What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-05-06 compared with 2024-11-05 · 94 added, 151 removed, 287 unchanged (46% of the section changed)

24 unchanged sentences

Many of our customer contracts contain termination for convenience provisions.

For the three months ended September 30, 2024, we generated $725.5 million in revenue, reflecting a 30% growth rate from the three months ended September 30, 2023, when we generated $558.2 million in revenue.

For the nine months ended September 30, 2024, we generated $2.0 billion in revenue, reflecting a 26% growth rate from the nine months ended September 30, 2023, when we generated $1.6 billion in revenue.

In the three months ended September 30, 2024, we generated income from operations of $113.1 million, or adjusted income from operations of $275.5 million when excluding stock-based compensation and related employer payroll taxes.

In the three months ended September 30, 2023, we generated income from operations of $40.0 million, or adjusted income from operations of $163.3 million when excluding stock-based compensation and related employer payroll taxes.

In the nine months ended September 30, 2024, we generated income from operations of $299.4 million, or adjusted income from operations of $755.5 million when excluding stock-based compensation and related employer payroll taxes.

In the nine months ended September 30, 2023, we generated income from operations of $54.2 million, or adjusted income from operations of $423.4 million when excluding stock-based compensation and related employer payroll taxes.

In the three months ended September 30, 2024, our gross profit was $578.9 million, reflecting a gross margin of 80%, or 82% when excluding stock-based compensation.

In the three months ended September 30, 2023, our gross profit was $450.2 million, reflecting a gross margin of 81%, or 82% when excluding stock-based compensation.

In the nine months ended September 30, 2024, our gross profit was $1.6 billion, reflecting a gross margin of 81%, or 83% when excluding stock-based compensation.

In the nine months ended September 30, 2023, our gross profit was $1.3 billion, reflecting a gross margin of 80%, or 82% when excluding stock-based compensation.

For the three months ended March 31, 2025, we generated $883.9 million in revenue, reflecting a 39% growth rate from the three months ended March 31, 2024, when we generated $634.3 million in revenue.

In the three months ended March 31, 2025, we generated income from operations of $176.0 million, or adjusted income from operations of $390.7 million when excluding stock-based compensation and related employer payroll taxes.

In the three months

ended March 31, 2024, we generated income from operations of $80.9 million, or adjusted income from operations of $226.5 million when excluding stock-based compensation and related employer payroll taxes.

In the three months ended March 31, 2025, our gross profit was $710.9 million, reflecting a gross margin of 80%, or 82% when excluding stock-based compensation.

In the three months ended March 31, 2024, our gross profit was $518.1 million, reflecting a gross margin of 82%, or 83% when excluding stock-based compensation.

For more information about our adjusted income from operations, which excludes stock-based compensation and related employer payroll taxes;

3 unchanged sentences

We define a customer as an organization from which we have recognized revenue during the trailing twelve-month period.

During the period ended September 30, 2024, we had 629 customers, including companies in various commercial sectors and government agencies around the world.

During the period ended September 30, 2023, we had 453 customers.

During the period ended March 31, 2025, we had 769 customers, including companies in various commercial sectors and government agencies around the world.

During the period ended March 31, 2024, we had 554 customers.

For large government agencies, where a single institution has multiple divisions, units, or subsidiary agencies, each such division, unit, or subsidiary agency that enters into a separate contract with us and is invoiced as a separate entity is treated as a separate customer.

1 unchanged sentence

Food and Drug Administration, Centers for Disease Control and Prevention, and National Institutes of Health are subsidiary agencies of the U.S.

Department of Health and Human Services, we treat each of those agencies as a separate customer given that the governing structures and/or procurement processes of each agency are independent.

Department of Health and Human Services, we treat each of those agencies as a separate customer given that the governing structures and procurement processes of each agency are independent.

We have built lasting and significant customer relationships and partnerships with some of the world’s leading government institutions and companies.

Our average revenue for the top twenty customers during the trailing twelve months ended September 30, 2024 was $60.1 million, which grew 12% from an average of $53.7 million in revenue from the top twenty customers during the trailing twelve months ended September 30, 2023, demonstrating our expanding relationships with existing customers.

Our average revenue for the top twenty customers during the trailing twelve months ended March 31, 2025 was $69.9 million, which grew 26% from an average of $55.5 million in revenue from the top twenty customers during the trailing twelve months ended March 31, 2024, demonstrating our expanding relationships with existing customers.

