Rapid7, Inc. 10-K

Item 8. Financial Statements and Supplementary Data. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Statements: Report of Independent Registered Public Accounting Firm ( KPMG LLP , Boston, MA , Auditor Firm: 185 ) 57 Consolidated Balance Sheets 59 Consolidated Statements of Operations 60 Consolidated Statements of Comprehensive Income (Loss) 61 Consolidated Statements of Changes in Stockholders' Equity (Deficit) 62 Consolidated Statements of Cash Flows 63 Notes to Consolidated Financial Statements 64 56 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and Board of Directors Rapid7, Inc.: Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting We have audited the accompanying consolidated balance sheets of Rapid7, Inc. and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity (deficit), and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Basis for Opinions The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. 57 Table of Contents Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Sufficiency of audit evidence over products revenue As discussed in Note 2 to the consolidated financial statements, the Company derives revenue primarily from product subscriptions revenue which consists of cloud-based subscriptions, managed services, term software licenses, content subscriptions and maintenance and support associated with its software licenses. For the year ended December 31, 2025, the Company recorded revenue of $860 million, which includes product subscriptions revenue of $831 million. The Company has high volumes of transactions and the processing and recording of the related product subscriptions revenue is reliant upon the Company’s information technology (IT) system. We identified the evaluation of the sufficiency of audit evidence over product subscriptions revenue as a critical audit matter. Subjective auditor judgment was required to determine the nature and extent of procedures performed over the processing and recording of product subscriptions revenue because the revenue recognition process is highly automated. Additionally, specialized skills and knowledge were required to test the IT system used for the processing and recording of product subscriptions revenue. The following are the primary procedures we performed to address this critical audit matter. We applied auditor judgment to determine the nature and extent of procedures to be performed over the processing and recording of product subscriptions revenue, including the related IT system. We evaluated the design and tested the operating effectiveness of certain internal controls related to the processing and recording of product subscriptions revenue. We involved IT professionals with specialized skills and knowledge, who assisted in evaluating the design and testing the operating effectiveness of certain general IT and application controls. We performed a software-assisted data analysis to test the relationships among certain revenue transactions during the year. For a sample of product subscriptions revenue transactions, we determined the revenue to be recorded in the current period based on the underlying contract and compared it to the Company's recorded balances. In addition, we evaluated the sufficiency of audit evidence obtained by assessing the results of procedures performed, including the appropriateness of the nature and extent of such evidence. /s/ KPMG LLP We have served as the Company's auditor since 2013. Boston, Massachusetts February 19, 2026 58 Table of Contents RAPID7, INC. Consolidated Balance Sheets (in thousands, except share and per share data) Year Ended December 31, 2025 2024 Assets Current assets: Cash and cash equivalents $ 246,664 $ 334,686 Short-term investments 228,006 187,025 Accounts receivable, net of allowance for credit losses of $ 2,476 and $ 1,833 at December 31, 2025 and 2024, respectively 167,017 168,242 Deferred contract acquisition and fulfillment costs, current portion 48,370 52,134 Prepaid expenses and other current assets 47,230 44,024 Total current assets 737,287 786,111 Long-term investments 184,119 37,274 Property and equipment, net 31,990 32,245 Operating lease right-of-use assets 45,485 48,877 Deferred contract acquisition and fulfillment costs, non-current portion 66,978 73,672 Goodwill 575,268 575,268 Intangible assets, net 65,105 85,719 Other assets 20,232 12,868 Total assets $ 1,726,464 $ 1,652,034 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 11,041 $ 18,908 Accrued expenses and other current liabilities 96,998 88,802 Convertible senior notes, current portion, net — 45,895 Operating lease liabilities, current portion 16,176 15,493 Deferred revenue, current portion 451,155 461,118 Total current liabilities 575,370 630,216 Convertible senior notes non-current portion, net 892,284 888,356 Operating lease liabilities, non-current portion 59,908 68,430 Deferred revenue, non-current portion 29,971 27,078 Other long-term liabilities 14,201 20,243 Total liabilities $ 1,571,734 $ 1,634,323 Stockholders’ equity: Preferred stock, $ 0.01 par value per share; 10,000,000 shares authorized at December 31, 2025 and 2024; 0 shares issued and outstanding at December 31, 2025 and 2024 $ — $ — Common stock, $ 0.01 par value per share; 100,000,000 shares authorized at December 31, 2025 and 2024; 66,417,175 and 64,067,220 shares issued at December 31, 2025 and 2024, respectively; 65,846,920 and 63,496,965 shares outstanding at December 31, 2025 and 2024, respectively 658 635 Treasury stock, at cost, 570,255 shares at December 31, 2025 and 2024 ( 4,765 ) ( 4,765 ) Additional paid-in-capital 1,120,963 1,011,080 Accumulated other comprehensive income (loss) 2,527 ( 1,205 ) Accumulated deficit ( 964,653 ) ( 988,034 ) Total stockholders’ equity 154,730 17,711 Total liabilities and stockholders’ equity $ 1,726,464 $ 1,652,034 The accompanying notes are an integral part of these consolidated financial statements. 59 Table of Contents RAPID7, INC. Consolidated Statements of Operations (in thousands, except share and per share data) Year Ended December 31, 2025 2024 2023 Revenue: Product subscriptions $ 831,325 $ 808,906 $ 740,168 Professional services 28,469 35,101 37,539 Total revenue 859,794 844,007 777,707 Cost of revenue: Product subscriptions 230,119 225,547 203,140 Professional services 24,921 25,488 28,906 Total cost of revenue 255,040 251,035 232,046 Total gross profit 604,754 592,972 545,661 Operating expenses: Research and development 190,660 173,126 177,937 Sales and marketing 317,665 298,809 313,661 General and administrative 84,861 86,002 85,340 Impairment of long-lived assets — — 30,784 Restructuring — — 22,227 Total operating expenses 593,186 557,937 629,949 Income (loss) from operations 11,568 35,035 ( 84,288 ) Other income (expense), net: Interest income 23,019 21,063 10,177 Interest expense ( 10,436 ) ( 10,963 ) ( 64,700 ) Other income (expense), net 6,030 ( 3,680 ) ( 14,522 ) Income (loss) before income taxes 30,181 41,455 ( 153,333 ) Provision (benefit) for income taxes 6,800 15,929 ( 518 ) Net income (loss) $ 23,381 $ 25,526 $ ( 152,815 ) Net income (loss) per share, basic $ 0.36 $ 0.41 $ ( 2.52 ) Net income (loss) per share, diluted $ 0.36 $ 0.40 $ ( 2.52 ) Weighted-average common shares outstanding, basic 64,727,551 62,607,583 60,756,087 Weighted-average common shares outstanding, diluted 65,001,955 63,183,651 60,756,087 The accompanying notes are an integral part of these consolidated financial statements. 60 Table of Contents RAPID7, INC. Consolidated Statements of Comprehensive Income (Loss) (in thousands) Year Ended December 31, 2025 2024 2023 Net income (loss) $ 23,381 $ 25,526 $ ( 152,815 ) Other comprehensive income (loss): Change in fair value of cash flow hedges 1,590 ( 1,723 ) 797 Adjustment for net losses (gains) realized on cash flow hedges and included in net income (loss), net of taxes 1,556 ( 546 ) 724 Total change in unrealized gains (losses) on cash flow hedges 3,146 ( 2,269 ) 1,521 Change in unrealized gains (losses) on investments 586 ( 280 ) $ 1,234 Total other comprehensive income (loss) 3,732 ( 2,549 ) 2,755 Comprehensive income (loss) $ 27,113 $ 22,977 $ ( 150,060 ) The accompanying notes are an integral part of these consolidated financial statements. 61 Table of Contents RAPID7, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) (in thousands, except share data) Common stock Treasury stock Additional paid-in-capital Accumulated other comprehensive income (loss) Accumulated deficit Total stockholders’ equity (deficit) Shares Amount Shares Amount Balance, December 31, 2022 59,720 $ 597 487 $ ( 4,764 ) $ 746,249 $ ( 1,411 ) $ ( 860,745 ) $ ( 120,074 ) Stock-based compensation expense — — — — 110,809 — — 110,809 Issuance of common stock under employee stock purchase plan 330 3 — — 11,320 — — 11,323 Vesting of restricted stock units 1,454 15 — — ( 15 ) — — — Shares withheld for employee taxes ( 113 ) ( 1 ) — — ( 5,569 ) — — ( 5,570 ) Issuance of common stock upon exercise of stock options 216 2 — — 3,051 — — 3,053 Issuance of common stock related to acquisition 107 1 — — ( 1 ) — — — Repurchase of common stock issued in related to acquisition — — 83 ( 1 ) 1 — — — Purchase of capped called related to convertible senior notes — — — — ( 36,570 ) — — ( 36,570 ) Reclassification of equity to derivative assets related to capped calls — — — — 33,029 — — 33,029 Repurchase and inducement of convertible senior notes — — — — 35,881 — — 35,881 Other comprehensive income — — — — — 2,755 — 2,755 Net loss — — — — — — ( 152,815 ) ( 152,815 ) Balance, December 31, 2023 61,714 $ 617 570 $ ( 4,765 ) $ 898,185 $ 1,344 $ ( 1,013,560 ) $ ( 118,179 ) Stock-based compensation expense — — — — 105,179 — — 105,179 Issuance of common stock under employee stock purchase plan 292 3 — — 9,243 — — 9,246 Vesting of restricted stock units 1,435 15 — — ( 15 ) — — — Shares withheld for employee taxes ( 104 ) ( 1 ) — — ( 4,729 ) — — ( 4,730 ) Vesting of equity awards previously classified as liabilities 27 — — — 1,652 — — 1,652 Issuance of common stock upon exercise of stock options 133 1 — — 1,565 — — 1,566 Repurchase of common stock issued in relation to acquisition — — 1 — — — — — Other comprehensive loss — — — — — ( 2,549 ) — ( 2,549 ) Net income — — — — — — 25,526 25,526 Balance, December 31, 2024 63,497 $ 635 571 $ ( 4,765 ) $ 1,011,080 $ ( 1,205 ) $ ( 988,034 ) $ 17,711 Stock-based compensation expense — — — — 100,225 — — 100,225 Issuance of common stock under employee stock purchase plan 385 4 — — 7,699 — — 7,703 Vesting of restricted stock units 1,753 18 — — ( 18 ) — — — Shares withheld for employee taxes ( 293 ) ( 3 ) — — ( 3,017 ) — — ( 3,020 ) Vesting of equity awards previously classified as liabilities 22 — — — 777 — — 777 Issuance of common stock upon exercise of stock options 357 3 — — 1,586 — — 1,589 Issuance of common stock issued in relation to acquisition 126 1 — — 2,631 — — 2,632 Other comprehensive income — — — — — 3,732 — 3,732 Net income — — — — — — 23,381 23,381 Balance, December 31, 2025 65,847 $ 658 571 $ ( 4,765 ) $ 1,120,963 $ 2,527 $ ( 964,653 ) $ 154,730 The accompanying notes are an integral part of these consolidated financial statements. 62 Table of Contents RAPID7, INC. Consolidated Statements of Cash Flows (in thousands) Year Ended December 31, 2025 2024 2023 Cash flows from operating activities: Net income (loss) $ 23,381 $ 25,526 $ ( 152,815 ) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 45,436 44,893 45,939 Amortization of debt issuance costs 4,211 4,447 4,138 Stock-based compensation expense 104,335 107,961 111,636 Impairment of long-lived assets — — 30,784 Change in fair value of derivative assets — — 15,511 Deferred income taxes ( 1,690 ) 791 ( 5,624 ) Induced conversion expense — — 53,889 Other ( 6,354 ) ( 1,503 ) 469 Changes in assets and liabilities: Accounts receivable 1,667 ( 5,480 ) ( 14,021 ) Deferred contract acquisition and fulfillment costs 10,457 ( 4,196 ) ( 18,534 ) Prepaid expenses and other assets ( 10,223 ) 2,805 ( 4,125 ) Accounts payable ( 8,929 ) 2,777 5,449 Accrued expenses 10,090 ( 9,829 ) 2,422 Deferred revenue ( 8,371 ) ( 795 ) 30,472 Other liabilities ( 10,183 ) 4,273 ( 1,312 ) Net cash provided by operating activities $ 153,827 $ 171,670 $ 104,278 Cash flows from investing activities: Business acquisitions, net of cash acquired — ( 37,301 ) ( 34,841 ) Purchases of property and equipment ( 7,599 ) ( 3,425 ) ( 4,366 ) Capitalization of internal-use software ( 16,106 ) ( 14,162 ) ( 15,878 ) Purchases of investments ( 533,342 ) ( 242,494 ) ( 276,829 ) Sales and maturities of investments 351,322 250,500 150,450 Purchase of strategic equity investments (See Note 5) ( 5,500 ) — — Other investing activities 1,786 360 2,710 Net cash used in investing activities $ ( 209,439 ) $ ( 46,522 ) $ ( 178,754 ) Cash flows from financing activities: Proceeds from issuance of convertible senior notes, net of issuance costs paid — — 292,091 Purchase of capped calls related to convertible senior notes — — ( 36,570 ) Payment of debt issuance costs ( 1,693 ) — — Payments for maturity of convertible senior notes ( 45,992 ) — ( 199,998 ) Payments related to business acquisitions ( 4,091 ) ( 500 ) ( 2,250 ) Proceeds from capped call settlement — — 17,518 Taxes paid related to net share settlement of equity awards ( 3,020 ) ( 4,730 ) ( 5,570 ) Proceeds from employee stock purchase plan 7,703 9,246 11,323 Proceeds from stock option exercises 1,589 1,566 3,053 Net cash (used in) provided by financing activities ( 45,504 ) 5,582 79,597 Effect of exchange rate changes on cash ,cash equivalents and restricted cash 5,679 ( 2,756 ) 1,202 Net (decrease) increase in cash, cash equivalents and restricted cash $ ( 95,437 ) $ 127,974 $ 6,323 Cash, cash equivalents and restricted cash, beginning of period 342,101 214,127 207,804 Cash, cash equivalents and restricted cash, end of period $ 246,664 $ 342,101 $ 214,127 Supplemental cash flow information: Cash paid for interest on convertible senior notes 5,768 6,358 4,605 Cash paid for income taxes, net of payments 7,948 8,489 1,624 Reconciliation of cash, cash equivalents and restricted cash: Cash and cash equivalents 246,664 334,686 213,629 Restricted cash included in prepaid expenses, other current assets, and other assets — 7,415 498 Total cash, cash equivalents and restricted cash $ 246,664 $ 342,101 $ 214,127 The accompanying notes are an integral part of these consolidated financial statements. 63 Table of Contents RAPID7, INC. Notes to Consolidated Financial Statements (1) Nature of Business Rapid7, Inc. and subsidiaries (“we,” “us” or “our”) are advancing security with visibility, analytics, and automation delivered through our Command Platform. Our solutions simplify the complex, allowing security teams to work more effectively with IT and development to reduce vulnerabilities, monitor for malicious behavior, investigate and shut down attacks, and automate routine tasks. Immaterial Correction of an Error During the fourth quarter of 2024, we identified an immaterial error related to stock-based compensation expense associated with certain restricted stock units (“RSUs”) and performance stock units (“PSUs”) granted during fiscal years 2023 and 2024 attributable to an improper valuation of the underlying awards, resulting in an understatement of stock-based compensation expense in 2023 and 2024. Based on an analysis of quantitative and qualitative factors in accordance with Staff Accounting Bulletin (“SAB”) No. 99, Materiality, and SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, and as described further in Note 19, Immaterial Correction of an Error , we evaluated the errors and determined the related impacts were not material to our consolidated financial statements for the prior periods when they occurred, but that correcting the cumulative errors in the period detected would have been material to our results of operations for that period. Accordingly, we revised previously reported comparative financial information presented herein for such immaterial errors. (2) Summary of Significant Accounting Policies (a) Basis of Presentation and Consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The consolidated financial statements include our results of operations and those of our wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. (b) Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The management estimates include, but are not limited to the determination of standalone selling prices in revenue transactions with multiple performance obligations, the estimated period of benefit for deferred contract acquisition costs, the useful lives and recoverability of long-lived assets, the valuation for credit losses, the valuation of stock-based compensation, the fair value of assets acquired and liabilities assumed in business combinations, the valuation of contingent consideration in business combinations, the incremental borrowing rate for operating leases and the valuation for deferred tax assets. We base our estimates on historical experience and on various other assumptions that we believe are reasonable. Actual results could differ from those estimates. (c) Revenue Recognition We generate revenue primarily from: (1) product subscriptions from the sale of cloud-based subscriptions, managed services, term software licenses, content subscriptions and maintenance and support associated with our software licenses and (2) professional services from the sale of our deployment and training services related to our solutions, incident response services, penetration testing and security advisory services. We recognize revenue when a customer obtains control of promised products or services. The amount of revenue recognized reflects the consideration that we expect to be entitled to receive in exchange for these products or services. To achieve the core principle of this standard, we apply the following four steps: 1) Identify the contract with a customer We consider the terms and conditions of the contracts and our customary business practices in identifying our contracts. We determine we have a contract with a customer when the contract is approved, we can identify each party’s rights regarding the services to be transferred, we can identify the payment terms for the services, and we have determined the customer has the ability and intent to pay and the contract has commercial substance. We apply judgment in determining the customer’s ability and intent to pay, which is based on a variety of factors, including the customer’s historical payment experience or, in the case of a new customer, credit and financial information pertaining to the customer. 64 Table of Contents 2) Identify the performance obligations in the contract Performance obligations promised in a contract are identified based on the products and services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the product or service either on its own or together with other resources that are readily available from third parties or from us, and are distinct in the context of the contract, whereby the transfer of the products or services is separately identifiable from other promises in the contract. 3) Determine the transaction price The transaction price is determined based on the consideration to which we expect to be entitled in exchange for transferring products or services to the customer. Variable consideration is included in the transaction price if, in our judgment, it is probable that no significant future reversal of cumulative revenue under the contract will occur. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined our contracts generally do not include a significant financing component. The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our products and services, not to receive financing from our customers or to provide customers with financing. Examples include invoicing at the beginning of a subscription term with revenue recognized ratably over the contract period. Sales through our channel network of distributors and resellers are generally discounted as compared to the price that we would sell to an end user. Revenue for sales through our channel network is recorded net of any distributor or reseller margin. If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. The majority of our contracts with customers contain multiple performance obligations. For these contracts, we account for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price (“SSP”) basis. We determine SSP of our products and services based on our overall pricing objectives using all information reasonably available to us, taking into consideration market conditions and other factors, including the geographic locations of our customers, negotiated discounts from price lists and selling method (i.e., partner or direct). When available, we use directly observable stand-alone transactions to determine SSP. When not regularly sold on a stand-alone basis, we estimate SSP for our products and services utilizing historical sales data, including discounts from list price. The historical data is aggregated and analyzed by geographic location and selling method to establish a median or average price. Once SSP is established it is applied consistently to all transactions including that product or service. 4) Recognize revenue when or as we satisfy a performance obligation Revenue is recognized at the time the related performance obligation is satisfied by transferring the promised product or service to a customer. Revenue is recognized when control of the products or services is transferred to our customers, in an amount that reflects the consideration that we expect to receive in exchange for those products or services. Product Subscriptions Product subscriptions consist of revenue from our cloud-based subscription, term software licenses, managed services offerings, content subscriptions and maintenance and support associated with our software licenses. • We generate cloud-based subscription revenue primarily from sales of subscriptions to access our cloud platform, together with related support services to our customers. These arrangements do not provide the customer with the right to take possession of our software operating on our cloud platform at any time. Instead, customers are granted continuous access to our cloud platform over the contractual period. Revenue is recognized over time on a ratable basis over the contract term beginning on the date that our service is made available to the customer. Our cloud-based subscription contracts generally have annual or multi-year contractual terms which are billed in advance of the annual subscription period and are non-cancellable. • Managed services offerings consist of fees generated when we operate our software and provide our capabilities on behalf of our customers. Revenue is recognized on a ratable basis over the contract term beginning on the date that our 65 Table of Contents service is made available to the customer. Our managed services offerings generally have annual or multi-year contractual terms which are billed in advance of the annual subscription period and are non-cancellable. • For our term software licenses where the utility to the customer is dependent on the continued delivery of content subscriptions, we recognize the license revenue over the contractual term of the content subscription. • Content subscriptions and our maintenance and support services are sold with our term software licenses. Revenue related to our content subscriptions associated with our software licenses is recognized ratably over the contractual period. Professional Services All of our professional services are considered distinct performance obligations when sold stand alone or with other products. These contracts generally have terms of one year or less. For the majority of these arrangements, revenue is recognized over time based upon the proportion of work performed to date. Contract Balances Contract liabilities consist of deferred revenue and include payments received in advance of performance under the contract. Such amounts are recognized as revenue over the contractual period consistent with the above methodology. For the year ended December 31, 2025, we recognized revenue of $ 457.7 million that was included in the corresponding contract liability balance at the beginning of the period presented. Deferred revenue that will be realized during the succeeding 12-month period is recorded as current, and the remaining deferred revenue is recorded as non-current. We receive payments from customers based upon contractual billing schedules. Accounts receivable are recorded when the right to consideration becomes unconditional. Unbilled receivables include amounts related to our contractual right to consideration for both completed and partially completed performance obligations that have not been invoiced. If the right to consideration is based on satisfaction of another performance obligation in the contract other than the passage of time, we would record a contract asset. As of December 31, 2025 and 2024, unbilled receivables of $ 2.7 million and $ 2.5 million are included in prepaid expenses and other current assets in our consolidated balance sheet. As of December 31, 2025 and 2024, we have no contract assets recorded on our consolidated balance sheet. (d) Cash, Cash Equivalents and Restricted Cash We consider all highly liquid instruments with original maturities of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents are recorded at cost, which approximates fair value. As of December 31, 2025, we had no restricted cash. As of December 31, 2024, we had $ 7.4 million of restricted cash recorded on our consolidated balance sheet in prepaid expenses, other current assets in letters of credit outstanding as collateral for certain office space leases. (e) Investments Our investments consist o f U.S. Government agencies. We classify our investments as available-for-sale and record these investments at fair value. When the fair value of an investment declines below its amortized cost basis, any portion of that decline attributable to credit losses, to the extent expected to be nonrecoverable before the sale of the security, is recognized in our consolidated statements of operations. When the fair value of the investment declines below its amortized cost basis due to changes in interest rates, such amounts are recorded in accumulated other comprehensive income (loss), and are recognized in our consolidated statement of operations only if we sell or intend to sell the security before recovery of its cost basis. Realized gains and losses are determined based on the specific identification method, and are reflected in our consolidated statements of operations. Investments with an original maturity of greater than three months at the date of purchase and less than one year from the date of the balance sheet are classified as short-term and those with maturities of more than one year from the date of the balance sheet are classified as long-term in the consolidated balance sheet. We do not invest in any securities with contractual maturities greater than 24 months. (f) Accounts Receivable and Allowance for Credit Losses Accounts receivable are recorded at the invoiced amount, net of allowances for credit losses for any potential uncollectible amounts. We maintain an allowance for estimated credit losses resulting from the inability of our customers to make required payments. Management regularly reviews the adequacy of the allowance for credit loss based upon historical collection experience, the age of the receivable, an evaluation of each customer's expected ability to pay and current and future economic and market conditions. Additions to the allowance for credit losses are recorded in general and administrative expense in the 66 Table of Contents consolidated statement of operations. Accounts receivable deemed uncollectible are charged against the allowance for credit losses. We do not have any off-balance sheet credit exposure related to our customers. (g) Concentration of Credit Risk Financial instruments that potentially expose us to concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivable, investments and derivative financial instruments. We invest only in high-quality credit instruments and our cash and cash equivalents and available for sale investments consist primarily of fixed income securities. Management believes that the financial institutions that hold our investments are financially sound and, accordingly, are subject to minimal credit risk. Deposits held with banks may exceed the amount of insurance provided on such deposits. We provide credit to customers in the normal course of business. Collateral is not required for accounts receivable, but ongoing credit evaluations of customers’ financial condition are performed. We maintain reserves for potential credit losses. No single customer, including channel partners, accounted for 10% or more of our total revenues in 2025, 2024 or 2023 or accounts receivable as of December 31, 2025 or 2024. Our derivative financial instruments expose us to credit risk to the extent that the counterparties may be unable to meet the terms of the arrangement. We mitigate this credit risk by transacting with major financial institutions with high credit ratings. (h) Deferred Contract Acquisition Costs We defer contract costs that are recoverable and incremental to obtaining customer contracts. Contract costs, which primarily consist of sales commissions, are amortized on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the asset relates. Contract costs for a new customer, upsell or cross-sell are amortized on a straight-line basis over an estimated period of benefit of five years as sales commissions on initial sales are not commensurate with sales commissions on contract renewals. We determined the estimated period of benefit by taking into consideration the contractual term and expected renewals of customer contracts, our technology and other factors, including the fact that sales commissions paid on renewals are not commensurate with commissions paid on initial sales transactions. Contract costs relating to contract renewals are deferred and amortized on a straight-line basis over the weighted average contract length of renewal contracts. Contract costs for professional services arrangements are expensed as incurred in accordance with the practical expedient as the contractual period of our professional services arrangements is one year or less. We classify deferred contract costs as short-term or long-term based on when we expect to recognize the expense. Amortization expense associated with deferred contract acquisition costs is recorded to sales and marketing expense in our consolidated statements of operations. We periodically review the carrying amount of deferred contract acquisition costs to determine whether events or changes in circumstances have occurred that could impact the period of benefit. (i) Property and Equipment Property and equipment are recorded at cost and depreciated over their estimated useful lives using the straight-line method. The following table presents the useful lives of our property and equipment: Useful Lives Computer equipment and software 3 years Furniture and fixtures 3 - 5 years Leasehold improvements Shorter of the useful life of the asset or the lease term Repairs and maintenance costs are expensed as incurred. Periodically, fully depreciated property and equipment will be written off when no future economic benefits are expected. (j) Software Development Costs Software development costs associated with the development of products for sale are recorded to research and development expense until technological feasibility has been established for the product. Once technological feasibility is established, all software costs are capitalized until the product is available for release to customers. To date, the software development costs have not been capitalized as the cost incurred and time between technological feasibility and product release was insignificant. As such, these costs are expensed as incurred and recognized in research and development expenses in our consolidated statements of operations. 67 Table of Contents Costs related to software developed, acquired or modified for internal use are capitalized. Costs incurred during the preliminary planning and evaluation stage of the project and during the post implementation stages of the project are expensed as incurred. Costs incurred during the application development stage of the project are capitalized. These capitalized costs consist of internal compensation related costs and external direct costs. Costs related to software developed for internal use are amortized over an estimated useful life of 3 years. We capitalized $ 16.0 million, $ 14.2 million and $ 15.9 million of costs related to software developed for internal use in the years ended December 31, 2025, 2024 and 2023, respectively. Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. (k) Leases We determine whether an arrangement is or contains a lease at inception. We evaluate the classification of a lease at inception and, as necessary, at modification. Operating leases are recognized on the consolidated balance sheet as right-of-use (“ROU”) assets, lease liabilities and, if applicable, long-term lease liabilities. Operating lease ROU assets represent our right to use an underlying asset for the lease term. Operating lease liabilities represent our obligation to make payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the present value of future lease payments at the lease commencement date. The implicit rate within our operating leases is generally not determinable and therefore we use the incremental borrowing rate at the lease commencement date to determine the present value of lease payments. We determine our incremental borrowing rate for each lease using our estimated borrowing rate, adjusted for various factors including level of collateralization, term and currency to align with the terms of the lease. The operating lease ROU asset also includes any lease prepayments and initial direct costs, offset by lease incentives. Operating lease cost is recognized on a straight-line basis over the lease term. Certain of our leases include options to extend or terminate the lease. An option to extend the lease is considered in connection with determining the ROU asset and lease liability when it is reasonably certain we will exercise that option. An option to terminate is considered unless it is reasonably certain we will not exercise the option. We account for lease and non-lease components as a single lease component and do not recognize operating lease ROU assets and lease liabilities for leases with a term of one year or less. (l) Impairment of Long-Lived Assets We evaluate our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. When such events or changes in circumstances occur, recoverability of these assets or asset groups is measured by a comparison of the carrying value of the assets to the future net undiscounted cash flows directly associated with the assets. If such assets or asset groups are considered to be impaired, the impairment recognized is the amount by which the carrying value exceeds the fair value of the assets or asset groups. For the year ended December 31, 2023, we determined that triggering events occurred which indicated that the carrying value of our ROU and other lease-related assets related to a change in usage of certain idle office space at our corporate headquarters in Boston, Massachusetts as well as idle office spaces located in Plano, Texas, Los Angeles, California, and Toronto, Canada may not be fully recoverable. As a result, we utilized discounted cash flow models to estimate the fair value of the asset groups taking into consideration the time period it will take to obtain sublessees, the applicable discount rate and the anticipated sublease income and calculated the corresponding impairment loss. We used prices and other relevant information generated by recent market transactions involving similar or comparable assets, as well as our historical experience in real estate transactions. In the year ended December 31, 2023, we recorded impairment losses of $ 30.8 million related to these idle office spaces, consisting of $ 22.2 million related to ROU assets and $ 8.6 million related to leasehold improvements associated with these leased office spaces. (m) Restructuring Expense We record restructuring expense when management commits to and approves a restructuring plan, the restructuring plan identifies all significant actions, the period of time to complete the restructuring plan indicates that significant changes to the restructuring plan are not likely to occur, and employees who are impacted have been notified of the pending involuntary termination. A restructuring plan generally includes significant actions involving employee-related severance charges, employee-related benefits, and other charges associated with the restructuring (collectively, “restructuring expense”). Restructuring expense is recorded within restructuring in the consolidated statement of operations. The restructuring liability accrued but not paid at the end of the reporting period is included within accrued expenses in the consolidated balance sheet. 68 Table of Contents (n) Business Combinations We allocate the fair value of purchase consideration to the tangible asset acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair value these identifiable assets and liabilities is recorded as goodwill. During the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the fair value of these assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the final determination of the fair value of assets acquired or liabilities assumed any subsequent adjustments are recorded to the consolidated statements of operations. Determining the fair value of the tangible assets acquired, liabilities assumed and intangible assets requires management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, cash flows that an asset is expected to generate in the future, technology migration curves, discount rates, and useful lives. While we use our best estimates and judgments, our estimates are inherently uncertain and subject to refinement. Contingent consideration arising from business combinations is recorded at fair value as a liability on the acquisition date and remeasured at each reporting date. Changes in fair value are recorded in general and administrative expense in the consolidated statements of operations. Determining the fair value of the contingent consideration each period requires management to make assumptions and judgments. These estimates involve inherent uncertainties, and if different assumptions had been used, the fair value of contingent consideration could have been materially different from the amounts recorded. Acquisition-related transaction costs are expensed as incurred. (o) Goodwill We perform an annual goodwill impairment test each fiscal year and whenever events or changes in circumstances indicate that the carrying amount of this asset may exceed its fair value. For our goodwill impairment analysis, we operate with a single reporting unit. To test goodwill impairment, we perform a single-step goodwill impairment test to identify potential goodwill impairment. The single-step impairment test begins with an estimation of the fair value of a reporting unit. Goodwill impairment exists when the net assets of a reporting unit exceed its fair value. In performing the single step of the goodwill impairment testing and measurement process, we estimated the fair value of our single reporting unit using our market capitalization. In performing the single step of the goodwill impairment testing and measurement process, we estimated the fair value of our single reporting unit using our market capitalization. Based upon our assessment performed as of December 31, 2025, we concluded the fair value of our single reporting unit exceeded its carrying value and there was no impairment of goodwill. (p) Foreign Currency The functional currency of our foreign subsidiaries is the U.S. dollar. We translate all monetary assets and liabilities denominated in foreign currencies into U.S. dollars using the exchange rates in effect at the balance sheet dates and non-monetary assets and liabilities using historical exchange rates. Foreign currency denominated expenses are re-measured using the average exchange rates for the period. Foreign currency transaction and re-measurement gains and losses are included in other income (expense), net in the consolidated statement of operations. In 2025, foreign currency transact ion gains a nd foreign currency re-measurement gains were $ 0.9 million and $ 4.7 million, respectively. In 2024, foreign currency transaction gains and foreign currency re-measurement gains were $ 0.6 million and $ 3.8 million, respectively. (q) Derivative and Hedging Activities We are exposed to currency exchange rate risk. Although the majority of our revenue is denominated in U.S. dollars, a portion of our operating expenses are denominated in foreign currencies, making them subject to fluctuations in foreign currency exchange rates. We enter into foreign currency derivative contracts, which we designate as cash flow hedges, to manage the foreign currency exchange risk associated with these expenses. Our derivative financial instruments are recorded at fair value and reported as either an asset or liability on our consolidated balance sheets. Gains or losses related to our cash flow hedges are recorded as a component of accumulated other comprehensive income (loss) in our consolidated balance sheets and are reclassified into the financial statement line item associated with the underlying hedged transaction in our consolidated statement of operations when the underlying hedged transaction is recognized in our earnings. If it becomes probable that the hedged transaction will not occur, the cumulative unrealized gain or loss is reclassified immediately from accumulated other comprehensive income (loss) into the financial statement line item associated with the underlying hedged transaction in our consolidated statement of operations. Derivatives designated as cash flow hedges are classified in our consolidated statements of cash flow in the same manner as the underlying hedged transaction, primarily within cash flow from operating activities. 69 Table of Contents As of December 31, 2025 and 2024, our cash flow hedges have contractual maturities of eighteen months or less, and as of December 31, 2025 and 2024, outstanding forward contracts had a total notional value of $ 78.8 million and $ 50.4 million, respectively. The notional value represents the gross amount of foreign currency that will be bought or sold upon maturity of the forward contract. During the years ended December 31, 2025 and 2024, all cash flow hedges were considered effective. Refer to Note 6, Fair Value Measurements , for the fair values of our outstanding derivative instruments. (r) Stock-Based Compensation Stock-based compensation expense related to our stock options, restricted stock units (“RSUs”), performance-based restricted stock units (“PSUs”) and purchase rights issued under our 2015 Employee Stock Purchase Plan (“ESPP”) is calculated based on the estimated fair value of the award on the grant date. The fair values of RSUs and PSUs are based on the value of our common stock on the date of grant. The fair values of stock options and ESPP purchase rights are estimated on the grant date using the Black-Scholes option pricing model which requires management to make a number of assumptions, including the expected life of the option, the volatility of the underlying stock, the risk-free interest rate and expected dividends. The assumptions used in our Black-Scholes option-pricing model represent management’s best estimates at the time of grant. These estimates involve a number of variables, uncertainties and assumptions and the application of management’s judgment, as they are inherently subjective. If any assumptions change, our stock-based compensation expense could be materially different in the future. The fair value is recognized as expense on a straight-line basis over the requisite service period, which is generally the vesting period of the respective award. The actual number of PSUs earned and eligible to vest are determined based on the performance conditions defined when the awards are granted. We recognize share-based compensation expense for the PSUs on a straight-line basis over the requisite service period for each separately vesting portion of the award when it is probable that the performance conditions will be achieved. We reassess the probability of vesting at each reporting period for awards with performance conditions and adjust stock-based compensation cost based on its probability assessment. We recognize forfeitures as they occur and do not estimate a forfeiture rate when calculating the stock-based compensation expense. (s) Advertising Advertising costs are expensed as incurred, and are