — — 35,265 — — 35,265 Issuance of common stock upon follow-on offering, net of offering costs of $ 1,569 — — ( 4 ) — — ( 4 ) Foreign currency translation adjustments — — — 61 — 61 Net loss — — — — ( 24,534 ) ( 24,534 ) Balance as of December 31, 2023 71,941 $ 72 $ 852,558 $ ( 1,278 ) $ ( 479,695 ) $ 371,657 See accompanying notes to unaudited condensed consolidated financial statements. 5 Table of Contents INTAPP, INC. CONDENSED CONSOLIDATED S TATEMENTS OF CASH FLOWS (in thousands) (unaudited) Six Months Ended December 31, 2024 2023 Cash Flows from Operating Activities: Net loss $ ( 14,737 ) $ ( 24,534 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 8,839 7,984 Amortization of operating lease right-of-use assets 2,558 2,282 Accounts receivable allowances 823 1,228 Stock-based compensation 45,400 35,265 Change in fair value of contingent consideration ( 1,004 ) ( 2,215 ) Deferred income taxes ( 74 ) ( 217 ) Other 76 77 Changes in operating assets and liabilities: Accounts receivable 6,465 12,570 Unbilled receivables, current ( 486 ) ( 5,774 ) Prepaid expenses and other assets ( 5,001 ) ( 1,788 ) Deferred commissions ( 165 ) ( 1,068 ) Accounts payable and accrued liabilities ( 7,875 ) ( 1,517 ) Deferred revenue, net 15,509 4,837 Operating lease liabilities ( 2,675 ) ( 2,339 ) Other liabilities 2,032 ( 1,144 ) Net cash provided by operating activities 49,685 23,647 Cash Flows from Investing Activities: Purchases of property and equipment ( 416 ) ( 1,354 ) Capitalized internal-use software costs ( 3,449 ) ( 3,453 ) Business combinations, net of cash acquired ( 897 ) — Net cash used in investing activities ( 4,762 ) ( 4,807 ) Cash Flows from Financing Activities: Payments for deferred offering costs — ( 781 ) Proceeds from stock option exercises 32,584 17,936 Proceeds from employee stock purchase plan 1,970 1,725 Payments of deferred contingent consideration and holdback associated with acquisitions ( 2,410 ) ( 2,551 ) Net cash provided by financing activities 32,144 16,329 Effect of foreign currency exchange rate changes on cash and cash equivalents 194 203 Net increase in cash, cash equivalents and restricted cash 77,261 35,372 Cash, cash equivalents and restricted cash - beginning of period 208,570 131,185 Cash, cash equivalents and restricted cash - end of period $ 285,831 $ 166,557 Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets: Cash and cash equivalents $ 285,631 $ 166,357 Restricted cash 200 $ 200 Total cash, cash equivalents and restricted cash $ 285,831 $ 166,557 Supplemental Disclosures of Cash Flow Information: Cash paid for interest $ — $ 1 Cash paid for income taxes, net of tax refunds $ 2,306 $ 352 Non-cash investing and financing activities: Purchases of property and equipment in accounts payable and accrued liabilities $ 276 $ 27 Capitalized internal-use software costs in accounts payable and accrued liabilities $ 672 $ — Deferred consideration and acquisition holdbacks in accounts payable, accrued and other liabilities $ 2,402 $ — Fair value of contingent consideration in accrued and other liabilities $ 305 $ — See accompanying notes to unaudited condensed consolidated financial statements. 6 Table of Contents Intapp, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note 1. Description of Business Intapp, Inc. ("Intapp" or the "Company") is a leading global provider of AI-powered solutions for professionals at advisory, capital markets and legal firms. The Company empowers the world’s premier accounting, consulting, investment banking, legal, private capital and real assets firms with the technology they need to operate more competitively, deliver timely insights to their professionals, and meet rapidly changing client, investor, and regulatory requirements. Using the power of Applied AI, its purpose-built vertical software as a service (“SaaS”) solutions accelerate the flow of information firmwide, activate expertise, empower teams, strengthen client relationships, manage risk, and help firms adapt more quickly in a highly complex ecosystem. The Company serves clients primarily in the United States (“U.S.”) and the United Kingdom (“U.K.”). References to “the Company,” “us,” “we,” or “our” in these unaudited condensed consolidated financial statements refer to the consolidated operations of Intapp and its consolidated subsidiaries. Note 2. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and the requirements of the U.S. Securities and Exchange Commission (the “SEC”) for interim reporting. Certain information and disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2024 filed with the SEC on August 26, 2024. The unaudited condensed consolidated financial statements include accounts of the Company and its consolidated subsidiaries, after eliminating all inter-company transactions and balances. The interim unaudited condensed consolidated financial statements have been prepared on a basis consistent with the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal and recurring adjustments, necessary to state fairly the Company’s financial condition, its operations and cash flows for the periods presented. The historical results are not necessarily indicative of future results, and the results of operations for the three and six months ended December 31, 2024 are not necessarily indicative of the results to be expected for the full year or any other period. Certain prior period amounts reported in our unaudited condensed consolidated financial statements and notes thereto have been reclassified to conform to the current year presentation. Effective July 1, 2024, the Company adjusted the classification of support services related to subscription license to be included within “license” on the unaudited condensed consolidated statements of operations. Prior to July 1, 2024, support services related to subscription license was included in a line item entitled “SaaS and Support.” The presentation of cost of revenues has been conformed to reflect the changes related to the presentation of revenues. Such reclassifications related to the presentation of revenues and cost of revenues did not affect total revenues, operating income, or net income. There was no change to the Company's revenue recognition policy, except for the change in classification noted herein. Accordingly, effective July 1, 2024, SaaS revenues include subscription fees from clients accessing our SaaS solutions, premium support services related to SaaS, and updates, if any, to the subscribed service during the subscription term. The Company recognizes SaaS revenues ratably over the contract term beginning on the commencement date of each contract, which is the date when the Company’s service is available to clients. License revenues include subscription fees from providing clients with the right to functional intellectual property where clients can benefit from the subscription licenses on their own and support services related to the licenses, which entitles clients to receive technical support and software updates, on a when and if available basis. The Company recognizes license revenues related to subscription fees at a point in time when control of the term software application is transferred to the client, which generally occurs at the time of delivery or upon commencement of the renewal term. The Company recognizes license revenues related to support ratably over the term of the support contract which corresponds to the underlying license agreement. 7 Table of Contents Use of Estimates The preparation of the accompanying unaudited condensed consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the amounts reported and disclosed in the unaudited condensed consolidated financial statements and accompanying notes. Those estimates and assumptions include, but are not limited to, revenue recognition including determination of the standalone selling price (“SSP”) of the deliverables included in multiple deliverable revenue arrangements; allowance for credit losses; the depreciable lives of long-lived assets including intangible assets; the expected useful life of deferred commissions; the fair value of stock-based awards; the fair value of assets acquired and liabilities assumed in business combinations; goodwill and long-lived assets impairment assessment; the fair value of contingent consideration liabilities; the incremental borrowing rate used to determine the operating lease liabilities; valuation allowances on deferred tax assets; uncertain tax positions; and loss contingencies. The Company evaluates estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ from these estimates, and those differences could be material to the unaudited condensed consolidated financial statements. Significant Accounting Policies There have been no material changes to the Company's significant accounting policies as described in Note 2, Summary of Significant Accounting Policies , to the consolidated financial statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2024. Concentrations of Credit Risk and Significant Clients Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents and accounts receivable. The Company maintains its cash and cash equivalents with multiple high credit quality financial institutions. The Company is exposed to credit risk for cash and cash equivalents held in financial institutions to the extent that such amounts recorded on the balance sheet are in excess of amounts that are insured by the Federal Deposit Insurance Corporation. The Company has not experienced any such losses. No client individually accounted for 10% or more of the Company’s revenues for either of the three and six months ended December 31, 2024 and 2023. As of December 31, 2024 , no client individually accounted for 10% or more of the Company’s total accounts receivable. As of June 30, 2024 , one client individually accounted for 16 % of the Company’s total accounts receivable. Accounting Pronouncements Not Yet Adopted In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (ASC 280): Improvements to Reportable Segment Disclosures , which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. This guidance will be applied retrospectively and will be effective for the Company for fiscal year ending June 30, 2025, and for interim periods beginning July 1, 2025. The Company is currently evaluating the impact of the adoption on its consolidated financial statements. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (ASC 740): Improvements to Income Tax Disclosures , which requires additional income tax disclosures to better assess how an entity’s operations, related tax risks, tax planning and operational opportunities affect its tax rate and prospects of future cash flows. This guidance will be effective for the Company’s fiscal year beginning July 1, 2025, and should be applied on a prospective or retrospective basis. The Company expects the adoption to result in additional disclosures only. In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (ASC 220): Disaggregation of Income Statement Expenses , which requires disclosures, on an annual and interim basis, about specific expense categories presented on the income statement. This guidance will be effective for the Company's fiscal year beginning July 1, 2027, and should be applied on either a prospective or retrospective basis. The Company is currently evaluating the impact of the adoption on its consolidated financial statements. 8 Table of Contents Note 3. Revenues Disaggregation of Revenues Revenues by geography were as follows (in thousands): Three Months Ended December 31, Six Months Ended December 31, 2024 2023 2024 2023 U.S. $ 83,138 $ 73,163 $ 161,710 $ 143,018 U.K. 18,217 13,829 38,220 28,555 Rest of the world 19,854 16,941 40,084 33,935 Total $ 121,209 $ 103,933 $ 240,014 $ 205,508 No country other than those listed above accounted for 10% or more of the Company’s total revenues during the three and six months ended December 31, 2024 and 2023. Deferred Commissions Deferred commissions were $ 32.6 million and $ 32.4 million as of December 31, 2024 and June 30, 2024 , respectively. Amortization expense with respect to deferred commissions, which is included in sales and marketing expense in the Company’s unaudited condensed consolidated statements of operations, was $ 4.1 million and $ 8.0 million for the three and six months ended December 31, 2024 , respectively, and $ 3.6 million and $ 7.1 million for the three and six months ended December 31, 2023 . There was no impairment loss in relation to the costs capitalized for the periods presented. Contract balances The Company’s contract assets and liabilities were as follows (in thousands): December 31, 2024 June 30, 2024 Unbilled accounts receivable (1) $ 14,003 $ 13,363 Deferred revenue, net 237,995 222,486 (1) The long-term portion of $ 217 thousand and $ 63 thousand as of December 31, 2024 and June 30, 2024 , respectively is included in other assets on the unaudited condensed consolidated balance sheets. There was no allowance for credit losses associated with unbilled receivables as of December 31, 2024 and June 30, 2024. During the six months ended December 31, 2024 and 2023 the Company recognized $ 149.3 million and $ 125.1 million in revenue pertaining to deferred revenue as of June 30, 2024 and 2023, respectively. Remaining Performance Obligations Remaining performance obligations represent non-cancellable contracted revenues that have not yet been recognized, which includes deferred revenue and amounts that will be invoiced and recognized as revenues in future periods. SaaS subscription is typically satisfied over one to three years, license is typically satisfied at a point in time, support services are generally satisfied within one year, and professional services are typically satisfied within one year. Professional services contracts are not included in the performance obligations amount. As of December 31, 2024 , approximately $ 615.3 million of revenues is expected to be recognized from remaining performance obligations with approximately 55 % over the next 12 months and the remainder thereafter. Note 4. Business Combinations In connection with the acquisition of Transform Data International B.V. and its subsidiaries ("TDI") on May 1, 2024 , the Company paid $ 0.9 million to the seller for certain working capital adjustments during the six months ended December 31, 2024. This was included in the purchase price and is recorded in investing activities in the Company's unaudited condensed consolidated statements of cash flows. For further information refer to Note 4, Business Combinations , in the Notes to Consolidated Financial Statements included in Part II, Item 8 of the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2024. 9 Table of Contents Note 5. Goodwill and Intangible Assets Goodwill Changes in the carrying amounts of goodwill were as follows (in thousands): Carrying Amount Balance as of June 30, 2024 $ 285,969 Foreign currency translation adjustment ( 62 ) Balance as of December 31, 2024 $ 285,907 Intangible Assets Intangible assets acquired through business combinations consisted of the following (in thousands): December 31, 2024 Useful Life (In years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Client relationships 9 to 15 $ 48,900 $ ( 31,150 ) $ 17,750 Non-compete agreements 3 to 5 4,907 ( 4,361 ) 546 Trademarks and trade names Indefinite 4,683 — 4,683 Trademarks and trade names 5 to 10 7,822 ( 5,983 ) 1,839 Core technology 2 to 7 60,584 ( 51,134 ) 9,450 Backlog 2 1,000 ( 917 ) 83 Intangible assets, net $ 127,896 $ ( 93,545 ) $ 34,351 June 30, 2024 Useful Life (In years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Client relationships 9 to 15 $ 48,900 $ ( 28,949 ) $ 19,951 Non-compete agreements 3 to 5 4,907 ( 4,035 ) 872 Trademarks and trade names Indefinite 4,683 — 4,683 Trademarks and trade names 5 to 10 7,822 ( 5,773 ) 2,049 Core technology 2 to 7 60,584 ( 48,054 ) 12,530 Backlog 2 1,000 ( 792 ) 208 Intangible assets, net $ 127,896 $ ( 87,603 ) $ 40,293 Amortization expense related to acquired intangible assets was recognized as follows (in thousands): Three Months Ended December 31, Six Months Ended December 31, 2024 2023 2024 2023 Cost of SaaS $ 1,509 $ 1,055 $ 3,080 $ 2,110 Sales and marketing 1,268 1,396 2,536 2,883 General and administrative 163 163 326 326 Total amortization expense $ 2,940 $ 2,614 $ 5,942 $ 5,319 10 Table of Contents As of December 31, 2024, the estimated future amortization expense for acquired intangible assets is as follows (in thousands): Fiscal Year Ending June 30, Amount 2025 (remaining 6 months) $ 5,221 2026 7,835 2027 5,121 2028 4,623 2029 3,252 2030 and thereafter 3,616 Total remaining amortization $ 29,668 Note 6. Fair Value Measurements The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows: Level 1 —Inputs are unadjusted, quoted prices in active markets for identical, assets or liabilities at the measurement date; Level 2 —Inputs are quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; Level 3 —Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). Money market funds are classified as Level 1 as the assets are valued using quoted prices in active markets. Liabilities for contingent consideration related to business combinations are classified as Level 3 liabilities as the Company uses unobservable inputs in the valuation, specifically related to the projected total contract value generated by the acquired businesses for a distinct period of time. The following table sets forth the Company’s financial assets that were measured at fair value on a recurring basis as of the date indicated by level within the fair value hierarchy (in thousands): December 31, 2024 Level 1 Level 2 Level 3 Total Financial assets: Cash equivalents: Money market funds $ 218,231 $ — $ — $ 218,231 Total financial assets $ 218,231 $ — $ — $ 218,231 June 30, 2024 Level 1 Level 2 Level 3 Total Financial assets: Cash equivalents: Money market funds $ 78,677 $ — $ — $ 78,677 Total financial assets $ 78,677 $ — $ — $ 78,677 11 Table of Contents The following tables set forth the Company’s financial liabilities that were measured at fair value on a recurring basis as of the dates indicated by level within the fair value hierarchy (in thousands): December 31, 2024 Level 1 Level 2 Level 3 Total Financial Liabilities: Liability for contingent consideration, current portion $ — $ — $ — $ — Liability for contingent consideration, non-current portion — — 305 305 Total financial liabilities $ — $ — $ 305 $ 305 June 30, 2024 Level 1 Level 2 Level 3 Total Financial Liabilities: Liability for contingent consideration, current portion $ — $ — $ 2,405 $ 2,405 Liability for contingent consideration, non-current portion — — 153 153 Total financial liabilities $ — $ — $ 2,558 $ 2,558 In connection with the acquisition of TDI, the Company is obligated to pay up to $ 1.0 million in cash on achievement of certain performance measures and in some cases, continued employment or service with the Company or its subsidiaries. The fair value of the contingent consideration liability was measured based on the probability of achieving certain performance measures pursuant to the acquisition agreement. The total fair value of the contingent consideration liability was $ 0.8 million as of December 31, 2024 and June 30, 2024 , of which $ 0.1 million was included as part of purchase consideration upon acquisition and $ 0.7 million was accounted for as post-combination compensation costs to be recognized over the required service period. Accordingly, the Company recorded a contingent consideration liability of $ 0.3 million as of December 31, 2024 and $ 0.2 million as of June 30, 2024 in other liabilities on the unaudited condensed consolidated balance sheets. In connection with the acquisition of Paragon Data Labs, Inc. in May 2023, the Company recorded a contingent consideration liability of $ 4.3 million on the acquisition date for the estimated fair value of the contingent consideration. The fair value was measured based on the probability of achieving certain performance measures pursuant to the acquisition agreement. During the six months ended December 31, 2024 , the Company made a fair value adjustment of $ 1.0 million based on the probability of achieving certain performance measures and paid $ 1.4 million related to the contingent consideration. Accordingly, the contingent consideration was fully settled as of December 31, 2024 , as compared to the fair value of $ 2.4 million as of June 30, 2024, which was included in other current liabilities on the unaudited condensed consolidated balance sheets. The fair value of the contingent consideration was initially estimated on the acquisition date using the Monte Carlo simulation and included key assumptions used by management related to the estimated probability of occurrence and discount rates. Subsequent changes in the fair value of the contingent consideration liabilities, resulting from management’s revision of key assumptions and estimates, have been recorded in general and administrative expenses in the unaudited condensed consolidated statements of operations. Gains and losses arising from exchange rate fluctuation on these liabilities not denominated in U.S. dollars have been included in interest and other income (expense), net on the unaudited condensed consolidated statements of operations. Changes in contingent consideration liabilities were as follows (in thousands): Six Months Ended December 31, 2024 2023 Balance, beginning of period $ 2,558 $ 6,681 Payment of contingent consideration ( 1,401 ) ( 985 ) Change of contingent consideration ( 848 ) ( 2,215 ) Effect of foreign currency exchange rate changes ( 4 ) — Balance, end of period $ 305 $ 3,481 Other financial instruments consist of accounts receivable, accounts payable, accrued expenses, accrued liabilities and other current liabilities, which are stated at their carrying value as it approximates fair value due to the short time to expected receipt or payment. 12 Table of Contents Note 7. Internal-Use Software Costs Capitalized Internal-Use Software Costs related to software acquired, developed, or modified solely to meet the Company’s internal requirements, with no substantive plans to market such software at the time of development, or costs related to development of our hosted SaaS products are capitalized during the application development stage. The Company capitalized $ 3.5 million and $ 3.1 million of costs related to software developed for internal use during the six months ended December 31, 2024 and 2023 , respectively. Capitalized stock-based compensation expense was not material for the periods presented. Amortization expense related to capitalized internal-use software was $ 0.9 million for the three months ended December 31, 2024 and 2023 , and was $ 1.9 million and $ 1.7 million for the six months ended December 31, 2024 and 2023 , respectively, and was recognized in cost of revenues related to SaaS in the unaudited condensed consolidated statements of operations. The net book value of capitalized internal-use software was $ 15.1 million and $ 13.5 million as of December 31, 2024 and June 30, 2024 , respectively. Capitalized internal-use software costs are recorded in property and equipment on the Company’s unaudited condensed consolidated balance sheets. The Company has no t recorded any impairment charges during the periods presented. Capitalized Cloud Computing Implementation Costs Qualifying implementation costs incurred in cloud computing arrangements incurred during the application development stage are capitalized based on the existing guidance for internal-use software, which is presented as part of our prepaid expenses and other assets based on the term of the associated cloud computing arrangement. The capitalized implementation costs are amortized on a straight-line basis over the term of the associated cloud computing arrangement when the module or component of the cloud computing arrangement is ready for its intended use in the same line item as fees for the associated cloud computing arrangement in the unaudited condensed consolidated statements of operations. The Company capitalized $ 1.9 million and $ 2.1 million of costs related to cloud computing implementation during the six months ended December 31, 2024 and 2023 , respectively. Capitalized stock-based compensation expense was not material for the periods presented. Amortization expense related to capitalized cloud computing implementation costs was $ 0.2 million and no ne for the three months ended December 31, 2024 and 2023 , respectively. The net book value of capitalized cloud computing implementation costs was $ 5.7 million as of December 31, 2024 , out of which $ 1.3 million is recorded as part of prepaid expenses and $ 4.4 million is recorded as part of other assets based on the term of the associated cloud computing arrangement. The net book value of capitalized cloud computing implementation costs was $ 4.1 million as of June 30, 2024 , out of which $ 0.6 million is recorded as part of prepaid expenses and $ 3.5 million is recorded as part of other assets based on the term of the associated cloud computing arrangement. The Company has no t recorded any impairment charges during the periods presented. Note 8. Leases The Company leases the majority of its office space in the U.S., U.K., Netherlands, Ukraine, Germany, and Singapore under non-cancelable operating lease agreements, which have various expiration dates through November 2030 , some of which include options to extend the leases for up to 5 years . The components of lease costs were as follows (in thousands): Three Months Ended December 31, Six Months Ended December 31, Operating Leases: 2024 2023 2024 2023 Operating lease cost $ 1,678 $ 1,486 $ 3,383 $ 2,986 Short-term lease cost 678 406 870 677 Variable lease cost 134 28 250 55 The weighted-average remaining lease term of the Company’s operating leases and the weighted-average discount rate used to measure the present value of the operating lease liabilities are as follows: Lease Term and Discount Rate: December 31, 2024 December 31, 2023 Weighted-average remaining lease term (in years) 5.0 5.8 Weighted-average discount rate 6.9 % 7.1 % The following table presents supplemental cash flow information related to the Company's operating leases (in thousands): Six Months Ended December 31, 2024 2023 Cash payments included in the measurement of operating lease liabilities $ 3,461 $ 3,102 ROU assets obtained in exchange for new operating lease liabilities ( 419 ) 501 13 Table of Contents Current operating lease liabilities of $ 5.1 million and $ 6.0 million were included in other current liabilities on the Company’s unaudited condensed consolidated balance sheets as of December 31, 2024 and June 30, 2024, respectively. As of December 31, 2024, remaining maturities of operating lease liabilities are as follows (in thousands): Fiscal Year Ending June 30, Amount 2025 (remaining 6 months) $ 3,635 2026 5,259 2027 4,314 2028 4,605 2029 5,018 2030 and thereafter 3,748 Total lease payments 26,579 Less: imputed interest ( 4,067 ) Present value of operating lease liabilities $ 22,512 Note 9. Commitments and Contingencies Other Purchase Commitments The Company’s other purchase commitments primarily consist of third-party cloud services, support fees and software subscriptions to support operations in the ordinary course of business. There were no material purchase commitments that were entered into during the six months ended December 31, 2024. In December 2021, the Company entered into an agreement with Microsoft, pursuant to which the Company is committed to spend a minimum of $ 110.0 million on cloud services. The committed spend period concludes at the end of December 2028 , with the Company having the option to extend any remaining commitment into a further 12 -month period to the end of December 2029 . As of December 31, 2024, the Company had $ 86.5 million remaining on this commitment. Litigation From time to time, the Company is a party to claims, lawsuits, and proceedings which arise in the ordinary course of business. The Company warrants to its clients that it has all necessary rights and licenses to the intellectual property comprised in its products and services and indemnifies those clients against intellectual property claims with respect to such products and services, so such claims, lawsuits and proceedings might in the future include claims of alleged infringement of intellectual property rights. The Company records a liability when it believes that it is probable that a loss will be incurred, and the amount of loss or range of loss can be reasonably estimated. Given the unpredictable nature of legal proceedings, the Company bases its estimate on the information available at the time of the assessment. As additional information becomes available, the Company reassesses the potential liability and may revise the estimate. The Company is not presently a party to any litigation the outcome of which, it believes, if determined adversely to the Company, would individually or in the aggregate have a material adverse effect on the business, operating results, or financial condition. Note 10. Debt On October 5, 2021, the Company entered into a Credit Agreement, as amended on June 6, 2022 and further amended on November 17, 2022 (the “Credit Agreement”) among the Company, the guarantors party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent (“JPMorgan”). The Credit Agreement provides for a five-year , senior secured revolving credit facility of $ 100.0 million with a sub-facility for letters of credit in the aggregate amount of up to $ 10.0 million (the “JPMorgan Credit Facility”). The Credit Agreement also provides that the Company may seek additional revolving credit commitments in an aggregate amount not to exceed $ 50.0 million, subject to certain administrative procedures, including approval by the Administrative Agent. Future borrowings under the JPMorgan Credit Facility will bear interest, at the Company’s election, at an annual rate based on either (a) an adjusted secured overnight financing rate (SOFR, as described in the Credit Agreement) plus a percentage spread (ranging from 1.75 % to 2.50 %) or (b) an alternate base rate (as described in the Credit Agreement) plus a percentage spread (ranging from 0.75 % to 1.50 %), in each case based on the Company’s total net leverage ratio. In addition, a commitment fee accrues with respect to the unused amount of the JPMorgan Credit Facility at an annual rate ranging from 0.25 % to 0.40 %, based on the Company’s total net leverage ratio. In connection with the execution of the Credit Agreement, the Company also entered into a pledge and security agreement (the “Security Agreement”) dated as of October 5, 2021 among the Company, the subsidiary grantors thereto and JPMorgan, as administrative agent for the secured parties. Under the Security Agreement, borrowings under the JPMorgan Credit Facility are secured by a first priority pledge of all of the capital stock and substantially all of the assets (excluding real estate interests) of each subsidiary of the Company and the subsidiary guarantors. 14 Table of Contents The Credit Agreement provides that the Company must maintain compliance with a maximum consolidated total net leverage ratio covenant, as determined in accordance with the Credit Agreement. It also contains affirmative, negative and financial covenants, including limitations on certain other indebtedness, loans and investments, liens, mergers, asset sales, and transactions with affiliates, as well as customary events of default. The Company was in compliance with all covenants as of December 31, 2024. As of December 31, 2024 and June 30, 2024 , there were no outstanding borrowings under the JPMorgan Credit Facility. Note 11 . S tockholders' Equity and Stock-Based Compensation Equity Incentive Plans In June 2021, the Company’s Board of Directors adopted, and its stockholders approved, the 2021 Omnibus Incentive Plan (the “2021 Plan”) and the 2021 Employee Stock Purchase Plan (“ESPP”). The 2021 Plan provides for the grant of restricted shares, restricted share units (“RSUs”), performance shares, performance share units (“PSUs”), deferred share units, share options and share appreciation rights. All employees, non-employee directors and selected third-party service providers of the Company and its subsidiaries and affiliates are eligible to receive grants under the 2021 Plan. Eligible employees may purchase the Company’s common stock under the ESPP. Stock Awards The Company has granted time-based and performance-based stock options, RSUs and PSUs, collectively referred to as “Stock Awards.” The Company accounts for stock-based compensation using the fair value method which requires the Company to measure stock-based compensation based on the grant-date fair value of the awards and recognize compensation expense over the requisite service or performance period. Awards that contain only service conditions, are generally earned over four years and expensed on a straight-line basis over that term. Compensation expense for awards that contain performance conditions is calculated using the graded vesting method and the portion of expense recognized in any period may fluctuate depending on changing estimates of the achievement of the performance conditions. Stock Options Stock options granted generally become exercisable ratably over a four-year period following the date of grant and expire ten years from the date of grant. Stock option activity under the Company’s equity incentive plans during the six months ended December 31, 2024 was as follows (in thousands, except per share data): Number of Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (1) Balance as of June 30, 2024 6,866 $ 10.40 4.4 $ 180,360 Exercised ( 3,161 ) 10.31 Forfeited ( 24 ) 22.61 Balance as of December 31, 2024 3,681 $ 10.40 3.9 $ 197,632 Vested and exercisable as of December 31, 2024 3,604 $ 10.14 3.8 $ 194,412 Vested and expected to vest as of December 31, 2024 3,681 $ 10.40 3.9 $ 197,632 (1) Aggregate intrinsic value for stock options represents the difference between the exercise price and the per share fair value of the Company’s common stock as of the end of the period, multiplied by the number of stock options outstanding. There were no stock options granted during the six months ended December 31, 2024. The total intrinsic value of stock options exercised and the proceeds from option exercises during the six months ended December 31, 2024 were $ 125.9 million and $ 32.6 million, respectively. PSUs and RSUs During the six months ended December 31, 2024, the Company granted PSUs to certain of its employees with vesting terms based on meeting certain operating performance targets, including annual recurring revenue and profitability targets, and continued service conditions. The Company also granted RSUs to certain employees that vest based on continued service. 15 Table of Contents PSU activity during the six months ended December 31, 2024 was as follows (in thousands, except per share data): Number of Shares Weighted- Average Grant Date Fair Value Balance as of June 30, 2024 2,550 $ 29.48 Granted 1,091 38.45 Vested ( 731 ) 25.34 Forfeited ( 166 ) 29.22 Balance as of December 31, 2024 2,744 $ 34.16 RSU activity during the six months ended December 31, 2024 was as follows (in thousands, except per share data): Number of Shares Weighted- Average Grant Date Fair Value Balance as of June 30, 2024 2,524 $ 30.84 Granted 1,940 44.35 Vested ( 651 ) 33.33 Forfeited ( 177 ) 33.16 Balance as of December 31, 2024 3,636 $ 37.49 Stock-Based Compensation Expense The Company recorded stock-based compensation expense in the unaudited condensed consolidated statements of operations as follows (in thousands): Three Months Ended December 31, Six Months Ended December 31, 2024 2023 2024 2023 Cost of revenues Cost of SaaS $ 851 $ 427 $ 1,515 $ 840 Cost of license 199 159 388 287 Cost of professional services 1,652 1,432 3,031 2,765 Research and development 6,800 4,468 11,424 9,114 Sales and marketing 7,232 4,888 12,970 10,227 General and administrative 8,677 5,134 16,072 12,032 Total stock-based compensation $ 25,411 $ 16,508 $ 45,400 $ 35,265 During the six months ended December 31, 2024 , the Company modified the performance conditions related to certain PSU awards, which results in an improbable-to-probable modification with an increase in unrecognized stock-based compensation expense of approximately $ 14.8 million to be recognized through the remaining requisite service period. As of December 31, 2024 , there was approximately $ 179.4 million of unrecognized compensation cost related to unvested stock-based awards granted, which is expected to be recognized over the weighted-average period of approximately 2.5 years. 2021 Employee Stock Purchase Plan Under the ESPP, eligible employees may purchase the Company’s common stock at a price equal to 85 % of the lower of the fair market value of the Company’s common stock on the offering date or the applicable purchase date. The ESPP provides an offering period that begins on June 1 and December 1 of each year and each offering period consists of one six-month purchase period. During the six months ended December 31, 2024 , 67,464 shares were purchased under the ESPP. As of December 31, 2024 , total unrecognized compensation cost related to the ESPP was $ 0.6 million, which will be amortized over a weighted-average vesting term of 0.4 years. Note 12. Income Taxes The Company determines its income tax provision for interim periods using an estimate of its annual effective tax rate adjusted for discrete items occurring during the periods presented. The primary difference between its effective tax rate and the federal statutory 16 Table of Contents rate is the full valuation allowance the Company has established on its federal and state net operating losses and credits. Income taxes from international operations were not material for the three and six months ended December 31, 2024 and 2023. The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions and various foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities. The Company is not currently under audit by the Internal Revenue Service or other similar tax authorities. The Company’s tax returns remain open to examination as follows: U.S. federal and states, all tax years; and significant foreign jurisdictions, generally 2019 through 2024. Note 13. Net Loss Per Share Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding for the period. Diluted net loss per share is calculated by giving effect to all potentially dilutive securities outstanding for the period using the treasury stock method. Basic net loss per share is the same as diluted net loss per share because the Company reported net losses for all periods presented. The following table sets forth the computation of basic and diluted net loss per share for the periods presented (in thousands, except per share data): Three Months Ended December 31, Six Months Ended December 31, 2024 2023 2024 2023 Numerator: Net loss $ ( 10,217 ) $ ( 9,213 ) $ ( 14,737 ) $ ( 24,534 ) Denominator: Weighted-average shares used to compute net loss per share, basic and diluted 78,118 70,521 76,861 69,729 Net loss per share, basic and diluted $ ( 0.13 ) $ ( 0.13 ) $ ( 0.19 ) $ ( 0.35 ) The Company excluded the following potential shares of common stock from the calculation of diluted net loss per share because their effect would be anti-dilutive (in thousands): As of December 31, 2024 2023 Outstanding stock options to purchase common stock 3,681 8,345 Unvested PSUs and RSUs 6,380 6,168 Shares issuable under ESPP 41 10 Shares issuable related to acquisition 9 68 Total 10,111 14,591 17 Table of Contents