What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-27 compared with 2025-02-26 · 189 added, 194 removed, 436 unchanged (47% of the section changed)

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We have made it increasingly easy to standardize on Sprout Social as the centralized system of record for social and to help customers maximize the value of this mission critical channel.

Currently, approximately 30,000 customers across more than 100 countries rely on our platform.

Currently, tens of thousands of customers across more than 100 countries rely on our platform.

Introduced in 2011, our cloud software brings together social messaging, data and workflows in a unified system of record, intelligence and action.

Operating across major networks, including X (formerly known as Twitter), Facebook, Instagram, TikTok, Pinterest, LinkedIn, Google, Reddit, Glassdoor and YouTube, and commerce platforms Facebook Shops, Shopify and WooCommerce, we provide organizations with a centralized platform to manage their social media efforts across stakeholders and business functions.

Operating across major networks, including X (formerly known as Twitter), Facebook, Instagram, TikTok, Pinterest, LinkedIn, Google, Reddit, Bluesky, Glassdoor and YouTube, and commerce platforms Facebook Shops, Shopify and WooCommerce, we provide organizations with a centralized platform to manage their social media efforts across stakeholders and business functions.

Virtually every aspect of business has been impacted by social media, from marketing, sales, commerce and public relations to customer service, product and strategy, creating a need for an entirely new category of software.

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This revenue has historically represented less than 1% of our revenue and is expected to be immaterial for the foreseeable future.

Our tiered subscription-based model allows our customers to choose among three core plans to meet their needs.

Our tiered subscription-based model allows our customers to choose among four core plans to meet their needs.

Each plan is licensed on a per user per month basis at prices dependent on the level of features offered.

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We expect to continue investing in the growth of our business and, as a result, generate net losses for the foreseeable future.

Macroeconomic Conditions

As a company with a global footprint, we are subject to risks and exposures caused by significant events and their macroeconomic impacts, including, but not limited to, fluctuations in inflation and interest rates, ongoing overseas conflict, volatility in the capital markets and related market uncertainty.

Macroeconomic and Geopolitical Conditions

As a company with a global footprint, we are subject to risks and exposures caused by significant events and their macroeconomic impacts, including, but not limited to, geopolitical instability and uncertainty, fluctuations in inflation, interest rates and currency exchange rates, volatility in the capital markets, tariffs and trade tensions, and related market uncertainty.

We continuously monitor the direct and indirect impacts, and the potential for future impacts, of these circumstances on our business and financial results, as well as the overall global economy and geopolitical landscape.

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We believe macroeconomic uncertainty could persist, and as a result, we expect that some or all of these negative trends may emerge or recur during future quarters.

Acquisition of NewsWhip Group Holdings Limited

On July 30, 2025, we completed the acquisition of all of the outstanding voting shares of NewsWhip Group Holdings Limited (“NewsWhip”).

NewsWhip’s proprietary real-time media monitoring and predictive analytics provide insights into emerging trends and narratives, and allowed us to enter the public relations and crisis monitoring space.

Consideration for the acquisition of NewsWhip consisted of an upfront cash payment of $52.3 million, subject to adjustment for cash, indebtedness and working capital, deferred consideration of $3.2 million and up to $10.0 million of an earnout, which is contingent upon NewsWhip’s achievement of financial performance metrics through June 30, 2027.

We funded the upfront cash payment with cash on hand and $32 million of borrowings under the Facility (as defined below).

Refer to Note 4 of the Notes to the Financial Statements (Part II, Item 8 of this Annual Report) for further discussion.

The purchase price allocation as of the date of acquisition was based on a preliminary valuation and is subject to revision as more detailed analyses are completed and additional information about the fair value of assets acquired and liabilities assumed become available.

We expect to finalize the allocation of the purchase consideration as soon as practicable, pending any other adjustments to acquired assets or liabilities, but no later than 12 months from the acquisition date.

We have included the financial results of NewsWhip in our consolidated financial statements from the date of acquisition.

The impact of NewsWhip’s financial results following the date of acquisition were not significant to Sprout Social’s consolidated financial statements.

Acquisition of Tagger Media, Inc.

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Tagger’s platform enables marketers to discover influencers, plan and manage campaigns, analyze competitor strategies, report on trends and measure return on investment.

We funded the purchase consideration with a combination of cash on hand and $75 million borrowed under the Facility (defined below), which is further described in Note 8 - Revolving Line of Credit of the Notes to the Financial Statements (Part I, Item 8 of this Annual Report).

We funded the purchase consideration with a combination of cash on hand and $75 million borrowed under the Facility (as defined below), which is further described in Note 8 of the Notes to the Financial Statements (Part II, Item 8 of this Annual Report).

The fair values of the tangible and identifiable intangible assets acquired and liabilities assumed are based on management’s estimates and assumptions.

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We have included the financial results of Tagger in our consolidated financial statements from the date of acquisition.

The impact of Tagger’s financial results following the date of acquisition were not significant to Sprout Social’s consolidated financial statements.

Refer to Note 4 - Business Combinations of the Notes to the Financial Statements (Part I, Item 8 of this Annual Report) for further discussion.

The impact of Tagger’s financial results following the date of acquisition were not

significant to Sprout Social’s consolidated financial statements.

Refer to Note 4 of the Notes to the Financial Statements (Part II, Item 8 of this Annual Report) for further discussion.

Acquisition of Repustate, Inc.

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The impact of Repustate’s financial results following the date of acquisition were not significant to Sprout Social’s consolidated financial statements.

Refer to Note 4 - Business Combinations of the Notes to the Financial Statements (Part I, Item 8 of this Annual Report) for further discussion.

Refer to Note 4 of the Notes to the Financial Statements (Part II, Item 8 of this Annual Report) for further discussion.

Key Factors Affecting Our Performance

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We have invested, and expect to continue to invest, heavily in expanding our sales force and marketing efforts to acquire new customers.

Currently, we have approximately 30,000 customers.

For the year ended December 31, 2024, as compared to the year ended December 31, 2023, while our total number of customers decreased, our number of customers contributing over $10,000 in annualized recurring revenue (“ARR”) and $50,000 in ARR increased.

In addition, as we continue to focus on expanding our enterprise customer base, we have experienced and expect to continue to experience longer and more expansive average sale cycles and increased pricing pressure, which may be exacerbated by the macroeconomic factors described above.

We expect these trends to continue as we remain focused on our most sophisticated customers.

Currently, we have tens of thousands of customers.

For the year ended December 31, 2025, as compared to the year ended December 31, 2024, while our total number of customers decreased, our number of customers contributing $30,000 or more in annualized recurring revenue (“ARR”) and $50,000 or more in ARR increased.

We expect these trends to continue as we remain focused on our most sophisticated prospects and customers.