recorded in sales and marketing expense in our consolidated statement of operations. We incurred $ 24.6 million, $ 21.7 million, and $ 22.4 million in advertising expense in 2025, 2024, and 2023, respectively. (t) Income Taxes Income taxes are accounted for using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for differences between the consolidated financial statements carrying amounts of assets and liabilities and their respective income tax bases, and operating loss and tax credit carryforwards using enacted tax rates expected to apply to taxable income in the years in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax assets will not be realized. Significant judgment is required in determining any valuation allowance recorded against deferred tax assets. In assessing the need for a valuation allowance, we consider all available evidence, including past operating results, estimates of future taxable income, and the feasibility of tax planning strategies. In the event that we change our determination as to the amount of deferred tax assets that can be realized, we will adjust our valuation allowance with a corresponding impact to the provision for income taxes in the period in which such determination is made. We recognize tax provision from uncertain tax positions if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. Interest and penalties associated with such uncertain tax positions are classified as a component of income tax expense. (u) Net Income (Loss) per Share We calculate basic net income (loss) per share by dividing our net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by giving effect to all potentially dilutive securities, including stock options, RSUs, PSUs, the impact of our ESPP, common shares issued in connection with acquisitions and the impact of our convertible senior notes (“Notes”). We intend to settle any conversion of our Notes in cash, shares, or a combination thereof. The dilutive impact of the Notes for our calculation of diluted net income (loss) per share is considered 70 Table of Contents using the if-converted method. For the years ended December 31, 2025, 2024 and 2023, the shares underlying the Notes were not considered in the calculation of diluted net loss per share as the effect would have been anti-dilutive. (v) Recent Accounting Pronouncements Accounting Pronouncements Recently Adopted In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”). This guidance is designed to enhance the transparency and decision usefulness of income tax disclosures. The amendments of this update are related to the rate reconciliation and income taxes paid, requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. We adopted this standard prospectively for our fiscal year beginning on January 1, 2025. Accounting Pronouncements Not Yet Effective In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (“ASU 2024-03”). Entities are required to disaggregate any relevant expense caption presented on the face of the income statement within continuing operations into the following required natural expense categories, as applicable: (1) purchases of inventory, (2) employee compensation, (3) depreciation, (4) intangible asset amortization, and (5) depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities or other depletion expenses. Such disclosures must be made on an annual and interim basis in a tabular format in the footnotes to the financial statements. ASU 2024-03 is effective for fiscal years beginning after December 15, 2027. Early adoption is permitted. We do not plan to early adopt this standard. In January 2025, the FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”), which clarifies that all public business entities initially adopt ASU 2024-03 in the first annual period beginning after December 15, 2026, with interim adoption in annual periods beginning after December 15, 2027. We are currently evaluating the effect of adopting this standard on our disclosures In November 2024, the FASB issued ASU 2024-04, Induced Conversions of Convertible Debt Instruments (“ASU 2024-04”). This new guidance is intended to improve the relevance and consistency in application of the induced conversion guidance in Subtopic 470-20 for (a) convertible debt instruments with cash conversion features and (b) debt instruments that are not currently convertible. ASU 2024-04 is effective for fiscal years beginning after December 15, 2026. Early adoption is permitted. We do not plan to early adopt this standard. We are currently evaluating the effect of adopting this standard on our disclosures. In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”). The amendments provide a practical expedient for estimating expected credit losses on current accounts receivable and current contract assets arising from transactions accounted for under ASC 606 and, for entities other than public business entities, permit a policy election to consider certain post-balance-sheet collection activity when the expedient is elected. ASU 2025-05 is effective for annual periods beginning after December 15, 2025, and interim periods within those annual periods; early adoption is permitted. We do not intend to early adopt. We are evaluating the effect on our allowance methodology for trade receivables and contract assets and on related current expected credit losses ("CECL") disclosures; depending on our election of the practical expedient, we may experience changes in estimation inputs, but we do not currently anticipate a material impact to our consolidated financial statements. In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). The ASU modernizes the internal-use software guidance, including removing development “stages,” introducing a “probable-to-complete” recognition threshold and considerations of significant development uncertainty, superseding and relocating website development cost guidance, and enhancing disclosures (including applying certain ASC 360 disclosure requirements to capitalized software costs). ASU 2025-06 is effective for annual reporting periods beginning after December 15, 2027, and interim periods within those annual periods; early adoption is permitted with prospective, modified prospective, or retrospective transition alternatives. We do not plan to early adopt and are assessing the potential impact on capitalization timing, impairment assessments, useful lives, and expanded disclosures related to our internal-use software projects, including any cumulative-effect adjustments under the selected transition method. In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvement to Interim Disclosure Requirements ("ASU 2025-11"). The ASU amends ASC Topic 270 to compile all interim disclosure requirements under one codification, introduces a material events disclosure requirement for interim periods, clarifies presentation of interim 71 Table of Contents financial statements, allows entities to omit interim disclosures that would substantially duplicate their most recent annual disclosures, and clarifies these disclosure requirements apply to all entities that issue interim financial statements in accordance with U.S. GAAP. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027; early adoption is permitted and may be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. We do not plan to early adopt this standard and are currently evaluating its impact on our interim financial reporting processes and disclosures. We will continue to monitor developments and implementation guidance related to these new accounting standards and will provide additional information regarding their impact as our evaluation progresses. (3) Revenue from Contracts with Customers Disaggregated Revenue by geographic location: Revenues by geographic area presented based upon the location of the customer are as follows (in thousands): Year Ended December 31, 2025 2024 2023 United States $ 612,225 $ 614,085 $ 579,025 Rest of world 247,569 229,922 198,682 Total $ 859,794 $ 844,007 $ 777,707 Transaction Price Allocated to the Remaining Performance Obligations The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied as of December 31, 2025 (in thousands). The estimated revenues do not include unexercised contract renewals. Next Twelve Months Thereafter Product subscriptions $ 565,859 $ 270,397 Professional services 13,105 4,665 Total $ 578,964 $ 275,062 Deferred contract acquisition and fulfillment costs The following table summarizes the activity of the deferred contract acquisition and fulfillment costs, which primarily consist of capitalized sales commissions, for the year ended December 31, 2025 and 2024 (in thousands): Year Ended December 31, 2025 2024 Beginning balance $ 125,806 $ 121,609 Capitalization of contract acquisition and fulfillment costs 47,334 57,796 Amortization of deferred contract acquisition and fulfillment costs ( 57,792 ) ( 53,599 ) Ending balance $ 115,348 $ 125,806 (4) Business Combinations Noetic Cyber, Inc. On July 3, 2024, we acquired Noetic Cyber, Inc, (“Noetic”) a provider of cyber asset attack surface management, to extend Rapid7’s security operations platform by unlocking more accessible and accurate asset inventory in order to provide customers more comprehensive visibility to their attack surface, for a purchase price with an aggregate fair value of $ 51.2 million . The purchase consideration consisted of $ 38.6 million in cash paid at closing, $ 12.1 million of contingent consideration and $ 0.5 million of deferred cash payments. The deferred cash payments were held by Rapid7 to satisfy certain post-closing purchase price adjustments and payment was made during the fourth quarter of 2024. 72 Table of Contents Subject to the terms of the merger agreement, we are required to pay consideration of up to $ 20.0 million to Noetic shareholders based on the achievement of certain performance targets (the “Earnout Consideration”), measured annually upon the first, second and third anniversaries of the closing date of the transaction (the “Earnout Period”). If all performance targets are achieved, approximately $ 13.1 million of Earnout Consideration will be paid in cash, and the remaining $ 6.9 million of Earnout Consideration will be issued to certain employees in the form of shares of our common stock subject to continued employment requirements over the Earnout Period. The approximate $ 6.9 million of the Earnout Consideration that is subject to continued employment will be recognized as stock-based compensation expense over the required employment period. The fair value of the portion of the Earnout Consideration that is not subject to continued employment is included as part of purchase consideration at the date of the acquisition. As of July 3, 2024, we determined the fair value of the contingent purchase consideration to be $ 12.1 million. The fair value of the contingent purchase consideration will be reassessed each reporting period and any required adjustment will be recorded to general and administrative expense. On October 3, 2025, we distributed $ 6.0 million as Earnout Consideration related to the initial Earnout Period. Of this amount, $ 4.1 million was settled in cash, while the remaining $ 1.9 million was settled through the issuance of 94,229 common stock units, determined by the attainment of certain performance objectives. As of December 31, 2025 , the fair value of the contingent purchase c onsideration was $ 8.9 million which was recorded within accrued expenses and other current liabilities in our consolidated balance sheet. For the year ended December 31, 2025 , we recorded approximately $ 0.5 million of accretion expense related to the contingent purchase consideration to general and administrative expense. In connection with the acquisition, we expect to issue an aggregate value of $ 2.3 million of our common stock to two key employees of Noetic in three installments over a 36 -month period following the closing date of the transaction, subject to continued employment requirements (the “Key Employee Consideration”), which therefore will be recognized as stock-based compensation expense over the required employment period. In June 2025, we issued 31,911 shares of common stock as the first installment of common stock issued to the two key Noetic employees. The number of shares to be issued at each issuance date for both the Earnout Consideration and the Key Employee Consideration are determined by dividing the aggregate value by the 30-day average fair market value of our common stock on the issuance date, and therefore will be liability-classified until the final issuance dates. In the year ended December 31, 2025 , we recognized stock-based compensation expense related to such shares in the amount of $ 4.2 million . 73 Table of Contents The following table summarizes the allocation of purchase price to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date (in thousands): Consideration: Cash $ 38,597 Deferred cash consideration 500 Contingent consideration 12,055 Fair value of total consideration transferred $ 51,152 Recognized amount of identifiable assets acquired and liabilities assumed: Cash and cash equivalents $ 1,296 Accounts receivable 510 Prepaid and other current assets 102 Property and equipment, net 19 Accrued expenses and other current liabilities ( 220 ) Deferred revenue ( 910 ) Other long-term liabilities ( 62 ) Intangible asset 11,500 Total identifiable net assets assumed $ 12,235 Goodwill 38,917 Total purchase price allocation $ 51,152 We identified developed technology as the sole acquired intangible asset. The estimated fair value of the developed technology intangible asset was $ 11.5 million which was based on a valuation using a probability weighted expected return model (“PWERM”). The estimated useful life of the developed technology is 7 years. The excess of the purchase price over the tangible assets acquired, identifiable intangible asset acquired and assumed liabilities was recorded as goodwill. We believe that the amount of goodwill reflects the expected synergistic benefits of being able to leverage the integration of the technology acquired with our existing product offerings and being able to successfully market and sell these new features to our customer base. The goodwill was allocated to our one reporting unit. The acquired goodwill and intangible asset were not deductible for tax purposes. In the year ended December 31, 2024, we recorded $ 0.8 million of acquisition-related transaction costs related to the acquisition of Noetic to general and administrative expense. Our revenue and net income attributable to the Noetic business for the year ended December 31, 2025 was not material. 74 Table of Contents (5) Investments Our investments, which are all classified as available-for-sale, consisted of the following: As of December 31, 2025 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Description: U.S government agencies $ 411,424 $ 701 $ — $ 412,125 Total assets $ 411,424 $ 701 $ — $ 412,125 As of December 31, 2024 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Description: U.S government agencies 224,187 328 ( 216 ) 224,299 Total assets $ 224,187 $ 328 $ ( 216 ) $ 224,299 As of December 31, 2025 and December 31, 2024, our available-for-sale investments had maturities ranging from one to fourteen and from one to seventeen months , respectively. On October 30, 2025, we entered into a Simple Agreement for Future Equity (“SAFE”) in conjunction with a license and resale agreement with an independent cybersecurity cloud application detection and response organization (“the investee”). Pursuant to the terms of the agreement, we provided capital in the amount of $ 5.5 million to the investee, which is convertible into shares of the investee contingent upon the attainment of a minimum valuation threshold of $ 70 million. The SAFE instrument is convertible at the greater of the SAFE price or the discount price, as stipulated in the agreement. The investment in the SAFE is accounted for at cost, subject to adjustments for impairment and observable changes in fair value, and is presented on the consolidated balance sheets within the category of Other Assets. For all of our investments for which the amortized cost basis was greater than the fair value at December 31, 2025 and December 31, 2024, we have concluded that there is no plan to sell the security nor is it more likely than not that we would be required to sell the security before its anticipated maturity. In making the determination as to whether the unrealized loss is other-than-temporary, we considered the length of time and extent the investment has been in an unrealized loss position, the financial condition and near-term prospects of the issuers, the issuers’ credit rating and the time to maturity. (6) Fair Value Measurements We measure certain financial assets and liabilities at fair value. Fair value is determined based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, as determined by either the principal market or the most advantageous market. Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy, as follows: • Level 1 : Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. • Level 2 : Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. • Level 3 : Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the asset or liability. We consider an active market to be one in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis, and consider an inactive market to be one in which there are infrequent or few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers. 75 Table of Contents The following table presents our financial assets and liabilities measured and recorded at fair value on a recurring basis using the above input categories (in thousands): As of December 31, 2025 Level 1 Level 2 Level 3 Total Description: Assets: U.S. government agencies $ 412,125 $ — $ — $ 412,125 Foreign currency forward contracts designated as cash flow hedges (prepaid expenses and other current assets) — 1,868 — 1,868 Total assets $ 412,125 $ 1,868 $ — $ 413,993 Liabilities: Contingent consideration (other current liabilities) — — 8,864 8,864 Total liabilities $ — $ — $ 8,864 $ 8,864 As of December 31, 2024 Level 1 Level 2 Level 3 Total Description: Assets: U.S. government agencies $ 224,299 $ — $ — $ 224,299 Foreign currency forward contracts designated as cash flow hedges (prepaid expenses and other current assets and other assets) — 96 — 96 Total assets $ 224,299 $ 96 $ — $ 224,395 Liabilities: Contingent consideration (other current liabilities and other long-term liabilities) — — 12,422 12,422 Foreign currency forward contracts designated as cash flow hedges (other current liabilities and other long term liabilities) — 1,415 — 1,415 Total liabilities $ — $ 1,415 $ 12,422 $ 13,837 Cash and cash equivalents are excluded from the table above as carrying amounts reported in our consolidated balance sheet equal or approximate fair value. As of December 31, 2025, the fair value of our 0.25 % and 1.25 % convertible senior notes due 2027 and 2029, as further described in Note 10, Debt , was $ 565.5 million and $ 272.9 million, respectively, based upon quoted market prices. We consider the fair value of the Notes (as defined in Note 10, Debt ) to be a Level 2 measurement due to limited trading activity of the Notes. As of December 31, 2025, the fair value of our contingent consideration, as further described in Note 4, Business Combinations, was $ 8.9 million and is classified as a Level 3 measurement based on inputs not observable in the market. Our SAFE investment, as described in Note 5 , Investments , is accounted for as an equity investment under the measurement alternative per ASC 321 as there was no readily determinable fair value. Accordingly, the investment is measured at cost, less impairment, and adjusted for observable price changes in orderly transactions for an identical or a similar investment of the same issuer. The investment had a carrying amount of $ 5.5 million as of December 31, 2025 and is included within other assets as a long-term asset on the consolidated balance sheets. We did not recognize any impairment or observable price changes related to this investment for the year ended December 31, 2025 . 76 Table of Contents (7) Property and Equipment Property and equipment are recorded at cost and consist of the following (in thousands): As of December 31, 2025 2024 Computer equipment and software $ 23,728 $ 28,789 Furniture and fixtures 11,893 10,960 Leasehold improvements 61,456 57,051 Total 97,077 96,800 Less accumulated depreciation ( 65,087 ) ( 64,555 ) Property and equipment, net $ 31,990 $ 32,245 We recorded depreciation expense of $ 9.8 million, $ 11.1 million, and $ 14.0 million for the years ended December 31, 2025, 2024 and 2023, respectively. During the year ended December 31, 2025, we wrote off $ 9.1 million of fully depreciated computer equipment and software, in accordance with our policy as described in Note 2 . (8) Goodwill and Intangibles Goodwill was $ 575.3 million as of December 31, 2025 and 2024. The following table displays the changes in the gross carrying amount of goodwill (in thousands): Carrying Amount Balance at December 31, 2023 $ 536,351 Noetic acquisition 38,917 Balance at December 31, 2024 575,268 Balance at December 31, 2025 $ 575,268 The following table presents details of our intangible assets which include acquired identifiable intangible assets and capitalized internal-use software costs (in thousands): As of December 31, 2025 As of December 31, 2024 Weighted-Average Estimated Useful Life (years) Gross Carrying Amount Accumulated Amortization Net Book Value Gross Carrying Amount Accumulated Amortization Net Book Value Intangible assets subject to amortization: Developed technology 6.3 $ 146,855 $ ( 111,886 ) $ 34,969 $ 146,855 $ ( 94,193 ) $ 52,662 Customer relationships 4.3 12,000 ( 11,906 ) 94 12,000 ( 10,363 ) 1,637 Trade names 5.0 2,619 ( 2,619 ) — 2,619 ( 2,559 ) 60 Total acquired intangible assets 161,474 ( 126,411 ) 35,063 161,474 ( 107,115 ) 54,359 Internal-use software 3.0 83,934 ( 53,892 ) 30,042 68,878 ( 37,518 ) 31,360 Total intangible assets $ 245,408 $ ( 180,303 ) $ 65,105 $ 230,352 $ ( 144,633 ) $ 85,719 Intangible assets are expensed on a straight-line basis over the useful life of the asset. Amortization expense was $ 35.7 million, $ 33.8 million, and $ 31.9 million for the years ended December 31, 2025, 2024 and 2023, respectively. 77 Table of Contents Estimated future amortization expense of the acquired identifiable intangible assets and completed capitalized internal-use software costs as of December 31, 2025 was as follows (in thousands): 2026 $ 28,868 2027 16,478 2028 6,113 2029 3,243 2030 3,243 2031 and thereafter 1,166 Total $ 59,111 The table above excludes the impact of $ 6.0 million of capitalized internal-use software costs for projects that have not been completed as of December 31, 2025, and therefore, all the costs associated with these projects have not been incurred. (9) Derivative and Hedging Activities To mitigate our exposure to foreign currency fluctuations resulting from certain expenses denominated in certain foreign currencies, we enter into forward contracts that are designated as cash flow hedging instruments. These forward contracts have contractual maturities of eighteen months or less, and as of December 31, 2025 and 2024, outstanding forward contracts had a total notional value of $ 78.8 million and $ 50.4 million, respectively. The notional value represents the gross amount of foreign currency that will be bought or sold upon maturity of the forward contract. During the years ended December 31, 2025 and 2024, all cash flow hedges were considered effective. Refer to Note 6, Fair Value Measurements , for the fair values of our outstanding derivative instruments. (10) Debt Convertible Senior Notes In May 2020, we issued $ 230.0 million aggregate principal amount of convertible senior notes due May 1, 2025 (the “2025 Notes”), in March 2021, we issued $ 600.0 million aggregate principal amount of convertible senior notes due March 15, 2027 (the “2027 Notes”), and in September 2023, we issued $ 300.0 million aggregate principal amount of convertible senior notes due March 15, 2029 (the “2029 Notes”) (collectively, the “Notes”). In September 2023, we used $ 201.0 million of the proceeds from the issuance of the 2029 Notes to repurchase and retire $ 184.0 million aggregate principal amount of the 2025 Notes and paid accrued and unpaid interest thereon. Further details of the Notes are as follows: Issuance Maturity Date Interest Rate First Interest Payment Date Effective Interest Rate Semi-Annual Interest Payment Dates Initial Conversion Rate per $1000 principal Initial Conversion Price Number of shares (in millions) 2025 Notes May 1, 2025 2.25 % November 1, 2020 2.88 % May 1 and November 1 16.3875 61.02 0.8 2027 Notes March 15, 2027 0.25 % September 15, 2021 0.67 % March 15 and September 15 9.6734 103.38 5.8 2029 Notes March 15, 2029 1.25 % March 15, 2024 1.69 % March 15 and September 15 15.4213 64.85 4.6 On May 1, 2025, we paid $ 46.5 million to redeem the outstanding portion of the 2025 Notes, including the outstanding principal amount and accrued interest through the maturity date of the 2025 Notes. The 2027 Notes and the 2029 Notes are senior unsecured obligations, do not contain any financial covenants and are governed by indentures between us, as issuer, and U.S. Bank Trust Company, National Association, as trustee (the “Indentures”). The total net proceeds from the 2025 Notes, the 2027 Notes and the 2029 Notes offerings, after deducting initial purchase discounts and debt issuance costs, were $ 222.8 million, $ 585.0 million and $ 292.0 million, respectively. As of December 31, 2025, the 2027 Notes and the 2029 Notes were not convertible at the option of the holders. The holders may convert the 2027 Notes and the 2029 Notes at any time on or after December 15, 2026 and December 15, 2028, respectively, until the close of business on the second scheduled trading day immediately preceding the maturity date, regardless of the circumstances set forth above. Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election, in the manner and subject to the terms and conditions provided in the Indentures. If we undergo a fundamental change (as set forth in the Indentures) at any time prior to the maturity date, holders of the Notes will have the right, at their option, to require us to repurchase for cash all or any portion of their Notes at a repurchase price 78 Table of Contents equal to 100 % of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, following certain corporate events that occur prior to the maturity date or following our issuance of a notice of redemption, in each case as described in the Indentures, we will increase the conversion rate for a holder of the Notes who elects to convert its Notes in connection with such a corporate event or during the related redemption period in certain circumstances. Accounting for the Notes In accounting for the issuance of the Notes, the principal less debt issuance costs are recorded as debt on our consolidated balance sheet. The debt issuance costs are amortized to interest expense using the effective interest method over the contractual term of the Notes. The net carrying amount of the Notes as of December 31, 2025 and 2024 was as follows (in thousands): 2025 Notes 2027 Notes 2029 Notes Principal Unamortized debt issuance costs Total Principal Unamortized debt issuance costs Total Principal Unamortized debt issuance costs Total Balance at December 31, 2024 $ 45,992 $ ( 97 ) $ 45,895 $ 600,000 $ ( 5,564 ) $ 594,436 $ 300,000 $ ( 6,080 ) $ 293,920 Amortization of debt issuance costs — 97 97 — 2,520 2,520 — 1,408 1,408 Principal payment upon maturity ( 45,992 ) — ( 45,992 ) — — — — — — Balance at December 31, 2025 $ — $ — $ — $ 600,000 $ ( 3,044 ) $ 596,956 $ 300,000 $ ( 4,672 ) $ 295,328 Interest expense related to the Notes was as follows (in thousands): Year Ended December 31, 2025 2024 2023 2025 Notes 2027 Notes 2029 Notes Total 2025 Notes 2027 Notes 2029 Notes Total 2025 Notes 2027 Notes 2029 Notes Total Contractual interest expense $ 345 $ 1,500 $ 3,750 $ 5,595 $ 1,035 $ 1,500 $ 3,749 $ 6,284 $ 3,795 $ 1,500 $ 1,167 $ 6,462 Amortization of debt issuance costs 97 2,520 1,408 4,025 307 2,513 1,435 4,255 1,066 2,487 394 3,947 Induced conversion expense — — — — — — — — 53,889 — — 53,889 Total interest expense $ 442 $ 4,020 $ 5,158 $ 9,620 $ 1,342 $ 4,013 $ 5,184 $ 10,539 $ 58,750 $ 3,987 $ 1,561 $ 64,298 Capped Calls We entered into privately negotiated capped call transactions with certain counterparties in connection with the issuance of the 2025 Notes (the "2025 Capped Calls"), the 2027 Notes (the "2027 Capped Calls"), and the 2029 Notes (the “2029 Capped Calls” and, together with the 2025 Capped Calls and the 2027 Capped Calls, the “Capped Calls”). The Capped Calls are expected to reduce potential dilution to our common stock upon conversion of a given series of notes and/or offset any cash payments that we are required to make in excess of the principal amount of converted notes of such series, as the case may be, with such reduction and/or offset subject to a cap. The Capped Calls are subject to adjustment upon the occurrence of certain specified extraordinary events affecting us, including merger events, tender offers and announcement events. In addition, the Capped Calls are subject to certain specified additional disruption events that may give rise to a termination of the Capped Calls, including nationalization, insolvency or delisting, changes in law, failures to deliver, insolvency filings and hedging disruptions. 79 Table of Contents The following table sets forth other key terms and premiums paid for the Capped Calls related to each series of Notes: Capped Calls Entered into in Connection with the Issuance of the 2025 Notes Capped Calls Entered into in Connection with the Issuance of the 2027 Notes Capped Calls Entered into in Connection with the Issuance of the 2029 Notes Initial strike price, subject to certain adjustments $ 61.02 $ 103.38 $ 64.85 Cap price, subject to certain adjustments $ 93.88 $ 159.04 $ 97.88 Total premium paid (in thousands) $ 27,255 $ 76,020 $ 36,570 Expiration dates March 4, 2025 - April 29, 2025 January 1, 2027 - March 11, 2027 February 13, 2029 - March 13, 2029 The 2025 Capped Calls expired in full on April 29, 2025. We did not elect to exercise any portion of the 2025 Capped Calls prior to expiration. For accounting purposes, the 2025 Capped Calls, the 2027 Capped Calls and the 2029 Capped Calls are separate transactions, and not part of the terms of the 2025 Notes, the 2027 Notes and the 2029 Notes. The 2025 Capped Calls, 2027 Capped Calls and 2029 Capped Calls are recorded in stockholders' equity and are not accounted for as derivatives. Credit Agreement On June 25, 2025 (the "Closing Date"), we entered into a credit agreement (the "Credit Agreement"), by and among us, Rapid7 LLC, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, that provides for a $ 200.0 million revolving credit facility with a letter of credit sublimit of $ 20.0 million. The Credit Agreement allows for incremental facilities up to the greater of $ 141 million or 75 % of Consolidated EBITDA (as defined in the Credit Agreement), which we currently would be able to utilize, if needed. Additional incremental facilities may be incurred, subject to certain conditions. We incurred fees of $ 1.7 million in connection with entering into the Credit Agreement. The fees are recorded in other current and non-current assets on the consolidated balance sheet and are amortized on a straight-line basis over the contractual term of the arrangement. Under the terms of the Credit Agreement, we are required to pay a commitment fee on the unused portion of the credit facility. The commitment fee rate is determined by our total net leverage ratio and that of our subsidiaries, ranging from 0.20 % to 0.25 % per annum on the unused portion of the credit facility. The commitment fee is expensed as incurred and included within interest expense on the consolidated statement of operations. The Credit Agreement matures on the fifth anniversary of the Closing Date or, if certain specified liquidity conditions are not satisfied, 91 days prior to the earliest maturity date of either the 2027 or the 2029 Notes. The Credit Agreement also contains certain affirmative and negative covenants, including a requirement to maintain a minimum interest coverage ratio for the duration of the Credit Agreement and a maximum net leverage ratio. The borrowings under the Credit Agreement bear interest at a variable annual rate based on either the Secured Overnight Financing Rate (SOFR) subject to a floor of zero or alternate base rate plus, in each case, a fixed margin, which varies depending on our net leverage ratio. As of December 31, 2025, we did not have any outstanding borrowings under the Credit Agreement. We recorded $ 0.2 million of amortization of debt issuance costs related to the Credit Agreement for the year ended December 31, 2025. As of December 31, 2025, we had a total of $ 5.6 million in letters of credit outstanding as collateral for certain office space leases which reduce the amount of borrowing availability under our Credit Agreement. (11) Leases Our leases primarily relate to office facilities that have remaining terms of up to 6.3 years, some of which include one or more options to renew with renewal terms of up to 5 years and some of which include options to terminate the leases within 1 year . All of our leases are classified as operating leases. 80 Table of Contents The components of lease expense were as follows (in thousands): Year Ended December 31, 2025 2024 Operating lease costs $ 15,730 $ 16,129 Short-term lease costs 1,874 951 Variable lease costs 9,009 8,825 Total lease costs $ 26,613 $ 25,905 Supplemental balance sheet information related to the operating leases was as follows: As of December 31, 2025 2024 Weighted average remaining lease terms (in years) 4.1 4.9 Weighted average discount rate 6.4 % 6.4 % Supplemental cash flow information related to leases was as follows (in thousands): Year Ended December 31, 2025 2024 Cash paid for amounts included in the measurement of lease liabilities $ 22,528 $ 22,870 ROU assets obtained in exchange for new lease obligations $ 7,795 $ 4,488 Maturities, which are the undiscounted cash flows, of operating lease liabilities are as follows (in thousands): As of December 31, 2025 2026 $ 20,699 2027 20,635 2028 21,361 2029 18,663 2030 3,900 2031 and thereafter 1,342 Total lease payments $ 86,600 Less: imputed interest ( 10,516 ) Total $ 76,084 During the year ended December 31, 2023, we determined that triggering events occurred which indicated that the carrying value of our right-of-use (“ROU”) and other lease-related assets related to a change in usage of certain idle office space at our corporate headquarters in Boston, Massachusetts as well as idle office spaces located in Plano, Texas, Los Angeles, California, and Toronto, Canada may not be fully recoverable. As a result, we utilized discounted cash flow models to estimate the fair value of the asset groups taking into consideration the time period it will take to obtain sublessees, the applicable discount rate and the anticipated sublease income and calculated the corresponding impairment loss. We used prices and other relevant information generated by recent market transactions involving similar or comparable assets, as well as our historical experience in real estate transactions. In the year ended December 31, 2023, we recorded impairment losses of $ 30.8 million, respectively, related to these idle office spaces, consisting of $ 22.2 million, related to ROU assets and $ 8.6 million related to leasehold improvements associated with these leased office spaces. 81 Table of Contents (12) Stock-Based Compensation ( a) General In connection with our IPO, our board of directors resolved not to make future grants under our 2011 Stock Option and Grant Plan (the “2011 Plan”). The 2011 Plan will continue to govern outstanding awards granted thereunder. The 2011 Plan provided for the grant of qualified incentive stock options and nonqualified stock options or other awards such as restricted stock awards (“RSAs”) to our employees, officers, directors and outside consultants. In July 2015, our board of directors adopted and our stockholders approved our 2015 Equity Incentive Plan (the “2015 Plan”). We initially reserved 800,000 shares of our common stock for the issuance of awards under the 2015 Plan plus the number of shares of common stock reserved for issuance under the 2011 Plan at the time the 2015 Plan became effective. The 2015 Plan also provides that (i) any shares subject to awards granted under the 2011 Plan that would have otherwise returned to the 2011 Plan (such as upon the expiration or termination of a stock award prior to vesting) will be added to, and available for issuance under, the 2015 Plan and (ii) the number of shares reserved and available for issuance under the 2015 Plan automatically increases each January 1, beginning on January 1, 2016, by 4 % of the outstanding number of shares of our common stock on the immediately preceding December 31 (known as the “evergreen” provision) or such lesser number of shares as determined by our board of directors. Additionally, on October 8, 2015, our board of directors amended the 2015 Plan to reserve an additional 1,500,000 shares of our common stock for issuance of inducement awards. As of December 31, 2025, the shares of common stock authorized to be issued under the 2015 Plan totaled 27,582,571 and there were 6,060,448 shares of common stock available for grant. We recognize stock-based compensation expense for all awards on a straight-line basis over the applicable vesting period, which is generally three to four years . Stock-based compensation expense for restricted stock units (“RSUs”), performance-based restricted stock units (“PSUs”), stock options, purchase rights issued under our employee stock purchase plan (“ESPP”), and earnout consideration and key employee consideration shares related to acquisitions was classified in the accompanying consolidated statements of operations as follows (in thousands): Year Ended December 31, 2025 2024 2023 Stock-based compensation expense: Cost of revenue $ 9,641 $ 12,208 $ 11,005 Research and development 39,357 37,566 39,183 Sales and marketing 28,230 28,718 30,350 General and administrative 27,107 29,469 31,098 Total stock-based compensation expense $ 104,335 $ 107,961 $ 111,636 The unrecognized stock-based compensation expense and estimated weighted average amortization periods remaining at December 31, 2025 was as follows: Unrecognized Compensation Expense (in thousands) Weighted-Average Amortization Period Remaining (in years) RSUs and PSUs $ 109,985 2.0 Purchase rights under our ESPP 1,491 0.6 Earnout and key employee consideration shares $ 2,835 0.9 Our Compensation Committee adopted and approved the performance goals, targets and payout formulas for our 2025, 2024, and 2023 bonus plans, including permitting executive officers and certain other employees the opportunity to receive payment of their earned bonuses in the form of common stock (in lieu of cash). In the fourth quarter of 2025, the Compensation Committee approved the elimination of the option for certain employees to receive earned bonuses in common stock (in lieu of cash). For the year ended December 31, 2025, no stock-based compensation expense was recognized related to such bonuses. During the years ended December 31, 2024 and 2023, we recognized expense of $ 0.9 million and $ 1.6 million, respectively, based on the probable expected performance against the pre-established corporate financial objectives as of December 31, 2024 and 2023. For employees, including executive officers, who elect to receive their bonuses in the form of common stock (in lieu 82 Table of Contents of cash), the payouts are expected to be made in the form of fully vested stock awards in the first quarter of the following year pursuant to our 2015 Equity Incentive Plan, as amended. The number of shares underlying such awards is determined by dividing the dollar value of the actual bonus award payment by the 30-day average closing price per share of our common stock on the date of grant. (b) Restricted Stock, Restricted Stock Units and Performance-Based Restricted Stock Units RSUs and PSUs activity during the years ended December 31, 2025, 2024 and 2023 was as follows: Restricted Stock Units Weighted Average Grant Date Fair Value Unvested balance as of December 31, 2022 3,001,443 $ 83.88 Unvested balance as of Granted 2,304,140 48.83 (1) Vested ( 1,453,713 ) 73.29 (1) Forfeited ( 1,137,444 ) 67.93 (1) Unvested balance as of December 31, 2023 2,714,426 66.40 (1) Granted 2,563,810 53.99 Vested ( 1,462,352 ) 64.78 Forfeited ( 962,649 ) 62.16 Unvested balance as of December 31, 2024 2,853,235 57.25 Granted 3,659,632 28.00 Vested ( 1,774,808 ) 53.65 Forfeited ( 767,542 ) 48.92 Unvested balance as of December 31, 2025 3,970,517 $ 33.48 (1) The weighted average grant date fair values for RSUs and PSUs granted, vested and forfeited during fiscal year 2023, as well as the weighted average grant date fair value of awards unvested as of December 31, 2023 have been revised from prior period disclosures. Refer to Note 19, Immaterial Correction of an Error , for further information. In January 2025, our Compensation Committee awarded 181,067 PSUs that required the achievement of net annualized recurring revenue (“Net ARR”) and Adjusted EBITDA targets for the 2025 fiscal-year to earn any payout. Net ARR is defined as the change in the annual value of all recurring revenue related to contracts in place at year end. In addition, the portion of the PSUs that are earned would be capped at a maximum of 200 % of the target level payout and if certain net ARR or Adjusted EBITDA goals were not met, no PSUs will be earned. The PSUs have a performance period of one year and the earned PSUs will vest in three equal installments following each of the first, second and third anniversary of the vesting commencement date, subject to the participant’s continuous service as of each such date. The 2025 target level attainment was 50 %, and in the year ended December 31, 2025, we recorded $ 1.7 million of stock-based compensation expense related to these PSUs based on level of attainment of the performance criteria. 83 Table of Contents (c) Stock Options The following tables summarizes information about stock option activity during the reporting periods: Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value (in thousands) Outstanding as of December 31, 2022 932,196 $ 12.70 $ 19,837 Granted — — Exercised ( 215,856 ) 14.14 6,519 Forfeited/cancelled — — Outstanding as of December 31, 2023 716,270 12.26 32,115 Granted — — Exercised ( 133,182 ) 11.75 5,013 Forfeited/cancelled ( 450 ) 7.73 Outstanding as of December 31, 2024 582,638 12.38 16,225 Granted — — Exercised ( 357,317 ) 11.71 5,077 Forfeited/cancelled ( 2,089 ) 20.17 Outstanding as of December 31, 2025 223,232 13.38 1.0 498 Vested and exercisable as of December 31, 2025 223,232 $ 13.38 1.0 $ 498 (d) Employee Stock Purchase Plan The number of shares reserved and available for issuance under our 2015 Employee Stock Purchase Plan (“ESPP”) automatically increases each January 1, beginning on January 1, 2016, by 1% of the outstanding number of shares of our common stock on the immediately preceding December 31 (known as the “evergreen” provision) or such lesser number of shares as determined by our board of directors. As of December 31, 2025, the shares of common stock authorized to be issued under the ESPP totaled 6,005,108 and there were 3,327,135 shares of common stock available for grant. Under the Rapid7, Inc. 2015 Employee Stock Purchase Plan ("ESPP"), employees may set aside up to 15 % of their gross earnings, on an after-tax basis, to purchase our common shares at a discounted price, which is calculated at 85 % of the lesser of: (i) the market value of our common stock at the beginning of each offering period and (ii) the market value of our common stock on the applicable purchase date. The fair value of shares issued under our ESPP is estimated on the grant date using the Black-Scholes option pricing model. The expected term represents the term from the first day of the offering period to the purchase dates within each offering period. The expected volatility is based on the historical volatilities of our own common stock. The risk-free interest rate is based on U.S. Treasury zero-coupon securities with maturities consistent with the estimated expected term. We have not paid dividends on our common stock nor do we expect to pay dividends in the foreseeable future. The following table reflects the assumptions used in the Black-Scholes option pricing model to calculate the expense related to the ESPP: Year Ended December 31, 2025 2024 2023 Expected term (in years) 0.5 - 1.0 0.5 - 1.0 0.5 - 1.0 Expected volatility 41 - 47 % 37 - 47 % 47 - 68 % Risk-free interest rate 3.6 - 3.8 % 4.0 - 5.4 % 4.5 - 5.5 % Expected dividend yield — — — Grant date fair value per share $ 5.61 - $ 6.34 $ 9.96 - $ 17.25 $ 11.70 - $ 20.07 84 Table of Contents The following table provides the number of common shares issued to employees, the purchase prices and aggregate proceeds for the purchase dates in the years ended December 31, 2025, 2024 and 2023: September 15, 2025 March 14, 2025 September 13, 2024 March 15, 2024 September 15, 2023 March 15, 2023 Common shares issued 198,074 186,793 144,445 147,445 152,419 177,886 Purchases prices $ 16.52 $ 23.79 $ 29.08 $ 33.78 and $ 39.78 $ 33.78 $ 34.71 Aggregate proceeds (in millions) $ 3.3 $ 4.4 $ 4.2 $ 5.0 $ 5.1 $ 6.1 (13) Income Taxes We have provided for current and deferred U.S. federal, state, and foreign income taxes for all tax jurisdictions in which we operate. Income (loss) before income taxes included in the consolidated statements of operations was as follows (in thousands): As of December 31, 2025 2024 2023 United States $ 21,244 $ 35,699 $ ( 139,295 ) Foreign 8,937 5,756 ( 14,038 ) Income (loss) before Income taxes $ 30,181 $ 41,455 $ ( 153,333 ) Income tax expense included in the consolidated statements of operations was as follows (in thousands): Year Ended December 31, 2025 2024 2023 Current: Federal $ ( 948 ) $ 2,426 $ 428 State and Local 3,038 2,848 1,361 Foreign 6,400 9,864 3,317 Total current tax expense $ 8,490 $ 15,138 $ 5,106 Deferred: Federal $ — $ 12 $ 9 State and local — — 2 Foreign ( 1,690 ) 779 ( 5,635 ) Total deferred tax expense (benefit) ( 1,690 ) 791 ( 5,624 ) Income tax expense (benefit) $ 6,800 $ 15,929 $ ( 518 ) As of January 1, 2025, we elected to adopt ASU 2023-09 prospectively. Refer to Note 2, Summary of Significant Accounting Policies - Accounting Pronouncements Recently Adopted, for additional detail regarding our adoption. 85 Table of Contents The reconciliation of the federal statutory rate of 21% to the effective income tax rate for the year ended December 31, 2025 subsequent to the adoption of ASU 2023-09 was as follows (in thousands, except for percents): As of December 31, 2025 U.S. Federal Statutory Tax Rate $ 6,338 21.0 % State and Local Income Tax, Net of Federal Income Tax Effect* 2,400 8.0 % Effect of Cross-Border Tax Laws Subpart F Income 650 2.2 % Global Intangible Low Tax Income 5,128 17.0 % Other 187 0.6 % Tax Credits Research and Development Credits ( 2,578 ) ( 8.5 ) % Changes in Valuation Allowances ( 27,430 ) ( 90.9 ) % Nontaxable or Nondeductible Items Stock Compensation Adjustment 14,689 48.7 % Excess Officer's Compensation 2,135 7.1 % Other 253 0.8 % Other Adjustments Impact of Filed Tax Returns 1,920 6.4 % Other 816 2.5 % Foreign Tax Effects Brazil Withholding Tax 390 1.3 % Canada Impact of Filed Tax Returns ( 317 ) ( 1.0 ) % Other 51 0.2 % Israel Impact of Filed Tax Returns 600 2.0 % Stock Compensation Adjustment 1,159 3.8 % Tax Effect from Repatriation of Foreign Earnings 324 1.1 % Other ( 355 ) ( 1.2 ) % United Kingdom Changes in Valuation Allowances 2,628 8.7 % Impact of Filed Tax Returns 721 2.4 % Stock Compensation Adjustment ( 4,135 ) ( 13.7 ) % Withholding Tax 1,008 3.3 % Other ( 122 ) ( 0.4 ) % Other Jurisdiction 122 0.4 % Changes in Unrecognized Tax Benefits 218 0.7 % Effective Tax Rate $ 6,800 22.5 % *State taxes in CA, FL, IL made up the majority (greater than 50 percent) of the tax effect in this category 86 Table of Contents The reconciliation of the federal statutory rate of 21% to the effective income tax rate for the years ended December 31, 2024 and 2023 prior to the adoption of ASU 2023-09 was as follows: Year Ended December 31, 2024 2023 Federal statutory rate 21.0 % 21.0 % State taxes, net of federal benefit 6.0 ( 0.5 ) Permanent differences 7.0 ( 0.9 ) Stock-based compensation 15.7 ( 7.0 ) Federal research and development credit ( 18.5 ) 0.9 Foreign rate differential 3.0 0.3 Change in valuation allowance ( 11.2 ) ( 3.2 ) Excess officers' compensation 5.5 ( 1.7 ) Tax rate change ( 13.4 ) ( 3.4 ) Induced conversion expense — ( 9.5 ) Tax reserves 12.6 ( 0.1 ) Provision to return ( 0.5 ) 5.2 U.S. taxation of international operations 3.5 — Other 7.7 ( 0.8 ) Effective income tax rate 38.4 % 0.3 % Income taxes paid during the year ended December 31, 2025 subsequent to the adoption of ASU 2023-09 was as follows (in thousands): As of December 31, 2025 US Federal Taxes United States $ 559 US State and Local Taxes California 461 Illinois 568 Other 886 Total US State and Local $ 1,915 Foreign Czech Republic $ 687 Ireland 795 Israel 2,362 United Kingdom 939 Other 691 Total Foreign $ 5,474 Total $ 7,948 87 Table of Contents Net deferred tax assets and liabilities, as set forth in the table below, reflect the impact of temporary differences between the amounts of assets and liabilities recorded for financial statement purposes and such amounts measured in accordance with tax laws (in thousands): Year Ended December 31, 2025 2024 Deferred tax assets: Accruals and reserves $ 1,027 $ 824 Net operating loss carryforwards 112,976 121,343 Deferred revenue 3,112 3,192 Depreciation 4,732 4,304 Research and development credits 15,489 13,697 Capitalized research and development 70,704 90,965 Operating lease liabilities 15,045 18,164 Stock-based compensation 14,042 12,290 Other 31 3,369 Gross deferred tax assets $ 237,158 $ 268,148 Valuation allowance ( 199,095 ) ( 229,283 ) Total deferred tax assets $ 38,063 $ 38,865 Deferred tax liabilities: Operating lease ROU assets $ ( 8,812 ) $ ( 10,329 ) Deferred contract acquisition and fulfillment costs ( 23,918 ) ( 26,277 ) Other ( 4,329 ) ( 2,944 ) Total deferred tax liabilities $ ( 37,059 ) $ ( 39,550 ) Net deferred tax assets (liabilities) $ 1,004 $ ( 685 ) Valuation Allowance As of December 31, 2025, we have evaluated the need for a valuation allowance on our deferred tax assets. In making this determination, management considered whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The valuation allowance decreased by $ 30.2 million for the year ended December 31, 2025, primarily due to the utilization of US federal and state net operating loss ("NOL"). This compares to a decrease of $ 2.4 million for the year ended December 31, 2024. We continue to record a full valuation allowance against our net deferred tax assets in the United States and U.K. We may release additional valuation allowances in future periods if positive evidence, such as projection of sustained future growth, supports the realization of such deferred tax assets. Release of all or a portion of these valuation allowances would result in a decrease in the provision for income taxes in the period of the release. Net Operating Loss Carryforwards and Research and Development Credits As of December 31, 2025, we had federal and state NOL carryforwards in the United States of $ 222.6 million and $ 240.3 million, respectively. Of these amounts, $ 219.1 million of federal and $ 30.9 million of state NOLs can be carried forward indefinitely. The remaining NOLs expire at various dates beginning in 2033. We had foreign NOL carryforwards of $ 234.2 million that can be carried forward indefinitely. We also had federal and state research and development credit and other state tax credit carryforwards of $ 10.8 million, $ 4.5 million and $ 1.0 million as of December 31, 2025, respectively. These credit carryforwards expire at various dates beginning in 2025. As of December 31, 2025, our ability to utilize NOLs remains limited under IRC Sections 382 and 383 due to an ownership change we experienced in January 2018. We will not be precluded from realizing the NOL carryforwards and tax credits but may be limited in the amount we could utilize in any given tax year in the event that the federal and state taxable income exceeds the limitation imposed by Section 382. The amount of the annual limitation is determined based on our value immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. Unrecognized Tax Benefits We file income tax returns in all jurisdictions in which we operate. In the normal course of business, we are subject to 88 Table of Contents examination by federal, state, and foreign tax authorities, where applicable. The statute of limitations for these jurisdictions is generally three to seven years . However, to the extent we utilize net operating losses or other similar carryforward attributes such as credits, the statute remains open to the extent of the net operating losses or credits that are utilized. We are currently under tax examination in Israel for tax years 2018 through 2023. The following is a reconciliation of the beginning and ending balances of unrecognized tax benefits (excluding interest and penalties), in thousands: Balance, January 1, 2025 $ 9,876 Additions for tax positions of prior years 113 Reductions for tax positions of prior years ( 315 ) Balance, December 31, 2025 $ 9,674 We have established reserves to provide for additional income taxes that management believes will more likely than not be due in future years. The reserves have been established based upon our assessment of the potential exposure. The change in our reserves during the year 2025 consists of $ 0.2 million of U.S. state reserves related to unrecognized tax benefits. During the next twelve months, we do not expect any change to our uncertain tax positions other than the accrual of interest in the normal course of business. From time to time, we may receive income tax assessments from taxing authorities asserting additional tax liabilities owed. During the quarter ended June 30, 2024, we received an initial assessment from the Israel Tax Authority (“ITA”) of approximately 324 million Israeli New Shekels (approximately $ 102 million, based upon exchange rates as of December 31, 2025 between the Israeli New Shekel and the US Dollar) related to fiscal year 2021. Based on our interpretation of the regulations and available case law, we believe that the tax positions we have taken on our filed tax return in Israel are sustainable and we intend to defend our position through all available means. As such, we have not recorded any impact of the ITA assessment in our consolidated financial statements for the year ended December 31, 2025. We are continuing to monitor developments related to this matter and its impact on our existing income tax reserves for all open years. If we are unsuccessful in sustaining our tax position in this matter, our financial condition and results of operations would be adversely affected. Other Tax Matters On July 4, 2025, President Donald Trump signed the One Big Beautiful Bill Act ("OBBBA"). The OBBBA changes the current tax law related to both corporate income taxes and deferred tax assets and liabilities, which we currently accounts for under ASC 740, Income taxes ("ASC 740"). The provisions include the immediate expensing of domestic research and development costs which reduced our U.S. federal cash tax payments for the remainder of 2025. Overall, OBBBA did not have a material impact on our financial statements As of December 31, 2025, we have accumulated earnings generated by foreign subsidiaries. Except for unremitted earnings associated with our Israel legal entity, we have not recognized a deferred tax liability for the majority of these unremitted earnings as our intention is to indefinitely reinvest these accumulated earnings in our foreign subsidiaries. During 2025, we recorded an incremental liability of $ 0.4 million related to the taxes expected to be imposed upon the repatriation of these unremitted foreign earnings from our Israel legal entity that are not considered indefinitely reinvested. The Organization for Economic Co-operation and Development (“OECD”) Pillar Two Model Rules (“Pillar Two”) for the global 15% minimum tax have been adopted in a number of jurisdictions in which we operate. We are continuing to evaluate the potential impact on future periods of the Pillar Two framework, pending legislative adoption by additional individual countries. 89 Table of Contents (14) Net Income (Loss) per Share The following table summarizes the computation of basic and diluted net income (loss) per share of our common stock for the years ended December 31, 2025, 2024 and 2023 (in thousands, except share and per share data): Year Ended December 31, 2025 2024 2023 Numerator: Net income (loss) attributable to common stockholders, basic and diluted $ 23,381 $ 25,526 $ ( 152,815 ) Denominator: Weighted-average common shares outstanding, basic 64,727,551 62,607,583 60,756,087 Weighted-average effect of dilutive shares: Dilutive effect of equity incentive plans 274,404 576,068 — Weighted-average common shares outstanding, diluted 65,001,955 63,183,651 60,756,087 Net income (loss) per share attributable to common stockholders, basic $ 0.36 $ 0.41 $ ( 2.52 ) Net income (loss) per share attributable to common stockholders, diluted $ 0.36 $ 0.40 $ ( 2.52 ) We intend to settle any conversion of our 2027 Notes and 2029 Notes in cash, shares, or a combination thereof. The dilutive impact of the Notes for our calculation of diluted net income per share is considered using the if-converted method. For the years ended December 31, 2025, 2024 and 2023, the shares underlying the Notes were not considered in the calculation of diluted net income per share as the effect would have been anti-dilutive. In connection with the issuance of the 2025 Notes, the 2027 Notes and the 2029 Notes, we entered into the 2025 Capped Calls, 2027 Capped Calls and 2029 Capped Calls, which were not included for the purpose of calculating the number of diluted shares outstanding, as their effect would have been anti-dilutive. As of December 31, 2025, the 2027 Notes and the 2029 Notes were not convertible at the option of the holder. As of December 31, 2024, the 2025 Notes were convertible at the option of the holder, however, the 2027 Notes and the 2029 Notes were not convertible at the option of the holder. We had not received any conversion notices through the issuance date of our consolidated financial statements. For disclosure purposes, we have calculated the potentially dilutive effect of the conversion spread, which is included in the table below. The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted-average shares outstanding for the respective periods below because they would have been anti-dilutive: Year Ended December 31, 2025 2024 2023 Options to purchase common stock — — 716,270 Unvested restricted stock units — — 2,983,020 Common shares issued in conjunction with acquisitions — 227,316 115,051 Shares to be issued under ESPP 173,166 91,634 103,778 Convertible senior notes 10,679,754 11,183,611 11,183,611 Total 10,852,920 11,502,561 15,101,730 90 Table of Contents (15) Commitments and Contingencies (a) Purchase Obligations As of December 31, 2025, we have non-cancellable firm purchase commitments primarily relating to cloud infrastructure services and software subscriptions. The following table presents details of the future non-cancellable purchase commitments under these agreements as of December 31, 2025 (in thousands): 2026 $ 152,789 2027 140,807 2028 126,000 Thereafter 295,417 Total $ 715,013 (b) Warranty We provide limited product warranties. Historically, any payments made under these provisions have been immaterial. (c) Litigation and Claims From time to time, we may be a party to litigation or subject to claims incident to the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of these ordinary course matters will not have a material adverse effect on our business. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. (d) Indemnification Obligations We agree to standard indemnification provisions in the ordinary course of business. Pursuant to these provisions, we agree to indemnify, hold harmless and reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally our customers, in connection with any United States patent, copyright or other intellectual property infringement claim by any third party arising from the use of our products or services in accordance with the agreement or arising from our gross negligence, willful misconduct or violation of the law (provided that there is not gross or willful misconduct on the part of the other party) with respect to our products or services. The term of these indemnification provisions is generally perpetual from the time of execution of the agreement. We carry insurance that covers certain third-party claims relating to our services and limits our exposure. We have never incurred costs to defend lawsuits or settle claims related to these indemnification provisions. As permitted under Delaware law, we have entered into indemnification agreements with our officers and directors, indemnifying them for certain events or occurrences while they serve as officers or directors of Rapid7. (e) Income Taxes From time to time, we may receive income tax assessments from taxing authorities asserting additional tax liabilities owed. During the quarter ended June 30, 2024, we received an initial assessment from the Israel Tax Authority (“ITA”) of approximately 324 million Israeli New Shekels (approximately $ 102 million, based upon exchange rates as of December 31, 2025 between the Israeli New Shekel and the US Dollar) related to fiscal year 2021. Based on our interpretation of the regulations and available case law, we believe that the tax positions we have taken on our filed tax return in Israel are sustainable and we intend to defend our position through all available means. As such, we have not recorded any impact of the ITA assessment in our consolidated financial statements for the year ended December 31, 2025. We are continuing to monitor developments related to this matter and its impact on our existing income tax reserves for all open years. If we are unsuccessful in sustaining our tax position in this matter, our financial condition and results of operations would be adversely affected. (16) Employee Benefit Plan In December 2008, we established a discretionary 401(k) plan in which all full-time U.S. employees above the age 18 are eligible to participate after they have been employed for us for 90 days following the applicable date of hire. Matching 91 Table of Contents contributions to the 401(k) plan can be made at our discretion. In 2025, 2024 and 2023, we made discretionary contributions of $ 3.3 million, $ 3.5 million and $ 4.3 million, respectively, to the plan. (17) Segment Information and Information about Geographic Areas We operate in a single reportable operating segment, providing product subscriptions and professional services to our customers. The operating segment’s accounting policies are consistent with those described in Note 2, Summary of Significant Accounting Policies . Our chief operating decision maker (“CODM”) is our Chief Executive Officer. One of the measures of profit or loss that is used by our CODM to assess performance and allocate resources is consolidated net income, as reported in the consolidated statements of operations. Consolidated net income is used by our CODM in monitoring actual versus budgeted results as well as in benchmarking against our competitors, which are used in assessing performance of the segment. The following table includes segment revenue, segment profit or loss, significant segment expenses and other segment expenses for the years ended December 31, 2025, 2024 and 2023 (in thousands): Year Ended December 31, 2025 2024 2023 Total revenue $ 859,794 $ 844,007 $ 777,707 Adjusted total cost of revenue (1) 227,706 221,664 202,655 Adjusted research and development (1) 151,303 135,560 138,754 Adjusted sales and marketing (1) 287,892 267,483 280,703 Adjusted general and administrative (1) 57,161 55,792 53,374 Other segment expense, net (2) 112,351 137,982 255,036 Net income (loss) $ 23,381 $ 25,526 $ ( 152,815 ) (1) Adjusted total cost of revenue excludes the impact of stock-based compensation expense and amortization of acquired intangible assets. Adjusted research and development excludes the impact of stock-based compensation expense. Adjusted sales and marketing excludes the impact of stock-based compensation and amortization of acquired intangible assets. Adjusted general and administrative excludes the impact of stock-based compensation, amortization of acquired intangible assets and acquisition-related expenses. (2) Other segment expenses include stock-based compensation expense, amortization of acquired intangible assets, acquisition-related expenses, restructuring expense, interest income, interest expense, other income (expense) and provision for income taxes. See the consolidated financial statements for other financial information regarding our operating segment. Property and equipment, net by geographic area was as follows (in thousands): Year Ended December 31, 2025 2024 United States $ 18,243 $ 22,613 Rest of World 13,747 9,632 Total $ 31,990 $ 32,245 (18) Restructuring On August 7, 2023, our board of directors approved a restructuring plan that was designed to improve operational efficiencies, reduce operating costs and better align our workforce with current business needs, top strategic priorities and key growth opportunities (collectively, the “Restructuring Plan”). The Restructuring Plan included a reduction of our workforce by approximately 16 %. In 2023, we incurred $ 22.2 million of restructuring charges which were recorded within restructuring in the consolidated statements of operations. In addition, we incurred $ 1.3 million of stock-based compensation expense related to acceleration of share-based awards. In 2023, we permanently closed certain idle office spaces in Plano, Texas, Los Angeles, California and Toronto, Canada, which resulted in an impairment loss of $ 3.6 million. Refer to Note 11, Leases , for further details on the impairment of long-lived assets. 92 Table of Contents During the first quarter of 2024, the execution of the Restructuring Plan was completed and we recorded $( 0.2 ) million of restructuring charges within general and administrative expense in the consolidated statements of operations. Additionally, during the second quarter of 2024, the remaining payments were made, resulting in no remaining restructuring liability as of December 31, 2025. (19) Immaterial Correction of an Error During the fourth quarter of 2024, we identified an immaterial error related to stock-based compensation expense associated with certain RSUs and PSUs granted during fiscal years 2023 and 2024 attributable to an improper valuation of the underlying awards, resulting in an understatement of stock-based compensation expense in 2023 and 2024. In accordance with Staff Accounting Bulletin (“SAB”) No. 99, Materiality , and SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements , we evaluated the errors and determined that the related impact was not material to results of operations or financial position for any historical annual or interim period. As a result, the errors were corrected in our 2024 financial statements by adjusting prior period financial statements as of and for each of the quarterly and year-to-date periods shown below. Additionally, Note 12, Stock-Based Compensation, Note 13, Income Taxes and Note 14, Net Income (Loss) per Share, were adjusted in our 2024 financial statements to reflect the correction of the immaterial errors. The following table sets forth the effect of the immaterial error correction to certain line items of our consolidated statement of operations, consolidated balance sheet and consolidated statement of cash flows as of and for the year ended December 31, 2023 (in thousands, except share amounts): Year Ended December 31, 2023 As Reported Adjustment Revised Consolidated Statement of Operations: Cost of revenue - product subscriptions $ 202,904 $ 236 $ 203,140 Cost of revenue - professional services 28,837 69 28,906 Research and development expense 176,776 1,161 177,937 Sales and marketing expense 312,636 1,025 313,661 General and administrative expense 84,276 1,064 85,340 Net income (loss) ( 149,260 ) ( 3,555 ) ( 152,815 ) Net income (loss) per share, basic ( 2.46 ) ( 0.06 ) ( 2.52 ) Net income (loss) per share, diluted $ ( 2.46 ) $ ( 0.06 ) $ ( 2.52 ) Consolidated Statement of Cash Flows: Net income (loss) $ ( 149,260 ) $ ( 3,555 ) $ ( 152,815 ) Stock-based compensation expense 108,081 3,555 111,636 Net cash provided by operating activities $ 104,278 $ — $ 104,278 As of December 31, 2023 As Reported Adjustment Revised Consolidated Balance Sheet: Additional paid-in capital $ 894,630 $ 3,555 $ 898,185 Accumulated deficit ( 1,010,005 ) ( 3,555 ) ( 1,013,560 ) Total stockholders' deficit $ ( 118,179 ) $ — $ ( 118,179 ) The following tables set forth the effect of the immaterial error corrections to (i) certain line items of our unaudited condensed consolidated statements of operations for the interim periods ended March 31, 2023, June 30, 2023, September 30, 2023 and December 31, 2023, as well as (ii) certain line items of our unaudited condensed consolidated statements of operations and unaudited condensed consolidated statements of cash flows for the interim periods ended March 31, 2024, June 30, 2024 and September 30, 2024. The immaterial error correction of these unaudited condensed consolidated financial statements for the 2024 interim periods was reflected when those statements were reproduced on a comparative basis in our Quarterly Reports on Form 10-Q throughout fiscal year 2025: 93 Table of Contents Three Months Ended March 31, 2023 Three Months Ended June 30, 2023 As Reported Adjustment Revised As Reported Adjustment Revised (unaudited, in thousands, except per share amounts) (unaudited, in thousands, except per share amounts) Consolidated Statement of Operations: Cost of revenue - product subscriptions $ 48,188 $ 36 $ 48,224 $ 51,148 $ 78 $ 51,226 Cost of revenue - professional services 7,811 10 7,821 7,016 22 7,038 Research and development expense 46,346 148 46,494 50,762 402 51,164 Sales and marketing expense 80,587 166 80,753 83,036 332 83,368 General and administrative expense 24,207 269 24,476 22,888 562 23,450 Net income (loss) ( 25,915 ) ( 629 ) ( 26,544 ) ( 66,782 ) ( 1,396 ) ( 68,178 ) Net income (loss) per share, basic ( 0.43 ) ( 0.01 ) ( 0.44 ) ( 1.10 ) ( 0.03 ) ( 1.13 ) Net income (loss) per share, diluted $ ( 0.43 ) $ ( 0.01 ) $ ( 0.44 ) $ ( 1.10 ) $ ( 0.03 ) $ ( 1.13 ) Three Months Ended September 30, 2023 Three Months Ended December 31, 2023 As Reported Adjustment Revised As Reported Adjustment Revised (unaudited, in thousands, except per share amounts) (unaudited, in thousands, except per share amounts) Consolidated Statement of Operations: Cost of revenue - product subscriptions $ 51,261 $ 60 $ 51,321 $ 52,307 $ 62 $ 52,369 Cost of revenue - professional services 6,569 21 6,590 7,441 16 7,457 Research and development expense 39,940 309 40,249 39,729 302 40,031 Sales and marketing expense 75,699 284 75,983 73,314 243 73,557 General and administrative expense 17,866 ( 76 ) 17,790 19,314 309 19,623 Net income (loss) ( 76,611 ) ( 598 ) ( 77,209 ) 20,048 ( 932 ) 19,116 Net income (loss) per share, basic ( 1.25 ) ( 0.01 ) ( 1.26 ) 0.33 ( 0.02 ) 0.31 Net income (loss) per share, diluted $ ( 1.25 ) $ ( 0.01 ) $ ( 1.26 ) $ 0.27 $ ( 0.01 ) $ 0.26 Three Months Ended March 31, 2024 As Reported Adjustment Revised (unaudited, in thousands, except per share amounts) Consolidated Statement of Operations: Cost of revenue - product subscriptions $ 54,655 $ 79 $ 54,734 Cost of revenue - professional services 6,248 12 6,260 Research and development expense 40,990 378 41,368 Sales and marketing expense 72,805 290 73,095 General and administrative expense 19,835 93 19,928 Net income (loss) 2,258 ( 852 ) 1,406 Net income (loss) per share, basic 0.04 ( 0.02 ) 0.02 Net income (loss) per share, diluted $ 0.03 $ ( 0.01 ) $ 0.02 Consolidated Statement of Cash Flows: Net income $ 2,258 $ ( 852 ) $ 1,406 Stock-based compensation expense 24,893 852 25,745 Net cash provided by operating activities $ 31,070 $ — $ 31,070 94 Table of Contents Three Months Ended June 30, 2024 Six Months Ended June 30, 2024 As Reported Adjustment Revised As Reported Adjustment Revised (unaudited, in thousands, except per share amounts) (unaudited, in thousands, except per share amounts) Consolidated Statement of Operations: Cost of revenue - product subscriptions $ 54,982 $ 125 $ 55,107 $ 109,637 $ 204 $ 109,841 Cost of revenue - professional services 5,866 19 5,885 12,114 31 12,145 Research and development expense 40,056 392 40,448 81,046 770 81,816 Sales and marketing expense 77,795 331 78,126 150,600 621 151,221 General and administrative expense 22,412 790 23,202 42,247 883 43,130 Net income (loss) 8,195 ( 1,657 ) 6,538 10,453 ( 2,509 ) 7,944 Net income (loss) per share, basic 0.13 ( 0.03 ) 0.10 0.13 ( 0.05 ) 0.08 Net income (loss) per share, diluted $ 0.11 $ ( 0.02 ) $ 0.09 $ 0.11 $ ( 0.03 ) $ 0.08 Consolidated Statement of Cash Flows: Net income (loss) $ 10,453 $ ( 2,509 ) $ 7,944 Stock-based compensation expense 52,302 2,509 54,811 Net cash provided by operating activities $ 63,928 $ — $ 63,928 Three Months Ended September 30, 2024 Nine Months Ended September 30, 2024 As Reported Adjustment Revised As Reported Adjustment Revised (unaudited, in thousands, except per share amounts) (unaudited, in thousands, except per share amounts) Consolidated Statement of Operations: Cost of revenue - product subscriptions $ 56,653 $ 121 $ 56,774 $ 166,290 $ 325 $ 166,615 Cost of revenue - professional services 6,364 19 6,383 18,478 50 18,528 Research and development expense 44,565 411 44,976 125,611 1,181 126,792 Sales and marketing expense 74,521 300 74,821 225,121 921 226,042 General and administrative expense 18,590 293 18,883 60,837 1,176 62,013 Net income (loss) 16,554 ( 1,144 ) 15,410 27,007 ( 3,653 ) 23,354 Net income (loss) per share, basic 0.26 ( 0.02 ) 0.24 0.43 ( 0.07 ) 0.36 Net income (loss) per share, diluted $ 0.22 $ ( 0.01 ) $ 0.21 $ 0.36 $ ( 0.04 ) $ 0.32 Consolidated Statement of Cash Flows: Net income (loss) $ 27,007 $ ( 3,653 ) $ 23,354 Stock-based compensation expense 76,896 3,653 80,549 Net cash provided by operating activities $ 107,897 $ — $ 107,897 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.