Omada Health, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from management’s expectations as a result of various factors, including, but not limited to, those discussed in the sections titled “Risk Factors” and “Special Note Regarding Forward-Looking Statements.” Overview Our mission is to bend the curve. Our hope is that, one day, tomorrow’s epidemiologists will notice a bend in disease curves, wonder what might be happening, and conclude that part of that impact has been Omada. As part of that mission, we strive to inspire and enable people to make lasting health changes on their own terms. We deliver virtual care between doctor’s visits , providing an engaging, personalized, and integrated experience for our members that is designed to improve their health while delivering value for the employers, health plans, health systems, pharmacy benefit managers (“PBMs”), and other entities that cover the cost of our programs. Our virtual care programs are rooted in evidence and combine relationship-based, human-led clinical care with purpose-built technology. We call this approach Compassionate Intelligence. We work to develop trust with each member and use technology to help us personalize their experience, enabling us to unlock results at scale. We sell our programs to customers that cover the cost for covered individuals. Our customers include employers that cover our programs for their employees and their dependents, health systems that cover our programs for patients, and any other entity that is financially responsible for costs of our programs for a population of covered lives. We also work closely with health plans and PBMs that either cover our programs for a portion of their members as our customers or act as channel partners reselling our programs to their own end customers. Our channel partners’ end customers typically consist of employers that cover our programs for their employees and their dependents. In general, our customers cover the cost of our programs for our members, except that members in our physical therapy program may incur copays, coinsurance, or deductibles, depending on plan design, much like in-person physical therapy. We launched our initial program in diabetes prevention and weight health in 2012, with the goal of showing that a virtual program could achieve the same clinical results as its in-person archetype. Through feedback from our customers, channel partners, members, and the market at large, we then recognized the need to create an integrated, multi-condition care platform to address multiple, commonly comorbid, chronic conditions. Today, we offer cardiometabolic programs for prediabetes, diabetes, and hypertension; a physical therapy program to address musculoskeletal (“MSK”) conditions; additional support for members taking glucagon-like peptide-1 agonists (“GLP-1”) in our cardiometabolic programs (“GLP-1 Care Tracks”); and behavioral health support across all programs. As we have expanded, we have kept our integrated human and technology approach at the center of our business model and have continued to base our program design on clinically validated evidence. Since our founding, our programs have had a meaningful, positive impact. As of June 30, 2025, we had over 752,000 total members enrolled in one or more programs. We count a member as enrolled in a program to the extent their participation was billed at least once in the preceding 12 months. We believe our programs serve a clear need for our customers and channel partners as well as our members, which is reinforced by our strong customer satisfaction and member engagement rates. We consider members to be still engaged after one year or two years in the program if, during their twelfth or twenty-fourth month of program participation in a cardiometabolic program, they complete at least one interaction with us, such as logging in or interacting with the Omada mobile app, sending messages to Omada Care Team members, or recording metrics such as weight, blood pressure, or blood glucose values. Our History Since launching our first program in 2012, we observed a demand from our customers and channel partners for us to expand beyond diabetes prevention and weight management and into other conditions, such as the treatment and management of diabetes, hypertension, and MSK conditions. The significant overlap across these chronic conditions created a natural growth avenue by enabling a coordinated, context-informed care approach across conditions. • Omada for Prevention & Weight Health : Omada for Prevention & Weight Health, our first program launched in 2012, focuses on prediabetes and weight management, two critical elements of preventing diabetes and heart 23 Table of Contents disease. Informed by guidelines and recommendations set by the U.S. Preventive Services Task Force and the Centers for Disease Control and Prevention (the “CDC”), the goal of the program is to enable members to lose weight, maintain a healthy weight, and increase physical activity. We pair members with a dedicated health coach for the entirety of their experience and support them with a connected scale, a personalized learning path, and support from peer groups to build community. In 2018, demand from customers and channel partners, member need, and clinically appropriate interventions came together in an opportunity to expand our offering to support members with diabetes and hypertension leveraging our existing, flexible platform. Considering this market need and feedback, we decided to launch Omada for Diabetes, Omada for Hypertension, and the combined Omada for Diabetes and Hypertension programs. We refer to these, along with our Omada Prevention & Weight Health program, as our cardiometabolic programs. • Omada for Diabetes : Launched in 2018, Omada for Diabetes is designed to help members with type 1 or type 2 diabetes achieve stable blood glucose levels and meet and reach their goals for reducing hemoglobin A1C (“A1C”) (a measure of blood glucose levels over the past three months) based in part on treatment guidelines from the American Diabetes Association. Because most people with type 2 diabetes have obesity or are overweight, we also support members with reaching and maintaining a healthy weight through modifications in diet, exercise, and other behaviors. Members are paired with a dedicated, professionally trained health coach who acts as their primary contact, except in the case of members living with type 1 diabetes, whose primary contact is a Certified Diabetes Care and Education Specialist. Care Teams for members with type 2 diabetes also include a Certified Diabetes Care and Education Specialist, in addition to the member’s primary contact. Members are also provided with connected third-party devices based on their needs, which can include a connected scale and a blood glucose meter. We can also facilitate prescriptions for connected glucose monitor sensors at certain points in the program through a third-party care partner to improve understanding of behavior and blood glucose levels. As in our Prevention & Weight Health program, members are engaged with a personalized learning path and supported by peer groups. • Omada for Hypertension : Launched in 2018, Omada for Hypertension is designed to help reduce members’ blood pressure and help them maintain healthy blood pressure based on clinical protocols recommended by the American Medical Association, the American College of Cardiology, and the American Heart Association. As with type 2 diabetes, hypertension is often comorbid with obesity. We help members in need of weight management support in reaching and maintaining a healthy weight through modifications to diet, exercise, and other behaviors. Members are paired with a dedicated, professionally trained health coach and a Certified Diabetes Care and Education Specialist who provide support and resources to improve blood pressure control through connected blood pressure monitors, secure asynchronous messaging, and group board discussions, as well as frequent and proactive check-ins. As in our Prevention & Weight Health program, members are engaged with a personalized learning path and supported by peer groups. • Omada for MSK : Launched in 2020, Omada for MSK connects individuals to licensed physical therapists for consultation and virtual treatment. Our program provides members access to treatment in as little as 24 hours from enrollment. We match clinically eligible patients with a dedicated physical therapist and provide ongoing access through video visits and asynchronous chat. Omada-affiliated physical therapists assign evidence-based treatment exercises and stretches to members, and the program helps members complete their prescribed care path at the recommended cadence. Physical therapists can assess patient progress through form analysis (by video), range of motion (by computer vision technology), and patient reports (in-app feedback). Members can also access an individualized education curriculum to help build healthy habits that support recovery and long-term health. Our education library includes hundreds of pieces of content, ranging from articles to interactive media and videos. • Omada GLP-1 Care Tracks : First launched in 2023, the initial version of Omada’s GLP-1 Care Track, currently embedded in our cardiometabolic programs, is designed to support members on a GLP-1 therapy—while also engaged in one of those programs—to enable their success before, during, and after GLP-1 therapy. Omada does not develop or prescribe GLP-1 therapies. Rather, our GLP-1 Care Tracks are intended to build and enhance outcomes from the combination of our virtual programs and the member’s medication, with the ultimate goal of supporting members to achieve and maintain weight loss long-term—even after they decide to discontinue GLP-1 therapy. While the initial version of our GLP-1 Care Track is embedded in each of our cardiometabolic programs, customers and channel partners are also able to purchase an enhanced version (the “Enhanced GLP-1 Care Track”), which includes more specialized programming and support. 24 Table of Contents Business Model Overview We have experienced strong growth since our inception. Revenue increased 49% to $61.4 million from $41.2 million for the three months ended June 30, 2025 and 2024, respectively, and increased 52% to $116.3 million from $76.3 million for the six months ended June 30, 2025 and 2024, respectively. We incurred net losses of $5.3 million and $10.7 million for the three months ended June 30, 2025 and 2024, respectively, and $14.8 million and $29.7 million for the six months ended June 30, 2025 and 2024, respectively. We sell our programs to customers that cover the cost for covered individuals. Our customers include employers that cover our programs for their employees and their dependents, health systems that cover our programs for patients, and any other entity that is financially responsible for costs of our programs for a population of covered lives. We also work closely with health plans and PBMs that either cover our programs for a portion of their members as our customers or act as channel partners reselling our programs to their own end customers. Our channel partners’ end customers typically consist of employers that cover our programs for their employees and their dependents. In general, our customers cover the cost of our programs for our members, except that members in our physical therapy program may incur copays, coinsurance, or deductibles, depending on plan design, much like in-person physical therapy. We generate revenue from sales to our customers and channel partners for the services that we provide to members. We generate services revenue by providing access to our programs for prevention & weight health, diabetes, hypertension, and MSK conditions and hardware revenue from connected third-party devices, which are provided to the member upon enrollment in our cardiometabolic programs. Upfront payments or billings received from customers and channel partners are initially recorded as deferred revenue on the balance sheet and recognized as revenue as we fulfill our obligations. Go-To-Market Strategy Our go-to-market strategy follows a business-to-business-to-consumer (“B2B2C”) motion, and as of June 30, 2025, we had over 752,000 total members enrolled in one or more programs that were billable in the preceding 12 months. We sell primarily to employers, who either contract with Omada directly or obtain access to our programs through a channel partner, such as a health plan or PBM, and a key part of our go-to-market strategy is winning new employer contracts during the annual benefits selling season. During that time, our sales and marketing team engages with human resources professionals, benefits managers, and decision makers across various industries to sign up new customers. We sell our programs directly to customers and through channel partners. This selling season typically spans from late spring to early fall, aligning implementation with benefits enrollment schedules and allowing us to launch our products for customers at the start of the following year. The remainder of our revenue is derived from our inclusion as a benefit in fully insured health plans, from PBMs through specific therapeutic programs, or via health systems that assume the cost of care for their patients. We leverage our partner sales team, which engages with health plans and PBMs, to identify new, and expand existing, partner channels through which we can sell directly to partners’ end customers or access and enroll their members. Enrollment and Outreach After a customer or channel partner contracts with us, we collaborate to support enrollment of covered employees or dependents, covered health plan or PBM members, or patients. Our customer experience and partner management teams, account executives, and engineering and product teams work together to support technical implementation and launch of outreach communications before members begin enrolling into our programs. We work with our customers and channel partners to increase awareness through outreach campaigns designed to inform eligible members of their ability to join the respective Omada program. Outreach campaigns can be led by the customer or channel partner or led by Omada, leveraging our preferred methods and materials. The cost of our enrollment and outreach teams are recognized primarily within sales and marketing expense. 25 Table of Contents Care Team and Devices Once a member enrolls in an Omada program, we support the member with an Omada Care Team and our member-facing application, and we provide the member with a set of connected third-party devices. Each Care Team consists of a primary health coach or specialist, additional relevant specialists where applicable, and/or a licensed physical therapist, depending on the program. Member Support Agents also provide device and platform support to members across all programs, via phone, email, and self-service support articles. The connected third-party devices supplied in connection with our programs can include scales, blood pressure monitors, blood glucose monitors, and continuous glucose monitors. The cost of our Care Team and our connected third-party devices are all recognized within cost of revenue. Key Factors Affecting Our Performance We believe that our future growth, success, and performance are dependent on many factors, including those set forth below. While these factors present significant opportunities for us, they also represent the challenges that we must successfully address in order to grow our business and improve our results of operations. Acquisition of New Customers and Channel Partners We believe there is substantial opportunity to further grow our base of customers and channel partners in our large addressable market. Historically, we have relied on a limited number of customers and channel partners, including employers, health plans, PBMs, health systems, and government entities, for a substantial portion of our total sales. Our customers include employers that cover our programs for their employees and their dependents and health systems that cover our programs for patients, among other types of customers. In addition, our channel partners, which include certain of the health plans, PBMs, and other entities that we work with, operate as resellers of our programs to their employer customers or other end customers, which can limit an end customer’s ability to continue purchasing our programs if the customer no longer works with a particular channel partner. Some of the health plans and PBMs we work with as channel partners also cover our programs directly, for a portion of their own members, as our customers. We seek to grow our business by acquiring more covered lives across multiple buyer categories: selling to new customers and channel partners as well as expanding within our existing channel partners to new lines of business. Our diverse go-to-market strategy affords us flexibility to pursue growth via multiple distinct channels, including through new channels and in lines of business where we have yet to place significant focus, such as Medicare Advantage. Customer and Channel Partner Retention Our ability to increase revenue depends on maintaining relationships with customers and channel partners over time, driving both renewal revenue and expansion revenue as customers and channel partners add new programs to provide to their member base. We have invested and plan to continue to invest across our data, analytics, operations, and customer success capabilities to build the infrastructure that supports our go-to-market approach. Program Expansion within Existing Customer Base We believe that the ability to grow the share of revenue that we generate from existing customers is a key driver of long-term growth. We have seen significant expansion over time as existing customers and channel partners have added our newer Diabetes and Hypertension programs, and we remain focused on driving multi-program adoption as a key growth lever. We believe there is still opportunity to continue multi-condition expansion. Member Enrollment Having served over one million members since launch, there is still significant opportunity to enroll more members. We are focused on achieving higher enrollment rates by helping more customers and channel partners adopt our outreach best practices, including enabling Omada-led outreach campaigns, implementing strategies to reach individuals with known risk, and evaluating new enrollment strategies and channels. 26 Table of Contents Member Engagement and Outcomes Member engagement in our programs and the clinical outcomes and cost savings of our offerings affect the market acceptance and adoption of our programs. Most of our customers pay fees to us based on member enrollment and/or engagement with our programs, and our contracts generally may provide that we are obligated to repay a portion of our fees if our programs fail to deliver certain member engagement targets, clinical outcomes, or cost savings. Investments in Growth We expect to continue to focus on long-term growth of our core business, while selectively investing in areas that enhance our platform, programs, or operations. Though our focus remains on continued progress in our current care areas, we monitor the needs of our customers and channel partners, and we believe we are well positioned to respond to their requirements organically or, where appropriate, to add new capabilities through partnerships and potential acquisitions. Key Metric We monitor the following key metric to help us evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions. Total Members A member is a person who is enrolled in one of our virtual care programs and that generated a billing event in the preceding 12 months. We believe growth in the number of members is a key indicator of the performance of our business for both investors and management as we monitor the performance of our business, as members primarily drive services revenue. The number of members depends, in part, on our ability to successfully market our services to new customers and channel partners, our ability to sell additional programs to existing customers and channel partners, and our ability to promote awareness of our programs among covered individuals and to encourage their enrollment. As of March 31, As of June 30, 2025 2024 2025 2024 Total Members 679,000 461,000 752,000 496,000 Key Components of Results of Operations Revenue We generate services revenue from our customers by providing access to our virtual care programs in which our Care Teams implement clinically validated behavior change protocols for individuals living with prediabetes and weight management issues, diabetes, and hypertension (collectively referred to as “cardiometabolic” conditions) and MSK conditions over the term of the program. Our MSK program generally includes a fixed, upfront consultation fee and an additional fee for members that opt in to a physical therapist-guided treatment plan. We use a number of pricing models for our cardiometabolic programs. In general, our legacy pricing models for cardiometabolic programs may include a fixed, upfront enrollment fee and include variable monthly fees which are based on either outcomes or milestones for the respective member service period. In general, our latest pricing models for cardiometabolic programs are based on the respective member’s level of activity in the program. Each month, members that have completed a minimum number of qualifying activities during an agreed-upon backward-looking measurement period are considered billable members. The length of the measurement period and the qualifying activities may vary based on negotiations with customers and channel partners. Most activity measurement periods are defined as the preceding three or six months, and in most cases, members are considered active if they complete three activities during that period, such as logging in or interacting with the Omada mobile app, sending messages to Omada Care Team members, or recording metrics such as weight, blood pressure, or blood glucose values. 27 Table of Contents The price for Omada for Diabetes and Omada for Hypertension is generally higher than the price for Omada for Prevention & Weight Health to account for the higher costs of delivering those programs, including additional included devices and increased Care Team support appropriate for those conditions. We typically bill for our services monthly, in arrears. We recognize a portion of revenue upfront upon hardware delivery or initial consultation and the remaining revenue over the period members have access to our virtual care programs. In general, among our members in cardiometabolic programs, members in Omada for Diabetes and Omada for Hypertension remain active and enrolled in our programs for longer periods than members in Omada for Prevention & Weight Health. In addition to the overall number of members, our quarterly revenues reflect the mix of members enrolled in our various programs and the pricing models for these programs. Sales from or through our top five health plan and PBM partners, including any sales to these entities as customers and sales through these entities as channel partners, represented 76% and 69% of our revenue for the three months ended June 30, 2025 and 2024, respectively, and 75% and 68% for the six months ended June 30, 2025 and 2024, respectively. Significant customers and channel partners are those which represent 10% or more of the accounts receivable balance or revenue for the periods presented. Customers and channel partners that accounted for 10% or more of accounts receivable, net as of June 30, 2025 and December 31, 2024 or 10% or more of revenue as of and for the three and six months ended June 30, 2025 and 2024 were as follows: Accounts Receivable, net Revenue As of Three Months Ended June 30, Six Months Ended June 30, June 30, 2025 December 31, 2024 2025 2024 2025 2024 Partner A 27 % 29 % 32 % 37 % 31 % 37 % Partner B 19 % 28 % 33 % 18 % 32 % 18 % Each of these health plans or PBMs are affiliates of The Cigna Group. Cost of Revenue Cost of revenue consists of expenses that are directly related to or closely correlated to the delivery of our virtual care programs and member support. Cost of services revenue include salaries, share-based compensation expense, bonuses, benefits, travel, and meals and entertainment expenses (collectively, “personnel costs”), data server management expense, hosting costs, connectivity fees for cellular devices, and the amortization of capitalized internal-use software and developed technology. Cost of hardware revenue includes equipment costs, shipping and logistics costs, and provisions for excess and obsolete inventory. Most of the devices delivered in connection with our programs are manufactured in China and may be manufactured in other international markets in the future, and we expect that the prices of these devices may increase as a result of recent tariffs and any new or increased tariffs in the future. Gross Profit and Gross Margin Gross profit is total revenue less total cost of revenue. Gross margin is gross profit expressed as a percentage of revenue. Gross profit and gross margin have been and will continue to be affected by various factors, including the acquisition of new customers and channel partners, renewals of existing agreements, sales of additional programs to our existing customers, the mix of programs covered by our customers and channel partners and members enrolled in those programs, the timing of members enrolling in our programs, the costs associated with third-party data server management and third-party hosting services, costs of hardware, economies of scale, and the extent to which we introduce new features or functionality or expand our Care Teams and hire other additional personnel. Operating Expenses Our operating expenses consist of research and development (“R&D”), sales and marketing, and general and administrative expenses. Personnel costs are the most significant component of operating expenses. Operating expenses also include professional and consulting services and the allocation of shared general corporate expenses primarily related to technology. 28 Table of Contents Research and Development Our R&D expenses support our efforts to add new features and content to our programs and to ensure the reliability and scalability of our virtual care platform. R&D expenses consist primarily of personnel costs and the allocation of shared general corporate expenses primarily related to technology. R&D costs are expensed as incurred. We expect to make continued investments in our virtual care platform in connection with our future growth. Sales and Marketing Sales and marketing expenses consist of personnel costs, commissions for our sales and marketing teams, administrative and marketing fees that we pay to channel partners for their services, promotional marketing materials, and advertising costs. Sales and marketing expenses also include costs for third-party consulting services and the allocation of shared general corporate expenses primarily related to technology. The sales and marketing teams are responsible for growing and maintaining our relationships with customers and channel partners and increasing enrollments. General and Administrative General and administrative expenses consist of personnel costs for our finance, legal, compliance, human resources, and administrative teams, software and infrastructure costs, professional fees, and the allocation of shared general corporate expenses primarily related to technology. We expect general and administrative expenses to increase in absolute dollars as we grow our operations and incur additional expenses associated with operating as a public company. Increased expenses as a result of operating as a public company include expenses necessary to comply with the rules and regulations applicable to companies listed on a national securities exchange and related compliance and reporting obligations pursuant to the rules and regulations of the SEC, as well as higher expenses for general and director and officer insurance, investor relations, and other third-party consulting services. Other Expense, Net Interest Income Interest income consists of income earned on our cash and cash equivalents. Interest Expense Interest expense consists of interest costs associated with our debt financing, including amortization of debt issuance costs. Change in Fair Value of Warrant Liabilities We classify our redeemable convertible preferred stock warrants and common stock warrants as liabilities on our condensed consolidated balance sheets. We remeasure the warrant liabilities to fair value at each reporting date and recognize changes in the fair value of the warrant liabilities in our consolidated statements of operations. We will continue to adjust the warrant liabilities for changes in fair value until the earlier of the expiration or exercise of the redeemable convertible preferred stock warrants and common stock warrants. Provision for Income Taxes We are subject to income taxes in U.S federal, state, and local jurisdictions in which we conduct business. We maintain a full valuation allowance on our federal and state deferred tax assets as we have concluded that it is not more likely than not that the deferred tax assets will be realized. 29 Table of Contents We account for uncertain tax positions in accordance with Accounting Standards Codification (“ASC”) 740-10, Accounting for Uncertainty in Income Taxes . We recognize the tax effects of an uncertain tax position only if it is more likely than not to be sustained based solely on its technical merits as of the reporting date and only in an amount more likely than not to be sustained upon review by the tax authorities. Interest and penalties related to uncertain tax positions are classified in the condensed consolidated financial statements as income tax expense. On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We are currently assessing its impact on our consolidated financial statements. Results of Operations The following table sets forth our results of operations for each of the periods presented: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 (in thousands) (in thousands) Revenue Services $ 56,960 $ 38,351 $ 106,456 $ 70,255 Hardware 4,411 2,861 9,878 6,052 Total revenue 61,371 41,212 116,334 76,307 Cost of revenue - Services (1)(2)(3) 12,673 10,759 25,417 21,055 Hardware 8,392 5,619 18,711 13,070 Total cost of revenue 21,065 16,378 44,128 34,125 Gross profit 40,306 24,834 72,206 42,182 Operating expenses Research and development (1)(3) 10,024 8,987 18,830 17,883 Sales and marketing (1)(2)(3) 22,318 15,191 42,488 32,387 General and administrative (1)(3) 12,308 10,693 23,628 19,942 Total operating expenses 44,650 34,871 84,946 70,212 Operating loss (4,344) (10,037) (12,740) (28,030) Other expense, net - Interest expense 1,094 1,132 2,168 2,262 Interest income (863) (85) (1,405) (614) Change in fair value of warrant liabilities 736 (392) 1,256 (17) Total other expense, net 967 655 2,019 1,631 Loss before provision for income taxes (5,311) (10,692) (14,759) (29,661) Provision for income taxes - - - - Net loss and comprehensive loss $ (5,311) $ (10,692) $ (14,759) $ (29,661) _____________ (1) Includes share-based compensation expense as follows: 30 Table of Contents Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 (in thousands) (in thousands) Cost of services revenue $ 33 $ 53 $ 71 $ 105 Research and development 528 465 1,023 797 Sales and marketing 884 635 1,614 1,367 General and administrative 1,385 926 2,966 2,679 Total share-based compensation expense $ 2,830 $ 2,079 $ 5,674 $ 4,948 _____________ (2) Includes amortization of intangible assets as follows: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 (in thousands) (in thousands) Cost of services revenue $ 439 $ 439 $ 878 $ 878 Sales and marketing 31 63 94 126 Total amortization of intangible assets $ 470 $ 502 $ 972 $ 1,004 (3) Includes depreciation and amortization as follows: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 (in thousands) (in thousands) Cost of services revenue $ 786 $ 568 $ 1,527 $ 1,100 Research and development 20 22 38 41 Sales and marketing 29 31 56 58 General and administrative 47 48 92 93 Total depreciation and amortization (i) $ 882 $ 669 $ 1,713 $ 1,292 (i) Depreciation and amortization includes depreciation of property and equipment and amortization of capitalized internal-use software costs. 31 Table of Contents Percentage of Revenue Data Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 (as a percentage of revenue) Revenue Services 93 % 93 % 92 % 92 % Hardware 7 7 8 8 Total Revenue 100 100 100 100 Cost of revenue Services 21 26 22 28 Hardware 14 14 16 17 Total cost of revenue 35 40 38 45 Gross profit 65 60 62 55 Operating expenses Research and development 16 22 16 23 Sales and marketing 36 37 37 42 General and administrative 20 26 20 26 Total operating expenses 72 85 73 91 Operating loss (7) (25) (11) (36) Other expense, net Interest expense 2 2 2 3 Interest income (1) — (1) (1) Change in fair value of warrant liabilities 1 (1) 1 — Total other expense, net 2 1 2 2 Loss before provision for income taxes (9) (26) (13) (38) Provision for income taxes — — — — Net loss and comprehensive loss (9) % (26) % (13) % (38) % Comparison of the Three and Six Months Ended June 30, 2025 and 2024 Revenue Three Months Ended June 30, Six Months Ended June 30, 2025 2024 $ Change % Change 2025 2024 $ Change % Change (in thousands, except percentages) Services $ 56,960 $ 38,351 $ 18,609 49 % $ 106,456 $ 70,255 $ 36,201 52 % Hardware 4,411 2,861 1,550 54 % 9,878 6,052 3,826 63 % Total revenue $ 61,371 $ 41,212 $ 20,159 49 % $ 116,334 $ 76,307 $ 40,027 52 % Total revenue increased by $20.2 million, or 49%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 . Total revenue increased $40.0 million, or 52%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. Three Months Ended June 30, 2025 Compared with the Same Period in 2024 Services revenue increased by $18.6 million, or 49%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily driven by an increase of $19.0 million related to growth in total members, with the average number of total members during the three months ended June 30, 2025 increasing by 50% compared to the average for the three months ended June 30, 2024. 32 Table of Contents Hardware revenue increased by $1.6 million, or 54%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily driven by a 44% increase in total members, reflecting new members enrolled in our programs compared to the prior-year period, which directly drove the number of devices that we delivered. Six Months Ended June 30, 2025 Compared with the Same Period in 2024 Services revenue increased by $36.2 million, or 52%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily driven by an increase of $35.3 million related to growth in total members, with the average number of total members during the six months ended June 30, 2025 increasing by 49% compared to the average for the six months ended June 30, 2024, and by $0.9 million related to higher average fees per member compared to prior-year. Hardware revenue increased by $3.8 million, or 63%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily driven by a 52% increase in total members, reflecting new members enrolled in our programs compared to the prior-year period, which directly drove the number of devices that we delivered. Cost of Revenue Three Months Ended June 30, Six Months Ended June 30, 2025 2024 $ Change % Change 2025 2024 $ Change % Change (in thousands, except percentages) Services $ 12,673 $ 10,759 $ 1,914 18 % $ 25,417 $ 21,055 $ 4,362 21 % Hardware 8,392 5,619 $ 2,773 49 % 18,711 13,070 $ 5,641 43 % Total cost of revenue $ 21,065 $ 16,378 $ 4,687 29 % $ 44,128 $ 34,125 $ 10,003 29 % Total cost of revenue increased by $4.7 million, or 29%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 . Total cost of revenue increased $10.0 million, or 29%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. Three Months Ended June 30, 2025 Compared with the Same Period in 2024 Cost of services revenue increased by $1.9 million, or 18%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily driven by a $1.6 million increase in personnel costs related in part to an increase in headcount, a $0.2 million increase in technology support and product costs to support the growth in our total members, and a $0.1 million increase in amortization of capitalized internal-use software costs. Cost of hardware revenue increased by $2.8 million, or 49%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily driven by a 44% increase in total members, reflecting new members enrolled in our programs compared to the prior-year period, which drove new devices, supplies, and fulfillment costs. Six Months Ended June 30, 2025 Compared with the Same Period in 2024 Cost of services revenue increased $4.4 million, or 21%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily driven by a $3.7 million increase in personnel costs related in part to an increase in headcount, a $0.3 million increase in technology support and product costs to support the growth in our total members, and a $0.4 million increase in amortization of capitalized internal-use software costs. Cost of hardware revenue increased by $5.6 million, or 43%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily driven by a 52% increase in total members, reflecting new members enrolled in our programs compared to the prior-year period, which drove new devices, supplies, and fulfillment costs. 33 Table of Contents Gross Profit and Gross Margin Three Months Ended June 30, Six Months Ended June 30, 2025 2024 $ Change % Change 2025 2024 $ Change % Change (in thousands, except percentages) Gross profit $ 40,306 $ 24,834 $ 15,472 62 % $ 72,206 $ 42,182 $ 30,024 71 % Gross margin 65.7 % 60.3 % 5.4 ppt 62.1 % 55.3 % 6.8 ppt Three Months Ended June 30, 2025 Compared with the Same Period in 2024 Gross profit increased by $15.5 million, or 62%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, driven by a 44% increase in total members and by a decrease in personnel costs per total member needed to support enrolled members as a result of strategic efficiency initiatives such as improving the effectiveness of our Care Team interventions and Care Team time management (“Care Team efficiency initiatives”), as well as the expanded use of supporting technologies, such as tools that can surface helpful templates for our Care Team’s consideration in frequently recurring scenarios (“Care Team message support”). Gross margin expanded by 5.4 percentage points for the three months ended June 30, 2025 compared to the three months ended June 30, 2024.The expansion of gross margin was primarily driven by lower personnel costs per total member needed to support enrolled members as a result of Care Team efficiency initiatives as well as the expanded use of supporting technologies, such as tools for Care Team message support. Six Months Ended June 30, 2025 Compared with the Same Period in 2024 Gross profit increased by $30.0 million, or 71%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, driven by a 52% increase in total members and a decrease in personnel costs per total member needed to support enrolled members as a result of Care Team efficiency initiatives, as well as the expanded use of supporting technologies, such as tools for Care Team message support. Gross margin expanded by 6.8 percentage points for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The expansion of gross margin was primarily driven by lower personnel costs per total member needed to support enrolled members as a result of Care Team efficiency initiatives, as well as the expanded use of supporting technologies, such as tools for Care Team message support. Operating Expenses Research and Development Three Months Ended June 30, Six Months Ended June 30, 2025 2024 $ Change % Change 2025 2024 $ Change % Change (in thousands, except percentages) Research and development $ 10,024 $ 8,987 $ 1,037 12 % $ 18,830 $ 17,883 $ 947 5 % Three Months Ended June 30, 2025 Compared with the Same Period in 2024 Research and development expenses increased by $1.0 million, or 12%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily driven by a $0.7 million increase in personnel costs related primarily to an increase in headcount and increases in compensation expenses per employee, and a $0.3 million increase in technology infrastructure expenses and professional and outside services costs. 34 Table of Contents Six Months Ended June 30, 2025 Compared with the Same Period in 2024 Research and development expenses increased $0.9 million, or 5%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily driven by a $0.4 million increase in personnel costs related primarily to an increase in headcount and stock-based compensation per employee and a $0.5 million increase in technology infrastructure expenses and professional and outside services costs. Sales and Marketing Three Months Ended June 30, Six Months Ended June 30, 2025 2024 $ Change % Change 2025 2024 $ Change % Change (in thousands, except percentages) Sales and marketing $ 22,318 $ 15,191 $ 7,127 47 % $ 42,488 $ 32,387 $ 10,101 31 % Three Months Ended June 30, 2025 Compared with the Same Period in 2024 Sales and marketing expenses increased by $7.1 million, or 47%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily driven by a $4.1 million increase in administrative and marketing fees that we paid to channel partners for their services in support of our member enrollments, a $1.8 million increase in personnel costs related primarily to an increase in headcount and increases in compensation expenses per employee, and a $1.2 million increase in other marketing and technology infrastructure expenses. Six Months Ended June 30, 2025 Compared with the Same Period in 2024 Sales and marketing expenses increased by $10.1 million, or 31%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily driven by a $6.0 million increase in administrative and marketing fees that we paid to channel partners for their services in support of our member enrollments, a $2.6 million increase in personnel costs related primarily to an increase in headcount and increases in compensation expenses per employee, and a $1.7 million increase in advertising and marketing expenses, offset by a $0.2 million decrease in professional and outside services. General and Administrative Three Months Ended June 30, Six Months Ended June 30, 2025 2024 $ Change % Change 2025 2024 $ Change % Change (in thousands, except percentages) General and Administrative $ 12,308 $ 10,693 $ 1,615 15 % $ 23,628 $ 19,942 $ 3,686 18 % Three Months Ended June 30, 2025 Compared with the Same Period in 2024 General and administrative expenses increased by $1.6 million, or 15%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily driven by a $1.8 million increase in personnel costs related primarily to an increase in headcount, increases in compensation expenses per employee, and increased travel and entertainment costs associated with our IPO, and a $0.5 increase in technology infrastructure expenses, which were offset by a $0.5 decrease in professional and outside services expenses related to financial statement audits and preparing for public company operations and a $0.2 million decrease in other general and administrative expenses. Six Months Ended June 30, 2025 Compared with the Same Period in 2024 General and administrative expenses increased by $3.7 million, or 18%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily driven by a $1.9 million increase in personnel costs related primarily to an increase in headcount, increases in compensation expenses per employee, and increased travel and entertainment costs associated with our IPO, a $0.8 million increase in technology infrastructure expenses, a $0.5 million increase in professional and outside services costs related to financial statement audits and preparing for public company operations, and a $0.5 million increase in other general and administrative expenses. 35 Table of Contents Other Expense, Net Interest Expense Three Months Ended June 30, Six Months Ended June 30, 2025 2024 $ Change % Change 2025 2024 $ Change % Change (in thousands, except percentages) Interest Expense $ 1,094 $ 1,132 $ (38) (3) % $ 2,168 $ 2,262 $ (94) (4) % Three Months Ended June 30, 2025 Compared with the Same Period in 2024 There were no significant changes to the business related to our debt and other interest generating liabilities for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. Six Months Ended June 30, 2025 Compared with the Same Period in 2024 There were no significant changes to the business related to our debt and other interest generating liabilities for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. Interest Income Three Months Ended June 30, Six Months Ended June 30, 2025 2024 $ Change % Change 2025 2024 $ Change % Change (in thousands, except percentages) Interest Income $ 863 $ 85 $ 778 915 % $ 1,405 $ 614 $ 791 129 % Three Months Ended June 30, 2025 Compared with the Same Period in 2024 Interest income increased by $0.8 million, or 915%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily driven by interest earned from the increase in cash and cash equivalents from IPO proceeds. Six Months Ended June 30, 2025 Compared with the Same Period in 2024 Interest income increased by $0.8 million, or 129%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily driven by interest earned from the increase in cash and cash equivalents from IPO proceeds. Change in Fair Value of Warrant Liabilities Three Months Ended June 30, Six Months Ended June 30, 2025 2024 $ Change % Change 2025 2024 $ Change % Change (in thousands, except percentages) Change in fair value of warrant liabilities $ 736 $ (392) $ 1,128 (288) % $ 1,256 $ (17) $ 1,273 (7488) % Three Months Ended June 30, 2025 Compared with the Same Period in 2024 The change in fair value of warrant liabilities increased by $1.1 million, or (288%), for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily driven by changes in the stock price, expected stock volatility, risk-free rate, and reduction in time to expiry. 36 Table of Contents Six Months Ended June 30, 2025 Compared with the Same Period in 2024 The change in fair value of warrant liabilities increased by $1.3 million, or (7488%), for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily driven by changes in the stock price, expected stock volatility, risk-free rate, and reduction in time to expiry. Trends Seasonality We typically close a higher percentage of sales to new customers, as well as renewals or expansions with existing customers, in the second and third quarters, aligning with benefits enrollment schedules and allowing us to launch our products at the start of the following year. This seasonality generally leads to higher new member enrollment in the first and second quarters, resulting in increased Care Team costs to support the newly enrolled members. These higher new member enrollments also require shipments of new devices to newly enrolled members in the same quarter of enrollment or the beginning of the following quarter and increased hardware revenue in those periods. These increased costs result in lower overall gross margins in those quarters and there is typically a decrease in these costs in subsequent quarters. After the effects of these early program costs of new enrollments, increases in the number of members will generally be reflected in increased revenue in subsequent quarters as services revenue is generally recognized in arrears after the provision of our virtual care programs begins. Obesity and Weight Management While Omada does not develop or prescribe GLP-1 therapies, we believe the approval of several GLP-1s to treat diabetes and obesity alongside changes in diet and exercise has the potential to increase interest in cardiometabolic programs such as ours. The GLP-1 treatment landscape is relatively new and evolving, and the continued growth of GLP-1 prescriptions may drive fluctuations in demand for our cardiometabolic programs and impact revenue in future periods. GLP-1 therapies have driven significant spending related to cardiometabolic conditions and obesity, with combined global sales of Ozempic, Rybelsus, Wegovy, and Mounjaro reaching approximately $41.4 billion in 2024, a 73% increase compared to 2023, according to public filings by the respective drug manufacturers. GLP-1 therapies can represent a significant cost burden to employers and other entities (including health plans and PBMs). For example, employers pay for GLP-1 therapies with list prices that can exceed $1,000 per month. However, the lasting value derived from the prescription alone may be limited without long-term behavior change. As of June 30, 2025, FDA-approved labels guided that GLP-1 therapies prescribed in adults for obesity or chronic weight management should be prescribed concurrently with a behavioral and lifestyle treatment plan. Accordingly, we believe that the growth in GLP-1 medication prescriptions may also result in increased interest in lifestyle modification programs such as our cardiometabolic programs, which can support members on a GLP-1 therapy. The GLP-1 treatment landscape is relatively new and evolving, and actions by employers, health plans, PBMs, pharmaceutical companies, regulators, and other third parties could impact the adoption of our GLP-1 Care Tracks. While our GLP-1 Care Tracks are designed to be offered only to eligible members who are also engaged in one of our cardiometabolic programs, demand for those cardiometabolic programs could fluctuate and impact our financial condition. Liquidity and Capital Resources Since our inception, we have financed our operations primarily through proceeds from issuance of our redeemable convertible preferred stock, debt financing agreements, and cash generated from the sale of our products and services. As of June 30, 2025, our principal sources of liquidity were cash and cash equivalents of $223.1 million and working capital of $213.1 million. Cash and cash equivalents are composed of cash held in sweep accounts, checking accounts, and money market funds. Our principal use of cash is to fund our operations and invest in R&D to support our growth. 37 Table of Contents We have generated significant losses from operations and negative cash flows from operating activities in the past, as reflected in our accumulated deficit of $458.7 million as of June 30, 2025. We believe that our current cash and cash equivalents will be sufficient to fund our operations for at least the next 12 months. Our future capital requirements, however, will depend on many factors, including our growth rate, the timing and extent of our sales and marketing and R&D expenditures, the continuing market acceptance of our products and services, and the use of cash to fund potential mergers or acquisitions. In the event that additional financing is required from outside sources, we may seek to raise additional funds through equity, equity-linked arrangements, and debt. If we are unable to raise additional capital when desired and on acceptable terms, our business, results of operations, and financial condition could be materially and adversely affected. In June 2023, we entered into a financing arrangement with Physera, Inc., MidCap Funding IV Trust (“MidCap”), as administrative agent, MidCap Financial Trust, as term loan servicer, certain funds managed by MidCap, as lenders, and the lenders, additional borrowers, and guarantors from time to time party thereto (as amended, restated, amended and restated, supplemented, or otherwise modified from time to time, the “MidCap Credit Agreement”), for a senior secured term loan (the “MidCap Term Facility”) in an aggregate principal amount of up to $60.0 million, with up to $30.0 million available upon the initial closing date and up to $30.0 million (the “Second Tranche”) available for draw from October 2024 through March 2025 conditional upon achievement of $120.0 million of trailing 12-month revenue (the “Revenue Condition”) and $60.0 million liquidity. On March 7, 2025, we entered into an amendment to the MidCap Credit Agreement which, among other things, (i) extended the availability of the Second Tranche until December 31, 2025 and (ii) modified the Revenue Condition to require trailing 12-month revenue of $165.0 million if the Second Tranche is advanced during the first fiscal quarter of 2025, $170.0 million if the Second Tranche is advanced during the second fiscal quarter of 2025, $175.0 million if the Second Tranche is advanced during the third fiscal quarter of 2025 and $180.0 million if the Second Tranche is advanced during the fourth fiscal quarter of 2025. Upon the initial closing date of the MidCap Credit Agreement, we drew down on $30.0 million of the MidCap Term Facility and used a portion of the proceeds to repay the outstanding principal balance (including prepayment premium) and accrued interest on the Perceptive Credit Agreement. The MidCap Term Facility is interest-only for 48 months. At the end of the initial interest-only period, we can elect to extend the interest-only period an additional 12 months if we meet a certain trailing 12-month revenue level (the “Minimum Net Revenue”) and no event of default has occurred and is continuing. The MidCap Credit Agreement also includes a revolving line of credit facility (the “MidCap Revolving Facility”) allowing for up to $20.0 million in revolving borrowings. The availability of the MidCap Revolving Facility is calculated as a percentage of our outstanding accounts receivable and inventory balances (“Availability”). We are required to maintain a minimum drawn balance on the MidCap Revolving Facility of no less than 20% of Availability, or will be required to pay a fee equal to the MidCap Revolving Facility interest rate on the difference between the amount of revolving loans drawn and 20% of Availability. Upon the initial closing date of the MidCap Credit Agreement, we drew $1.0 million on the MidCap Revolving Facility. The maturity date of the MidCap Term Facility and the MidCap Revolving Facility is June 1, 2028. As of each of June 30, 2025 and 2024, the outstanding balance on the MidCap Term Facility was $30.0 million and the outstanding balance on the MidCap Revolving Facility was $1.0 million. Interest is charged on any outstanding principal of the MidCap Term Facility at the sum of the one-month forward-looking term SOFR rate plus 0.10% (“Adjusted SOFR”), plus 7.00%, subject to a floor of 2.50%. Interest on the MidCap Revolving Facility is charged at the sum of Adjusted SOFR plus 4.00%, subject to a floor of 2.50%. Both interest rates are reset monthly. The effective interest rate for the three months ended June 30, 2025 and 2024, was 13.4% and 14.4%, respectively, on the MidCap Term Facility, and 11.2% and 12.0%, respectively, on the MidCap Revolving Facility. The effective interest rate for the six months ended June 30, 2025 and 2024 on the MidCap Term Facility was 13.4% and 14.4%, respectively, and 11.3% and 12.3% on the MidCap Revolving Facility, respectively. MidCap Credit Agreement includes customary covenants for a facility of this type, including monthly reporting requirements and, at any time that liquidity is less than 1.50x the outstanding principal balance of the MidCap Term Facility, a financial covenant to maintain minimum trailing 12-month net revenue levels specified in the MidCap Credit Agreement. The MidCap Credit Agreement also contains various covenants that limit our ability to, among other things: sell, transfer, lease, or dispose of our assets subject to certain exclusions; create, incur, assume, guarantee, or assume additional indebtedness, other than certain permitted indebtedness; encumber or permit liens on any of our assets other than certain permitted liens; make restricted payments, including paying cash dividends on, repurchasing or making distributions with respect to any of our capital stock; make specified investments; consolidate, merge with, or acquire any other entity, or sell or otherwise dispose of all or substantially all of our assets; and enter into certain transactions with our affiliates, in each case, subject to certain exceptions, baskets, and thresholds set forth in the MidCap Credit Agreement. As of June 30, 2025, we were in compliance with our financial covenants. 38 Table of Contents On June 9, 2025, we completed our IPO of 9,085,000 shares of our common stock, which includes the exercise in full by the underwriters of their option to purchase from us 1,185,000 shares of our common stock, at a price to the public of $19.00 per share. The gross proceeds to us from the IPO were $172.6 million and $151.6 million, after deducting $12.0 million underwriting discounts and commissions and $9.0 million estimated offering expenses payable by us. Immediately prior to the closing of the IPO, each outstanding share of our Series A, Series B, Series C, Series C-1, Series D, Series D-1, and Series E redeemable convertible preferred stock, including shares of redeemable convertible preferred stock issued upon the exercise of Series B and Series D redeemable convertible preferred stock warrants, converted into one-third of a share our common stock. On July 31, 2025, we fully repaid outstanding amounts under the MidCap Term Facility and MidCap Revolving Facility, with cumulative principal and accrued interest balances of $31.0 million and $0.4 million, respectively, ahead of their contractual maturity on June 1, 2028. The extinguishment will reduce future interest expense and eliminate related debt covenants. Cash Flows The following table summarizes our cash flows for the periods presented: Six Months Ended June 30, 2025 2024 (in thousands) Net cash used in operating activities $ (13,260) $ (28,748) Net cash used in investing activities $ (2,499) $ (1,826) Net cash provided by (used in) financing activities $ 162,513 $ (898) Operating Activities Our largest source of operating cash flows is cash collections from our customers who purchase access to our programs for their members. Our primary use of cash in operating activities is for personnel and related expenses, marketing expenses, and third-party hosting and software costs. We have incurred negative cash flows from operating activities and have supplemented working capital requirements through net proceeds from the sale of redeemable convertible preferred stock and proceeds from debt financing arrangements. Net cash used in operating activities during the six months ended June 30, 2025 of $13.3 million was the result of a $14.8 million net loss, adjusted for $12.3 million of non-cash adjustments and $10.8 million of net cash outflow from changes in operating assets and liabilities. The non-cash adjustments consisted primarily of $5.7 million of share-based compensation expense, $2.7 million of depreciation and amortization expense, $1.6 million of amortization of deferred commissions, a $1.3 million increase in the fair value of warrant liabilities, a $0.5 million increase in the provision for credit losses, $0.4 million of amortization of operating lease right-of-use assets, and $0.3 million of amortization of debt issuance costs. The net cash outflow from changes in operating assets and liabilities was primarily the result of an $10.4 million increase in accounts receivable, a $4.8 million decrease in accrued expenses and other current liabilities, a $0.9 million increase in prepaid and other current assets, a $1.4 million increase in deferred commissions, a $0.4 million decrease in operating lease liabilities, and a $0.2 million increase in inventory, partially offset by a $6.0 million increase in deferred revenue, a $1.0 million increase in accounts payable, a $0.1 million decrease in other non-current assets, and a $0.1 million increase in other non-current liabilities. Net cash used in operating activities during the six months ended June 30, 2024 of $28.7 million was the result of a $29.7 million net loss, adjusted for $9.5 million of non-cash adjustments and $8.5 million of net cash outflow from changes in operating assets and liabilities. The non-cash adjustments consisted primarily of $4.9 million in share-based compensation expense, $2.3 million of depreciation and amortization expense, $1.2 million of amortization of deferred commissions, $0.5 million increase in the provision for credit losses, $0.4 million of amortization of operating lease right-of-use assets, and $0.2 million of amortization of debt issuance costs. The net cash outflow from changes in operating assets and liabilities was primarily the result of a $9.8 million increase in accounts receivable, a $0.5 million increase in prepaid and other current assets, a $3.7 million increase in deferred commissions, a $0.4 million decrease in operating lease liabilities, a $1.2 million decrease in accounts payable, and a $3.1 million decrease in accrued expenses and other current liabilities, partially offset by a $8.3 million increase in deferred revenue, a $1.5 million decrease in inventory, a $0.2 million decrease in other non-current assets, and a $0.1 million increase in other non-current liabilities. 39 Table of Contents Investing Activities Net cash used in investing activities during the six months ended June 30, 2025 of $2.5 million was the result of purchases of property and equipment of $0.6 million and capitalized internal-use software costs of $1.9 million. Net cash used in investing activities during the six months ended June 30, 2024 of $1.8 million was the result of purchases of property and equipment of $0.3 million and capitalized internal-use software costs of $1.5 million. Financing Activities Net cash provided by financing activities for the six months ended June 30, 2025 of $162.5 million was the result of $160.5 million of proceeds from the IPO net of underwriting discounts and commissions and $3.9 million of proceeds from the exercise of stock options, partially offset by $1.9 million of payments for offering expenses. Net cash used by financing activities for the six months ended June 30, 2024 of $0.9 million was the result of $2.3 million of payments for offering expenses, partially offset by $1.4 million of proceeds from the exercise of stock options. Contractual Obligations and Other Commitments Operating lease commitments . Our operating lease commitments primarily consist of the lease of our corporate offices. As of June 30, 2025, we had fixed lease payment obligations of less than $1 million, all of which is expected to be paid within 12 months. Purchase commitments . Our unconditional purchase commitments primarily consist of technology and cloud services related to our daily business operations. As of June 30, 2025, we had $4.2 million of unconditional purchase commitments due in 2025 and $8.2 million due in 2026 and thereafter. The purchase obligation amounts do not represent the entire anticipated purchases in the future but represent only those items for which we are contractually obligated. The majority of our goods and services are purchased as needed, with no unconditional commitment. For this reason, these amounts do not provide an indication of our expected future cash outflows related to purchases. See Note 6 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. Indemnification Agreements In the ordinary course of business, we include in our agreements indemnification provisions of varying scope and terms pursuant to which we agree to indemnify customers, channel partners, suppliers, vendors, lessors, business partners, and other parties with respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements, services to be provided by us, or from intellectual property infringement claims made by third parties. The term of these indemnification provisions generally survive the termination of the agreements indefinitely. The maximum potential amount of future payments we could be required to make under these arrangements is not determinable. No demands have ever been made upon us to provide indemnification under such agreements, and there are no claims under those indemnification terms that we are aware of that could have a material effect on our consolidated balance sheets, consolidated statements of operations and comprehensive loss, or consolidated statements of cash flows. As a result, we believe the fair value of these agreements is minimal. In addition, we have entered into separate indemnification agreements with our directors and certain officers and other employees that require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers, and employees. 40 Table of Contents Emerging Growth Company Status We qualify as an “emerging growth company,” as defined in the JOBS Act. As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies. These provisions include: (i) being permitted to present only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure in this Quarterly Report on Form 10-Q; (ii) reduced disclosure about our executive compensation arrangements; (iii) not being required to hold advisory votes on executive compensation or to obtain stockholder approval of any golden parachute arrangements not previously approved; (iv) an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002; and (v) an exemption from compliance with the requirements of the Public Company Accounting Oversight Board regarding the communication of critical audit matters in the auditor’s report on the financial statements. We may take advantage of these exemptions for up to five years or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company on the date that is the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the completion of our IPO; (iii) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC. We may choose to take advantage of some but not all of these exemptions. We have taken advantage of reduced reporting requirements in this Quarterly Report on Form 10-Q. Accordingly, the information contained herein may be different from the information you receive from other public companies in which you hold stock. Additionally, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this exemption, and therefore, while we are an emerging growth company, we will not be subject to new or revised accounting standards at the same time that they become applicable to other public companies that are not emerging growth companies. As a result of this election, our unaudited condensed consolidated financial statements may not be comparable to those of other public companies that comply with new or revised accounting pronouncements as of public company effective dates. We may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies. Critical Accounting Policies and Estimates Our condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q are prepared in accordance with GAAP. The preparation of condensed consolidated financial statements in accordance with GAAP requires us to make certain estimates, judgements, and assumptions that affect the reported amounts of assets and liabilities and the related disclosures as of the date of the financial statements, as well as reported amounts of revenue and expenses during the period presented. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from our estimates. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows could be affected. There have been no material changes to our critical accounting policies and estimates as described in our Prospectus. Recently Issued Accounting Pronouncements Adopted For more information on recently issued accounting pronouncements, see Note 2 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information. New Accounting Pronouncements Not Yet Adopted For more information on new accounting pronouncements not yet adopted, see Note 2 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information.