Expanding within our current customer base

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Our sales and customer success efforts include encouraging organizations to expand use-cases to more fully realize the value from the broader adoption of our platform throughout an organization.

We will continue to invest in enhancing awareness of our brand, creating additional uses for our products and developing more products, features and functionality of existing products, which we believe are vital to achieving increased adoption of our platform.

We have a history of attracting new customers and we have recently increased our focus on expanding their use of our platform over time.

We use dollar-based net retention rate to evaluate the long-term value of our customer relationships, because we believe this metric reflects our ability to retain and expand subscription revenue generated from our existing customers.

We intend to continue to invest in enhancing awareness of our brand, creating additional uses for our products and developing more products, features and functionality of existing products, which we believe are vital to achieving increased adoption of our platform.

In recent years, we have increased our focus on expanding our customers’ use of our platform over time.

We use dollar-based net retention rate to evaluate the long-term value of our customer relationships, because we believe this metric reflects our ability to retain and expand subscription revenue

generated from our existing customers.

Our dollar-based net retention rate for the years ended December 31, 2025 and 2024 was 100% and 104%, respectively.

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Our success is dependent on our ability to sustain product and technology innovation and maintain the competitive advantage of our proprietary technology.

We continue to invest resources to enhance the capabilities of our platform by introducing new products, features and functionality of existing products.

We continue to invest resources to enhance the capabilities of our platform by introducing new products, features and functionality of existing products, either through acquisition or internal development.

International expansion

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We have teams in Ireland, Canada, the United Kingdom, Singapore, India, Australia, the Philippines and Poland to support our growth internationally.

We believe global demand for our

platform and offerings will continue to increase as awareness of our platform in international markets grows.

We believe global demand for our platform and offerings will continue to increase as awareness of our platform in international markets grows.

We plan to continue adding to our local sales, customer support and customer success teams in select international markets over time.

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We review the following key business metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions.

As previously disclosed, we no longer believe that ARR and total number of customers are key performance indicators of Sprout Social’s business due to our evolving customer mix and we will no longer publicly disclose these metrics.

While we no longer believe that ARR and total number of customers are key performance indicators of Sprout Social’s business, the definitions of these metrics are necessary for an understanding of how we define number of customers contributing over $10,000 in ARR and number of customers contributing over $50,000 in ARR.

For this purpose, we define ARR as the annualized revenue run-rate of subscription agreements from all customers as of the last date of the specified period and we define a customer as a unique account, multiple accounts containing a common non-personal email domain, or multiple accounts governed by a single agreement or entity.

Number of customers contributing more than $10,000 in ARR

We define customers contributing more than $10,000 in ARR as those on a paid subscription plan that had more than $10,000 in ARR as of a period end.

We view the number of customers that contribute more than $10,000 in ARR as a measure of our ability to scale with our customers and attract larger organizations.

For purposes of the below metrics, we define ARR as the annualized revenue run-rate of subscription agreements from all customers as of the last date of the specified period, and we define a customer as a unique account, multiple accounts containing a common non-personal email domain, or multiple accounts governed by a single agreement or entity.

Beginning in the third quarter of 2025, the metrics below include NewsWhip customers.

Number of customers contributing $30,000 or more in ARR

We define customers contributing $30,000 or more in ARR as those on a paid subscription plan that had $30,000 or more in ARR as of a period end.

We view the number of customers that contribute $30,000 or more in ARR as a measure of our ability to scale with our customers and attract larger organizations.

We believe this represents potential for future growth, including expanding within our current customer base.

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As of December 31,

Number of customers contributing more than $10,000 in ARR

Number of customers contributing more than $50,000 in ARR

We define customers contributing more than $50,000 in ARR as those on a paid subscription plan that had more than $50,000 in ARR as of a period end.

We view the number of customers that contribute more than $50,000 in ARR as a measure of our ability to scale with our largest customers and attract more sophisticated organizations.

Number of customers contributing $30,000 or more in ARR 3,803 3,374

Beginning in the fourth quarter of 2025, we replaced our disclosure of customers with ARR of $10,000 or more with customers with ARR of $30,000 or more.

We believe this metric better reflects our

strategic focus on larger customers and aligns with how management evaluates performance and allocates resources.

Number of customers contributing $50,000 or more in ARR

We define customers contributing $50,000 or more in ARR as those on a paid subscription plan that had $50,000 or more in ARR as of a period end.

We view the number of customers that contribute $50,000 or more in ARR as a measure of our ability to scale with our largest customers and attract more sophisticated organizations.

We believe this represents potential for future growth, including expanding within our current customer base.

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As of December 31,

Number of customers contributing more than $50,000 in ARR 1,718 1,399

Number of customers contributing $50,000 or more in ARR 2,022 1,718

Components of our Results of Operations

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Cost of revenue primarily consists of expenses related to hosting our platform and providing support to our customers.

These expenses are comprised of fees paid to data providers, hosted data center costs and personnel costs directly associated with cloud infrastructure, customer success and customer support, including salaries, benefits, bonuses and allocated overhead.

These expenses comprise fees paid to data providers, hosted data center costs and personnel costs directly associated with cloud infrastructure, customer success and customer support, including salaries, benefits, bonuses and allocated overhead.

These costs also include depreciation expense and amortization expense related to acquired developed technologies that directly benefit sales.

Overhead associated with facilities and information technology is allocated to cost of revenue and operating expenses based on headcount.

Although we expect our cost of revenue to increase in absolute dollars as our business and revenue grows, we expect our cost of revenue to decrease as a percentage of our revenue over time.

Although we expect our cost of revenue to increase in absolute dollars as our business and revenue grows, we expect it to decrease as a percentage of our revenue over time.

Professional Services and Other

Cost of professional services primarily consists of expenses related to our professional services organization and are comprised of personnel costs, including salaries, benefits, bonuses and allocated overhead.

Cost of professional services primarily consists of expenses related to our professional services organization and comprise personnel costs, including salaries, benefits, bonuses and allocated overhead.

Gross Profit and Gross Margin

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Research and development expenses primarily consist of personnel costs, including salaries, benefits and allocated overhead.

Research and development expenses also include depreciation

expense and other expenses associated with product development.

Research and development expenses also include depreciation expense and other expenses associated with product development.

We plan to increase the dollar amount of our investment in research and development for the foreseeable future as we focus on developing new features and enhancements to our plan offerings.

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Sales commissions are deferred and amortized on a straight-line basis over the expected period of benefit, which we have determined to be five years.

We plan to increase the dollar amount of our investment in sales and marketing for the foreseeable future, primarily for increased headcount for our sales department.

We plan to increase the dollar amount of our investment in sales and marketing for the foreseeable future as we continue to scale the business.

General and Administrative

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Interest Income (Expense), Net

Interest income (expense), net consists primarily of interest expense related to the credit facility and is offset by interest income earned on our cash and investment balances.

Interest income (expense), net consists primarily of interest expense related to the Facility and is offset by interest income earned on our cash and investment balances.

Other Expense, Net

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Loss before income taxes (42,740) (61,301) (65,778)

Income tax (benefit) expense 670 649 366

Income tax expense 587 670 649

Net loss $ (43,327) $ (61,971) $ (66,427)

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Loss before income taxes (9) % (15) % (20) %

Income tax (benefit) expense — % — % — %

Income tax expense — % — % — %

Net loss (9) % (15) % (20) %

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Year Ended December 31, 2025 Compared to Year Ended December 31, 2024

Years Ended December 31,

Years Ended December 31, Change

2025 2024 Amount %

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The increase in subscription revenue was primarily driven by increased revenue from our highest tier customers.

Customers contributing over $10,000 in ARR grew 7% versus the prior year and customers contributing over $50,000 in ARR grew 23% versus the prior year.

The number of customers contributing $30,000 or more in ARR grew 13% versus the prior year and the number of customers contributing $50,000 or more in ARR grew 18% versus the prior year.

The increase in new customers within the highest tiers was primarily driven by prioritizing our customer success and growth resources towards these customers and continuing to grow our sales force capacity to meet market demand.

Cost of Revenue and Gross Margin

Years Ended December 31,

Years Ended December 31, Change

2025 2024 Amount %

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Data provider fees $ 8,514

Personnel costs 1,780

Hosting fees 4,161

Amortization of intangible assets 700

Restructuring costs 354

Personnel costs (1,414)

Stock-based compensation expense (1,134)

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Fees paid to our data providers increased due to higher costs of third-party data utilized in our platform.

Personnel costs and stock-based compensation expense increased as we continue to invest in our customer support and customer success teams to support our customer growth.

The increase in the amortization expense of intangible assets was driven by the acquired developed technology recognized as part of the Tagger acquisition in August 2023.

The increase in other was primarily driven by hosting fees.

Hosting fees increased due to additional costs associated with the expansion of our highest tier customers and increased utilization of computing and storage needs.

The increase in the amortization expense of intangible assets was driven by the acquired developed technology recognized as part of the NewsWhip acquisition in July 2025.

In February 2025, we initiated a restructuring plan with the primary focus on our Sales and Customer Experience teams, which resulted in restructuring costs as well as a decrease in personnel costs and stock-based compensation expense.

Operating Expenses

Research and Development

Years Ended December 31,

Years Ended December 31, Change

2025 2024 Amount %

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Percentage of total revenue 22 % 25 %

The increase in research and development expense for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily due to the following:

The decrease in research and development expense for the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily due to the following:

( in thousands )

Personnel costs $ 11,617

Stock-based compensation expense 7,141

Restructuring costs $ (2,928)

Stock-based compensation expense (457)

Personnel costs 277

Research and development $ (1,515)

Personnel costs and stock-based compensation expense increased primarily as a result of higher headcount within our research and development teams throughout the majority of the year.

Restructuring costs were driven by a restructuring plan, which resulted in a reduction of approximately 50 roles, initiated in November 2024 to improve the efficiency and effectiveness of the research and development organization.

The decrease in restructuring costs was driven by a restructuring plan initiated in November 2024 to improve the efficiency and effectiveness of the research and development organization.

Stock-based compensation expense decreased primarily as a result of lower headcount within our research and

development teams throughout the majority of the year, as a result of the November 2024 restructuring plan.

The increase in other was primarily driven by increased contractor costs.

Sales and Marketing

Years Ended December 31,

Years Ended December 31, Change

2025 2024 Amount %

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( in thousands )

Sales commission expense $ 7,729

Restructuring costs 2,285

Advertising 1,788

Personnel costs 932

Stock-based compensation expense (8,761)

Advertising 1,074

Sales commission expense (10,235)

Sales and marketing $ 6,437

Personnel costs increased primarily as a result of an increase in headcount as we continue to expand our sales teams to grow our customer base.

Headcount in the sales and marketing organization throughout 2024 was on average 14% higher than 2023.

The increase in stock-based compensation expense was primarily due to the increased headcount.

Sales commission expense increased due to year-over-year sales growth.

Restructuring costs increased as a result of a restructuring plan initiated in February 2025 with a primary focus on our Sales and Customer Experience teams.

The increase in personnel costs was primarily driven by higher variable compensation costs.

Stock-based compensation expense decreased as a result of lower headcount driven by the February 2025 restructuring plan.

The increase in other expense was driven by various marketing events and initiatives .

The decrease in sales commission expense was driven by updating the period of benefit from three to five years which was accounted for as a change in accounting estimate.

See Note 1 - “Nature of Operations and Summary of Significant Accounting Policies” of the Notes to the Financial Statements (Part I, Item 8 of this Annual Report) for additional information on the change in accounting estimate.

General and Administrative

Years Ended December 31,

Years Ended December 31, Change

2025 2024 Amount %

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( in thousands )

Stock-based compensation expense $ 7,318

Personnel costs $ 6,529

Amortization of intangible assets 965

Gain on lease modification (1,570)

Stock-based compensation expense 4,768

Bad debt expense 1,849

Acquisition-related costs 1,805

Accounting fees 446

Accretion expense 423

General and administrative $ 18,594

Personnel costs increased primarily as a result of an increase in headcount as we continue to invest in our finance, legal and other administrative functions to support the company’s growth.

Headcount in the general and administrative organizations throughout 2024 was on average 11% higher than 2023.

The increase in stock-based compensation expense was primarily driven by equity grants made to the executive team.

The increase in the amortization expense of intangible assets was primarily driven by the intangible assets recognized as part of the Tagger acquisition in August 2023.

The non-cash gain on lease modification was due to the amendment of our Chicago office lease agreement in November 2024.

See Note 6 - “Operating Leases” of the Notes to the Financial Statements (Part I, Item 8 of this Annual Report) for additional information on the lease amendment.

The decrease in acquisition-related costs was driven by costs associated with the Tagger acquisition in August 2023.

The increase in stock-based compensation expense was primarily driven by annual equity grants made to the executive team.

Bad debt expense increased due to higher accounts receivable balances.

Acquisition-related costs increased due to the acquisition of NewsWhip on July 30, 2025.

Accretion expense related to contingent consideration increased in connection with the NewsWhip acquisition.

Interest Income, Net

Years Ended December 31,

Years Ended December 31, Change

2025 2024 Amount %

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Percentage of total revenue — % — %

The decrease in interest income, net was primarily driven by higher interest expense from the credit facility, partially offset by lower interest income attributable to a lower balance of marketable securities.

The increase in interest income, net was primarily driven by lower interest expense as a result of a lower average balance on the Facility as compared to the same period in 2024, partially offset by lower interest income attributable to a lower balance of marketable securities.

Other Expense, Net

Years Ended December 31,

Years Ended December 31, Change

2025 2024 Amount %

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Percentage of total revenue — % — %

The change in other expense, net was primarily driven by higher foreign exchange transaction losses.

The change in other expense, net was primarily driven by lower foreign exchange transaction losses.

Income Tax Expense

Years Ended December 31,

Years Ended December 31, Change

2025 2024 Amount %

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Percentage of total revenue — % — %

The change in income tax expense was due to higher earnings in foreign jurisdictions.

The change in income tax expense was due to the release of certain foreign valuation allowance reserves, partly offset by increased taxes due to higher earnings in foreign jurisdictions.

Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

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The increase in subscription revenue was primarily driven by increased revenue from our highest tier customers.

Customers contributing over $10,000 in ARR grew 31% versus the prior year and customers contributing over $50,000 in ARR grew 44% versus the prior year.

The number of customers contributing $30,000 or more in ARR grew 17% versus the prior year and the number of customers contributing $50,000 or more in ARR grew 23% versus the prior year.

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Personnel costs 1,780

Stock-based compensation expense 733

Amortization of intangible assets 1,645

Stock-based compensation expense 712

Subscription cost of revenue $ 15,229

Fees paid to our data providers increased due to higher costs of third-party data utilized in our platform.

Personnel costs increased primarily as a result of a 9% increase in headcount as we continue to grow our customer support and customer success teams to support our customer growth.

The increase in stock-based compensation expense was primarily due to the increased headcount.

The increase in the amortization expense of intangible assets was driven by the acquired developed technology recognized as part of the Tagger acquisition.

Personnel costs and stock-based compensation expense increased as we continue to invest in our customer support and customer success teams to support our customer growth.

The increase in the amortization expense of intangible assets was driven by the acquired developed technology recognized as part of the Tagger acquisition in August 2023.

The increase in other was primarily driven by hosting fees.

Operating Expenses

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Stock-based compensation expense 7,141

Restructuring costs 2,958

Research and development $ 23,244

Personnel costs increased primarily as a result of increased headcount to grow our research and development teams to drive our technology innovation through the development and maintenance of our platform.

During the year ended December 31, 2023, we increased headcount within our engineering team by 19%.

The increase in stock-based compensation expense was primarily due to the increased headcount.

Personnel costs and stock-based compensation expense increased primarily as a result of higher headcount within our research and development teams throughout the majority of the year.

Sales and Marketing

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Advertising 1,074

Sales commission expense (10,235)

Sales and marketing $ 16,031

Personnel costs increased primarily as a result of a 15% increase in headcount as we continue to expand our sales teams to grow our customer base, as well as additional sales commission expense due to the year-over-year sales growth, which increased the amortization of contract acquisition costs.

Personnel costs increased primarily as a result of an increase in headcount as we continue to expand our sales teams to grow our customer base.

Headcount in the sales and marketing organization throughout 2024 was on average 14% higher than 2023.

The increase in stock-based compensation expense was primarily due to the increased headcount.

The increase in other expense was driven by internal training costs and other general marketing costs.

The increase in other expense was driven by various marketing events and initiatives.

The decrease in sales commission expense was driven by updating the period of benefit from three to five years, which was accounted for as a change in accounting estimate.

See Note 1 - “Nature of Operations and Summary of Significant Accounting Policies” of the Notes to the Financial Statements (Part II, Item 8 of this Annual Report) for additional information on the change in accounting estimate.

General and Administrative

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( in thousands )

Personnel costs $ 5,194

Stock-based compensation expense $ 7,318

Acquisition-related costs 4,272

Personnel costs 5,204

Amortization of intangible assets 965

Credit losses on accounts receivable 1,219

Accounting fees 771

Gain on lease modification (1,570)

Acquisition-related costs (4,272)

General and administrative $ 8,862

Personnel costs and stock-based compensation expense increased primarily as a result of an 18% increase in headcount as we continue to invest in our finance, legal and other administrative functions to support the company’s growth.

Acquisition-related costs increased due to the acquisition of Tagger on August 2, 2023.

The increase in the amortization expense of intangible assets was primarily driven by the intangible assets recognized as part of the Tagger acquisition.

The increase in credit losses on accounts receivable was primarily driven by higher accounts receivable balances.

Interest Income (Expense), Net

Personnel costs increased primarily as a result of an increase in headcount as we continue to invest in our finance, legal and other administrative functions to support the company’s growth.

Headcount in the general and administrative organizations throughout 2024 was on average 11% higher than 2023.

The increase in stock-based compensation expense was primarily driven by equity grants made to the executive team.

The increase in the amortization expense of intangible assets was primarily

driven by the intangible assets recognized as part of the Tagger acquisition in August 2023.

The non-cash gain on lease modification was due to the amendment of our Chicago office lease agreement in November 2024.

The decrease in acquisition-related costs was driven by costs associated with the Tagger acquisition in August 2023.

Interest Income, Net

Years Ended December 31,

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( dollars in thousands )

Interest income (expense), net $ 4,267 $ 2,382 $ 1,885 79 %

Interest income, net $ 448 $ 4,267 $ (3,819) (90) %

Percentage of total revenue — % 1 %

The increase in interest income (expense), net was primarily driven by higher interest income from the Company’s marketable securities due to higher interest rates, partially offset by higher interest expense from the revolving line of credit.

The decrease in interest income, net was primarily driven by higher interest expense from the Facility, partially offset by lower interest income attributable to a lower balance of marketable securities.

Other Expense, Net

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Percentage of total revenue — % — %

The change in other expense, net was primarily driven by foreign exchange transaction losses.

Income Tax (Benefit) Expense

The change in other expense, net was primarily driven by higher foreign exchange transaction losses.

Income Tax Expense

Years Ended December 31,

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( dollars in thousands )

Income tax (benefit) expense $ 649 $ 366 $ 283 77 %

Income tax expense $ 670 $ 649 $ 21 3 %

Percentage of total revenue — % — %

The change in income tax (benefit) expense was due to higher earnings in foreign jurisdictions.

The change in income tax expense was due to higher earnings in foreign jurisdictions.

Non-GAAP Financial Measures

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Non-GAAP Gross Profit

We define non-GAAP gross profit as GAAP gross profit, excluding stock-based compensation expense, amortization expense associated with the acquired developed technology from the Tagger acquisition and restructuring charges.

We believe non-GAAP gross profit provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as this non-GAAP financial measure eliminates the effect of stock-based compensation, amortization expense and restructuring charges, which are often unrelated to overall operating performance.

During the fourth quarter of 2024, we revised our definition of non-GAAP gross profit to exclude restructuring charges associated with a workforce reorganization, consisting primarily of severance and other personnel-related costs.

