What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-13 compared with 2025-11-07 · 105 added, 137 removed, 111 unchanged (69% of the section changed)

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This Quarterly Report on Form 10-Q contains statements that relate to future events and expectations and, as such, constitute forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995.

Certain statements, other than purely historical information, including estimates, projections, statements relating to our strategies, outlook, business and financial prospects, business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements.” These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions.

Certain statements, other than purely historical information, including estimates, projections, statements relating to our strategies, outlook, business and financial prospects, business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements.” These forward-looking statements generally are identified by the words “believes,” “projects,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions.

Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements.

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dependence on a concentrated group of customers;

inability to maintain contracts with electronic prescription platforms and electronic health record systems, agreements with electronic prescription platforms and electronic health record systems being subject to audit;

inability to maintain contracts with electronic prescription (“eRx”) platforms and electronic health record (“EHR”) systems, and agreements with eRx platforms and EHR systems being subject to audit;

inability to attract and retain customers;

federal or state legislation or regulatory action and/or policy efforts restricting direct-to-consumer advertising and limitations on interactions with healthcare professionals;

inability to comply with laws and regulations that affect the healthcare industry;

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inability to identify suitable acquisition targets, complete acquisitions, or integrate acquisitions successfully;

acquisition activities may disrupt ongoing business and may involve increased expenses;

strategic activities that may disrupt ongoing business and may involve increased expenses;

inability to realize the financial and strategic goals contemplated at the time of a transaction;

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OptimizeRx helps life sciences organizations engage and support their customers through our combined HCP and DTC marketing strategies.

OptimizeRx has historically generated revenue by delivering messages to HCPs via their EHR systems and eRx platforms using our proprietary network of channel partners.

OptimizeRx has historically generated revenue by delivering messages to HCPs via EHR systems and “eRx” platforms using our proprietary network of channel partners.

We have gradually expanded our offerings to include audience development, audience creation, and media execution across different messaging types and media distribution channels.

Overall, we employ a “land and expand” strategy focused on growing our existing customer base and generating greater and more consistent revenues in part through a continued shift in our business model toward enterprise level engagements, while also broadening our platform with innovative proprietary virtual communication solutions such as our patented Micro-Neighborhood Targeting and our AI-powered Dynamic Audience Activation Platform (“DAAP”), which uses sophisticated machine-learning algorithms to find the best audiences in the correct channels at the right time.

Overall, we employ a “land and expand” strategy focused on growing our existing customer base and generating greater and more consistent revenues in part through a continued shift in our business model toward enterprise level engagements, while also broadening our platform with innovative proprietary virtual communication solutions such as our patented Micro-Neighborhood Targeting and our artificial intelligence ( “AI”)-powered Dynamic Audience Activation Platform (“DAAP”), which uses sophisticated machine-learning algorithms to find the best audiences in the correct channels at the right time.

Our strategy for driving revenue growth is also expected to work in tandem with our efforts to increase margin and profitability as revenue drivers such as DAAP have inherently higher margins than most other messaging solutions we offer.

In addition, by aiming to transition our DAAP customers to a more predictable subscription-based model for data services, we believe will further improve margins, increase visibility, and enhance the overall predictability of our revenue streams over time.

Dollar figures are in thousands, except per share data and where the context indicates otherwise.

Customer Concentration

Because the pharmaceutical industry is dominated by large companies with multiple brands, our revenue is concentrated in a relatively small number of companies.

We have approximately 100 pharmaceutical companies as customers, and our revenues are concentrated among the largest pharmaceutical companies in the world.

Loss of one or more of our larger customers could have a negative impact on our operating results.

We have over 100 pharmaceutical manufacturers as customers, and our revenues are concentrated in these customers.

Our top five customers represented approximately 47% and 49% of our revenue for the years ended December 31, 2025 and 2024, respectively.

In 2024 and 2023, we had two customers and one customer, respectively, that represented more than 10% of our revenues.

In 2025 and 2024, we had three customers and two customers, respectively, that represented more than 10% of our revenues.

Loss or a year over year reduction in sales of one of more of our larger customers, or a loss of one or more of any of the pharmaceutical brands that purchase our solutions, could have a material negative impact on our operating results.

In general, the pharmaceutical brand marketing industry spends its advertising budget seasonally.

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Unfavorable conditions in the economy may negatively affect the growth of our business and our results of operations.

For example, macroeconomic events including rising inflation and interest rates have led to economic uncertainty in the recent past, and threats of multinational tariffs and retaliatory tariffs provide uncertainty as to heightened inflation in the domestic markets.

In addition, high levels of employee turnover across the pharmaceutical industry as well as a fewer number of U.S.

drug approvals could create additional uncertainty within our target customer markets.

For example, macroeconomic events including persistent inflation, elevated interest rates maintained by the U.S.

Federal Reserve, ongoing most favored nations (“MFN”) pricing dynamics and ongoing geopolitical conflicts (including the wars in Ukraine and the Middle East) have contributed to sustained economic uncertainty.

The implementation of broad-based U.S.

tariffs and retaliatory tariffs by major trading partners in 2025 and 2026 has further disrupted global supply chains and contributed to renewed inflationary pressure in the domestic markets, which may continue over the next twelve months.

In addition, continued high levels of employee turnover across the pharmaceutical industry, a slower pace of U.S.

drug approvals, and reductions in force and policy shifts at the U.S.

Food and Drug Administration and other federal health agencies over the past year have created additional uncertainty within our target customer markets.

Historically, during periods of economic uncertainty and downturns, businesses may slow spending, which may impact our business and our customers’ businesses.

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As a result of this change, prior periods have been restated for comparative purposes.

Average revenue per top 20 pharmaceutical manufacturer.

Average revenue per top 20 pharmaceutical manufacturers.

Average revenue per top 20 pharmaceutical manufacturer is calculated by taking the total revenue the Company recognized through pharmaceutical manufacturers listed in Fierce Pharma’s “The top 20 pharma companies by 2025 revenue” over the last twelve months, divided by 20, representing the aforementioned pharmaceutical manufacturers highlighted on that list.

The Company uses this metric to monitor its progress in “landing and expanding” with key customers within its largest customer vertical and believe it also provides investors with a transparent way to chart our progress in penetrating this important customer segment.

The increase in the average in the twelve months ended September 30, 2025 as compared to the twelve months ended September 30, 2024 is primarily the result of stronger DTC and DAAP related revenue streams (in thousands).

The decrease in the average of twelve months ended March 31, 2026, as compared to the twelve months ended March 31, 2025, is a result of reduced revenues from the top 20 pharmaceutical manufacturers.

Rolling Twelve Months

Ended September 30,

Average revenue per top 20 pharmaceutical manufacturer $ 3,073 $ 2,874

Ended March 31,

Average revenue per top 20 pharmaceutical manufacturers (in thousands) $ 2,791 $ 2,963

Percent of total revenue attributable to top 20 pharmaceutical manufacturers.

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The Company uses this metric to monitor its progress in “landing and expanding” with key customers within its largest customer vertical and believes it also provides investors with a transparent way to chart our progress in penetrating this important customer segment.

This decrease in our percent of total revenue attributable to top 20 pharmaceutical manufacturers, in conjunction with the increase in average revenue per top 20 pharmaceutical manufacturer discussed above, is reflective of the onboarding and growth of other customers that are not top 20 pharmaceutical manufacturers and not a decrease in our activity with top 20 pharmaceutical manufacturers.

The percent of total revenue attributable to top 20 pharmaceutical manufacturers reflects a combination of a year over year decrease in overall revenue from top 20 pharmaceutical manufacturers and growth in revenue from non-top 20 customers.

Rolling Twelve Months

Ended September 30,

Ended March 31,

Percent of total revenue attributable to top 20 pharmaceutical manufacturers 52 % 63 %

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The Company uses this metric to monitor its ability to improve its penetration with existing customers and believes it also provides investors with a metric to chart our ability to increase our year-over-year penetration and revenue with existing customers.

Net revenue for the period ending September 30, 2024 benefited from the timing of the Medicx Health acquisition, which was consummated on October 12, 2023, as its comparator period (the trailing twelve months ended September 30, 2023) did not have any Medicx Health related revenue.

The period ended September 30, 2025 did not have the same magnitude of inorganic benefit from the Medicx Health acquisition;

however, the Company still retained a 120% net revenue retention in the period as a result of strong organic growth from existing customers.

The decline in net revenue retention for the period ending March 31, 2026, is primarily due to a decline in DTC related managed service revenue and lower revenue from the top 20 pharmaceutical manufacturers.

Rolling Twelve Months

Ended September 30,

Ended March 31,

Net revenue retention 110 % 114 %

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Our revenue rate

per employee increased year over year due to revenue growing at a higher rate than the average number of FTEs over the last 12 month period (in thousands).

per employee increased year over year due to revenue growing at a higher rate than the average number of FTEs over the last 12 month period.

This is reflective of operational efficiencies gained over the previous twelve months.

Rolling Twelve Months

Ended September 30,

Revenue per average full-time employee $ 820 $ 732

Results of Operations for the Three and Nine Months Ended September 30, 2025 and 2024

The following tables set forth, for the periods indicated, the dollar value and percentage of net revenue represented by certain items in our condensed consolidated statements of operations (in thousands):

Three Months Ended September 30,

Net revenue $ 26,067 100.0 % $ 21,309 100.0 %

Cost of revenues 8,551 32.8 % 7,862 36.9 %

Gross profit 17,516 67.2 % 13,447 63.1 %

Operating expenses 15,466 59.3 % 22,009 103.3 %

Income (loss) from operations 2,050 7.9 % (8,562) (40.2) %

Other expenses (1,001) (3.8) % (1,379) (6.5) %

Income (loss) before provision for income taxes 1,049 4.0 % (9,941) (46.7) %

Income tax benefit (expense) (270) (1.0) % 817 3.8 %

Net income (loss) $ 779 3.0 % $ (9,124) (42.8) %

* Balances and percentage of net revenue information may not add due to rounding

Nine Months Ended September 30,

Ended March 31,

Revenue per average full-time employee (in thousands) $ 801 $ 710

Results of Operations for the Three Months Ended March 31, 2026 and 2025

The following tables sets forth, for the periods indicated, the dollar value and percentage of net revenue represented by certain items in our condensed consolidated statements of operations (in thousands):

Three Months Ended March 31,

Net revenue $ 19,844 100.0 % $ 21,928 100.0 %

Cost of revenues 27,695 35.9 % 22,456 37.5 %

Gross profit 49,495 64.1 % 37,355 62.5 %

Operating expenses 46,371 60.1 % 54,695 91.4 %

Expenses 19,448 98.0 % 24,030 109.6 %

Income (loss) from operations 396 2.0 % (2,102) (9.6) %

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Income tax benefit 149 0.8 % 1,073 4.9 %

Net income (loss) $ 112 0.1 % $ (20,032) (33.5) %

Net loss $ (495) (2.5) % $ (2,199) (10.0) %

* Balances and percentage of net revenue information may not add due to rounding

Our net revenue increased 22% to $26,067 for the three months ended September 30, 2025 from $21,309 from the same period in 2024.

Our net revenue increased 29% to $77,190 for the nine months ended September 30, 2025 from $59,811 from the same period in 2024.

The increase in net revenue was a result of the growth of DTC and DAAP related sales.

Cost of Revenues

Our cost of revenues, composed primarily of revenue-share expense paid to our channel partners, increased for the three months ended September 30, 2025 to $8,551 compared to $7,862 for the same period of 2024.

Our cost of revenues as a percentage of revenue decreased to approximately 33% for the three months ended September 30, 2025 from approximately 37% for the three months ended September 30, 2024.

Our cost of revenues increased for the nine months

ended September 30, 2025 to $27,695 compared to $22,456 for the nine months ended September 30, 2024.

Our cost of revenues as a percentage of revenue decreased to approximately 36% for the nine months ended September 30, 2025 from approximately 38% for the nine months ended September 30, 2024.

This improvement in cost of revenues as a percentage of revenues was primarily a result of solution and channel partner mix.

Our gross margin, which is the difference between our revenues and our cost of revenues, divided by our revenues, increased for the three months ended September 30, 2025 and the nine months ended September 30, 2025 compared to the same periods of 2024, primarily due to product and channel partner mix.

Further, the increase in revenue year over year diluted the effect of certain fixed cost of sales on gross margin.

Operating Expenses

Operating expenses decreased to $15,466 for the three months ended September 30, 2025 from $22,009 for the same period in 2024, a decrease of approximately 30%.

For nine months ended September 30, 2025, operating expenses decreased to $46,371 from $54,695 for the nine months ended September 30, 2024, a decrease of approximately 15%.

The detail by major category is reflected in the table below (in thousands).

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

Our net revenue decreased 10% to $19,844 for the three months ended March 31, 2026 from $21,928 from the same period in 2025.

The decrease in net revenue was primarily attributable to a $3,400 decline in revenue from a low-margin managed service program which represented approximately 9.8% of total revenue in 2025.

The Company is no longer actively supporting these types of low-margin managed service contracts.

In addition, the Company did not generate revenue during the current period from a customer that accounted for approximately 10% of total revenue in fiscal 2025.

While the master service agreement with this customer remains in effect, future revenue is uncertain and may be lower than in prior periods.

This decrease is also attributable to some short to intermediate term disruption from prior year Most Favored Nations pricing negotiations and other macroeconomic factors leading to more measured customer spending.

These decreases were partially offset by increased spending from new and existing customers.

Expenses decreased to $19,448 for the three months ended March 31, 2026 from $24,030 for the same period in 2025, a decrease of approximately 19%.

The detail by major category is reflected in the next table (in thousands).

Three Months Ended March 31,

Cost of revenues, exclusive of depreciation and amortization presented separately below $ 4,912 $ 8,584

Sales and marketing 4,729 4,985

General and administrative 3,513 4,557

Research and development 3,402 3,252

Stock-based compensation 1,828 1,558

Depreciation and amortization 1,064 1,094

Goodwill impairment — 7,489 — 7,489

Other general and administrative expenses 12,430 10,821 38,120 35,441

Total operating expenses $ 15,466 $ 22,009 $ 46,371 $ 54,695

Stock-based compensation decreased to $1,956 for the three months ended September 30, 2025 from $2,604 for the three months ended September 30, 2024, and decreased to $5,002 for the nine months ended September 30, 2025 from $8,530 for the nine months ended September 30, 2024.

The decrease in stock-based compensation expense in both periods primarily reflects changes in the Company’s stock price, which affects the grant-date fair value of awards.

The Company’s stock price peaked in 2021, resulting in higher grant-date fair values for awards issued during that period.

These higher-valued awards were generally amortized over a three-year vesting period, which concluded in 2024.

In addition, stock-based compensation expense in the prior year included costs associated with awards granted to the former CEO, which were forfeited as of December 31, 2024.

Depreciation and amortization remained consistent, slightly decreasing at $1,080 for the three months ended September 30, 2025 from $1,095 for the three months ended September 30, 2024, and remained consistent, slightly increasing to $3,249 for the nine months ended September 30, 2025 from $3,235 for the nine months ended September 30, 2024.

The Company did not have a goodwill impairment in the three months ended September 30, 2025, whereas the Company recorded goodwill impairment in the amount of $7,489 in the three months ended September 30, 2024.

This amount represented the excess of the book value of the Company’s equity over the estimated fair value.

Other general and administrative expenses increased to $12,430 for the three months ended September 30, 2025 from $10,821 for the three months ended September 30, 2024, and increased to $38,120 for the nine months ended September 30, 2025 from $35,441 for the nine months ended September 30, 2024.

This increase in both periods is primarily a result of an increase in compensation expense.

The increase reflects higher variable compensation tied to sales achievement and performance-based incentive plans aligned with our operating results.

These increases were partially offset by cost savings realized across various expense categories as a result of ongoing efficiency initiatives.

Total expenses $ 19,448 $ 24,030

Cost of Revenues

Our total cost of revenues, composed primarily of revenue-share expense paid to our channel partners, decreased for the three months ended March 31, 2026 to $4,912 compared to $8,584 for the same period of 2025.

Our cost of revenues as a percentage of revenue decreased to approximately 25% for the three months ended March 31, 2026 from approximately 39% for the three months ended March 31, 2025.

This improvement in our cost of revenues as a percentage of revenues was primarily a result of solution and channel partner mix.

In addition, the prior year period included a large DTC managed service program that operated at lower margins.

This program concluded in the third quarter of 2025 and the Company has since shifted its focus toward higher-margin solutions.

Sales and marketing remained consistent at $4,729 for the three months ended March 31, 2026 from $4,985 for the three months ended March 31, 2025.

General and administrative decreased to $3,513 for the three months ended March 31, 2026 from $4,557 for the three months ended March 31, 2025.

This decrease is primarily a result of cost savings realized across various expense categories as a result of ongoing efficiency initiatives.

Research and development remained consistent at $3,402 for the three months ended March 31, 2026 from $3,252 for the three months ended March 31, 2025.

Stock-based compensation increased to $1,828 for the three months ended March 31, 2026 from $1,558 for the three months ended March 31, 2025.

The increase in stock-based compensation expense primarily reflects changes in the Company’s stock price, which affects the grant-date fair value of awards.

There was also an increase in the quantity of awards granted.

Depreciation and amortization remained consistent at $1,064 for the three months ended March 31, 2026 from $1,094 for the three months ended March 31, 2025.

Other income (expense)

Interest expense decreased to $1,154 for the three months ended September 30, 2025 from $1,524 for the three months ended September 30, 2024, and decreased to $4,053 for the nine months ended September 30, 2025 from $4,597 for the

nine months ended September 30, 2024.

Interest expense represents interest charges on our Term Loan, together with the amortization of the related issuance costs.

The decrease in both periods is primarily a result of the decrease in the interest rate on the Term Loan and a lower average principal balance for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024 and for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024

Interest income decreased to $91 for the three months ended September 30, 2025 from $107 for the three months ended September 30, 2024, and increased to $269 for the nine months ended September 30, 2025 from $231 for the nine months ended September 30, 2024.

The variability in interest income is a result in the fluctuation of interest rates as the balance in the Company's money market account has remained consistent.

Income tax benefit (expense)

Income tax expense was $270, or an effective rate of 25.7%, and income tax benefit was $633, or an effective rate of (121.5)% for the three and nine months ended September 30, 2025, respectively.

Income tax benefit was approximately $817, or an effective rate of 8.2%, and $1,561, or an effective rate of 7.2% for the three and nine months ended September 30, 2024, respectively.

Interest expense decreased to $1,155 for the three months ended March 31, 2026 from $1,297 for the three months ended March 31, 2025 and represents interest charges on our Term Loan, together with the amortization of the related issuance costs.

The decrease is primarily a result of the decrease in the interest rate on the Term Loan and a lower average principal balance for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025.

Interest income decreased to $77 for the three months ended March 31, 2026 from $88 for the three months ended March 31, 2025.

The variability in interest income is a result of the fluctuation in interest rates as the balance in the Company's money market account has remained consistent.

Income tax (expense) benefit

Income tax benefit was approximately $149, or an effective rate of 23.1%, for the three months ended March 31, 2026.

Income tax benefit was approximately $1,073, or an effective rate of 32.8%, for the three months ended March 31, 2025.

For further information, see Part I, Item I.

“ Financial Statements;

Note 13 — Income Taxes in the Condensed Consolidated Financial Statements.

Note 12 — Income Taxes.”

Net income (loss)

We had a net income of approximately $779 for the three months ended September 30, 2025, as compared to a net loss of approximately $(9,124) during the three months ended September 30, 2024 and a net income of approximately $112 for the nine months ended September 30, 2025 as compared to a net loss of $(20,032) for the nine months ended September 30, 2024.

We had a net loss of approximately $(495) for the three months ended March 31, 2026, as compared to a net loss of approximately $(2,199) during the same period in 2025.

The reasons and specific components associated with the change are discussed above.

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In addition, on October 11, 2023, the Company entered into a Term Loan of $40,000 in order to partially fund the acquisition of Medicx Health.

As of September 30, 2025, the total principal balance outstanding on the Term Loan was approximately $28,790 and we were in compliance with all of the financial covenants of the Term Loan.

As of September 30, 2025, we had total current assets of approximately $56,320, compared with current liabilities of approximately $18,466, resulting in working capital of approximately $37,854 and a current ratio of approximately 3.0 to 1.

This represents an increase from our working capital of approximately $35,317 and a consistent current ratio compared to 3.0 to 1 at December 31, 2024.

We believe that funds generated from operations, together with existing cash, will be sufficient to finance our current operations and meet our obligations under the Term Loan for the next twelve (12) months.

As of March 31, 2026, the total principal balance outstanding on the Term Loan was approximately $23,598 and we were in compliance with all of the financial covenants of the Term Loan.

On March 2, 2026, the maturity date of the Term Loan was extended to October 11, 2029.

On May 7, 2026, upon the closing of the

Credit Agreement, the proceeds from the New Term Loan were used to repay our outstanding Term Loan balance and the Financing Agreement was terminated.

As of March 31, 2026, we had total current assets of $56,165, compared with current liabilities of $10,459, resulting in working capital of $45,706 and a current ratio of 5.4 to 1.

This represents a increase from our working capital of $43,451 and an increase from the current ratio of 3.0 to 1 at December 31, 2025.

We believe that funds generated from operations, together with existing cash, will be sufficient to finance our current operations and meet our obligations under the New Term Loan for the next twelve (12) months.

In addition, we believe we can generate the cash needed to operate beyond the next 12 months from operations.

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We currently have an effective shelf registration statement, which allows us to issue, from time to time, up to $75,000 of any combination of our common stock, preferred stock, debt securities, warrants, or units.

Following is a table with summary data from the condensed consolidated statements of cash flows for the nine months ended September 30, 2025 and 2024, as presented (in thousands).

Nine Months Ended September 30,

Net cash provided by operating activities $ 11,627 $ 4,691

On March 5, 2026, the Company announced that its’ Board authorized the repurchase of up to $10,000 of the Company’s outstanding common stock.

Under this new program, share repurchases may be made from time to time depending on market conditions, share price, share availability, and other factors at the Company’s discretion.

This share repurchase authorization was effective on March 12, 2026 and will expire on the earlier of March 15, 2027 or when the repurchase of $10,000 of shares has been reached.

The Company’s repurchase of shares will take place in open market transactions or privately negotiated transactions in accordance with applicable securities and other laws, including the Securities Exchange Act of 1934.

The Company intends to finance the purchase using its available cash and cash equivalents.

The Board may modify, suspend, extend or terminate the repurchase program at any time.

Following is a table with summary data from the condensed consolidated statements of cash flows for the three months ended March 31, 2026 and 2025, as presented (in thousands).

Three Months Ended March 31,

Net cash (used in) provided by operating activities $ (467) $ 3,864

Net cash used in investing activities (21) (84)

Net cash used in financing activities (2,708) (587)

Net increase in cash and cash equivalents $ 6,139 $ 2,274

Our operating activities provided $11,627 during the nine months ended September 30, 2025, compared with $4,691 in the same period in 2024.

The net increase in net cash provided by operating activities was mainly attributable to a $20,144 increase in net income (loss).

This was partially offset by a $3,528 decrease in noncash expense related to stock based compensation, a $3,810 decrease in cash flows from accounts receivable and a $3,037 decrease in cash flows from taxes receivable and payable.

Investing activities used $138 during the nine months ended September 30, 2025, compared with $330 in the same period in 2024.

Net (decrease) increase in cash and cash equivalents $ (3,196) $ 3,193

Our operating activities used $467 during the three months ended March 31, 2026, compared with operating activities provided $3,864 in the same period in 2025.

The net increase in net cash (used in) provided by operating activities was mainly attributable to a $8,843 increase in cash flows from accrued expenses and other liabilities due to the payout of the prior year variable compensation in the three months ended March 31, 2026.

This was partially offset by a $1,704 decrease in net loss, a $1,179 decrease in cash flows from revenue share payable, a $655 decrease in cash flows from deferred tax liabilities and a $312 decrease in cash flows from taxes receivable and payable.

Investing activities used $21 for the three months ended March 31, 2026, compared with $84 in the same period in 2025.

The decrease in net cash used in investing activities was mainly attributed to a decrease in capitalization of internally developed software.

Financing activities used $5,350 during the nine months ended September 30, 2025, compared with $2,087 in the same period in 2024.

The increase in net cash used for financing activities was primarily related to the increase in repayments of long-term debt partially offset by a decrease in payments of withholding taxes on behalf of employees vesting in restricted stock units and an increase in the receipt of funds from the exercise of stock options.

Financing activities used $2,708 during the three months ended March 31, 2026, compared with $587 in the same period in 2025.

The increase in net cash used for financing activities was primarily related to the repayment of long-term debt.

Critical Accounting Estimates

We prepare our condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”).

We prepare our condensed consolidated financial statements in conformity with U.S.

The preparation of these financial statements requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the periods presented.

Actual results could differ from those estimates and assumptions.

The following areas all require the use of subjective or complex judgments, estimates or assumptions:

the allowance for credit losses, carrying value of assets, fair values assigned to acquired long-lived assets, depreciable and amortizable lives of tangible and intangible assets, the carrying value of liabilities, the valuation allowance for deferred tax assets, the timing of revenue recognition and related revenue-share expenses, and inputs used in the calculation of stock-based compensation.

Our significant accounting policies are described in Note 2 to the Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2024 (2024 Annual Report on Form 10-K).

Our significant accounting policies are described in Part II, Item 8.

“Financial Statements and Supplementary Data;

Note 2 - Summary of Significant Accounting Policies” in our Annual Report on Form 10-K for the year ended December 31, 2025.

The accounting policies we used in preparing these financial statements are substantially consistent with those we applied in our 2025 Annual Report on Form 10-K.

Our critical accounting estimates are described in Management’s Discussion and Analysis included in the 2024 Annual Report on Form 10-K.

Our critical accounting estimates are described in Management’s Discussion and Analysis included in our 2025 Annual Report on Form 10-K.

Recently Issued Accounting Pronouncements

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

2023-09 (“ASU 2023-09”), Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

ASU 2023-09 addresses investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information.

This update also includes certain other amendments to improve the effectiveness of income tax disclosures.

The provisions of ASU 2023-09 are effective for annual periods beginning after December 15, 2024, with early adoption permitted.

We are currently evaluating the impact of adopting ASU 2023-09.

expect to adopt ASU 2023-09 for the annual period ending December 31, 2025, and the adoption will not materially affect our financial position or our results of operations, but the Company expects the adoption to result in additional disclosures.

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

ASU 2024-03 requires that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods.

The prescribed categories include purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depletion.

This authoritative guidance is effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027, with early adoption permitted.

The Company is currently evaluating the effect of this new guidance on its consolidated financial statements.

In July 2025, the FASB issued ASU No.

2025-05 (“ASU 2025-05”), ASU No.

2025-05, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets.

ASU 2025-05 provides (1) all entities with a practical expedient and (2) entities other than public business entities, with an accounting policy election when estimating credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606.

This authoritative guidance is effective for annual periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted.

We are currently evaluating the impact of adopting ASU 2025-05.

In September 2025, the FASB issued ASU No.

2025-06 (“ASU 2025-06”), ASU No.

2025-06, Intangibles—Goodwill and Other — Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software.

ASU 2025-06 updates the cost capitalization threshold for internal-use software development costs by removing all references to software project development stages and providing new guidance on how to evaluate whether the probable-to-complete recognition threshold has been met.

This authoritative guidance is effective for annual periods beginning after December 15, 2027, and interim periods within those annual reporting periods.

The Company is currently evaluating the effect of this new guidance on its consolidated financial statements.

See Part I, Item I.

“ Financial Statements;

Note 2 — Recently Issued Accounting Pronouncements” for information on recently adopted accounting standards and new accounting pronouncements issued.

Off Balance Sheet Arrangements

From time to time, the Company enters into arrangements with channel partners to acquire minimum amounts of media, data or messaging capabilities.

As of September 30, 2025, the Company had commitments with channel partners for future minimum payments of $9,609 that will be reflected in cost of revenues during the remainder of 2025 and years from 2026 through 2029.

As of March 31, 2026, the Company had commitments with channel partners for future minimum payments of $31,293 that will be reflected in cost of revenues during the remainder of 2026 and years from 2027 through 2030.

See Part I, Item 2.

“Financial Statements;

Note 12 – Commitments and Contingencies.

Note 11 – Commitments and Contingent Liabilities.”

Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

Not applicable to smaller reporting companies.

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-Q

Item 2. Management’s Discussion and Analysis