Organizations in the commercial and government sectors face similar challenges when it comes to managing data, and we intend to expand our reach in both markets moving forward.

2 unchanged sentences

We manage customers at the account level, not by industry or sector, so that we can optimize on the specific growth opportunities for each customer.

In the nine months ended September 30, 2024, 55% of our revenue came from government customers and 45% came from commercial customers.

In the three months ended March 31, 2025, 55% of our revenue came from government customers and 45% came from commercial customers.

customers have been a meaningful source of revenue growth for our business.

In the nine months ended September 30, 2024, we generated 66% of our revenue from customers in the United States and the remaining 34% from non-U.S.

In the three months ended March 31, 2025, we generated 71% of our revenue from customers in the United States and the remaining 29% from non-U.S.

Revenue from our U.S.

customers during the trailing twelve months ended September 30, 2024 was $1.7 billion, which grew 30% from the prior twelve-month period.

customers during the trailing twelve months ended March 31, 2025 was $2.1 billion, which grew 47% from the prior twelve-month period.

We expect that U.S.

customers will continue to be a source of significant revenue growth for us.

We continue to believe that our government customers remain a meaningful and resilient source of revenue for our business, particularly during periods of economic uncertainty.

We continue to believe that our government customers remain a meaningful source of revenue for our business, particularly during periods of economic uncertainty.

However, large government customers, in particular, are generally subject to a number of uncertainties regarding budgets and spending levels, changes in timing and spending priorities, and regulatory and policy changes, which can make it difficult to predict when, or if, we will make sales to such customers or the size and scope of any contract awards.

7 unchanged sentences

Macroeconomic Trends

As a corporation with an international presence, we are subject to risks and uncertainties caused by significant events with macroeconomic impacts, including, but not limited to, geopolitical tensions, heightened interest rates, monetary policy changes,and foreign currency fluctuations.

Additionally, these macroeconomic impacts have disrupted, and may continue to disrupt, the operations of our customers and prospective customers.

4 unchanged sentences

We continue to closely monitor the impact of various geopolitical tensions and their global impacts on our business.

While the ongoing Russia-Ukraine and Israel conflicts are still evolving and the outcomes remain highly uncertain, we do not expect that the resulting challenging macroeconomic conditions will have a material impact on our business or results of operations.

While the ongoing Russia-Ukraine, and Israel and broader Middle East conflicts are still evolving and the outcomes remain highly uncertain, we do not expect that the resulting challenging macroeconomic conditions will have a material impact on our business or results of operations.

We do not currently have office locations in Russia or Palestinian territories and none of our revenues came from sales to entities headquartered in those countries or territories.

In 2023, we announced partnerships with Ukraine to support its defense and reconstruction efforts and investigations of potential war crimes, among other activities.

In 2024, we agreed to a strategic partnership with the Israeli Defense Ministry to supply technology to Israel to assist in the ongoing war.

However, our current operations related to Ukraine and Israel are not material to our financial position or results of operations.

Our current operations related to Ukraine and Israel are not material to our financial position or results of operations.

If the respective conflicts continue or worsen, leading to greater disruptions and uncertainty within the technology industry or global economy, our business and results of operations could be negatively impacted.

2 unchanged sentences

Our contracts with customers and vendors are primarily denominated in U.S.

However, the general strengthening of the U.S.

dollar relative to other major foreign currencies (primarily the Euro and British pound sterling (“GBP”)) has had, and could in the future have, an unfavorable impact on our revenues and expenses from certain non-U.S.

customers or vendors whose contracts are denominated in currencies other than U.S.

However, when the U.S.

dollar strengthens compared to other major foreign currencies (primarily the Euro and British pound sterling (“GBP”)), it has had, and could in the future have, an unfavorable impact on our revenues and expenses from certain non-U.S.

customers or vendors whose contracts are denominated in currencies other than the U.S.

Additionally, certain of our U.S.

subsidiaries may hold monetary assets and liabilities in currencies other than their functional currency (primarily the Japanese Yen (“JPY”), Euro, and GBP), which could subject our results of operations and cash flows to adverse fluctuations due to changes in such foreign currency exchange rates as compared to the U.S.

For the nine months ended September 30, 2024 such impacts were not material to our financial position or results of operations.

For the three months ended March 31, 2025 such impacts were not material to our financial position or results of operations.

Customer Impacts

Current macroeconomic conditions have impacted, and may continue to adversely impact, our customers’ businesses, particularly our early- and growth-stage customers.

Relationships with early- or growth-stage customers carry inherent risks because, among other things, such customers may be unable to generate sufficient revenues or profitability or to access any necessary financing or funding in a timely manner or on favorable terms to them in the current macroeconomic environment, which has impacted, and may continue to impact, our expected revenue and collections.

As a result, current macroeconomic conditions have impacted, and may continue to impact, our ability to realize the full value of our commercial contracts with such early- or growth-stage customers.

For additional information, see Note 4.

Investments and Fair Value Measurements in the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Current macroeconomic conditions have impacted, and may continue to adversely impact, our customers’ businesses.

If the economic uncertainty continues, we may experience additional negative impacts on new customer acquisition, customer renewals, and customer collections, among other things, which could negatively impact our business and results of operations.

Key Business Measure

6 unchanged sentences

Our software engineers working with existing customers often manage the deployment and operation of our platforms as well as identify new ways that those platforms can be used.

To calculate the contribution by segment, we allocate cost of revenue and sales and marketing expenses, excluding stock-based compensation, to an account pro rata based on headcount and time spent on the account during the period.

calculate the contribution by segment, we allocate cost of revenue and sales and marketing expenses, excluding stock-based compensation, to an account pro rata based on headcount and time spent on the account during the period.

To the extent certain costs or personnel are not directly assigned to a specific account, they are allocated pro rata based on total headcount staffed during such period.

24 unchanged sentences

Contribution Margin

The following table provides a reconciliation of contribution margin for the three and nine months ended September 30, 2024 and 2023 (in thousands, except percentages):

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

The following table provides a reconciliation of contribution margin for the three months ended March 31, 2025 and 2024 (in thousands, except percentages):

Three Months Ended March 31,

Income from operations $ 176,048 $ 80,881

8 unchanged sentences

Gross Profit and Gross Margin, Excluding Stock-Based Compensation

The following table provides a reconciliation of gross profit and gross margin, excluding stock-based compensation for the three and nine months ended September 30, 2024 and 2023 (in thousands, except percentages):

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

The following table provides a reconciliation of gross profit and gross margin, excluding stock-based compensation for the three months ended March 31, 2025 and 2024 (in thousands, except percentages):

Three Months Ended March 31,

Gross profit $ 710,885 $ 518,082

3 unchanged sentences

Adjusted Income from Operations

The following table provides a reconciliation of adjusted income from operations, which excludes stock-based compensation and related employer payroll taxes for the three and nine months ended September 30, 2024 and 2023 (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

The following table provides a reconciliation of adjusted income from operations, which excludes stock-based compensation and related employer payroll taxes for the three months ended March 31, 2025 and 2024 (in thousands):

Three Months Ended March 31,

Income from operations $ 176,048 $ 80,881

2 unchanged sentences

Adjusted income from operations $ 390,710 $ 226,458

Adjusted operating margin 44 % 36 %

Components of Results of Operations

3 unchanged sentences

We agree to provide continuous access to our hosted software throughout the contract term.

Revenue associated with Palantir Cloud subscriptions is generally recognized over the contract term on a ratable basis, which is consistent with the transfer of control of the Palantir services to the customer.

Revenue associated with Palantir Cloud subscriptions is

generally recognized over the contract term on a ratable basis, which is consistent with the transfer of control of the Palantir services to the customer.

On-Premises Software

Sales of our software subscriptions grant customers the right to use functional intellectual property, either on their internal hardware infrastructure or on their own cloud instance, over the contractual term and are also sold together with stand-ready O&M services.

Sales of our software licenses, primarily term licenses, grant customers the right to use functional intellectual property, either on their internal hardware infrastructure or on their own cloud instance, over the contractual term and are also sold together with stand-ready O&M services.

O&M services include critical updates and support and maintenance services required to operate the software and, as such, are necessary for the software to maintain its intended utility over the contractual term.

Because of this requirement, we have concluded that the software subscriptions and O&M services, which together we refer to as our On-Premises Software, are highly interdependent and interrelated and represent a single distinct performance obligation within the context of the contract.

Because of this requirement, we have concluded that the software licenses and O&M services, which together we refer to as our On-Premises Software, are highly interdependent and interrelated and represent a single distinct performance obligation within the context of the contract.

Revenue is generally recognized over the contract term on a ratable basis.

1 unchanged sentence

Our professional services support the customers’ use of the software and include, as needed, on-demand user support, user-interface configuration, training, and ongoing ontology and data modeling support.

Professional services contracts typically include the provision of on-demand professional services for the duration of the contractual term.

These services are typically coterminous with a Palantir Cloud or On-Premises Software subscriptions.

Professional services are on-demand, whereby we perform services throughout the contract period;

therefore, the revenue is recognized over the contractual term.

Professional services contracts typically include the provision of on-demand professional services for the duration of the contractual term, which may be coterminous or non-coterminous with a Palantir Cloud subscription or the On-Premises Software.

Professional services are on-demand, whereby we perform services throughout the service period;

therefore, the revenue is recognized over the related term.

Cost of Revenue

42 unchanged sentences

The following table summarizes our condensed consolidated statements of operations data (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Revenue $ 883,855 $ 634,338

15 unchanged sentences

The following table sets forth the components of our condensed consolidated statements of operations data as a percentage of revenue:

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Revenue 100 % 100 %

14 unchanged sentences

Net income attributable to common stockholders 24 % 17 %

Comparison of the Three and Nine Months Ended Months Ended September 30, 2024 and 2023

Three Months Ended

September 30, Change Nine Months Ended

September 30, Change

2024 2023 Amount % 2024 2023 Amount %

Comparison of the Three Months Ended March 31, 2025 and 2024

Three Months Ended March 31, Change

2025 2024 Amount %

Government $ 486,963 $ 335,373 $ 151,590 45 %

1 unchanged sentence

Total revenue $ 883,855 $ 634,338 $ 249,517 39 %

Revenue increased by $167.4 million, or 30%, for the three months ended September 30, 2024 compared to the same period in 2023.

Revenue from government customers increased by $100.7 million, or 33%, for the three months ended September 30, 2024 compared to the same period in 2023.

Of the increase, $74.9 million was from government customers existing as of December 31, 2023.

Revenue from U.S.

government customers was $319.8 million for the three months ended September 30, 2024 compared to $229.2 million for the same period in 2023.

Revenue from commercial customers increased by $66.6 million or 27%, for the three months ended September 30, 2024 compared to the same period in 2023.

Of the increase, $47.9 million was from commercial customers existing as of December 31, 2023, including a decrease of $5.0 million of revenue from Strategic Commercial Contracts.

Revenue from U.S.

commercial customers was $179.2 million for the three months ended September 30, 2024 compared to $116.3 million for the same period in 2023, a 54% increase.

Revenue increased by $421.3 million, or 26%, for the nine months ended September 30, 2024 compared to the same period in 2023.

Revenue from government customers increased by $216.3 million, or 24%, for the nine months ended September 30, 2024 compared to the same period in 2023.

Revenue increased by $249.5 million, or 39%, for the three months ended March 31, 2025 compared to the same period in 2024.

Revenue from government customers increased by $151.6 million, or 45%, for the three months ended March 31, 2025 compared to the same period in 2024.

Of the increase, $148.7 million was from government customers existing as of December 31, 2024.

Revenue from U.S.

government customers was $854.5 million for the nine months ended September 30, 2024 compared to $684.0 million for the same period in 2023.

Revenue from commercial customers increased by $205.0 million, or 29%, for the nine months ended September 30, 2024 compared to the same period in 2023.

government customers was $373.0 million for the three months ended March 31, 2025 compared to $256.7 million for the same period in 2024.

Revenue from commercial customers increased by $97.9 million, or 33%, for the three months ended March 31, 2025 compared to the same period in 2024.

Of the increase, $73.3 million was from commercial customers existing as of December 31, 2024, including a decrease of $18.7 million of revenue from Strategic Commercial Contracts.

Revenue from U.S.

commercial customers was $488.1 million for the nine months ended September 30, 2024 compared to $326.3 million for the same period in 2023, a 50% increase.

commercial customers was $255.5 million for the three months ended March 31, 2025 compared to $149.7 million for the same period in 2024, a 71% increase.

Generally, increases in revenue from our existing customers are related to increased adoption of our products and services within their organizations.

2 unchanged sentences

Cost of Revenue and Gross Profit

Three Months Ended

September 30, Change Nine Months Ended

September 30, Change

2024 2023 Amount % 2024 2023 Amount %

Three Months Ended March 31, Change

2025 2024 Amount %

Cost of revenue $ 172,970 $ 116,256 $ 56,714 49 %

1 unchanged sentence

Gross margin 80 % 82 % (2) %

Cost of revenue for the three months ended September 30, 2024 increased by $38.7 million compared to the same period in 2023.

The increase was primarily due to increases of $20.1 million in subcontractor expenses, $8.8 million in third-party cloud hosting services, and $6.2 million in stock-based compensation and related expenses.

Our gross margin for the three months ended September 30, 2024 decreased from 81% for the same period in 2023 to 80% as a result of the growth of cost of revenue slightly outpacing revenue growth.

Cost of revenue for the nine months ended September 30, 2024 increased by $69.0 million, or 21%, compared to the same period in 2023.

The increase was primarily due to increases of $39.7 million in subcontractor expenses, $29.7 million in third-party cloud hosting services, and $13.5 million in stock-based compensation and related expenses.

These increases were partially offset by a decrease of $11.0 million in field service representatives.

Our gross margin for the nine months ended September 30, 2024 increased from 80% for the same period in 2023 to 81% as a result of the growth of revenue slightly outpacing cost of revenue growth.

Cost of revenue for the three months ended March 31, 2025 increased by $56.7 million, or 49%, compared to the same period in 2024.

The increase was primarily due to increases of $17.6 million in subcontractor and field service representatives expenses, $13.7 million in third-party cloud hosting services, and $11.5 million in stock-based compensation expense and related expenses.

Our gross margin for the three months ended March 31, 2025 decreased from 82% for the same period in 2024 to 80% as a result of cost of revenue growth outpacing revenue growth.

For additional information related to stock-based compensation expense, see the section titled “Stock-Based Compensation” below.

Operating Expenses

Three Months Ended

September 30, Change Nine Months Ended

September 30, Change

2024 2023 Amount % 2024 2023 Amount %

Three Months Ended March 31, Change

2025 2024 Amount %

Sales and marketing $ 236,309 $ 193,177 $ 43,132 22 %

3 unchanged sentences

Sales and Marketing

Sales and marketing expenses increased by $33.1 million, or 19%, for the three months ended September 30, 2024 compared to the same period in 2023.

The increase was primarily due to increases of $16.4 million in stock-based compensation and related expenses and $7.2 million in payroll and other payroll-related costs.

Sales and marketing expenses increased by $51.8 million, or 9%, for the nine months ended September 30, 2024 compared to the same period in 2023.

The increase was primarily due to increases of $31.6 million in stock-based compensation and related expenses and $10.6 million in third-party cloud hosting services.

Sales and marketing expenses increased by $43.1 million, or 22%, for the three months ended March 31, 2025 compared to the same period in 2024.

The increase was primarily due to increases of $22.9 million in stock-based compensation expense and related expenses and $7.8 million in payroll and other payroll-related costs.

For additional information related to stock-based compensation expense, see the section titled “Stock-Based Compensation” below.

Research and Development

Research and development expenses increased by $11.8 million, or 11%, for the three months ended September 30, 2024 compared to the same period in 2023.

The increase was primarily due to an increase of $11.0 million in stock-based compensation and related expenses.

Research and development expenses increased by $41.0 million, or 14%, for the nine months ended September 30, 2024 compared to the same period in 2023.

The increase was primarily due to increases of $27.5 million in stock-based compensation and related expenses and $12.5 million in third-party cloud hosting services.

Research and development expenses increased by $24.8 million, or 23%, for the three months ended March 31, 2025 compared to the same period in 2024.

The increase was primarily due to increases of $13.5 million in stock-based compensation expense and related expenses and $4.0 million in payroll and other payroll-related costs.

For additional information related to stock-based compensation expense, see the section titled “Stock-Based Compensation” below.

General and Administrative

General and administrative expenses increased by $10.5 million, or 8%, for the three months ended September 30, 2024 compared to the same period in 2023.

The increase was primarily due to increases of $5.5 million in stock-based compensation and related expenses and $5.1 million in travel costs.

General and administrative expenses increased by $14.3 million, or 4%, for the nine months ended September 30, 2024 compared to the same period in 2023.

The increase was primarily due to increases of $14.3 million in stock-based compensation and related expenses, and $8.6 million in travel costs.

These increases were partially offset by a decrease of $9.4 million to our allowance for credit losses.

General and administrative expenses increased by $29.7 million, or 22%, for the three months ended March 31, 2025 compared to the same period in 2024.

The increase was primarily due to an increase of $21.1 million in stock-based compensation expense and related expenses.

For additional information related to stock-based compensation expense, see the section titled “Stock-Based Compensation” below.

Stock-Based Compensation

Three Months Ended

September 30, Change Nine Months Ended

September 30, Change

2024 2023 Amount % 2024 2023 Amount %

Three Months Ended March 31, Change

2025 2024 Amount %

Cost of revenue $ 15,016 $ 10,416 $ 4,600 44 %

3 unchanged sentences

Total stock-based compensation expense $ 155,339 $ 125,651 $ 29,688 24 %

Stock-based compensation expenses increased by $28.0 million and $66.5 million, or 25% and 19%, for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023.

The increase was driven by expense from new grants awarded since September 30, 2023, including restricted stock units (“RSUs”), performance-based RSUs (“P-RSUs”), and stock appreciation rights (“SARs”), partially offset by a reduction in expense from equity awards that became fully vested, forfeitures, and lower expense under the accelerated attribution method for RSUs granted prior to September 30, 2020, the date we completed the direct listing of our Class A common stock on the New York Stock Exchange (“NYSE”).

Stock-based compensation expenses increased by $29.7 million, or 24%, for the three months ended March 31, 2025 compared to the same period in 2024.

The increase was driven by expense from new grants awarded since March 31, 2024, including restricted stock units (“RSUs”), performance-based RSUs (“P-RSUs”), and stock appreciation rights (“SARs’), partially offset by reductions in expense from equity awards that became fully vested and forfeitures.

Interest Income

Three Months Ended

September 30, Change Nine Months Ended

September 30, Change

2024 2023 Amount 2024 2023 Amount

Three Months Ended March 31, Change

2025 2024 Amount

Interest income $ 50,441 $ 43,352 $ 7,089

Interest income increased by $15.3 million and $54.0 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023 primarily due to an increase in our interest-bearing cash, cash equivalents, and our investments in short-term U.S.

Interest income increased by $7.1 million for the three months ended March 31, 2025 compared to the same period in 2024 primarily due to an increase in our interest-bearing cash, cash equivalents, and investments in short-term U.S.

Treasury securities.

Other Income (Expense), Net

Three Months Ended

September 30, Change Nine Months Ended

September 30, Change

2024 2023 Amount 2024 2023 Amount

Three Months Ended March 31, Change

2025 2024 Amount

Other income (expense), net $ (3,173) $ (13,507) $ 10,334

Other income (expense), net changed by $11.2 million and $21.4 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023 primarily due to an increase in net realized and unrealized losses from our shares held in equity securities.

Other income (expense), net changed by $10.3 million for the three months ended March 31, 2025 compared to the same period in 2024 primarily due to favorable changes in foreign currency exchange gains and losses and upward adjustments related to privately-held equity securities.

Provision for Income Taxes

Three Months Ended

September 30, Change Nine Months Ended

September 30, Change

2024 2023 Amount 2024 2023 Amount

Three Months Ended March 31, Change

2025 2024 Amount

Provision for income taxes $ 5,599 $ 4,655 $ 944

Provision for income taxes increased by $1.3 million and $7.3 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023 primarily due to increased foreign tax expense as the result of higher foreign taxable income and withholding taxes.

Provision for income taxes increased by an immaterial amount for the three months ended March 31, 2025 compared to the same period in 2024.

For additional information see Note 10.

Income Taxes in our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Liquidity and Capital Resources

We generated positive cash flow from operations for the nine months ended September 30, 2024.

We generated positive cash flow from operations for the three months ended March 31, 2025.

We had cash, cash equivalents, and short-term U.S.

Treasury securities totaling $4.6 billion available as of September 30, 2024.

We believe that cash flows generated from operations, available funds, and access to financing sources, including our undrawn credit facility,

will be sufficient to meet our anticipated operating cash needs for at least the next twelve months.

However, any projections of future cash needs and cash flows are subject to substantial uncertainty.

While we have generated income from operations and positive cash flows from operations for the nine months ended September 30, 2024, the amounts may fluctuate for the foreseeable future.

As of September 30, 2024, our accumulated deficit balance was $5.3 billion, and our principal sources of liquidity were cash, cash equivalents, and short-term U.S.

Treasury securities totaling $5.4 billion available as of March 31, 2025.

We believe that we have sufficient liquidity to meet our operating requirements for at least the next twelve months and thereafter for the foreseeable future.

We continue to evaluate our liquidity and capital resources, including our access to external capital, to ensure we can finance future capital requirements.

As of March 31, 2025, our accumulated deficit balance was $5.0 billion, and our principal sources of liquidity were cash, cash equivalents, and short-term U.S.

Treasury securities totaling $5.4 billion.

As of September 30, 2024, we had no outstanding debt balances and additional available and undrawn revolving commitments of $500.0 million under our credit facility.

As of March 31, 2025, we had no outstanding debt balances and additional available and undrawn revolving commitments of $500.0 million under our credit facility.

For more information, see Note 6.

Debt in our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

In August 2023, the Company’s Board of Directors authorized a stock repurchase program of up to $1.0 billion of the Company’s outstanding shares of Class A common stock (the “Share Repurchase Program”).

For additional information on our Share Repurchase Program, see Note 8.

Stockholders’ Equity in our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

During the nine months ended September 30, 2024, the Company repurchased and subsequently retired 1.8 million shares of its Class A common stock for an aggregate amount, including commissions, of $45.6 million under the Share Repurchase Program.

As of September 30, 2024, approximately $954.4 million of the originally authorized amount under the Share Repurchase Program remained available for future repurchases.

In August 2023, our Board of Directors authorized a stock repurchase program of up to $1.0 billion of our outstanding shares of Class A common stock (the “Share Repurchase Program”).

During the three months ended March 31, 2025, the Company repurchased and subsequently retired 0.2 million shares of its Class A common stock for an aggregate amount, including commissions, of $18.0 million under the Share Repurchase Program.

As of March 31, 2025, approximately $917.8 million of the originally authorized amount under our Share Repurchase Program remained available for future repurchases.

Our future capital requirements will depend on many factors, including, but not limited to, the rate of our growth, our ability to attract and retain customers and their willingness and ability to pay for our products and services, and the timing and extent of spending to support our efforts to market and develop our products.

7 unchanged sentences

The following table summarizes our cash flows for the periods indicated (in thousands):

Nine Months Ended

September 30,

Three Months Ended March 31,

Net cash provided by (used in):

3 unchanged sentences

Effect of foreign exchange on cash, cash equivalents, and restricted cash

3,980 (4,024)

Net decrease in cash, cash equivalents, and restricted cash

1 unchanged sentence

Operating Activities

Net cash provided by operating activities was $693.5 million and $411.0 million for the nine months ended September 30, 2024 and 2023, respectively.

The increase was primarily driven by the growth of our business and timing of the receipt of payments from our customers and timing of payments to vendors.

Net cash provided by operating activities was $310.3 million and $129.6 million for the three months ended March 31, 2025 and 2024, respectively.

The increase was primarily driven by revenue growth partially offset by timing of payments received from customers.

Investing Activities

Net cash used in investing activities was $980.8 million and $2.1 billion for the nine months ended September 30, 2024 and 2023, respectively.

The decrease in cash used in investing activities was primarily due to fewer purchases of marketable securities, primarily comprised of U.S.

Net cash used in investing activities was $1.4 billion and $511.2 million for the three months ended March 31, 2025 and 2024, respectively.

The increase in cash used in investing activities was primarily due to increased purchases of short-term U.S.

Treasury securities compared to the prior year.

Financing Activities

Net cash provided by financing activities was $224.7 million and $167.6 million for the nine months ended September 30, 2024 and 2023, respectively, each of which primarily consisted of proceeds from the exercise of common stock options.

Net cash used in financing activities was $28.9 million for the three months ended March 31, 2025 and net cash provided by financing activities was $75.2 million for the three months ended March 31, 2024.

Financing cash inflows consisted primarily of proceeds from the exercise of common stock options.

Financing cash outflows were driven by taxes paid related to the net share settlement of SARs and repurchases of our Class A common stock.

Contractual Obligations and Commitments

17 unchanged sentences

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