Year Ended December 31,

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Non-GAAP gross profit $ 361,590 $ 321,251 $ 261,774

Non-GAAP Operating Income (Loss)

We define non-GAAP operating income (loss) as GAAP loss from operations, excluding stock-based compensation expense, acquisition-related expenses and amortization expense associated with the acquired intangible assets from the Tagger acquisition, restructuring charges and non-cash gains from lease modifications.

We believe non-GAAP operating income (loss) provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as this non-GAAP financial measure eliminates the effect of stock-based compensation, acquisition-related expenses, amortization expense, restructuring charges and non-cash gains from lease modifications, which are often unrelated to overall operating performance.

During the fourth quarter of 2024, we revised our definition of non-GAAP operating income (loss) to exclude

restructuring charges associated with a workforce reorganization, consisting primarily of severance and other personnel-related costs, and non-cash gain related to an office lease modification.

Non-GAAP Operating Income

We define non-GAAP operating income as GAAP loss from operations, excluding stock-based compensation expense, acquisition-related expenses, amortization expense associated with the acquired intangible assets from the Tagger and NewsWhip acquisitions, restructuring charges, non-cash losses or gains from lease terminations and modifications, and accretion associated with contingent consideration.

We believe non-GAAP operating income provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as this non-GAAP financial measure eliminates the effect of stock-based compensation, acquisition-related expenses, amortization expense, restructuring charges, non-cash losses or gains from lease terminations and modifications, and accretion associated with contingent consideration, which are often unrelated to overall operating performance.

Year Ended December 31,

2025 2024 2023

Reconciliation of Non-GAAP operating income (loss) ( dollars in thousands )

Reconciliation of Non-GAAP operating income ( dollars in thousands )

Loss from operations $ (43,453) $ (60,356) $ (69,277)

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Restructuring charges 2,731 3,020 —

Gain on lease modification (1,570) — —

Non-GAAP operating income (loss) $ 30,248 $ 4,721 $ (3,938)

Non-GAAP Net Income (Loss)

We define non-GAAP net income (loss) as GAAP net loss, excluding stock-based compensation expense, acquisition-related expenses and amortization expense associated with the acquired intangible assets from the Tagger acquisition, restructuring charges and non-cash gains from lease modifications.

We believe non-GAAP net income (loss) provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as this non-GAAP financial measure eliminates the effect of stock-based compensation, acquisition-related expenses, amortization expense, restructuring charges and non-cash gains from lease modifications, which are often unrelated to overall operating performance.

During the fourth quarter of 2024, we revised our definition of non-GAAP net income (loss) to exclude restructuring charges associated with a workforce reorganization, consisting primarily of severance and other personnel-related costs, and non-cash gain related to an office lease modification.

Loss/(gain) on lease termination and modification 1,175 (1,570) —

Accretion associated with contingent consideration 423 — —

Non-GAAP operating income $ 48,111 $ 30,248 $ 4,721

Non-GAAP Net Income

We define non-GAAP net income as GAAP net loss, excluding stock-based compensation expense, acquisition-related expenses, amortization expense associated with the acquired intangible assets from the Tagger and NewsWhip acquisition, restructuring charges, non-cash losses or gains from lease terminations and modifications, and accretion associated with contingent consideration.

We believe non-GAAP net income provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as this non-GAAP financial measure eliminates the effect of stock-based compensation, acquisition-related expenses, amortization expense, restructuring charges, non-cash losses or gains from lease terminations and modifications, and accretion associated with contingent consideration, which are often unrelated to overall operating performance.

Year Ended December 31,

2025 2024 2023

Reconciliation of Non-GAAP net income (loss) ( dollars in thousands )

Reconciliation of Non-GAAP net income ( dollars in thousands )

Net loss $ (43,327) $ (61,971) $ (66,427)

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Restructuring charges 2,731 3,020 —

Gain on lease modification (1,570) — —

Non-GAAP net income (loss) $ 28,633 $ 7,571 $ (2,502)

Non-GAAP Net Income (Loss) per Share

We define non-GAAP net income (loss) per share as GAAP net loss per share attributable to common shareholders, basic and diluted, excluding stock-based compensation expense, acquisition-related expenses and amortization expense associated with the acquired intangible assets from the Tagger acquisition, restructuring charges and non-cash gains from lease modifications.

We believe non-GAAP net income (loss) per share provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as this non-GAAP financial measure eliminates the effect of stock-based compensation, acquisition-related expenses and amortization expense, restructuring charges and non-cash gains from

lease modifications, which are often unrelated to overall operating performance.

During the fourth quarter of 2024, we revised our definition of non-GAAP net income (loss) per share to exclude restructuring charges associated with a workforce reorganization, consisting primarily of severance and other personnel-related costs, and non-cash gain related to an office lease modification.

Loss/(gain) on lease termination and modification 1,175 (1,570) —

Accretion associated with contingent consideration 423 — —

Non-GAAP net income $ 48,237 $ 28,633 $ 7,571

Non-GAAP Net Income per Share

We define non-GAAP net income per share as GAAP net loss per share attributable to common shareholders, basic and diluted, excluding stock-based compensation expense, acquisition-related expenses, amortization expense associated with the acquired intangible assets from the Tagger and NewsWhip acquisitions, restructuring charges, non-cash losses or gains from lease terminations and modifications, and accretion associated with contingent consideration.

We believe non-GAAP net income per share provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as this non-GAAP financial measure eliminates the effect of stock-based compensation, acquisition-related expenses, amortization expense, restructuring charges, non-cash losses or gains from lease terminations and modifications, and

accretion associated with contingent consideration, which are often unrelated to overall operating performance.

Year Ended December 31,

2025 2024 2023

Reconciliation of Non-GAAP net income (loss) per share

Reconciliation of Non-GAAP net income per share

Net loss per share attributable to common shareholders, basic and diluted $ (0.74) $ (1.09) $ (1.19)

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Restructuring charges 0.05 0.05 —

Gain on lease modification (0.03) — —

Non-GAAP net income (loss) per share $ 0.50 $ 0.14 $ (0.05)

Non-GAAP Free Cash Flow

Non-GAAP free cash flow is a non-GAAP financial measure that we define as net cash used in operating activities less expenditures for property and equipment, acquisition-related costs, interest and payments related to restructuring charges.

We believe that non-GAAP free cash flow is a useful indicator of liquidity that provides information to management and investors about the amount of cash used in our core operations that, after the expenditures for property and equipment, acquisition-related costs, interest and payments of restructuring charges, is available to be used for strategic initiatives.

For example, if non-GAAP free cash flow is negative, we may need to access cash reserves or other sources of capital to invest in strategic initiatives.

One limitation of non-GAAP free cash flow is that it does not reflect our future contractual obligations.

Additionally, non-GAAP free cash flow does not represent the total increase or decrease in our cash balance for a given period.

During the fourth quarter of 2024, we revised our definition of non-GAAP free cash flow to exclude payments related to restructuring charges associated with a workforce reorganization.

Year Ended December 31,

2024 2023 2022

Reconciliation of non-GAAP free cash flow ( dollars in thousands )

Net cash provided by operating activities $ 26,321 $ 6,456 $ 10,668

Expenditures for property and equipment (2,950) (2,073) (1,824)

Interest paid on credit facility 3,635 1,588 —

Acquisition-related costs — 4,272 —

Payments related to restructuring charges 2,682 — —

Non-GAAP free cash flow $ 29,688 $ 10,243 $ 8,844

Loss/(gain) on lease termination and modification 0.02 (0.03) —

Accretion associated with contingent consideration 0.01 — —

Non-GAAP net income per share $ 0.82 $ 0.50 $ 0.14

Liquidity and Capital Resources

As of December 31, 2024, our principal sources of liquidity were cash and cash equivalents of $86.4 million, marketable securities of $3.7 million, and net accounts receivable of $84.0 million.

Historically, we have generated losses from operations as evidenced by our accumulated deficit and in previous years, we had negative cash flows from operations.

However, during the years ended December 31, 2024, 2023 and 2022, we generated positive cash flows from operations.

continue to incur operating losses for the foreseeable future as we continue to grow the business.

We may experience greater than anticipated operating losses in the short- and long-term due to macroeconomic, financial and other factors that are beyond our control, such as rising inflation rates and a potential recession.

As of December 31, 2025, our principal sources of liquidity were cash and cash equivalents of $95.3 million and net accounts receivable of $101.0 million.

Historically, we have generated losses from operations as evidenced by our accumulated deficit.

However, we have generated positive cash flows from operations for the last five fiscal years, from 2021 to 2025.

We expect to continue to incur operating losses for the foreseeable future as we continue to grow the business.

We may experience greater than anticipated operating losses in the short- and long-term due to macroeconomic, financial, geopolitical and other factors that are beyond our control.

The impact of these factors on our customers and our operations going forward remains uncertain, and we continue to proactively monitor our liquidity position.

Prior to our IPO in December 2019, we financed our operations primarily through private issuance of equity securities and line of credit borrowings.

In our IPO, we received net proceeds of $134.3 million after deducting underwriting discounts and commissions of $10.5 million and offering expenses of $5.2 million.

We subsequently received an additional $10.0 million of net proceeds after deducting underwriting discounts and commissions in January 2020 as a result of the over-allotment option exercise by the underwriters of our IPO.

In August 2020, we received $42.1 million of net proceeds from our equity follow-on offering after deducting underwriting discounts and commissions.

As described below, in August 2023, we borrowed $75 million under the Facility (defined below) in connection with the Tagger acquisition.

Our principal uses of cash in recent periods have been to fund operations, pay for acquisitions, invest in marketable securities, pay down the Facility and invest in capital expenditures.

We primarily finance our operations through cash flows from operating activities, available cash and line of credit borrowings.

In August 2023, we borrowed $75 million under the Facility in connection with the Tagger acquisition, and in July 2025, we borrowed $32 million under the Facility in connection with the NewsWhip acquisition.

Our principal uses of cash in recent periods have been to fund operations, pay for acquisitions, pay down our Facility and invest in capital expenditures.

We believe our existing cash and cash equivalents will be sufficient to meet our operating and capital needs for at least the next 12 months.

We believe we will meet longer-term expected future cash requirements and obligations through a combination of cash flows from operating activities, available cash and investment balances and potential future equity or debt transactions.

Our future capital requirements will depend on many factors, including our subscription growth rate, subscription renewal activity, billing frequency, the impact of macroeconomic conditions on our customers and our operations, the timing and extent of spending to support our research and development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced product offerings, and the continuing market acceptance of our product.

Our future capital requirements will depend on many factors, including our subscription growth rate, subscription renewal activity, billing frequency, the impact of macroeconomic and geopolitical conditions on our customers and our operations, the timing and extent of spending to support our research and development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced product offerings, and the continuing market acceptance of our product.

We have in the past, and may in the future, enter into arrangements to acquire or invest in complementary businesses, products and technologies, including intellectual property rights.

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Borrowings under the Facility may be used to finance acquisitions and other investments permitted under the terms of the Credit Agreement, to pay related fees and expenses and for general corporate purposes.

Borrowings under the Facility may be designated as SOFR Loans or ABR Loans (each as defined in the Credit Agreement), subject to certain terms and conditions under the Credit Agreement, and bear interest at a rate of either (i) SOFR (subject to a 1.0% floor), plus 0.10%, plus a margin ranging from 2.75% to 3.25% based on the Company’s liquidity or (ii) ABR (subject to a 2.0% floor) plus a margin ranging from 1.75% to 2.25% based on the Company’s liquidity.

As of December 31, 2024, the borrowings under the Facility were designated as SOFR Loans.

The Facility also includes a quarterly commitment fee on the unused portion of the Facility of 0.30% or 0.35% based on the Company’s liquidity.

The Credit Agreement includes customary conditions to credit extensions, affirmative and negative covenants, and customary events of default.

In addition, the Credit Agreement contains financial covenants as to (i) minimum liquidity, requiring the maintenance, at all times and measured at the end of each fiscal quarter, of cash and cash equivalents of not less than the greater of (x) $30 million and (y) 30% of the total revolving commitments, and (ii) minimum recurring revenue growth, requiring recurring revenue growth for the trailing four fiscal quarter period, measured at the end of each fiscal quarter, of not

less than 115% of the actual recurring revenue for the same period in the prior fiscal year.

As of December 31, 2024, we were in compliance with the covenants in the Credit Agreement and expect to be in compliance with the covenants for the next 12 months.

On August 1, 2023, we borrowed $75 million under the Credit Agreement in connection with the Tagger acquisition.

As of December 31, 2024, $25 million remains outstanding under the Credit Agreement.

Refer to Note 8 of the Notes to the Financial Statements (Part I, Item 8 of this Annual Report) for further discussion.

On April 4, 2025, we entered into the First Amendment to Credit Agreement (the “Amendment”, and the Credit Agreement as amended thereby, the “Amended Credit Agreement”) which, among other things, extended the maturity date of the Facility from August 1, 2028 to April 4, 2030 and revised the manner in which the applicable interest rate is determined from a liquidity based determination to a leverage based determination.

In addition, the Amendment removed the minimum liquidity and annual recurring revenue covenants contained in the Credit Agreement and replaced them with financial covenants as to (i) maximum Consolidated Senior Net Leverage Ratio and (ii) minimum Consolidated Interest Coverage Ratio (each as defined in the Amended Credit Agreement).

As of December 31, 2025, we were in compliance with such financial covenants in the Amended Credit Agreement and expect to be in compliance with such financial covenants for the next 12 months.

Pursuant to the Amended Credit Agreement, borrowings under the Facility may be designated as SOFR Loans or ABR Loans (each as defined in the Amended Credit Agreement), subject to certain terms and conditions under the Amended Credit Agreement, and bear interest at a rate of either (i) SOFR (subject to a 1.0% floor), plus 0.10%, plus a margin ranging from 2.25% to 2.75% based on our consolidated Senior Net Leverage Ratio or (ii) ABR (subject to a 2.0% floor) plus a margin ranging from 1.25% to 1.75% based on our Consolidated Senior Net Leverage Ratio.

For the twelve months ended December 31, 2025, the borrowings under the Facility were designated as SOFR Loans.

The Facility also includes a quarterly commitment fee on the unused portion of the Facility of 0.30% or 0.35% based on our Consolidated Senior Net Leverage Ratio.

The Amended Credit Agreement includes customary conditions to credit extensions, covenants, and customary events of default, including restrictions on our ability to incur liens, incur indebtedness, make or hold investments, execute certain change of control transactions, business combinations or other fundamental changes to its business, dispose of assets, make certain types of restricted payments, including dividends and other distributions to stockholders, enter into certain related party transactions, or amend or terminate certain contracts, subject to customary exceptions.

As of December 31, 2025, we had an outstanding balance of $40 million under the Amended Credit Agreement.

Refer to Note 8 of the Notes to the Financial Statements (Part II, Item 8 of this Annual Report) for further discussion.

The following table summarizes our cash flows for the periods presented:

3 unchanged sentences

Net cash provided by operating activities $ 43,427 $ 26,321 $ 6,456

Net cash provided by (used in) investing activities 40,726 (86,635) (37,672)

Net cash (used in) provided by investing activities (52,146) 40,726 (86,635)

Net cash provided by (used in) financing activities 15,504 (30,324) 53,957

6 unchanged sentences

Net cash provided by operating activities during the year ended December 31, 2025 was $43.4 million, which resulted from a net loss of $43.3 million adjusted for non-cash charges of $120.0 million and net cash outflow of $33.2 million from changes in operating assets and liabilities.

Non-cash charges primarily consisted of $78.7 million of stock-based compensation expense, $24.1 million for amortization of deferred contract acquisition costs, which were primarily commissions, $10.8 million of depreciation and intangible asset amortization expense, $3.6 million for credit losses on accounts receivable, $1.5 million of amortization of right-of-use, or ROU, operating lease assets and a $1.2 million gain on lease modification.

The net cash outflow from changes in operating assets and liabilities was primarily the result of a $36.3 million increase in deferred commissions due to the addition of new customers and expansion of the business, an $18.3 million increase in gross accounts receivable and a $3.3 million decrease in operating lease liabilities.

These outflows were partially offset by a $22.5 million increase in deferred revenue, a $1.5 million decrease in prepaid expenses and other assets, and a $0.6 million increase in accounts payable and accrued expenses .

Net cash provided by operating activities during the year ended December 31, 2024 was $26.3 million, which resulted from a net loss of $62.0 million adjusted for non-cash charges of $112.5 million and net cash outflow of $24.2 million from changes in operating assets and liabilities.

Non-cash charges primarily consisted of $84.3 million of stock-based compensation expense, $10.0 million of depreciation and intangible asset amortization expense, $16.3 million for amortization of deferred contract acquisition costs, which were primarily commissions, $1.7 million for credit losses on accounts receivable, $1.8 million of amortization of right-of-use, or ROU, operating lease assets and a $1.6 million gain on lease modification.

3 unchanged sentences

Non-cash charges primarily consisted of $67.7 million of stock-based compensation expense, $6.7 million of depreciation and intangible asset amortization expense, $26.6 million for amortization of deferred contract acquisition costs, which were primarily commissions, $2.4 million for credit losses on accounts receivable and $1.6 million of amortization of right-of-use, or ROU, operating lease assets.

The net cash outflow from changes in operating assets and liabilities was primarily the result of a $40.5 million increase in deferred commissions due to the addition of new customers and expansion of the business, a $27.0 million

increase in gross accounts receivable and a $3.5 million decrease in operating lease liabilities.

These outflows were partially offset by a $41.9 million increase in deferred revenue.

Net cash provided by operating activities du ring the year ended December 31, 2022 was $10.7 million, which resulted from a net loss of $50.2 million adjusted for non-cash charges of $71.9 million and net cash outflow of $11.0 million from changes in operating assets and liabilities.

Non-cash charges primarily consisted of $47.7 million of stock-based compensation expense, $3.9 million of depreciation and intangible asset amortization expense, $18.6 million for amortization of deferred contract acquisition costs, which were primarily commissions, $1.2 million for credit losses on accounts receivable and $1.0 million of amortization of right-of-use, or ROU, operating lease assets.

The net cash outflow from changes in operating assets and liabilities was primarily the result of a $30.3 million increase in deferred commissions due to the addition of new customers and expansion of the business, an $11.5 million increase in gross accounts receivable and a $2.9 million decrease in operating lease liabilities.

These outflows were partially offset by a $26.9 million increase in deferred revenue and a $7.1 million increase in accounts payable and other accrued liabilities.

Investing Activities

Net cash used in investing activities for the year ended December 31, 2025 was $52.1 million, which was primarily due to $51.8 million paid for the acquisition of NewsWhip and $4.1 million in purchases of computer equipment and hardware, partially offset by $3.8 million in proceeds from the maturities of marketable securities.

Net cash provided by investing activities for the year ended December 31, 2024 was $40.7 million, which was primarily due to $45.1 million in proceeds from the maturities of marketable securities, partially offset by $3.0 million in purchases of computer equipment and hardware and the $1.5 million payout of the Repustate acquisition purchase price holdback.

Net cash used in investing activities for the year ended December 31, 2023 was $86.6 million, which was primarily due to $145.6 million paid for the acquisitions of Tagger and Repustate and $63.1 million in purchases of marketable securities, partially offset by $124.2 million in proceeds from the maturities and sale of marketable securities.

Net cash used in investing activities for the year ended December 31, 2022 was $37.7 million, which was primarily due to $190.0 million in purchases of marketable securities, partially offset by $154.1 million in proceeds from maturities of marketable securities.

Financing Activities

Net cash provided by financing activities for the year ended December 31, 2025 was $15.5 million, primarily driven by $32.0 million in borrowings under the Facility and $1.3 million of proceeds under our employee stock purchase plan, partially offset by $17.0 million in repayments of the Facility, $0.5 million in issuance costs related to the Amended Credit Agreement and $0.3 million in payments related to employee withholding taxes as a result of the net settlement of stock-based awards.

Net cash used in financing activities for the year ended December 31, 2024 was $30.3 million, primarily driven by $30.0 million in repayments of the Facility and $2.3 million in payments related to employee withholding taxes as a result of the net settlement of stock-based awards, partially offset by $2.0 million of proceeds under our employee stock purchase plan.

Net cash provided by financing activities for the year ended December 31, 2023 was $54.0 million, primarily driven by $75.0 million in borrowings under the Facility and $2.3 million of proceeds under our employee stock purchase plan, partially offset by $20.0 million in repayments of the Facility, $2.4 million in payments related to employee withholding taxes as a result of the net settlement of stock-based awards and $1.0 million in issuance costs related to the Facility.

Net cash used in financing activities for the year ended December 31, 2022 was $0.2 million, primarily driven by $1.9 million in payments related to employee withholding taxes as a result of the net settlement of stock-based awards, offset by $1.7 million of proceeds under our employee stock purchase plan.

Contractual Obligations

As of December 31, 2024, we have $25 million outstanding under the Credit Agreement, which matures on August 1, 2028.

Refer to Note 8 of the Notes to the Financial Statements (Part I, Item 8 of this Annual Report) for further discussion.

As of December 31, 2025, we have $40 million outstanding under the Amended Credit Agreement, which matures on April 4, 2030.

Refer to Note 8 of the Notes to the Financial Statements (Part II, Item 8 of this Annual Report) for further discussion.

In connection with our acquisition of NewsWhip in July 2025, we are required to make post-closing earnout payments, which are contingent upon NewsWhip’s achievement of financial performance metrics through June 30, 2027.

As of December 31, 2025, the total estimated liability associated with the contingent consideration was $8.9 million.

Refer to Note 4 and 14 of the Notes to the Financial Statements (Part II, Item 8 of this Annual Report) for further discussion.

As of December 31, 2025, we have non-cancellable contractual obligations related primarily to operating leases and minimum guaranteed purchase commitments for data and services.

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As of December 31, 2025, our purchase commitment for primarily data and services was $115.7 million, of which $86.8 million is expected in the next twelve months.

See Note 6 and Note 11 of the Notes to the Financial Statements (Part I, Item 8 of this Annual Report) for more information regarding these obligations.

See Note 6 and Note 11 of the Notes to the Financial Statements (Part II, Item 8 of this Annual Report) for more information regarding these obligations.

Recent Accounting Pronouncements

Refer to section titled “Recently Adopted Accounting Pronouncements” in Note 1 of the Notes to the Financial Statements (Part I, Item 8 of this Annual Report) for more information.

Refer to section titled “Recently Adopted Accounting Pronouncements” in Note 1 of the Notes to the Financial Statements (Part II, Item 8 of this Annual Report) for more information.

Critical Accounting Policies and Estimates

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Our actual results may differ from these estimates.

The significant accounting policies used in the preparation of our audited financial statements are discussed in Note 1 of the Notes to the Financial Statements (Part I, Item 8 of this Annual Report).

The significant accounting policies used in the preparation of our audited financial statements are discussed in Note 1 of the Notes to the Financial Statements (Part II, Item 8 of this Annual Report).

The accounting assumptions and estimates discussed in the section below are those that we consider most critical to an understanding of our financial statements because they inherently involve a greater degree of judgment and complexity.

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Sales commissions earned for initial contracts and for expansion of contracts with existing customers are deferred and amortized on a straight-line basis over a period of benefit that we have determined to be five years.

Determining the period of benefit of requires judgment for which we take into consideration products sold, expected customer life, expected contract renewals, technology life cycle and other factors.

Determining the period of benefit requires judgment for which we take into consideration products sold, expected customer life, expected contract renewals, technology life cycle and other factors.

The Company assesses the expected period of benefit on an annual basis and whenever events or changes in circumstances occur that could impact the recoverability of these assets.

Based on the assessment performed during the first quarter of 2024, the Company updated the period of benefit from three years to five years.

Refer to Note 1 - Nature of Operations and Summary of Significant Accounting Policies of the Notes to the Financial Statements (Part I, Item 8 of this Annual Report) for further discussion on the impact of the change in estimate.

Revenue Recognition

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Stock-Based Compensation

Currently, the equity awards we issue to certain of our employees consist solely of restricted stock units.

For equity awards with only service conditions, we recognize compensation expense based on the grant‐date fair value on a straight-line basis over the remaining requisite service period for the award.

For equity awards with both service and performance conditions, compensation expense is recognized on a graded vesting basis over the requisite service period once the achievement of the performance condition is considered probable.

For equity awards with both service and performance conditions, compensation expense is recognized on a graded vesting basis over the requisite service period once the achievement of the

performance condition is considered probable.

Assessing whether performance conditions are probable to be achieved and estimating the timing upon which the condition may be achieved requires judgment.

We estimate the probability and timing of achievement at the grant date and reassess each reporting period.

Restricted Stock Units

At the end of 2015, we began issuing restricted stock units to certain of our employees.

The general terms of the restricted stock units required both a service and performance condition to be satisfied prior to vesting.

The service condition is satisfied upon the participant’s completion of a required period of continuous service from the vesting start date.

The performance condition was satisfied upon the consummation of our IPO, which resulted in recognition of stock-based compensation expense in the fourth quarter of 2019 for awards that had vested prior to December 31, 2019.

In late 2019, we began issuing restricted stock units to certain employees that require a service condition to be satisfied prior to vesting, but that do not require a liquidity event condition to be satisfied prior to vesting.

In both December 2020 and October 2021, we granted 120,000 restricted stock units to our President requiring both the satisfaction of a service condition and a performance condition prior to vesting.

For each of these awards, the performance condition was considered probable at the grant date and the awards have been recognized as compensation expense over their respective requisite service periods.

In 2024 and 2023, we recognized $2.7 million and $5.2 million, respectively, of stock-based compensation expense in relation to these awards.

For the periods presented, there were no equity awards granted containing performance conditions.

Business Combinations

We account for acquisitions using the acquisition method of accounting, which requires assigning the fair value of purchase consideration to the assets acquired and liabilities assumed at the acquisition date.

The excess of the fair value of purchase consideration over the fair value of these assets acquired and liabilities assumed is recorded as goodwill.

When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets.

We account for acquisitions using the acquisition method of accounting, which requires assigning the fair value of purchase consideration to the assets acquired, liabilities assumed and any contingent consideration at the acquisition date.

The excess of the fair value of purchase consideration over the fair value of these assets acquired, liabilities assumed and any contingent consideration is recorded as goodwill.

When determining the fair values of assets acquired, liabilities assumed and any contingent consideration, management makes significant estimates and assumptions, especially with respect to intangible assets and contingent consideration.

Fair value estimates are based on the assumptions management believes a market participant would use in pricing the asset or liability.

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Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of operations.

Contingent consideration is remeasured to fair value at each reporting date until the contingency is resolved.

Changes in the fair value of contingent consideration, other than measurement period adjustments, are recorded to our consolidated statements of operations.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis