What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-08-01 compared with 2024-05-02 · 123 added, 90 removed, 295 unchanged (42% of the section changed)

51 unchanged sentences

We enable global businesses to work smarter with over 25 cloud software products that help increase revenue, reduce costs, and deliver business value.

Our solutions cover digital marketing, knowledge management, contact center service, sales productivity, and content lifecycle automation.

Our solutions offer many integrated AI capabilities and cover digital marketing, knowledge management, contact center service, sales productivity, and content lifecycle automation.

We service over 10,000 customers ranging from large global corporations and various government agencies as well as small and medium-sized businesses.

2 unchanged sentences

Our revenue has grown from $149.9 million in the year ended December 31, 2018 to $297.9 million in the year ended December 31, 2023, representing a compound annual growth rate of 15%.

During the three months ended March 31, 2024 and 2023, foreign revenue as a percent of total revenue was 30% and 29%, respectively.

To support continued growth, we intend to pursue acquisitions of complementary technologies and businesses.

This will expand our product library, customer base, and market access resulting in increased benefits of scale.

Consistent with our growth strategy, we have made 31 acquisitions from February 2012 through March 31, 2024.

During the six months ended June 30, 2024 and 2023, foreign revenue as a percent of total revenue was 29% and 30%, respectively.

To support continued growth, we may pursue acquisitions of complementary technologies and businesses.

This may expand our product library, customer base, and market access resulting in increased benefits of scale.

We have made 31 acquisitions from February 2012 through June 30, 2024.

Key Metrics and Non-GAAP Financial Measures

6 unchanged sentences

Core Organic Growth Rate does not represent actual organic revenue generated by our business as it stood at the beginning of the respective period.

For the three-month period ended March 31, 2024, our Core Organic Growth Rate was negative 1.9%.

For the three-month period ended June 30, 2024, our Core Organic Growth Rate was a positive 0.3%.

Core Organic Growth Rates are not necessarily indicative of either future results of operations or actual results that might have been achieved had certain Sunset Asset classifications not been made or had certain acquisitions or dispositions been consummated on the first day of the prior year period presented.

7 unchanged sentences

The following table represents a reconciliation of total revenue, the most comparable GAAP measure, to core organic revenue for each of the periods indicated.

Three Months March 31,

Three Months Ended June 30,

(dollars in thousands)

11 unchanged sentences

The following table represents a reconciliation of net loss from continuing operations, the most comparable GAAP measure, to Adjusted EBITDA for each of the periods indicated.

Three Months Ended

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

(dollars in thousands)

4 unchanged sentences

Other expense (income), net (198) 617 (120) (808)

Benefit from income taxes (547) (1,422)

Provision for (benefit from) income taxes 1,210 (233) 663 (1,655)

Stock-based compensation expense 5,133 6,370 8,655 12,832

19 unchanged sentences

Consolidated Statements of Operations Data

The following tables set forth our results of operations for the specified periods, as well as our results of operations for the specified periods as a percentage of revenue.

The following table set forth our results of operations for the specified periods, as well as our results of operations for the specified periods as a percentage of revenue.

The period-to-period comparisons of results of operations are not necessarily indicative of results for future periods.

Three Months Ended March 31,

Amount Percent of Revenue Amount Percent of Revenue

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Amount Percent of Revenue Amount Percent of Revenue Amount Percent of Revenue Amount Percent of Revenue

(dollars in thousands, except share and per share data)

28 unchanged sentences

Loss before provision for income taxes (10,229) (15) % (15,380) (20) % (106,906) (77) % (156,847) (104) %

Benefit from income taxes 547 1 % 1,422 1 %

Benefit from (provision for) income taxes (1,210) (1) % 233 — % (663) — % 1,655 2 %

Net loss (11,439) (16) % (15,147) (20) % (107,569) (77) % (155,192) (102) %

7 unchanged sentences

Stockholders' Equity” .

(2) Includes general and administrative stock-based compensation of $2.3 million and $4.9 million for the three months March 31, 2024 and March 31, 2023, respectively.

General and administrative expense excluding stock-based compensation as a percentage of total revenues was 15% and 16% for the three months ended March 31, 2024 and March 31, 2023, respectively..

(3) Includes depreciation and amortization of $2.4 million and $3.4 million for the three months ended March 31, 2024 and March 31, 2023, respectively.

Comparison of the Three Months Ended March 31, 2024 and 2023

Three Months Ended March 31,

2024 2023 % Change

(2) Includes general and administrative stock-based compensation of $3.9 million and $4.9 million for the three months June 30, 2024 and June 30, 2023, respectively.

General and administrative expense excluding stock-based compensation as a percentage of total revenues was 14% and 14% for the three months ended June 30, 2024 and June 30, 2023, respectively..

(3) Includes depreciation and amortization of $2.4 million and $3.4 million for the three months ended June 30, 2024 and June 30, 2023, respectively.

Comparison of the Three and Six Months Ended June 30, 2024 and 2023

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 % Change 2024 2023 % Change

(dollars in thousands)

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Total revenue 100% 100% 100% 100%

For the Three Months Ended March 31, 2024

Total revenue was $70.7 million in the three months ended March 31, 2024, compared to $77.1 million in the three months ended March 31, 2023, a decrease of $6.4 million, or 8%.

For the Three Months Ended June 30, 2024

Total revenue was $69.3 million in the three months ended June 30, 2024, compared to $74.5 million in the three months ended June 30, 2023, a decrease of $5.2 million, or 7%.

This decrease is primarily due to the expected decline in revenue from Sunset Assets of $4.8 million.

The remaining decrease results from a decline in overage charges of $0.4 million as a result of customers not exceeding contractual minimums to the extent they did in the prior year period, and professional services revenue decline of $0.6 million due to fewer implementation projects.

These declines are offset by an increase in perpetual license revenue of $0.5 million.

For the Six Months Ended June 30, 2024

Total revenue was $140.1 million in the six months ended June 30, 2024, compared to $151.6 million in the six months ended June 30, 2023, a decrease of $11.5 million, or 8%.

This decrease is primarily due to the expected decline in revenue from Sunset Assets of $8.7 million.

The remaining decrease results from a decline in overage charges of $0.9 million as a result of customers not exceeding contractual minimums to the extent they did in the prior year period, professional services revenue decline of $1.0 million due to fewer implementation projects, and a decline of $1.3 million due to lower subscription and support revenue from a subset of our products which we are addressing with our growth investments.

These declines are offset by an increase in perpetual license revenue of $0.4 million.

Cost of Revenue

Three Months Ended March 31,

2024 2023 % Change

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 % Change 2024 2023 % Change

(dollars in thousands)

7 unchanged sentences

Subscription and support (1)

28% 30% 28% 30%

Professional services and other 2% 2% 2% 3%

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Stock Compensation $ 199 $ 301 $ 385 $ 604

For the Three Months Ended March 31, 2024

Cost of subscription and support revenue was $19.8 million in the three months ended March 31, 2024, compared to $23.5 million in the three months ended March 31, 2023, a decrease of $3.7 million, or 16%.

The decrease in cost of subscription and support revenue is primarily related to a decrease of $1.2 million in personnel-related costs, a decrease of $1.0 million in infrastructure costs, a $0.4 million decreases in variable telecom carrier costs, and a $1.0 million decrease in amortization of intangible assets related to our Sunset Assets.

Cost of professional services and other revenue was $1.2 million in the three months ended March 31, 2024, compared to $2.1 million in the three months ended March 31, 2023, a decrease of $0.9 million, or 41%.

For the Three Months Ended June 30, 2024

Cost of subscription and support revenue was $19.2 million in the three months ended June 30, 2024, compared to $22.1 million in the three months ended June 30, 2023, a decrease of $2.9 million, or 13%.

The decrease in cost of subscription and support revenue is primarily related to a decrease of $1.1 million in infrastructure costs, a $0.5 million decrease in variable telecom carrier costs, a $0.2 million decrease in personnel costs and a $1.0 million decrease in amortization of intangible assets related to our Sunset Assets.

Cost of professional services and other revenue was $1.2 million in the three months ended June 30, 2024, compared to $2.1 million in the three months ended June 30, 2023, a decrease of $0.9 million, or 42%.

The decrease in cost of professional services was related to a decrease in personnel-related expenses.

For the Six Months Ended June 30, 2024

Cost of subscription and support revenue was $39.1 million in the six months ended June 30, 2024, compared to $45.6 million in the six months ended June 30, 2023, a decrease of $6.5 million, or 14%.

The decrease in cost of subscription and support revenue is primarily related to a decrease of $2.2 million in infrastructure costs, a $0.9 million decrease in variable telecom carrier costs, a decrease of $1.4 million in personnel-related costs, and a $2.0 million decrease in amortization of intangible assets related to our Sunset Assets.

Cost of professional services and other revenue was $2.4 million in the six months ended June 30, 2024, compared to $4.2 million in the six months ended June 30, 2023, a decrease of $1.7 million, or 41%.

The decrease in cost of professional services was related to a decrease in personnel-related expenses.

Operating Expenses

Sales and Marketing Expense

Three Months Ended March 31,

2024 2023 % Change

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 % Change 2024 2023 % Change

(dollars in thousands)

4 unchanged sentences

Stock Compensation $ 362 $ 558 $ 759 $ 1,134

For the Three Months Ended March 31, 2024

Sales and marketing expense was $17.0 million in the three months ended March 31, 2024, compared to $14.3 million in the three months ended March 31, 2023, an increase of $2.7 million, or 19%.

The increase in sales and marketing expense is attributable to a $1.8 million increase in personnel-related expenses and a $0.8 million increase in marketing expenses associated with the announced investments in our growth plan.

For the Three Months Ended June 30, 2024

Sales and marketing expense was $16.8 million in the three months ended June 30, 2024, compared to $15.8 million in the three months ended June 30, 2023, an increase of $1.0 million, or 7%.

The increase in sales and marketing expense is attributable to an increase of $0.6 million in personnel costs and a $0.4 million increase in marketing and related expenses, both associated with the announced investments in our growth plan.

For the Six Months Ended June 30, 2024

Sales and marketing expense was $33.8 million in the six months ended June 30, 2024, compared to $30.0 million in the six months ended June 30, 2023, an increase of $3.8 million, or 13%.

The increase in sales and marketing expense is attributable to an increase of $2.7 million in personnel costs and a $1.1 million increase in marketing and related expenses, both associated with the announced investments in our growth plan.

Research and Development Expense

Three Months Ended March 31,

2024 2023 % Change

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 % Change 2024 2023 % Change

(dollars in thousands)

4 unchanged sentences

Stock Compensation $ 638 $ 648 $ 1,244 $ 1,303

For the Three Months Ended March 31, 2024

Research and development expense was $12.5 million in the three months ended March 31, 2024, compared to $12.5 million in the three months ended March 31, 2023.

While research and development expense has remained relatively flat in total, we have shifted the mix of our spending by moving personnel-related expenses from higher cost centers in the United States and abroad to our lower cost center in our India Center of Excellence thereby increasing development productivity for the same cost.

For the Three Months Ended June 30, 2024

Research and development expense was $12.2 million in the three months ended June 30, 2024, compared to $12.4 million in the three months ended June 30, 2023.

While research and development expense has remained relatively flat in total, we have shifted the mix of our spending by moving personnel-related expenses from higher cost centers to our lower cost center in our India Center of Excellence thereby increasing development productivity for the same cost.

For the Six Months Ended June 30, 2024

Research and development expense was $24.6 million in the six months ended June 30, 2024, compared to $25.0 million in the six months ended June 30, 2023.

While research and development expense has remained relatively flat in total, we have shifted the mix of our spending by moving personnel-related expenses from higher cost centers to our lower cost center in our India Center of Excellence thereby increasing development productivity for the same cost.

General and Administrative Expense

Three Months Ended March 31,

2024 2023 % Change

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 % Change 2024 2023 % Change

(dollars in thousands)

4 unchanged sentences

Stock compensation $ 3,934 $ 4,863 $ 6,267 $ 9,791

For the Three Months Ended March 31, 2024

General and administrative expense was $13.2 million in the three months ended March 31, 2024, compared to $17.2 million in the three months ended March 31, 2023, a decrease of $4.0 million, or 23%.

For the Three Months Ended June 30, 2024

General and administrative expense was $13.9 million in the three months ended June 30, 2024, compared to $15.6 million in the three months ended June 30, 2023, a decrease of $1.7 million, or 11%.

This decrease is primarily due to reductions in personnel-related costs including a decrease of $0.9 million in non-cash stock compensation expense.

For the Six Months Ended June 30, 2024

General and administrative expense was $27.1 million in the six months ended June 30, 2024, compared to $32.8 million in the six months ended June 30, 2023, a decrease of $5.7 million, or 17%.

This decrease is primarily due to reductions in personnel-related costs including a decrease of $3.5 million in non-cash stock compensation expense.

Depreciation and Amortization Expense

Three Months Ended March 31,

2024 2023 % Change

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 % Change 2024 2023 % Change

(dollars in thousands)

7 unchanged sentences

Total depreciation and amortization 16% 20% 16% 20%

For the Three Months Ended March 31, 2024

Depreciation and amortization expense was $11.4 million in the three months ended March 31, 2024, compared to $15.1 million in the three months ended March 31, 2023, a decrease of $3.7 million, or 25%.

This decrease primarily resulted from certain intangible assets related to Sunset Assets becoming fully amortized.

For the Three Months Ended June 30, 2024

Depreciation and amortization expense was $11.4 million in the three months ended June 30, 2024, compared to $14.9 million in the three months ended June 30, 2023, a decrease of $3.5 million, or 23%.

This decrease resulted from intangible assets becoming fully amortized.

For the Six Months Ended June 30, 2024

Depreciation and amortization expense was $22.8 million in the six months ended June 30, 2024, compared to $29.9 million in the six months ended June 30, 2023, a decrease of $7.2 million, or 24%.

This decrease resulted from intangible assets becoming fully amortized.

Acquisition-related Expenses

Three Months Ended March 31,

2024 2023 % Change

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 % Change 2024 2023 % Change

(dollars in thousands)

1 unchanged sentence

Percentage of total revenue —% 1% 1% 1%

For the Three Months Ended March 31, 2024

Acquisition-related expense was nil in the three months ended March 31, 2024, compared to $1.1 million in the three months ended March 31, 2023, a decrease of $1.1 million, or 100%.

For the Three Months Ended June 30, 2024

Acquisition-related expense was nil in the three months ended June 30, 2024, compared to $1.1 million in the three months ended June 30, 2023, a decrease of $1.1 million, or 100%.

We have had no new acquisitions since our two acquisitions during 2022.

Acquisition-related expenses in the three months ended March 31, 2023 include expenses related to acquisitions closed in 2022.

Acquisition-related expenses in the three months ended June 30, 2023 include expenses related to acquisitions closed in 2022.

For the Six Months Ended June 30, 2024

Acquisition-related expense was nil in the six months ended June 30, 2024, compared to $2.2 million in the six months ended June 30, 2023, a decrease of $1.1 million, or 100%.

We have had no new acquisitions since our two acquisitions during 2022.

Acquisition-related expenses in the three months ended June 30, 2023 include expenses related to acquisitions closed in 2022.

Impairment of goodwill

Three Months Ended March 31,

2024 2023 % Change

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 % Change 2024 2023 % Change

(dollars in thousands)

Impairment of goodwill $ 87,227 $ 128,755 (32) %

Impairment of goodwill $ — $ — N/A

$ 87,227 $ 128,755 (32) %

Goodwill impairment is recognized on a non-recurring basis when the carrying value (or GAAP basis book value) of our Company (which is our only reporting unit) exceeds the estimated fair value of our Company as determined by reference to a number of factors and assumptions, including the trends in the stock price of our Common Stock.

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Other Income (Expense)

Three Months Ended March 31,

2024 2023 % Change

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 % Change 2024 2023 % Change

(dollars in thousands)

7 unchanged sentences

Total other expense (7)% (8)% (7)% (7)%

For the Three Months Ended March 31, 2024

Interest expense, net of interest income was $5.0 million in the three months ended March 31, 2024 compared to $5.5 million in the three months ended March 31, 2023, a decrease of $0.5 million or 9%, due to a decrease in interest expense as a result of paying down $35 million of debt principal in August 2023 along with regularly scheduled principal payments lowering outstanding borrowings on our Credit Facility.

For the Three Months Ended June 30, 2024

Interest expense, net of interest income was $5.1 million in the three months ended June 30, 2024 compared to $5.4 million in the three months ended June 30, 2023, a decrease of $0.3 million or 6%, due to a decrease in interest expense as a result of paying down $35 million of debt principal in August 2023 along with regularly scheduled principal payments lowering outstanding borrowings on our Credit Facility.

Additionally, interest income earned on our cash balances has increased as interest rates have increased quarter over quarter.

Other expense, net was $0.1 million in the three months ended March 31, 2024, compared to other income, net of $1.4 million in the three months ended March 31, 2023.

Other income (expense), net recognized during the three months ended March 31, 2024 and 2023 were related primarily to foreign currency exchange fluctuations.

Other income, net was $0.2 million in the three months ended June 30, 2024, compared to other expense, net of $0.6 million in the three months ended June 30, 2023.

Other income (expense), net recognized during the three months ended June 30, 2024 and 2023 were related primarily to foreign currency exchange fluctuations.

For the Six Months Ended June 30, 2024

Interest expense, net of interest income was $10.0 million in the six months ended June 30, 2024, compared to $10.8 million in the six months ended June 30, 2023, a decrease of $0.8 million, or 8%.

The decrease is primarily attributable to paying down $35 million of debt principal in August 2023 along with regularly scheduled principal payments lowering outstanding borrowings on our Credit Facility combined with higher interest income on our interest-bearing cash accounts.

Other income, net was $0.1 million in the six months ended June 30, 2024, compared to other income, net of $0.8 million in the six months ended June 30, 2023.

Other income (expense), net recognized in the six months ended June 30, 2024 and June 30, 2023 related primarily to foreign currency exchange fluctuations.

Benefit from Income Taxes

Three Months Ended March 31,

2024 2023 % Change

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 % Change 2024 2023 % Change

(dollars in thousands)

Benefit from income taxes $ 547 $ 1,422 (62) %

Benefit from (provision for) income taxes $ (1,210) $ 233 (619) % $ (663) $ 1,655 (140) %

Percentage of total revenue (1)% —% —% 2%

For the Three Months Ended March 31, 2024

Benefit from income taxes was $0.5 million in the three months ended March 31, 2024, compared to a benefit for income taxes of $1.4 million in the three months ended March 31, 2023, resulting in a decrease in benefit from income taxes of $0.9 million.

The benefit from income taxes for the three months ended March 31, 2024 related primarily to the deferred tax impact of the $87.2 million goodwill impairment booked during the first quarter of 2024.

This tax benefit is offset by the foreign income taxes associated with our combined non U.S.

operations, changes in deferred tax liabilities associated with amortization of United States tax deductible goodwill, and U.S.

state taxes in certain states in which the Company does not file on a consolidated basis or have net operating loss carryforwards.

The benefit from income taxes for the three months ended March 31, 2023 related primarily related to the deferred tax impact of the $128.8 million goodwill impairment booked during the first quarter of 2023.

This tax benefit is offset by the foreign income taxes associated with our combined non U.S.

operations, changes in deferred tax liabilities associated with amortization of United States tax deductible goodwill, and U.S.

state taxes in certain states in which the Company does not file on a consolidated basis or have net operating loss carryforwards.

For the Three Months Ended June 30, 2024

Provision for income taxes was $1.2 million in the three months ended June 30, 2024, compared to a benefit from income taxes of $0.2 million in the three months ended June 30, 2023, resulting in an increase in expense from income taxes of $1.4 million.

The provision for income taxes for the three months ended June 30, 2024 related primarily to the foreign income taxes associated with our combined non U.S.

The benefit from income taxes for the three months ended June 30, 2023 related primarily to the foreign income taxes associated with our combined non U.S.

This tax benefit is offset by changes in deferred tax liabilities associated with amortization of United States tax deductible goodwill, and U.S.

state taxes in certain states in which the Company does not file on a consolidated basis or have NOL’s.

For the Six Months Ended June 30, 2024

The provision for income taxes was $0.7 million in the six months ended June 30, 2024, compared to a benefit from income taxes of $1.7 million in the six months ended June 30, 2023, an increase in the provision of $2.4 million.

This increase was due primarily to foreign taxes associated with our combined non-U.S.

operations, which was partially offset by the non-cash impact of deferred taxes related to the goodwill impairment recorded in the first quarter of 2024.

Liquidity and Capital Resources

1 unchanged sentence

We believe that current cash and cash equivalents, cash flows from operating activities, and availability under our existing credit facility will be sufficient to fund our operations for at least the next twelve months.

In addition, we may utilize the sources of capital available to us under our Revolver to support our continued growth via acquisitions.

As of March 31, 2024, we had cash and cash equivalents of $231.6 million, $60.0 million of available borrowings under our Revolver, as discussed below, and $480.7 million of borrowings outstanding under our Term Loans.

As of June 30, 2024, we had cash and cash equivalents of $232.4 million, $60.0 million of available borrowings under our Revolver that matures August 6, 2024, and $479.4 million of borrowings outstanding under our Term Loans that mature August 6, 2026.

As of December 31, 2023, we had cash and cash equivalents of $236.6 million, $60.0 million of available borrowings under our Revolver, and $482.1 million of borrowings outstanding under our Term Loans.

The $4.9 million decrease in cash and cash equivalents from December 31, 2023 to March 31, 2024 was due primarily to $7.9 million paid to repurchase shares of the Company’s Common Stock, and $1.4 million in debt repayment, offset by $5.1 million in cash flows from operations.

Our cash and cash equivalents held by our foreign subsidiaries was $33.8 million as of March 31, 2024 and $34.8 million as of December 31, 2023.

The $4.2 million decrease in cash and cash equivalents from December 31, 2023 to June 30, 2024 was due primarily to $11.0 million paid to repurchase shares of the Company’s Common Stock, and $2.7 million in debt repayment, offset by $10.6 million in cash flows from operations.

Our cash and cash equivalents held by our foreign subsidiaries was $33.8 million as of June 30, 2024 and $34.8 million as of December 31, 2023.

Our intent is to permanently reinvest these funds outside the U.S.

1 unchanged sentence

We do not provide for federal income taxes on the undistributed earnings of our foreign subsidiaries.

As of March 31, 2024 and December 31, 2023, we had working capital surpluses of $165.8 million and $169.6 million, respectively.

As of June 30, 2024 and December 31, 2023, we had working capital surpluses of $167.6 million and $169.6 million, respectively.

Credit Facility

As described in “ Note 6.

Debt—Credit Facility ”, the Company has a Credit Facility which includes the fully drawn Term Loans as of March 31, 2024, and a $60 million undrawn Revolver.

Debt—Credit Facility ”, the Company has a Credit Facility which includes the fully drawn Term Loans as of June 30, 2024, and a $60 million undrawn Revolver.

The Term Loans mature on August 6, 2026, after the scheduled quarterly principal amortization.

1 unchanged sentence

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

Three Months Ended March 31,

Six Months Ended June 30,

(dollars in thousands)

9 unchanged sentences

Cash provided by operating activities is significantly influenced by the amount of cash we invest in personnel and infrastructure to support the anticipated growth of our business.

Included in net cash provided by operations are one-time acquisition related expenses incurred after each acquisition to transact and transform the acquired business into the Company's unified operating platform.

Additionally, operating cash flows include the impact of earn-outs payments in excess of original purchase accounting estimates.

Our working capital consists primarily of cash, receivables from customers, prepaid assets, unbilled professional services, deferred commissions, accounts payable, accrued compensation and other accrued expenses, acquisition related earnout and holdback liabilities, lease liabilities, and deferred revenues.

The volume of professional services rendered, the volume and timing of customer bookings and contract renewals, and the related timing of collections on those bookings and renewals, as well as the timing of spending commitments and payments of our accounts payable, accrued expenses, accrued payroll and related benefits, all affect these account balances.

Cash provided by operating activities was $5.1 million for the three months ended March 31, 2024 compared to cash provided by operating activities of $15.8 million for the three months ended March 31, 2023, a decrease of $10.7 million.

Changes in working capital for the three months ended March 31, 2024 included collections on accounts receivable, increases in prepaid and other current assets, payments of current liabilities and decreases in deferred revenue.

Cash provided by operating activities was $10.6 million for the six months ended June 30, 2024 compared to cash provided by operating activities of $22.8 million for the six months ended June 30, 2023, a decrease of approximately $12.3 million driven by changes in net loss and non-cash adjustments to operating cash flow.

Changes in working capital for the six months ended June 30, 2024 included collections on accounts receivable, increases in prepaid and other current assets, payments of current liabilities and decreases in deferred revenue.

A substantial source of cash is invoicing for subscriptions and support fees in advance, which is recorded as deferred revenue, and is included on our condensed consolidated balance sheets as a liability.

4 unchanged sentences

As our business grows, we expect our primary investing activities to continue to expand our product library, customer base, and market access.

For the three months ended March 31, 2024, cash used in investing activities consisted of purchases of property and equipment of $0.2 million.

For the six months ended June 30, 2024, cash used in investing activities consisted of purchases of property and equipment of $0.5 million.

Cash Flows from Financing Activities

Our primary financing activities have consisted of capital raised to fund our acquisitions, proceeds from debt obligations incurred to finance our acquisitions, repayments and servicing of our debt obligations, share repurchases and share based employee payroll tax payment activity.

Cash used in financing activities changed by $2.8 million for the three months ended March 31, 2024 compared to the same period in 2023 due to $7.9 million used for Common Stock repurchases in 2024 offset by additional consideration paid to sellers of businesses of $5.1 million for the three months ended March 31, 2023.

Historically, our primary financing activities have consisted of capital raised to fund our acquisitions, proceeds from debt obligations incurred to finance our acquisitions, repayments and servicing of our debt obligations, share repurchases and share based employee payroll tax payment activity.

Cash used in financing activities changed by $5.5 million for the six months ended June 30, 2024 compared to the same period in 2023 due to $11.0 million used for Common Stock repurchases in 2024 and $5.5 million used for payments for additional consideration to sellers of businesses in 2023.

Critical Accounting Policies and the Use of Estimates

8 unchanged sentences

• goodwill and other intangibles.

We are not aware of any specific event or circumstance that would require updates to our estimates or judgments or require us to revise the carrying value of our assets or liabilities as of May 2, 2024, the date of issuance of this Quarterly Report on Form 10-Q.

We are not aware of any specific event or circumstance that would require updates to our estimates or judgments or require us to revise the carrying value of our assets or liabilities as of August 1, 2024, the date of issuance of this Quarterly Report on Form 10-Q.

These estimates may change as new events occur and additional information is obtained.

1 unchanged sentence

Other Key Accounting Policies

Our unaudited interim financial statements and other financial information for the three months ended March 31, 2024, as presented herein and in “ Item 1.

Our unaudited interim financial statements and other financial information for the three and six months ended June 30, 2024, as presented herein and in “ Item 1.

Financial Statements ” to this Quarterly Report on Form 10-Q, reflect no material changes in our critical accounting policies and estimates as set forth in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 22, 2024 (the “Annual Report”).

6 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis