What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-16 compared with 2025-03-14 · 90 added, 85 removed, 175 unchanged (50% of the section changed)

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These metrics should be viewed independently of revenue, deferred revenue and remaining performance obligations.

ARPC increased to approximately $625,000 in 2024, as compared to approximately $610,000 in 2023.

Revenue retention for our enterprise and mid-market customers on the LivePerson Platform, which represents the trailing-twelve-month change in total revenue from existing customers after upsells, downsells and attrition, was approximately 82%, below our target range of 105% to 115% in 2024, a decline from the 95% retention rate in 2023 and an increase from the 79% retention rate for the trailing twelve months ended September 30, 2024.

While our expectations for retention rates continue to improve as we look forward to the 2025 renewal cycle, we see heightened risk for the remainder of the current renewal cycle with customers who were likely making their renewal decisions before we installed our new customer success motion.

The last set of customers we have identified in this risk category has renewal dates in the first half of 2025.

As a result, we currently expect short-term attrition to continue into the first half of 2025 and revenue to decline sequentially as a consequence, with a transition toward positive net new annual recurring revenue expected in the second half of 2025.

ARPC is a measure of the average recurring revenue per enterprise and mid-market customer over the trailing twelve months.

ARPC increased to $680,000 in 2025, as compared to $625,000 in 2024.

Revenue retention for our enterprise and mid-market customers on the LivePerson Platform, which represents the trailing-twelve-month change in total revenue from existing customers after upsells, downsells and attrition, was 78%, below our long-range target of 105% to 115%, a decline from the 82% retention rate in 2024.

We continue to observe slower than anticipated renewals and new business bookings, primarily driven by customer uncertainty regarding our financial stability as well as broader macroeconomic and industry factors extending enterprise buying cycles, including for high-value AI solutions, which can require additional approvals related to compliance reviews and other factors, with a corresponding impact on the Company’s revenue.

Critical Accounting Policies and Estimates

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For further information on our significant accounting policies, see Note 1 – Description of Business and Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K.

The critical accounting estimates, assumptions, and judgments that we believe have the most significant impact on our consolidated financial statements are described below.

The critical accounting policies, estimates, assumptions, and judgments that we believe have the most significant impact on our consolidated financial statements are described below.

Revenue Recognition

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Hosted Services Revenue

Hosted services revenue is reported at the amount that reflects the ultimate consideration expected to be received and primarily consist of fees that provide customers access to the LivePerson Platform.

Hosted services revenue is reported at the amount that reflects the ultimate consideration expected to be received and primarily consists of fees that provide customers access to the LivePerson Platform.

We have determined such access represents a stand-ready service provided continually throughout the contract term.

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In performing the quantitative test, impairment loss is recorded to the extent that the carrying value of the reporting unit exceeds its assessed fair value.

In connection with the annual impairment test completed as of October 1, 2024 using the quantitative “Step 1” assessment, we determined the fair value of our reporting unit, using both an income approach and a market approach.

The income approach uses a discounted cash flow model that reflects our assumptions regarding revenue growth rates, operating margins, risk-adjusted discount rate, economic and market trends and other expectations about the anticipated operating results of the reporting unit.

Under the market approach, we estimate the fair value based on market multiples of revenues derived from comparable publicly traded companies with operating characteristics similar to the reporting unit.

During the fourth quarter of 2023, the Company voluntarily changed its annual goodwill testing date from September 30 to October 1.

The Company believes this change of method of applying the accounting principle is preferable, as it more closely aligns the annual impairment testing date with the most current information from the budgeting and strategic planning process and provides management with sufficient time to complete its annual assessment.

This change was applied prospectively.

In the second quarter of 2024, the Company entered into an agreement for and completed the sale of 100% of the equity in WildHealth to a third party.

WildHealth was part of the Business segment and was a separate reporting unit.

Subsequent to WildHealth divestiture, the Company has one reporting unit.

In connection with the annual impairment test performed as of October 1, 2025 and the interim test performed as of December 31, 2025 using the quantitative “Step 1” assessment, we determined the fair value of our reporting unit, using both an income approach and a market approach.

The fair value determination using an income approach requires management to make significant estimates and assumptions related to forecasts of future revenues, EBITDA and the discount rate.

The fair value determination using a market approach requires management to make significant assumptions related to marketplace multiples from within a peer public company group.

Prior to testing goodwill for impairment, the Company first tests its long-lived assets for impairment.

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See Note 1 - Description of Business and Summary of Significant Accounting Policies, N ote 5 – Goodwill and Intangible Assets, Net and Note 6 - Property and Equipment, Net in the Notes to the Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K for additional information.

Convertible Senior Notes

Convertible Notes

Senior Notes and Warrants

Convertible Senior Notes due 2029

We account for convertible debt and related transactions in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 470, Debt , ASC 815, Derivatives and Hedging , and ASC 480, Distinguishing Liabilities from Equity .

We evaluate convertible debt instruments and related transactions at inception to determine if those contracts include embedded features that should be bifurcated as an embedded derivative.

The 2029 Notes issued during the current year are accounted for as a liability.

The 2029 Notes issued during 2024 were accounted for as a liability.

The transaction was accounted for as a debt extinguishment and a gain on extinguishment was recorded.

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The features do not have material values as of December 31, 2025, but they may have value in the future, should the estimates change, with any change in fair value recorded in the Company’s consolidated statements of operations.

Second Lien Senior Subordinated Secured Notes due 2029

We issued Second Lien Notes as part of our troubled debt restructuring in 2025.

They are accounted for as a liability and a troubled debt restructuring gain was recorded in other income (expense), net.

The Company paid third party fees in connection with the transaction, which reduced the gain recorded.

The cash-settled and share-settled warrants (together, “Warrants”) issued by the Company are classified as current liabilities in the consolidated balance sheets and recorded at their fair value.

Changes in fair value are recorded in the Company’s consolidated statements of operations.

See Note 8 – Convertible Senior Notes, Net of Current Portion, Capped Call Transactions, and Warrants and Note 10 - Fair Value Measurements in the Notes to the Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K for additional information.

Changes in fair value are recorded in Other income (expense), net in the Company’s consolidated statements of operations.

See Note 8 – Senior Notes, Capped Call Transactions, Warrants and Preferred Stock and Note 9 - Fair Value Measurements in the Notes to the Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K for additional information.

Recently Issued Accounting Standards

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Year Ended December 31,

2024 2023 % Change

2025 2024 $ Change % Change

(Dollars in thousands)

$ 312,474 $ 401,983 (22) %

Revenue $ 243,742 $ 312,474 $ (68,732) (22) %

Revenue decreased by 22% to $243.7 million for the year ended December 31, 2025, from $312.5 million for the year ended December 31, 2024.

Hosted services decreased by $71.3 million, primarily driven by customer cancellations and downsells.

Hosted services decreased by $54.1 million, primarily driven by customer cancellations and a decrease in customer commitments upon renewal of existing contracts.

Included in hosted services is a decrease of $12.0 million in revenue that is variable based on interactions and usage for the year ended December 31, 2025 .

In addition, Professional Services decreased by $14.7 million for the year ended December 31, 2025.

The year ended December 31, 2023 includ ed $15.8 million of revenue related to the WildHealth business, which was sold in June 2024, and $7.1 million of revenue related to Kasamba, which was sold in March 2023.

Refer to Key Metrics and Current Trends within Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations for further discussion of revenue trends.

Cost of Revenue

Cost of Revenue (exclusive of depreciation and amortization shown separately below)

Cost of revenue consists of compensation costs relating to employees who provide customer service to our customers, compensation costs relating to our network support staff, outside labor provider costs, the cost of supporting our server and network infrastructure, and allocated occupancy costs and related overhead.

Year Ended December 31,

2024 2023 % Change

2025 2024 $ Change % Change

(Dollars in thousands)

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Cost of revenue decreased by 10% to $69.4 million for the year ended December 31, 2025, from $77.4 million for the year ended December 31, 2024 .

This decrease in expense is primarily attributable to a decrease in outsourced labor and related costs of $20.1 million, a decrease in software and hosting expenses of $13.8 million, a decrease in salary and related employee expenses of $7.1 million due to attrition from the prior year, and a decrease in amortization expense of $9.5 million related to purchased intangible assets and finance leases.

This decrease in expense is primarily attributable to a decrease in salary, stock-based compensation and employee-related expenses of $6.7 million due to restructuring activities, and a decrease in business services and outsourced expenses of $5.1 million, partially offset by an increase in software and hosting expenses of $5.3 million.

Sales and Marketing

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Year Ended December 31,

2024 2023 % Change

2025 2024 $ Change % Change

(Dollars in thousands)

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Sales and marketing expenses decreased by 22% to $75.8 million for the year ended December 31, 2025, from $97.3 million for the year ended December 31, 2024.

This decrease was primarily attributable to a decrease in salary and employee-related expenses of $14.0 million due to attrition from the prior year, a decrease in marketing expenses of $5.7 million, a decrease in software and hosting expenses of $3.6 million, and a decrease in business services, outsourced labor and related costs of $1.9 million.

This decrease was primarily attributable to a decrease in salary, stock-based compensation expense and employee-related expenses of $13.0 million due to restructuring activities, a decrease in marketing expenses of $3.3 million, a decrease in software and hosting expenses of $3.0 million, and a decrease in business services and outsourced expenses of $2.2 million.

General and Administrative

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Year Ended December 31,

2024 2023 % Change

2025 2024 $ Change % Change

(Dollars in thousands)

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General and administrative expenses decreased by 44% to $44.4 million for the year ended December 31, 2025, from $79.8 million for the year ended December 31, 2024.

This is primarily related to a decrease in business services and outsourced labor of $9.4 million, a decrease in salary and related employee expenses of $5.7 million, and a decrease in other expenses of $8.3 million primarily related to legal, software and insurance costs.

These items were partially offset by an increase of $12.5 million in stock-based compensation expense driven by settlement of earn-outs in 2023.

This is primarily attributable to a decrease in bad debt expense of $14.1 million, a decrease in legal and insurance costs of $12.1 million, a decrease in salary, stock-based compensation expense and employee-related expenses of $4.8 million due to restructuring activities, a decrease in leadership transition costs of $3.0 million, and a decrease in business services and outsourced expenses of $1.0 million, partially offset by an increase in software expenses of $0.5 million.

In addition, the Company recognized $1.8 million of post-closing adjustments related to the Kasamba divestiture in 2024 that did not recur in 2025.

Product Development

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Year Ended December 31,

2024 2023 % Change

2025 2024 % Change % Change

(Dollars in thousands)

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Product development costs decreased by 31% to $54.7 million for the year ended December 31, 2025, from $79.8 million for the year ended December 31, 2024.

This decrease is primarily related to a decrease in business services and outsourced labor of $13.9 million, a decrease in salary and employee-related expenses of $10.6 million due to attrition from the prior year , and a decrease in software and hosting expenses of $1.4 million, partially offset by an increase in stock compensation expense of $1.0 million.

We continued to make investments in public cloud migration, and in enhancing and expanding new features of the LivePerson Platform.

This decrease is primarily related to a decrease in salary, stock-based compensation expense and employee-related expenses of $11.5 million due to restructuring activities, a decrease in software and hosting expenses of $6.8 million, and a decrease in business services and outsourced expenses of $5.5 million.

We continued to make investments in public cloud migration, and in the LivePerson Platform.

While innovation remains a core component of our strategy, we are operating in a competitive environment characterized by aggressive investment in artificial intelligence and other technological innovation by competitors with significant resources and investment capital.

During the years ended December 31, 2025 and 2024, $11.3 million and $19.3 million was capitalized, respectively.

Depreciation and Amortization

Our depreciation and amortization relates to depreciation and amortization of our property and equipment and to amortization of our intangible assets and finance leases.

Year Ended December 31,

2025 2024 $ Change % Change

(Dollars in thousands)

Depreciation and amortization $ 22,732 $ 42,272 $ (19,540) (46) %

Percentage of total revenue 9 % 14 %

Depreciation and amortization costs decreased by 46% to $22.7 million for the year ended December 31, 2025, from $42.3 million for the year ended December 31, 2024.

This decrease is primarily related to the reduction in asset balances due to impairments in 2024 of $37.4 million related to intangible assets and $9.5 million related to internal-use software development costs.

Refer to Note 5 - Goodwill and Intangible Assets, Net and Note 6 - Property and Equipment, Net for additional information on the impairment charges.

Restructuring Costs

We maintain restructuring initiatives to realign our cost structure with our current business model, in which we have flattened the organization to align to more efficient sales and service support.

We maintain restructuring initiatives to realign our cost structure with our current business model, in which we have flattened the Company’s organizational structure to align to more efficient sales and service support.

While the Company’s restructuring efforts are ongoing, the 2024 restructuring activities were substantially completed by December 31, 2024, and the 2025 restructuring activities were substantially completed by December 31, 2025.

Year Ended December 31,

2024 2023 % Change

2025 2024 $ Change % Change

(Dollars in thousands)

Restructuring costs $ 11,667 $ 11,139 $ 528 5 %

$ 11,139 $ 22,664 (51) %

Percentage of total revenue 5 % 4 %

Restructuring costs decreased by 51% to $11.1 million for the year ended December 31, 2024, from $22.7 million for the year ended December 31, 2023.

This decrease is primarily attributable to a $6.9 million decrease in IT infrastructure contract termination costs.

In addition, severance and other associated costs decreased by $4.6 million due to fewer reductions in our workforce compared to the year ended December 31, 2023.

Restructuring costs increased by 5% to $11.7 million for the year ended December 31, 2025, from $11.1 million for the year ended December 31, 2024.

This increase is attributable to a reversal of IT contract termination costs of $1.2 million in the comparable year which did not recur in the current year, partially offset by a decrease in severance and other associated costs of $0.7 million due to fewer reductions in our workforce compared to the year ended December 31, 2024.

Refer to Note 12 – Restructuring for additional information about the restructuring initiative.

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Year Ended December 31,

2024 2023 % Change

2025 2024 $ Change % Change

(Dollars in thousands)

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Percentage of total revenue 17 % 19%

Goodwill impairment was $41.6 million for the year ended December 31, 2025, as a result of our interim impairment test during the fourth quarter of fiscal 2025.

Goodwill impairment was $60.6 million for the year ended December 31, 2024, primarily related to goodwill impairment of $56.9 million as a result of our impairment test on October 1, 2024, and to a lesser extent, goodwill impairment of $3.6 million related to the WildHealth business, which was sold during the second quarter of 2024.

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Year Ended December 31,

2024 2023 % Change

2025 2024 $ Change % Change

(Dollars in thousands)

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Percentage of total revenue 1 % 15%

Impairment of intangibles and other assets was $46.9 million for the year ended December 31, 2024.

This impairment consisted of non-cash charges of $23.7 million related to developed technology, $11.0 million related to customer relationships, $0.5 million related to trademarks, $9.5 million related to property and equipment - internal-use software development costs, and $2.2 million attributable to the intangible assets associated with our WildHealth reporting unit, which was fully divested during 2024.

Impairment of intangibles and other assets was $2.1 million for the year ended December 31, 2025, related to pending patents.

Impairment of intangibles and other assets was $46.9 million and consisted of non-cash charges of $23.7 million related to developed technology, $11.0 million related to customer relationships, $0.5 million related to trademarks, $9.5 million related to property and equipment - internal-use software development costs, and $2.2 million attributable to the intangible assets associated with our WildHealth reporting unit, which was fully divested during 2024.

Refer to Note 5 - Goodwill and Intangible Assets, net, for additional information about the impairments.

Total Other Income, net

Total other income, net consists primarily of gain on debt extinguishment, fair value adjustments for our Warrants, foreign currency gains and losses and loss from our equity method investment.

Interest expense represents interest expense from our convertible senior notes, amortization of debt issuance costs and debt discount.

Interest expense represents interest expense from our senior notes, and amortization of debt issuance costs and debt discount.

Interest income represents interest earned from cash deposits.

Other income (expense), net consists primarily of fair value adjustments for our Warrants and foreign currency gains and losses.

Year Ended December 31,

2024 2023 % Change

2025 2024 $ Change % Change

(Dollars in thousands)

Interest expense $ (31,530) $ (14,486) $ (17,044) (118)%

$ (14,486) $ (4,882) (197)%

Interest income 4,751 5,860 (1,109) (19)%

5,860 9,551 (39)%

Gain on troubled debt restructuring 27,720 — 27,720 —%

Gain on debt extinguishment — 73,083 (73,083) (100)%

73,083 7,200 915%

Other (expense) income, net

(12,800) 3,234 (496)%

Other income (expense), net 13,977 (12,800) 26,777 209%

Total other income, net $ 14,918 $ 51,657 $ (36,739) (71)%

Total other income, net increased by $36.6 million to income of $51.7 million for the year ended December 31, 2024 from $15.1 million for the year ended December 31, 2023.

The increase is primarily due to a gain of $73.1 million related to the extinguishment of the 2026 Notes, partially offset by a $12.2 million adjustment to the fair value of our Warrants and $14.5 million interest expense on our convertible debt.

The remaining amount of total other income, net fluctuation is primarily attributable to interest income on our money market accounts, and the impact of currency rate fluctuations.

Total other income, net decreased by $36.7 million to $14.9 million for the year ended December 31, 2025 from $51.7 million for the year ended December 31, 2024.

The decrease is primarily due to a gain of $27.7 million on the troubled debt restructuring in the current period compared to a gain on debt extinguishment of $73.1 million in the comparable period.

In addition, interest expense was higher in the current period by $17.0 million, primarily related to the issuance of the 2029 Notes in June 2024 and Delayed Draw Notes in December 2024.

These were partially offset by a $13.2 million favorable adjustment to the fair value of our Warrants in the current period, compared to an unfavorable adjustment of $12.2 million in the comparable

The remaining amount of total other income, net, is attributable to interest income on our money market accounts, and the impact of currency rate fluctuations.

Provision For Income Taxes

Year Ended December 31,

2024 2023 % Change

2025 2024 $ Change % Change

(Dollars in thousands)

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Our consolidated effective tax rate was impacted by the statutory income tax rates applicable to each of the jurisdictions in which we operate, valuation allowance recorded against losses generated in the U.S.

and Germany and changes to unrecognized tax benefits in Israel.

and Germany, a tax benefit related to an increase in tax receivables, and changes to unrecognized tax benefits in Israel.

The overall tax provision recorded represents tax on non-U.S.

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Net cash used in investing activities (13,727) (28,216)

Net cash provided by (used in) financing activities

14,972 (151,142)

As of December 31, 2024, we had $183.2 million in cash, cash equivalents, and restricted cash, a decrease of $29.7 million from December 31, 2023.

The decrease is primarily attributable to the Company’s repayment in full at maturity of the outstanding $72.5 million in aggregate principal amount of the 2024 Notes, the repurchase of 2026 Notes for $4.9 million, capital

expenditures of $25.1 million, and various other uses of cash for operating purposes.

These uses of cash were partially offset by proceeds of $50.0 million from issuance of the 2029 Notes, along with $50.0 million in proceeds from the Delayed Draw Notes transaction in the fourth quarter of fiscal year 2024.

Net cash (used in) provided by financing activities (45,503) 14,972

As of December 31, 2025, we had $95.0 million in cash and cash equivalents, a decrease of $88.2 million from December 31, 2024.

The decrease is primarily attributable to cash paid of $45.0 million related to the troubled debt restructuring, various uses of cash for operating purposes, and purchases of property and equipment and capitalization of internal-use software development costs of $12.1 million.

Cash Flows from Operating Activities

Net cash used in operating activities was $30.4 million in the year ended December 31, 2025.

Our net loss was $134.3 million, which includes the effect of non-cash expenses related to depreciation of $30.3 million, amortization of purchased intangible assets and finance leases of $12.0 million, change in the fair value of Warrants of $12.2 million, PIK interest expense of $5.8 million, amortization of debt issuance costs and accretion of discount of $4.5 million, allowance for credit losses of $15.0 million, and stock-based compensation of $22.0 million.

Our net loss was $67.2 million, which includes the effect of non-cash expenses related to goodwill impairment of $41.6 million, depreciation and amortization of $22.0 million, non-cash interest expense of $15.3 million, stock-based compensation of $14.3 million, and amortization of debt issuance costs and accretion of discount of $7.6 million.

These items were partially offset by a gain on troubled debt restructuring of $42.4 million and a gain on change in fair value of Warrants of $13.2 million.

Net cash used in operating activities was further driven by a decrease in accounts payable, accrued expenses and other current liabilities of $19.8 million, a decrease in deferred revenue of $4.3 million, and a decrease in other liabilities of $3.7 million, partially offset by a decrease in contract acquisition costs of $10.4 million and a decrease in prepaid expenses and other current assets of $3.6 million.

Net cash used in operating activities was $15.1 million in the year ended December 31, 2024.

Our net loss was $134.3 million, which includes the effect of non-cash expenses related to depreciation and amortization of $30.3 million, amortization of intangible assets and finance leases of $12.0 million, change in the fair value of Warrants of $12.2 million, non-cash interest expense of $5.8 million, amortization of debt issuance costs and accretion of discount of $4.5 million, allowance for credit losses of $15.0 million, and stock-based compensation of $22.0 million.

In addition, we recorded a goodwill impairment of $60.6 million, and intangible and other assets impairments of $46.9 million primarily related to our developed technology and customer relationships, and to a lesser extent, related to our WildHealth reporting unit and internal-use software development costs.

These items were partially offset by a gain on repurchase of convertible notes of $73.1 million.

Net cash used in operating activities was further driven by a decrease in accounts payable, accrued expenses and other current liabilities of $44.5 million and a decrease in deferred revenue of $23.1 million, partially offset by a decrease in accounts receivable of $37.5 million, a decrease in prepaid expenses and other current assets of $7.3 million, and a decrease in contract acquisition costs of $3.3 million.

Net cash used in operating activities was $19.8 million in the year ended December 31, 2023.

Our net loss was $100.4 million, which included the effect of non-cash expenses related to depreciation of $32.6 million, amortization of purchased intangible assets and finance leases of $22.2 million, amortization of debt issuance costs of $4.0 million, allowance for credit losses of $3.3 million, a goodwill impairment of $11.9 million, intangible and other assets impairment of $8.0 million related to our WildHealth reporting unit and internal-use software development costs, a $4.6 million change in fair value of contingent consideration, and stock-based compensation of $11.9 million, partially offset by a gain on divestiture of $17.6 million and a gain on repurchase of convertible notes of $7.2 million.

Net cash used in operating activities was further driven by a decrease in deferred revenue of $3.2 million, a decrease in other liabilities of $7.8 million, and an increase in prepaid expenses and other current assets of $3.4 million, partially offset by an increase in accounts payable, accrued expenses and other current liabilities of $10.8 million, a decrease in contract acquisition costs of $5.0 million and a decrease in accounts receivable of $1.5 million.

Net cash used in operating activities was further driven by a decrease in accounts payable, accrued expenses and other current liabilities of $44.5 million and a decrease in

deferred revenue of $23.1 million, partially offset by a decrease in accounts receivable of $37.5 million, a decrease in prepaid expenses and other current assets of $7.3 million, and a decrease in contract acquisition costs of $3.3 million.

Cash Flows from Investing Activities

Net cash used in investing activities was $28.2 million in the year ended December 31, 2024 which was primarily driven by purchases of property and equipment and capitalization of internally developed software.

Net cash used in investing activities was $18.8 million in the year ended December 31, 2023 which was primarily driven by purchases of property and equipment and capitalization of internally developed software, partially offset by the proceeds from the sale of Kasamba.

Net cash used in investing activities was $13.7 million in the year ended December 31, 2025 which was primarily driven by purchases of property and equipment and capitalization of internal-use software development costs.

Cash Flows from Financing Activities

Net cash used in financing activities was $45.5 million in the year ended December 31, 2025 which was primarily driven by payments to lenders of $45.0 million related to the troubled debt restructuring.

Net cash provided by financing activities was $15.0 million in the year ended December 31, 2024, which was primarily driven by proceeds from issuance of 2029 Notes of $50.0 million, and proceeds from the Delayed Draw Notes of $50.0 million.

These proceeds were partially offset by full repayment of the 2024 Notes of $72.5 million, repurchases of the 2026 Notes of $4.9 million, and payment of debt issuance costs of $7.6 million.

Net cash used by financing activities was $151.1 million in the year ended December 31, 2023, driven primarily by the repurchase of the 2024 Notes of $149.8 million.

We have incurred significant expenses to develop our technology and services, to hire employees in our customer service and sales and marketing departments, and for the amortization of purchased intangible assets, as well as acquisition costs and non-cash compensation costs.

These proceeds were partially offset by full repayment of the 0.750% Convertible Senior Notes due 2024 (the “2024 Notes”) of $72.5 million, repurchases of the 2026 Notes of $4.9 million, and payment of debt issuance costs of $7.6 million.

We have incurred significant expenses to develop our technology and services and to hire employees in our customer service and sales and marketing departments, as well as acquisition costs and non-cash compensation costs.

Historically, we have incurred net losses and negative cash flows for various quarterly and annual periods since our inception, including during numerous quarters and annual periods in the past several years.

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However, we cannot assure you that we will not require additional funds prior to such time, and we would then seek to sell additional equity or debt securities through public financings, or seek alternative sources of financi ng.

Further, we continue to plan to refinance the remaining balance of the 2026 Notes on or prior to their maturity.

W e cannot assure you that additional funding will be available on favorable terms, when needed, if at all.

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In addition, we may require additional funds in order to fund more rapid expansion, to develop new or enhanced services or products or to invest in or acquire complementary businesses, technologies, services or products.

The indenture governing the 2029 Notes includes a financial covenant that requires the Company to maintain a minimum cash balance of $60 million at all times.

Proceeds of the 2029 Notes may be used only to (i) pay interest, or cash settle, the 2029 Notes, (ii) cash settle the Warrants, (iii) exchange, repurchase, redeem, replace or otherwise refinance 2026 Notes (or refund or replenish cash of the Company or any of its subsidiaries used to do so after May 13, 2024) or (iv) pay or reimburse certain fees, costs and expenses related to the foregoing and the other transactions contemplated by the Exchange and Purchase Agreement as amended or otherwise modified from time to time.

The indenture governing the 2029 Notes includes a financial covenant that requires the Company to maintain a minimum cash balance of $60.0 million (excluding the proceeds of the 2029 Notes) at all times.

Proceeds of the 2029 Notes may be used only to (i) pay interest, or cash settle, the 2029 Notes, (ii) cash settle the Warrants, (iii) exchange, repurchase, redeem, replace or otherwise refinance 2026 Notes (or refund or replenish cash of the Company or any of its subsidiaries used to do so), or (iv) pay or reimburse certain fees, costs and expenses related to the foregoing and the other transactions contemplated by the Exchange and Purchase Agreement as amended or otherwise modified from time to time.

Upon conversion or exercise, the 2029 Notes and cash-settled warrants would be settled for cash.

In addition, the 2026 Notes and the 2029 Notes are subject to repurchase at the option of holders if the Company undergoes a “fundamental change”, and the 2026 Notes and the 2029 Notes are subject to events of default customary for notes issued in connection with similar transactions, which could result in the acceleration of amounts owed.

See Note 8 – Convertible Senior Notes, Net of Current Portion, Capped Call Transactions, and Warrants for additional information.

The Company may from time to time, subject to board authorization and any applicable restrictions under contracts to which it may be or become a party, depending upon market conditions and the Company’s financing needs, use available funds to refinance or repurchase its outstanding debt or equity securities in privately negotiated or open market transactions, by tender offer or otherwise, in compliance with applicable laws, rules and regulations, at prices and on terms the Company deems appropriate (which, in the case of debt securities, may be below par) and subject to the Company’s cash requirements for other purposes and other factors management deems relevant.

In addition, the 2026 Notes, the 2029 Notes and the Second Lien Notes are subject to repurchase at the option of holders if the Company undergoes a “Fundamental Change” (as defined in the indentures governing the 2026 Notes, the 2029 Notes and the Second Lien Notes, as applicable), and the 2026 Notes, the 2029 Notes and the Second Lien Notes are subject to events of default customary for notes issued in connection with similar transactions, which could result in the acceleration of amounts owed.

See Note 8 – Senior Notes, Capped Call Transactions, Warrants and Preferred Stock for additional information.

appropriate (which, in the case of debt securities, may be below par) and subject to the Company’s cash requirements for other purposes and other factors management deems relevant.

We do not engage in off-balance sheet financing arrangements.

Capital Expenditures

Total capital expenditures in 2024 were $25.1 million, primarily related to software capitalization and to the continued investment in our co-location facilities.

Total capital expenditures in 2025 were $12.1 million, primarily related to internal-use software development costs.

We anticipate that our current cash and cash equivalents and cash from operations will be sufficient to fund our capital expenditures for at least the next 12 months.

9 unchanged sentences

Our purchase obligations consist of agreements to purchase goods and services entered into in the ordinary course of business.

As of December 31, 2024, the value of our non-cancellable unconditional purchase obligations was $15.5 million , primarily relating to contracts with vendors in connection with IT infrastructure.

As of December 31, 2025, the value of our non-cancelable unconditional purchase obligations was $74.4 million, primarily relating to contracts with vendors in connection with IT infrastructure.

See Note 10 – Commitments and Contingencies in the Notes to the Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K for additional information regarding our purchase obligations.

We also lease certain facilities under non-cancellable operating lease arrangements that expire at various dates through 2025.

See Note 9 – Leases in the Notes to the Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K for additional information regarding our lease obligations.

We also lease certain facilities under non-cancelable operating lease arrangements that expire at various dates through 2027.

See Note 1 – Description of Business and Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K for additional information regarding our lease obligations.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis