What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-02-13 compared with 2025-02-13 · 383 added, 353 removed, 991 unchanged (43% of the section changed)

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Consolidated Balance Sheets as of December 31, 2025 and 2024

Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years ended December 31, 2024, 2023, and 2022

Consolidated Statements of Operations and Comprehensive Income for the Years ended December 31, 2025, 2024, and 2023

Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2025, 2024, and 2023

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Notes to Consolidated Financial Statements 61

The supplementary financial information required by this item is included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Report of Independent Registered Public Accounting Firm

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We have audited the accompanying consolidated balance sheets of Upwork Inc.

and its subsidiaries (the "Company") as of December 31, 2024 and 2023, and the related consolidated statements of operations and comprehensive income (loss), of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2024, including the related notes (collectively referred to as the "consolidated financial statements").

and its subsidiaries (the "Company") as of December 31, 2025 and 2024, and the related consolidated statements of operations and comprehensive income, of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2025, including the related notes (collectively referred to as the "consolidated financial statements").

We also have audited the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

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A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

only in accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Escrow funds payable 180,752 195,736

Debt, current 359,770 —

Accrued expenses and other current liabilities 94,023 59,300

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Accumulated and other comprehensive income 754 264

Accumulated deficit ( 78,476 ) ( 294,062 )

Retained earnings (accumulated deficit) 36,949 ( 78,476 )

Total stockholders’ equity 630,315 575,377

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The accompanying notes are an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

For the Years Ended December 31, 2025, 2024, and 2023

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Other income, net 23,869 25,221 60,137

Income (loss) before income taxes 90,427 48,877 ( 89,349 )

Income tax benefit (provision) 125,159 ( 1,990 ) ( 536 )

Net income (loss) $ 215,586 $ 46,887 $ ( 89,885 )

Net income (loss) per share:

Income before income taxes 153,176 90,427 48,877

Income tax (provision) benefit ( 37,751 ) 125,159 ( 1,990 )

Net income $ 115,425 $ 215,586 $ 46,887

Net income per share:

Basic $ 0.87 $ 1.61 $ 0.35

Diluted $ 0.84 $ 1.52 $ 0.06

Weighted-average shares used to compute net income (loss) per share, basic and diluted

Weighted-average shares used to compute net income per share, basic and diluted

Basic 132,485 133,621 134,774

Diluted 140,660 143,152 137,263

Other comprehensive income (loss), net of tax:

Net unrealized holding gain (loss) on marketable securities, net $ 59 $ 3,290 $ ( 2,557 )

Total comprehensive income (loss) $ 215,645 $ 50,177 $ ( 92,442 )

Other comprehensive income, net of tax:

Net unrealized holding gain on marketable securities, net $ 490 $ 59 $ 3,290

Total comprehensive income $ 115,915 $ 215,645 $ 50,177

The accompanying notes are an integral part of these consolidated financial statements.

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Common Stock Additional

Capital Accumulated Other Comprehensive Income (Loss) Accumulated

Deficit Total

Capital Accumulated Other Comprehensive Income

Retained Earnings (Accumulated

Stockholders’

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Balances as of December 31, 2022 132,368,265 $ 13 $ 592,900 $ ( 3,085 ) $ ( 340,949 ) $ 248,879

Issuance of common stock upon exercise of stock options 412,171 — 1,642 — — 1,642

Issuance of common stock upon exercise of stock options and common stock warrants 640,687 — 2,012 — — 2,012

Stock-based compensation expense — — 75,175 — — 75,175

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Issuance of common stock in connection with employee stock purchase plan 598,781 — 4,081 — — 4,081

Unrealized loss on marketable securities — — — ( 2,557 ) — ( 2,557 )

Net loss — — — — ( 89,885 ) ( 89,885 )

Unrealized gain on marketable securities — — — 3,290 — 3,290

Net income — — — — 46,887 46,887

Balances as of December 31, 2023 137,272,754 $ 14 $ 674,918 $ 205 $ ( 294,062 ) $ 381,075

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Issuance of common stock in connection with employee stock purchase plan 657,526 — 4,795 — — 4,795

Repurchase of common stock, including excise tax ( 8,076,726 ) ( 1 ) ( 100,276 ) — — ( 100,277 )

Unrealized gain on marketable securities — — — 59 — 59

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CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss) $ 215,586 $ 46,887 $ ( 89,885 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Net income $ 115,425 $ 215,586 $ 46,887

Adjustments to reconcile net income to net cash provided by operating activities:

Provision for transaction losses 6,706 5,505 8,673

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Internal-use software and platform development costs ( 19,349 ) ( 10,916 ) ( 12,659 )

Net cash provided by (used in) investing activities 137,568 88,270 ( 69,468 )

Net cash (used in) provided by investing activities ( 136,939 ) 137,568 88,270

CASH FLOWS FROM FINANCING ACTIVITIES:

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Repurchase of common stock ( 135,959 ) ( 100,000 ) —

Net cash provided by (used in) financing activities ( 81,956 ) ( 139,791 ) 1,143

Net cash used in financing activities ( 138,005 ) ( 81,956 ) ( 139,791 )

NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH ( 26,685 ) 209,175 1,187

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Internal-use software and platform development costs incurred but not yet paid $ 1,103 $ 400 $ 215

(1) Refer to “Note 2—Basis of Presentation and Summary of Significant Accounting Policies” for discussion of the change in the current period presentation.

The accompanying notes are an integral part of these consolidated financial statements.

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Note 1— Organization and Description of Business

Upwork Inc., which is referred to as the Company or Upwork, operates a work marketplace that connects businesses, which are referred to as clients, with independent talent.

Independent talent on the Company’s work marketplace, which are referred to as talent, and, together with clients, as customers, include independent professionals and agencies of varying sizes and are an increasingly sought-after, critical, and expanding segment of the global workforce.

The Company is incorporated in the state of Delaware and is headquartered in Palo Alto, California.

Unless otherwise expressly stated or the context otherwise requires, the terms “Upwork” and the “Company” in these notes to the consolidated financial statements refer to Upwork and its wholly-owned subsidiaries.

Upwork Inc., which is referred to as the Company or Upwork, through its complementary, wholly owned subsidiaries, connects businesses with global, AI-enabled talent across every on-demand work type, including freelance, agency, fractional, and payrolled.

The Company’s portfolio of platforms and other workforce solutions includes the Upwork Marketplace, the world’s human and AI-powered work marketplace that connects businesses with on-demand access to highly skilled independent talent worldwide, and Lifted, the Company’s wholly owned subsidiary that provides a purpose-built solution for enterprise organizations to source, contract, manage, and pay talent across the full spectrum of contingent work.

The Company’s customers consist of both talent and clients, where talent includes independent professionals and agencies of varying sizes that deliver services through the Upwork Marketplace, Lifted, or other Company workforce solutions, and clients range from small businesses and entrepreneurs to large enterprises that seek and engage with talent through these platforms and other workforce solutions.

is incorporated in the state of Delaware and is headquartered in Palo Alto, California.

Unless otherwise expressly stated or the context otherwise requires, the terms “Upwork” and the “Company” in these notes to the consolidated financial statements refer to Upwork Inc.

and its wholly owned subsidiaries.

Note 2— Basis of Presentation and Summary of Significant Accounting Policies

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Prior period presentation has been revised to conform to the current period presentation as of December 31, 2025.

Changes in Presentation

During the fourth quarter of 2024, the Company elected to change the presentation of certain cash flows on its Consolidated Statement of Cash Flows.

The change in Trade and Client Receivables relating to amounts received on behalf of talent to fund their escrow accounts was reclassified from operating activities to financing activities, reflected within the caption Change in escrow fund payable, net.

Prior period comparative amounts have been recast to conform to the current period presentation.

This change had the impact of increasing cash flow provided by operating activities by $ 25.5 million and $ 4.9 million, for the years ended December 31, 2023 and 2022, respectively, and a corresponding offset in cash provided by (used in) financing activities.

This reclassification did not affect the previously reported total cash balances on the Consolidated Statement of Cash Flows.

Additionally, these reclassifications had no impact on the Consolidated Statements of Operation and Comprehensive Income, Consolidated Balance Sheets, or Consolidated Statements of Shareholders’ Equity.

Use of Estimates

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Such estimates include, but are not limited to:

valuation of acquired intangible assets;

the useful lives of assets;

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goodwill impairment;

standalone selling price of material rights and the period of time over which to defer and recognize the consideration allocated to the material rights;

allowance for expected credit losses;

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government securities, and debt securities with maturities of 90 days or less from the date of purchase.

Notes to Consolidated Financial Statements—Continued

Restricted Cash

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Short-term restricted cash included in prepaid expenses and other current assets was $ 3.6 million as of December 31, 2025 and 2024, and long-term restricted cash included in other assets, noncurrent was $ 0.3 million and $ 0.6 million as of December 31, 2025 and 2024, respectively.

Notes to Consolidated Financial Statements—Continued

Funds Held in Escrow, Including Funds in Transit

The Company maintains its customers’ funds held in escrow in demand or interest-bearing checking accounts at U.S.

financial institutions, as well as two California licensed money transmitters.

financial institutions, as well as three California licensed money transmitters.

The balance in these accounts was in excess of federally insured limits as of December 31, 2025 and 2024.

Customers’ funds held in escrow are denominated exclusively in U.S.

The Company is an internet escrow agent and is therefore required to hold its customers’ escrowed funds and escrow funds in-transit in trust as an asset and record a corresponding liability for escrow funds payable on its consolidated balance sheets.

For this reason, funds held in escrow, including funds in transit, are restricted cash.

The Company is a licensed internet escrow agent, as such, is required to hold its customers’ escrowed funds and escrow funds in-transit in trust as an asset and record a corresponding liability for escrow funds payable on its consolidated balance sheets.

Accordingly, funds held in escrow, including funds in transit, are classified as restricted cash.

The balances of funds held in escrow, including funds in transit, and the related liabilities fluctuate based on customer activity and may vary from period to period.

Escrow funds in-transit arise due to the time it takes to clear transactions through external payment networks.

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As of December 31, 2025 and 2024, the Company recorded $ 180.8 million and $ 195.7 million, respectively, as funds held in escrow, including funds in transit.

The below table reconciles cash, cash equivalents, and restricted cash as reported in the consolidated balance sheets to the total of the same amounts shown in the consolidated statements of cash flows for the years ended December 31, 2024, 2023, and 2022:

The table below reconciles cash, cash equivalents, and restricted cash as reported in the consolidated balance sheets to the total of the same amounts shown in the consolidated statements of cash flows for the years ended December 31, 2025, 2024, and 2023:

(In thousands) 2025 2024 2023

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If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses will be recorded through other income, net, limited by the amount that the fair value is less than the amortized cost basis.

Any additional impairment not recorded through an allowance for credit losses is recognized in other comprehensive

Notes to Consolidated Financial Statements—Continued

income (loss).

Any additional impairment not recorded through an allowance for credit losses is recognized in other comprehensive income.

Changes in the allowance for credit losses are reflected as provision for (or reversal of) credit loss expense.

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These changes are recorded in other income, net.

The Company determines realized gains or losses from the sale of marketable securities on a specific identification method and records such gains or losses in other income, net within the Company’s consolidated statements of operations and comprehensive income (loss).

Notes to Consolidated Financial Statements—Continued

Escrow Funds Payable

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These losses, when incurred, have been within the range of the Company’s expectations.

The Company had two clients that accounted for more than 10 % of trade and client receivables as of December 31, 2024.

The Company did not have any clients that accounted for more than 10% of trade and client receivables as of December 31, 2025.

The Company had two clients that accounted for more than 10 % of trade and client receivables as of December 31, 2024.

For the years ended December 31, 2025, 2024 and 2023, the Company did not have any clients that accounted for more than 10% of total revenue.

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Allowance for expected credit losses, ending balance $ 5,919 $ 4,646 $ 5,141

Derivative Instruments

The Company uses derivative financial instruments not designated as hedges, such as foreign currency forward contracts, to minimize the short-term impact of foreign currency exchange rate fluctuations on certain foreign currency denominated assets and liabilities, as well as certain foreign currency denominated expenses, hedging the gains or losses generated by the re-measurement of significant foreign currency denominated monetary assets and liabilities.

The Company does not enter into derivative instruments for speculative or trading purposes and these instruments generally have maturities within 12 months.

The foreign currency forward contracts were recorded at fair value and, when in gain positions, were reported within prepaid expenses and other current assets.

When in loss positions, the foreign currency forward contracts were recorded within accrued expenses and other current liabilities in the consolidated balance sheets.

Gains or losses from changes in the fair value of these foreign currency forward contracts not designated as hedging instruments were recorded in other income, net to offset the changes in the fair value of the underlying assets or liabilities that were being hedged.

The notional amounts associated with the Company’s foreign exchange activity as of December 31, 2024 and 2023 were $ 0.2 million and $ 7.0 million, respectively, none of which were designated as cash flow hedges.

The carrying values of the foreign currency forward contracts approximated their fair values due to their relatively short settlement durations.

The fair values of the Company’s outstanding foreign currency forward contracts not designated as hedging instruments as of December 31, 2024 and 2023 was not material.

Gains on foreign currency forward contracts not designated as hedging instruments were $ 0.1 million and $ 0.5 million for the years ended December 31, 2024 and 2023, respectively.

Losses on foreign currency forward contracts not designated as hedging instruments were $ 0.2 million for the year ended December 31, 2022.

The Company accounts for leases in accordance with Financial Accounting Standards Board, which is referred to as the FASB, Accounting Standards Update, which is referred to as ASU, No.

2016-02, Leases (Topic 842), which the Company adopted on December 31, 2019 effective as of January 1, 2019 using the effective date method.

2016-02, Leases (Topic 842).

Property and Equipment, Net

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Costs incurred for enhancements that are expected to result in additional significant functionality are also capitalized.

Such costs are generally amortized on a straight-line basis over their estimated useful lives determined on a project-by-project basis, which historically has ranged between two to five years , beginning when the asset is ready for its intended use.

Such costs are generally amortized on a straight-line basis over their estimated useful lives determined on a project-by-project basis, which historically has ranged between two to three years , beginning when the asset is ready for its intended use.

Costs incurred prior to meeting these criteria, together with costs incurred for training and maintenance, are expensed as incurred.

Amortization of capitalized internal-use software and platform development costs is allocated to functional expense categories based on headcount and the nature and intended use of the project.

Notes to Consolidated Financial Statements—Continued

Segment Information

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To support this process, the Company may engage a third-party valuation firm, as needed, to assist in determining the fair values of acquired assets, assumed liabilities, and any contingent consideration in a business combination.

Transaction costs associated with business combinations are expensed as incurred and are included in general and administrative expenses in the accompanying consolidated statements of operations and comprehensive income (loss).

Goodwill is not amortized, but rather is assessed for impairment at least annually, or more frequently if events and changes in circumstances indicate that its carrying amount may not be recoverable.

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The Company determined the fair value by using quoted market prices of the Company’s common stock.

The Company determined that the fair value of its reporting unit exceeded the carrying value, and, as such, the Company concluded that there was no impairment of goodwill at the impairment testing date.

The Company determined that the fair value of its reporting unit exceeded the carrying value, and, as such, the

Notes to Consolidated Financial Statements—Continued

Company concluded that there was no impairment of goodwill at the impairment testing date.

There has been no impairment of goodwill for any of the periods presented.

Acquired Intangible and Other Long-Lived Assets

The Company’s intangible assets include identifiable, finite-lived intangible assets such as customer relationships and developed technology, acquired as part of a business combination in November 2024, as well as an assembled workforce, acquired as part of an asset acquisition in November 2023.

The Company’s intangible assets include identifiable, finite-lived intangible assets such as developed technology and customer relationships, acquired as part of business combinations in 2024 and 2025, as well as an assembled workforce acquired in prior years.

These intangible assets are carried at cost, less accumulated amortization.

The Company amortizes the intangible assets over their estimated useful lives, either based on the pattern in which the economic benefits are consumed, or using the straight-line method when the pattern cannot be reliably determined.

The estimated useful lives of the intangible assets range from six months to three years .

Intangible amortization expense related to developed technology and an assembled workforce is included in research and development expense on the Company’s consolidated statement of operations and comprehensive income (loss).

Intangible amortization expense related to customer relationships is included in sales and marketing expense on the Company’s consolidated statement of operations and comprehensive income (loss).

The estimated useful lives of the intangible assets range from two years to five years .

Intangible amortization expense related to customer relationships is included in sales and marketing expense on the Company’s consolidated statement of operations and comprehensive income.

The Company periodically reviews the remaining estimated useful lives of its long-lived tangible and amortizable intangible assets.

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There has been no asset impairments for any of the periods presented.

Notes to Consolidated Financial Statements—Continued

Convertible Senior Notes

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The carrying value of the liability equals the proceeds received from the issuance of the Notes less debt issuance costs.

In March 2023, the Company entered into separate, privately negotiated repurchase agreements with a limited number of institutional holders of the Notes to repurchase for cash an aggregate of $ 214.0 million principal amount of the Notes for an aggregate cash payment of $ 170.8 million, which are collectively referred to as the Note Repurchases.

See “Note 10—Debt” for additional information.

Revenue Recognition

The Company generates revenue from talent and clients from its Marketplace and Enterprise offerings.

The Company generates revenue from talent and clients through its platforms and other workforce solutions.

The Company accounts for revenue in accordance with FASB ASU No.

2014-09, Revenue from Contracts with Customers (Topic 606), which the Company adopted on December 31, 2019 effective as of January 1, 2019 using the modified retrospective method.

2014-09, Revenue from Contracts with Customers (Topic 606).

Revenue is recognized upon transfer of control of promised services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those services.

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These transactions are primarily with certain financial institutions that the Company uses as payment processors on the work marketplace.

The Company accounts for the consideration payable to these customers in their capacity as vendors as a purchase of services from a vendor and records such payments in either cost of revenue or sales and marketing within the consolidated statements of operations and comprehensive income (loss).

Marketplace Offerings

The Company’s Marketplace revenue represents the majority of its revenue and is derived from its Marketplace offerings, which include all offerings other than the Enterprise offerings—Enterprise Solutions and Managed Services.

The Company generates Marketplace revenue from both talent and clients.

Marketplace revenue is primarily generated from talent service fees, and to a lesser extent, client marketplace fees.

The Company also generates Marketplace revenue through ads and monetization products, including purchases of Connects, which are virtual tokens required for talent to bid on projects and purchase ads products on the Company’s work marketplace, membership fees, and other services, such as foreign currency exchange when clients choose to pay in currencies other than the U.S.

dollar, Additionally the Company earns interest on funds held on behalf of customers.

The Company earns fees from talent under its Marketplace offerings and associated premium offerings, which represent a single promise to provide continuous access (i.e., stand-ready performance obligation) to the Company’s work marketplace and site services.

As each day of providing access to the work marketplace and site services (including, but not limited to, communication, invoicing, reporting, dispute resolution, and payment services) is substantially the same and talent simultaneously receive and consume the benefits as access is provided, the Company’s single promise is comprised of a series of distinct service periods.

The Company’s Marketplace revenue represents the majority of its revenue and is derived from the Upwork Marketplace.

The Company generates Marketplace revenue from both talent and clients, primarily generated from talent service fees and client marketplace fees.

The Company also generates Marketplace revenue through ads and monetization products, including purchases of Connects, which are virtual tokens required for talent to bid on projects and purchase ads products on the Upwork Marketplace, talent memberships, and other services, such as foreign currency exchange when clients choose to

Notes to Consolidated Financial Statements—Continued

pay in currencies other than the U.S.

Additionally, the Company earns interest on funds held on behalf of customers.

The Company earns fees from talent under its Upwork Marketplace offerings and associated premium offerings, which represent a single promise to provide continuous access (i.e., stand-ready performance obligation) to the Upwork Marketplace and site services.

As each day of providing access to the Upwork Marketplace and site services (including, but not limited to, communication, invoicing, reporting, dispute resolution, and payment services) is substantially the same and talent simultaneously receive and consume the benefits as access is provided, the Company’s single promise is comprised of a series of distinct service periods.

The Company allocates consideration to each distinct service period in which it has the contractual right to bill.

The Company’s talent arrangements may include fixed and variable consideration, or a combination of the two, comprised of the following:

Service fees.

Talent are provided access to the Company’s work marketplace to market their businesses, send proposals to and communicate with prospective clients, and, if engaged by a client, to perform specified services agreed between talent and clients, which are referred to as talent services.

Talent charge clients on an hourly or a milestone basis for services rendered to clients through the Company’s work marketplace, which are referred to as talent billings.

Prior to May 2023, the Company charged talent a service fee as a percentage of talent billings primarily using a tiered service fee model based on cumulative lifetime billings by talent to each client.

In May 2023, the Company retired the tiered service fee structure for talent working with clients on its Marketplace offering— ranging from 5 % to 20 %—in favor of a simplified flat service fee of 10 %.

This change took effect on new contracts and existing contracts that would have otherwise been subject to a 20 % fee under the tiered service fee model.

Talent that had existing contracts with a 5 % fee under the tiered service fee model retained that rate for those contracts through the end of 2023.

Prior to this change, talent service fee arrangements subject to tiered service fees also included contract renewal options that represented a material right.

The Company takes no responsibility for talent services, and therefore, does not control talent services.

Additionally, talent and clients negotiate and agree upon the scope and the price for talent services directly with each other, and the Company is not a party to those agreements.

Accordingly, for these arrangements, the

Notes to Consolidated Financial Statements—Continued

Company presents revenue on a net basis, as an agent.

The Company recognizes the service fees for each distinct service period when it has the contractual right to bill for the services.

Talent service fees.

Talent are provided access to the Upwork Marketplace to market their businesses, send proposals to and communicate with prospective clients, and, if engaged by a client, to perform specified services agreed between talent and clients, which are referred to as talent services.

Talent charge clients on an hourly or a milestone basis for services rendered to clients through the Upwork Marketplace, which are referred to as talent billings.

The Company charges talent a service fee as a percentage of talent billings.

Effective May 2025, the Company introduced a variable pricing structure for talent service fees for new contracts on the Upwork Marketplace.

Under this pricing structure, talent are charged a service fee for each contract ranging from 0 % to 15 % of their earnings, depending on platform-specific supply and demand factors, such as project type, job availability, and client demand.

The applicable service fee is disclosed at contract inception and remains fixed for the duration of the contract.

For contracts formed prior to May 2025, the Company continues to charge a flat talent service fee of 10 %.

The Company does not control the talent services, and talent and clients negotiate and agree upon the scope and the price for talent services directly with each other.

Accordingly, the Company presents revenue from talent service fees on a net basis as an agent.

The Company recognizes talent service fees for each distinct service period when it has the contractual right to bill for the services, which for a majority of talent service fees occurs on a weekly basis.

Withdrawal fees .

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Connects fees represent fixed consideration and are allocated to and recognized in the distinct service period in which the Connects are used by talent.

Certain of the Company’s contracts with talent contain multiple performance obligations in the event the Company determines a material right exists.

Specifically, prior to the shift to a simplified flat service fee in May 2023, the arrangements with talent subject to tiered service fees included contract renewal options that represent a material right.

For such arrangements, the Company allocated revenue to each performance obligation based on its relative standalone selling price by applying the portfolio approach practical expedient under Topic 606.

Standalone selling prices for offerings subject to tiered service fees were estimated based on observable transactions when these services were sold on a standalone basis.

Standalone selling price for a material right was estimated by determining the discount that talent would obtain when exercising the option, adjusted for the likelihood that the option will be exercised.

Significant judgment was applied in the application of the portfolio approach practical expedient, which included estimating the standalone selling price of the material rights and the period of time over which to defer and recognize the consideration allocated to the material rights.

Specifically, management applied significant judgment in assessing the appropriateness of the model for the estimates, which included assessing the appropriateness of the methodology and relevant data inputs to (i) estimate the standalone selling price of the material rights, which included the standalone selling price of the services when sold separately and the likelihood of exercise of the material rights;

and (ii) estimate the period of time over which to defer and recognize the consideration allocated to the material rights.

The Company utilized historical customer transaction data in developing the estimates.

The Company recognized revenue related to the material rights based on the Company’s estimate of when the material rights were exercised and adjusted revenue for changes in estimates in the period of change on a cumulative catch-up basis.

The Company earns fees from clients under the Marketplace offerings, which represents a single promise to provide continuous access (i.e., stand-ready performance obligation) to the Company’s work marketplace and site services.

As each day of providing access to the work marketplace and site services is substantially the same and the client simultaneously receives and consumes the benefits as access is provided, the Company’s single promise under its Marketplace offering is comprised of a series of distinct service periods.

As each day of providing access to the Upwork Marketplace and site services is substantially the same and the client simultaneously receives and consumes the benefits as access is provided, the Company’s single promise under its Marketplace offering is comprised of a series of distinct service periods.

The Company’s Marketplace offerings may include fixed and variable consideration, or a combination of the two, comprised of the following:

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For client marketplace fees, the Company presents revenue on a gross basis as a principal and not net of the third-party payment processing costs incurred because the Company controls the services prior to providing to the Company’s clients.

Notes to Consolidated Financial Statements—Continued

Contract initiation fees.

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For contract initiation fees, the Company presents revenue on a gross basis as a principal and not net of the third-party payment processing costs incurred because the Company controls the services prior to providing to the Company’s clients.

Notes to Consolidated Financial Statements—Continued

Foreign currency exchange fees.

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Upwork Payroll service fees.

The Company charges clients using the Upwork Payroll offering when their talent are classified as employees for engagements on the Company’s work marketplace.

The Company charges clients using the Upwork Payroll offering when their talent are classified as employees for engagements on the Upwork Marketplace.

The client enters into an Upwork Payroll agreement with the Company, and Upwork separately contracts with unrelated third-party staffing providers that provide employment services to such clients.

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Such service fees are variable consideration and charged as a fixed percentage of the total talent billings.

Under an Upwork Payroll agreement, the Company provides the client access to the Upwork work marketplace to procure and manage talent services, as well as access to employment services provided by the third-party staffing providers.

Under an Upwork Payroll agreement, the Company provides the client access to the Upwork Marketplace to procure and manage talent services, as well as access to employment services provided by the third-party staffing providers.

The Company presents Upwork Payroll service fees revenue on a net basis as an agent of the client for providing access to employment services provided by the third-party staffing providers.

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Enterprise Offerings

The Company earns fees from talent under its Enterprise Solutions offering, which represents a single promise to provide continuous access (i.e., stand-ready performance obligation) to the Company’s work marketplace and site services.

As each day of providing access to the work marketplace and site services is substantially the same and talent simultaneously receive and consume the benefits as access is provided, the Company’s single promise under its Enterprise Solutions offering is comprised of a series of distinct service periods.

The Company’s Enterprise offerings delivered through Lifted are designed to support enterprise organizations with more complex contingent workforce needs.

Lifted offers two lines of service, Enterprise Solutions and Managed Services, which provide enterprise clients with access to platform capabilities and services to source, contract, manage, and pay talent across multiple engagement models.

The Company earns fees from talent under its Enterprise Solutions offerings, which represents a single promise to provide continuous access (i.e., stand-ready performance obligation) to the Enterprise Solutions offerings and related services.

As each day of providing access to the Enterprise Solutions offerings and related services is substantially the same and talent simultaneously receive and consume the benefits as access is provided, the Company’s single promise under its Enterprise Solutions offerings is comprised of a series of distinct service periods.

The Company allocates variable consideration to each distinct service period in which it has the contractual right to bill.

These arrangements include variable consideration as follows:

Service fees.

The Company provides talent access to the Upwork marketplace to perform talent services for clients.

Talent service fees.

The Company provides talent access to the Enterprise Solutions offerings to perform talent services for clients.

The Company charges talent a service fee as a percentage of talent billings.

For service fees charged to talent, the Company presents revenue on a net basis, as an agent, for providing access to the Upwork marketplace as it does not control talent services provided to clients, and therefore the Company is not considered the principal for talent services.

For service fees charged to talent, the Company presents revenue on a net basis, as an agent, for providing access to the Enterprise Solutions offerings and related services as it does not control talent services provided to clients, and therefore the Company is not considered the principal for talent services.

Additionally, talent and clients negotiate and agree upon the scope and the price for talent services directly with each other, and the Company is not a party to their agreement.

The Company recognizes the service fees for each distinct service period in which it has the contractual right to bill for the services.

The Company earns fees from clients under its Enterprise Solutions and other premium offerings, each of which represent a single promise to provide continuous access (i.e., stand-ready performance obligation) to the Company’s work marketplace and site services.

As each day of providing access to the work marketplace and site services is substantially the same and the client simultaneously receives and consumes the benefits as access is provided, the Company’s single promise under its Enterprise Solutions and other premium offerings is comprised of a series of distinct service periods.

Notes to Consolidated Financial Statements—Continued

As each day of providing access to the Enterprise Solutions offerings and related services is substantially the same and the client simultaneously receives and consumes the benefits as access is provided, the Company’s single promise under its Enterprise Solutions and other premium offerings is comprised of a series of distinct service periods.

The Company allocates variable consideration to each distinct service period in which it has the contractual right to bill.

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Client service fees.

The Company offers clients access to the Company’s work marketplace to source talent in exchange for a client service fee calculated as a percentage of talent billings;

The Company offers clients access to the Enterprise Solutions offerings and related services to source talent in exchange for a client service fee calculated as a percentage of talent billings;

these fees represent variable consideration.

The Company recognizes the service fees for each distinct service period in which it has the contractual right to bill for the services.

Notes to Consolidated Financial Statements—Continued

Enterprise compliance service fees.

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Deferred revenue consists of subscription, membership, and Connects fees collected in advance of performing the service or the talent using the Connect.

Deferred revenue also consists of amounts attributable to unexercised material rights related to arrangements with talent that were subject to tiered service fees.

In May 2023, the Company retired its tiered service fee structure for talent and introduced a simplified flat service fee.

With this change, the Company no longer allocates a portion of the transaction price to unexercised material rights.

Cost of Revenue

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Advertising Expense

Advertising costs are expensed as they are incurred, and are included in sales and marketing expense in the Company’s consolidated statement of operations and comprehensive income (loss).

Advertising costs are expensed as they are incurred, and are included in sales and marketing expense in the Company’s consolidated statement of operations and comprehensive income.

The Company incurred $ 51.9 million, $ 57.1 million, and $ 83.2 million in advertising expenses during the years ended December 31, 2025, 2024, and 2023, respectively.

Notes to Consolidated Financial Statements—Continued

Provision for Transaction Losses

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Stock-Based Compensation

Notes to Consolidated Financial Statements—Continued

the 2018 Employee Stock Purchase Plan, which is referred to as the 2018 ESPP, to employees and directors based on their estimated fair value on the date of grant.

The Company accounts for stock options with service and market-based conditions, restricted stock units, which are referred to as RSUs, performance stock units, which are referred to as PSUs, and purchase rights granted under the 2018 Employee Stock Purchase Plan, which is referred to as the 2018 ESPP, to employees and directors based on their estimated fair value on the date of grant.

The Company calculates the estimated fair value of stock options and purchase rights granted under the 2018 ESPP on the date of grant using the Black-Scholes option pricing model.

The fair value and derived service period of stock options with market-based conditions is estimated using the Monte Carlo valuation model.

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The fair value of RSUs awarded to employees is based on the closing price of the Company’s common stock, as reported on The Nasdaq Global Select Market on the date of grant.

The grant date fair value of PSUs is determined using the Company’s closing common stock price on the grant date multiplied by the number of PSUs that are probable of being earned as of the grant date.

The grant date fair value of PSUs is measured in a manner similar to RSUs for awards that vest based on service and performance conditions or using a Monte Carlo model for awards that vest based on service and market conditions.

The fair value of purchase rights granted under the 2018 ESPP is estimated using the Black-Scholes valuation model.

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At the end of each reporting period, monetary assets and liabilities are remeasured using exchange rates in effect at the balance sheet date, while revenues and expenses are translated at average exchange rates during the year.

Foreign currency transaction gains and losses are included in other income, net in the consolidated statements of operations and comprehensive income (loss).

The Company recorded net foreign currency transaction gains of $ 0.1 million and $ 0.5 million for the years ended December 31, 2024 and 2023, respectively, and net foreign currency transaction losses of $ 0.2 million for the year ended December 31, 2022.

Foreign currency transaction gains and losses are included in other income, net in the consolidated statements of operations and comprehensive income.

The Company recorded net foreign currency transaction losses of $ 0.5 million for the year ended December 31, 2025, and net foreign currency transaction gains of $ 0.1 million and $ 0.5 million for the years ended December 31, 2024 and 2023, respectively.

The Company accounts for income taxes in accordance with the asset and liability method.

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The Company recognizes potential liabilities based on its estimate of whether, and the extent to which, additional taxes will be due.

The Company accounts for uncertain tax positions in accordance with the relevant guidance, which prescribes a recognition threshold and measurement approach for uncertain tax positions taken or expected to be taken in a company’s income tax return, and also provides guidance on recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.

The Company accounts for uncertain tax positions in accordance with the relevant guidance, which prescribes a recognition threshold and measurement approach for uncertain tax positions taken or

Notes to Consolidated Financial Statements—Continued

expected to be taken in a company’s income tax return, and also provides guidance on recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.

The guidance utilizes a two-step approach for evaluation of uncertain tax positions.

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Any interest and penalties related to unrecognized tax benefits are recorded as income tax expense.

Net Income (Loss) per Share

Basic net income (loss) per share is computed by dividing the net income (loss) by the weighted-average number of common shares outstanding for the period.

Diluted net income (loss) is computed by adjusting net income (loss) to

Notes to Consolidated Financial Statements—Continued

reallocate undistributed earnings based on the potential impact of dilutive securities, including outstanding common stock options, RSUs, PSUs, warrants to purchase common stock, common stock issuable in connection with the 2018 ESPP, and common stock issuable in connection with the Notes.

Net Income per Share

Basic net income per share is computed by dividing the net income by the weighted-average number of common shares outstanding for the period.

Diluted net income is computed by adjusting net income to reallocate undistributed earnings based on the potential impact of dilutive securities, including outstanding common stock options, RSUs, PSUs, warrants to purchase common stock, common stock issuable in connection with the 2018 ESPP, and common stock issuable in connection with the Notes.

For periods in which the Company has reported net losses, diluted net loss per share is the same as basic net loss per share because dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.

Recently Adopted Accounting Pronouncements

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280) :

Improvements to Reportable Segment Disclosures , which is referred to as ASU 2023-07 .

ASU 2023-07 requires public entities to disclose information about their significant expenses and other items by reportable segment on both an interim and annual basis.

Public entities with a single reportable segment are required to apply these enhanced disclosure requirements as well as all existing segment and reconciliation requirements under Accounting Standards Codification, which is referred to as ASC, 280 for both interim and annual reporting.

On December 31, 2024, the Company adopted ASU 2023-07, effective as of January 1, 2024.

As a result, the Company has updated its segment disclosures in “Note 15 – Segment Information,” providing more detailed information on significant expenses and other relevant segment items in accordance with the new guidance.

The adoption of ASU 2023-07 did not result in any changes to the Company’s reportable segments but did enhance the granularity of disclosures within our financial statements, increasing transparency for interim and annual reporting periods.

Recent Accounting Pronouncements Not Yet Adopted

With the exception of those discussed below, the Company has reviewed all recently issued accounting pronouncements and concluded they were either not applicable or not expected to have a material impact on the Company’s consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

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ASU 2023-09 requires public entities to provide annual disclosures of specific categories in the rate reconciliation and to disclose income taxes paid, disaggregated by jurisdiction.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact that ASU 2023-09 will have on its consolidated financial statements and accompanying footnotes.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024.

The Company adopted ASU 2023-09 retrospectively, effective as of January 1, 2025.

As a result, the Company has updated its income tax disclosures in “Note 14 – Income Taxes,” providing more detail on specific categories in the rate reconciliation and disclosed income taxes paid, disaggregated by jurisdiction.

Recent Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses , which is referred to as ASU 2024-03.

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The Company is currently evaluating the impact that ASU 2024-03 will have on its consolidated financial statements and accompanying footnotes.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets, which is referred to as ASU 2025-05.

ASU 2025-05 provides an optional practical expedient to permit entities to assume that the current conditions as of the balance sheet date will remain unchanged for the remaining life of short-term trade receivables and contract assets when developing reasonable and supportable forecasts for estimating expected credit losses.

ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, and interim reporting periods within those fiscal years, with early adoption permitted.

The Company has evaluated the impact of ASU 2025-05 and does not expect its adoption to have a material impact on the consolidated financial statements.

The Company’s trade receivables are short-duration in nature and have historically experienced low credit losses, and its existing aging-based allowance methodology is substantially consistent with the practical expedient introduced by ASU 2025-05.

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software , which is referred to ASU 2025-06.

ASU 2025-06 modernizes the accounting for internal-use software by removing all references to prescriptive and sequential software development stages.

ASU 2025-06 requires entities to begin capitalizing software costs when management authorizes and commits to funding the software project, and it is probable that the project will be completed and the software will be used for its intended purpose.

ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, and for interim periods within those fiscal years, with early adoption

Notes to Consolidated Financial Statements—Continued

The Company is currently evaluating the timing of adoption and the potential impact of this new guidance on its consolidated financial statements.

Note 3— Revenue

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Disaggregation of Revenue

Based on the information provided and reviewed by the CODM, the nature, amount, timing, and uncertainty of revenue and cash flows and how they are affected by economic factors are most appropriately depicted by the type of service and primary geographical markets.

Based on the information provided to and reviewed by the CODM, the nature, amount, timing, and uncertainty of revenue and cash flows and how they are affected by economic factors are most appropriately depicted by the type of service and primary geographical markets.

Revenues recorded within these categories are earned from similar products and services for which the nature of associated fees and the related revenue recognition models are substantially similar.

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The following table sets forth total revenue by type of service for the years ended December 31, 2025, 2024, and 2023:

Notes to Consolidated Financial Statements—Continued

(In thousands) 2025 2024 2023

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India 53,531 56,897 49,487

46,242 38,960 30,586

Rest of world (1)(2)

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Total clients 344,446 330,197 319,211

Total $ 769,325 $ 689,136 $ 618,318

(1) During the years ended December 31, 2024, 2023, and 2022, no country included in the Rest-of-World category had revenue that exceeded 10% of total talent revenue, total client revenue, or total revenue.

Total revenue

$ 787,784 $ 769,325 $ 689,136

(1) For the years ended December 31, 2024 and 2023, the Company revised the presentation of geographic revenue to separately present Pakistan to conform to the current period presentation.

This change in presentation did not impact total talent revenue or total revenue for the periods presented.

(2) During the years ended December 31, 2025, 2024, and 2023, no single country included in the Rest of world category had revenue that exceeded 10% of total talent revenue, total clients revenue, or total revenue.

Deferred Revenue and Remaining Performance Obligation

Deferred revenue represents amounts billed in advance for services not yet rendered.

Deferred revenue expected to be recognized within the next twelve months is classified as current deferred revenue, while the remaining balance is noncurrent.

As of December 31, 2024, the Company’s performance obligation from transaction price that has been allocated to unexercised material rights related to the Company’s arrangements with talent subject to tiered service fees was immaterial and is expected to be recognized as revenue within the next twelve months.

Deferred revenue expected to be recognized within the next twelve months is classified as current deferred revenue.

The Company has applied the practical expedients and exemptions and does not disclose the value of remaining performance obligations for (i) contracts with an original expected length of one year or less;

and (ii) contracts for which the variable consideration is allocated entirely to a wholly unsatisfied promise to transfer a distinct service that forms part of a single performance obligation under the series guidance.

Notes to Consolidated Financial Statements—Continued

Contract Balances

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Contract liabilities

Deferred revenue 7,269 17,361

Deferred revenue (component of other liabilities, noncurrent) — 790

During 2024, changes in the contract liabilities balances were primarily the result of normal business activity, including the deferral, and subsequent recognition, of revenue related to arrangements with talent subject to tiered service fees and related allocation of transaction price to material rights.

The significant change in deferred revenue in 2024 compared to the prior year was largely attributable to the Company’s transition away from the tiered service

Notes to Consolidated Financial Statements—Continued

fee structure to a flat fee structure, which impacted how transaction price was allocated and revenue was recognized.

Deferred revenue, current

During 2025, changes in the contract liabilities balances were primarily the result of normal business activity.

Revenue recognized during the year ended December 31, 2025 that was included in deferred revenue as of December 31, 2024 was $ 7.3 million.

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The Company’s financial instruments that are carried at fair value consist of Level I and Level II assets as of December 31, 2025 and 2024.

The following tables summarize the Company’s available-for-sale marketable securities’ amortized cost, gross unrealized gains, gross unrealized losses, and fair value by significant investment category reported as cash and cash equivalents or marketable securities as of December 31, 2024 and 2023.

The following tables summarize the Company’s available-for-sale marketable

Notes to Consolidated Financial Statements—Continued

securities’ amortized cost, gross unrealized gains, gross unrealized losses, and fair value by significant investment category reported as cash and cash equivalents or marketable securities as of December 31, 2025 and 2024.

(In thousands)

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Total Level I 368,586 210 — 368,796 113,216 255,580

Commercial paper 16,233 — — 16,233 — 16,233

Corporate bonds 117,532 561 ( 1 ) 118,092 — 118,092

Commercial deposits 4,121 — — 4,121 — 4,121

Asset-backed securities 592 2 — 594 — 594

Foreign government and agency securities 4,738 15 — 4,753 — 4,753

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Total $ 490,856 $ 786 $ ( 1 ) $ 491,641 $ 113,216 $ 378,425

Notes to Consolidated Financial Statements—Continued

(In thousands)

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Foreign government and agency securities 5,036 14 ( 12 ) 5,038 — 5,038

agency securities 4,506 — ( 6 ) 4,500 — 4,500

Total Level II 152,377 447 ( 156 ) 152,668 — 152,668

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Additionally, the Company deposits funds held in escrow in interest-bearing and non-interest-bearing cash accounts.

The interest earned on the interest-bearing accounts is included in revenue in the Company’s consolidated statement of operations and comprehensive income (loss).

The interest earned on the interest-bearing accounts is included in Revenue in the Company’s consolidated statement of operations and comprehensive income.

As of December 31, 2025 and 2024, the fair value of the Company’s funds held on behalf of customers and held in interest-bearing cash accounts was measured using Level I inputs.

The Company’s non-financial assets acquired pursuant its acquisition of Objective AI, Inc., including intangible assets and goodwill, are measured at estimated fair value on a non-recurring basis.

The Company’s non-financial assets acquired pursuant to its acquisitions of Bubty B.V., which is referred to as Bubty, Ascen Inc., which is referred to as Ascen, and Objective AI, Inc., which is referred to as Objective AI, including intangible assets and goodwill, are measured at estimated fair value on a non-recurring basis.

For additional information, refer to “Note 7—Business Combination.”

Notes to Consolidated Financial Statements—Continued

The following table summarizes the remaining contractual maturities of our cash equivalents and marketable securities as of December 31, 2025:

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Total $ 490,856 $ 491,641

Unrealized Investment Losses

The following table summarizes, for all debt securities classified as available for sale in an unrealized loss position as of December 31, 2024 and December 31, 2023, the aggregate fair value and gross unrealized loss by the length of time those securities have been continuously in an unrealized loss position.

(In thousands) Less Than 12 Months 12 Months or Longer Total

Duration of unrealized losses

December 31, 2024

Fair Value Unrealized loss Fair Value Unrealized loss Fair Value Unrealized loss

government securities $ 12,522 $ ( 27 ) $ 4,122 $ ( 6 ) $ 16,644 $ ( 33 )

Corporate bonds 33,386 ( 142 ) 2,819 ( 2 ) 36,205 ( 144 )

Foreign government and agency securities 2,362 ( 12 ) — — 2,362 ( 12 )

Total $ 48,270 $ ( 181 ) $ 6,941 $ ( 8 ) $ 55,211 $ ( 189 )

Notes to Consolidated Financial Statements—Continued

(In thousands) Less Than 12 Months 12 Months or Longer Total

Duration of unrealized losses

December 31, 2023

Fair Value Unrealized loss Fair Value Unrealized loss Fair Value Unrealized loss

government securities $ 15,381 $ ( 15 ) $ 5,182 $ ( 3 ) $ 20,563 $ ( 18 )

Corporate bonds 24,062 ( 10 ) 552 ( 2 ) 24,614 ( 12 )

Asset-backed securities 6,598 ( 20 ) 7,348 ( 22 ) 13,946 ( 42 )

agency securities 1,995 ( 1 ) 2,505 ( 5 ) 4,500 ( 6 )

Total $ 48,036 $ ( 46 ) $ 15,587 $ ( 32 ) $ 63,623 $ ( 78 )

For available-for-sale marketable debt securities with unrealized loss positions, the Company does not intend to sell these securities, nor does it anticipate that it will need to or be required to sell the securities.

As of December 31, 2024 and 2023, the decline in fair value of these securities was due to increases in interest rates and not due to credit related factors.

As of December 31, 2025 and 2024, the decline in fair value of these securities was attributable to changes in interest rates and not due to credit related factors.

As of December 31, 2025 and 2024, the Company considered any decreases in market value to be temporary in nature and did not consider any of the Company’s marketable securities to be other-than-temporarily impaired.

The Company did not record any impairment charges with respect to its marketable securities during the years ended December 31, 2025, 2024, and 2023.

In March 2023, the Company sold $ 138.2 million of available-for-sale marketable securities to enable the Note Repurchases.

For additional information regarding the Notes, refer to “Note 10—Debt.”

During the years ended December 31, 2024, 2023, and 2022, interest income was $ 28.0 million, $ 24.4 million, and $ 7.9 million, respectively, and is included in other income, net in the Company’s consolidated statement of operations and comprehensive income (loss).

During the years ended December 31, 2025, 2024, and 2023, interest income was $ 27.4 million, $ 28.0 million, and $ 24.4 million, respectively, and is included in other income, net in the Company’s consolidated statement of operations and comprehensive income.

Note 5— Balance Sheet Components

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The Company capitalized $ 24.8 million, $ 12.8 million, and $ 13.8 million of internal-use software and platform development costs during the years ended December 31, 2025, 2024, and 2023, respectively.

Amortization expense related to the capitalized internal-use software and platform development costs was $ 9.8 million for the year ended December 31, 2024, of which $ 8.6 million was included in cost of revenue related to developed technology used on the work marketplace.

Amortization expense related to the capitalized internal-use software and platform development costs was $ 6.5 million for the year ended December 31, 2023, of which $ 4.5 million was included in cost of revenue related to developed technology used on the work marketplace.

Amortization expense related to the capitalized internal-use software and platform development costs was $ 4.9 million for the year ended December 31, 2022, of which $ 2.7 million was included in cost of revenue related to developed technology used on the work marketplace.

Amortization expense related to the capitalized internal-use software and platform development costs was $ 14.0 million, $ 9.8 million, and $ 6.5 million for the years ended December 31, 2025, 2024, and 2023, respectively, of which $ 12.4 million, $ 8.6 million, and $ 4.5 million, respectively, were included in cost of revenue related to developed technology used on the Company’s platforms and other workforce solutions.

Notes to Consolidated Financial Statements—Continued

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Accrued compensation and related benefits $ 51,858 $ 30,666

Accrued indirect taxes 11,394 13,171

Accrued taxes 19,715 11,394

Accrued vendor expenses 12,899 9,485

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The application of the incremental borrowing rate is performed on a lease-by-lease basis and approximates the rate at which the Company could borrow, on a secured basis for a similar term, an amount equal to its lease payments in a similar economic environment.

The Company’s leases have remaining lease terms of approximately four years to eight years .

The Company’s leases have remaining lease terms of approximately three years to seven years .

The Company includes lease payments associated with renewal options in its operating lease asset and liability only when it becomes reasonably certain the company will exercise the renewal option.

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In June 2024, the Company entered into a new lease agreement to lease approximately 12,685 square feet of office space in Palo Alto, California, which serves as the Company’s corporate headquarters.

The lease commenced in September 2024 and rent payments for the premises will commence in March 2025.

The initial term of the lease is 91 months from the commencement date and is set to expire in September 2032, unless terminated earlier.

The Company has two options to extend the lease term, each for an additional three years , exercisable under certain conditions as specified in the lease agreement.

The Company evaluated these options as part of the lease accounting under ASC 842 and determined that the extension options are not reasonably certain to be exercised.

The lease commenced in September 2024, and rent payments began in March 2025.

The initial lease term is 91 months from the commencement date and is scheduled to expire in September 2032, unless terminated earlier.

The lease includes two options to extend the term, each for an additional three years , exercisable under certain conditions specified in the lease agreement.

The Company evaluated these extension options as part of the lease accounting under ASC 842 and determined that the extension options are not reasonably certain to be exercised.

As such, the options have not been included in the measurement of the right-of-use asset or lease liability.

As a result of entering into this lease, the Company recorded a right-of-use asset and lease liability of $ 4.5 million and $ 4.4 million, respectively.

Rent payments under this lease are approximately $ 0.1 million per month and are recorded within general and administrative expenses in the Company’s consolidated statements of operations and comprehensive income (loss).

The lease for the Company’s previous headquarters in San Francisco, California expired in August 2024.

Monthly rent payments under the lease are approximately $ 0.1 million and are recorded within general and administrative expenses in the Company’s consolidated statements of operations and comprehensive income.

Santa Clara Sub-Sublease

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The amended sub-sublease term aligns substantially with the remaining term of the Company’s master lease.

Rent payments under the amended agreement approximate $ 0.1 million per month and are recorded within general and administrative expenses within the Company’s consolidated statements of operations and comprehensive income (loss).

Monthly rent payments under the amended agreement are approximate $ 0.1 million and are recorded within general and administrative expenses within the Company’s consolidated statements of operations and comprehensive income.

Neither party has the option to renew or extend the sub-sublease agreement.

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Chicago Leases

In December 2024, as a result of the restructuring plan announced in October 2024, which the Company refers to as the Restructuring Plan, the Company entered into an early termination agreement for the Chicago leases, effective December 31, 2024.

In December 2024, as a result of the restructuring plan announced in October 2024, which is referred to as the Restructuring Plan, the Company entered into an early termination agreement for the Chicago leases, which was effective December 31, 2024.

The Company recognized approximately $ 1.1 million in early termination costs, primarily consisting of remaining lease payments under the termination agreement.

Operating lease costs for the year ended December 31, 2024, including variable lease charges, reflect amounts incurred prior to the lease termination.

Operating lease costs for the year ended December 31, 2024, including variable lease charges, reflected amounts incurred prior to the lease termination.

Notes to Consolidated Financial Statements—Continued

Prior to the termination, the Company leased office space in Chicago, Illinois, consisting of the 11th and 16th floors of an office building, with both leases originally scheduled to expire on April 30, 2025.

Monthly rent payments for each floor were approximately $ 0.1 million.

The following table shows the Company’s future lease commitments due in each of the next five years for operating leases, which excludes amounts received in the form of sublease income discussed above:

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Note 7— Business Combination

On November 20, 2024, the Company acquired Objective AI Inc., referred to as Objective AI, a search-as-a-service platform specializing in AI-native search integration for digital experiences.

The Company acquired 100 % of Objective AI’s outstanding equity for $ 19.1 million in cash consideration.

This strategic acquisition aims to enhance the Company’s platform by integrating advanced AI-native search capabilities and strengthen its AI and search teams with specialized talent.

2024 Acquisition

Objective AI Inc.

In November 2024, the Company acquired 100 % of the outstanding equity interests of Objective AI, a search-as-a-service platform specializing in AI-native search integration for digital experiences, for total cash consideration of $ 19.1 million.

The acquisition was completed in November 2024 and is included in the Company’s consolidated financial statements for the year ended December 31, 2024.

The acquisition of Objective AI was accounted for as a business combination under ASC Topic 805, Business Combinations.

Accordingly, the total purchase consideration was allocated as follows (in thousands):

Accordingly the purchase consideration was allocated as follows (in thousands):

Cash and cash equivalents

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Total purchase consideration

The excess purchase price over the net identifiable assets acquired was recorded as goodwill.

The goodwill recognized from the acquisition is primarily attributable to the assembled workforce associated with Objective AI, that cannot be individually identified and separately recognized as intangible asset.

Goodwill is not deductible for tax purposes.

The identifiable intangible assets acquired consisted primarily of developed technology and customer relationships, with estimated useful lives of three years and six months , respectively.

The Company engaged an independent third-party valuation specialist to assist in determining the fair value of the intangible assets.

The fair value measurements of the intangible assets were based primarily on significant unobservable inputs and this represents a Level 3 measurement.

Goodwill recognized in the acquisition was primarily attributable to the assembled workforce and expected synergies from integrating Objective AI’s technology and capabilities into the Company’s platform.

The goodwill is not deductible for income tax purposes.

The Company finalized the valuation of the assets acquired and liabilities assumed during 2024, and the purchase price allocation is considered final.

2025 Acquisitions

On June 27, 2025, Lifted acquired 100 % of the equity interests of Bubty, a Netherlands-based platform supporting enterprise management of contingent workforce solutions, for total purchase price consideration of $ 20.4 million.

This acquisition advances the Company's strategic objectives by equipping Lifted with enhanced workforce management capabilities and a platform for clients managing global talent.

Notes to Consolidated Financial Statements—Continued

The acquisition of Bubty was accounted for as a business combination in accordance with ASC Topic 805, Business Combinations.

Accordingly, the estimated allocation of the purchase price is as follows (in thousands):

Cash and cash equivalents $ 77

Trade and client receivables 71

Intangible assets 18,600

Accounts payable, accrued expenses and other liabilities

Deferred tax liability

Total liabilities

Total purchase price consideration

The excess of the purchase consideration over the fair value of net assets acquired has been recorded as goodwill.

The goodwill is primarily attributable to the expected synergies from integrating Bubty’s workforce management technology and operations with Lifted, and the value of the assembled workforce, which do not qualify for separate recognition as identifiable intangible assets.

The goodwill is not deductible for income tax purposes.

The Company engaged an independent third-party valuation specialist to assist in the determination of the fair value of intangible assets acquired.

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The fair value measurements of the intangible assets were based primarily on significant unobservable inputs, and this represents a Level 3 measurement.

The estimated useful lives and fair value of the identifiable intangible assets at acquisition date were as follows (dollars in thousands):

Expected Useful life

As of the acquisition date, the estimated fair value and expected useful lives of the identifiable intangible assets acquired were as follows (dollars in thousands):

Fair Value Expected Useful life

Developed technology $ 18,600 5 years

Notes to Consolidated Financial Statements—Continued

On August 18, 2025, Lifted acquired 100 % of the equity interests of Ascen, a tech-enabled employer of record company specifically designed for the contingent labor space, for total purchase price consideration of $ 40.8 million.

This acquisition supports the Company’s strategic objective to enhance its enterprise offerings by enabling clients of Lifted to engage workers classified as employees for U.S.

tax purposes.

The acquisition of Ascen was accounted for as a business combination in accordance with ASC Topic 805, Business Combinations.

Accordingly, the estimated allocation of the purchase price is as follows (in thousands):

Cash and cash equivalents

Trade and client receivables 12,420

Intangible assets 15,000

Other current assets (1)

Accounts payable, accrued expenses and other liabilities (1)

Deferred tax liability (1)

Total liabilities

Total purchase price consideration (1)

(1) During the three months ended December 31, 2025, certain estimates related to the fair value of the assets acquired and liabilities assumed were refined, resulting in a measurement period purchase accounting adjustment, with the related impacts to goodwill.

The excess of the purchase consideration over the fair value of net assets acquired has been recorded as goodwill.

The goodwill is primarily attributable to the expected synergies from Lifted’s ownership of Ascen and the Company’s expansion into employer of record and staffing solutions, which do not qualify for separate recognition as identifiable intangible assets.

The goodwill is not deductible for income tax purposes.

The Company engaged an independent third-party valuation specialist to assist in the determination of the fair value of intangible assets acquired.

All key estimates, assumptions, and forecasts were either provided by or reviewed by management.

While the third-party specialist provided significant input into the valuation, the final conclusions reflect the judgment of management.

The fair value measurements of the intangible assets were based primarily on significant unobservable inputs, and this represents a Level 3 measurement.

As of the acquisition date, the estimated fair value and expected useful lives of the identifiable intangible assets acquired were as follows (dollars in thousands):

Fair Value Expected Useful life

Customer relationship

$ 10,000 3 years

Developed technology

$ 5,000 5 years

Customer relationships

$ 1,000 6 months

Total intangibles

The purchase price allocations are preliminary and remain subject to change as the Company finalizes the valuation of intangible assets and related tax matters.

The final purchase price allocations may result in adjustments to the fair values initially assigned, including adjustments to goodwill.

The Company expects to finalize the purchase price allocations for the acquisitions of both Bubty and Ascen within the measurement period, which will not extend beyond one year from the respective acquisition dates, in accordance with ASC 805.

During the three months ended December 31, 2025, the Company decreased goodwill by $ 1.3 million related to the Ascen acquisition based on new information obtained about facts and circumstances that existed as of the acquisition date, resulting in a reduction to the preliminary purchase price allocation.

The Company incurred approximately $ 4.4 million of transaction-related expenses in connection with these acquisitions for the nine months ended September 30, 2025, all of which were recorded in general and

Notes to Consolidated Financial Statements—Continued

The Company considers the valuation of the assets acquired and liabilities assumed to be final.

Management does not anticipate any material adjustments to these allocations .

administrative expenses in the consolidated statements of operations and comprehensive income.

No additional transaction-related expenses were incurred during the three months ended December 31, 2025.

The Company has not presented unaudited supplemental pro forma financial information for the business acquisitions described above, as management determined that such information was not material to the Company’s consolidated results of operations for the periods presented, assuming the acquisitions had occurred as of the beginning of the comparable prior reporting period.

As of December 31, 2025, acquisition-related compensation includes aggregate founders’ holdback amounts of $ 18.2 million to be paid over a three-year period from the date of the respective deal close, subject to the relevant founder's continued employment or service, as applicable.

This represents compensation for post-combination services because the payments are subject to the relevant founder's continuous employment or service, as applicable, to the relevant vesting dates.

The Company expects to recognize related compensation expense over the service period as amounts are earned.

Note 8— Goodwill and Net Intangible Assets

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Balance at December 31, 2024

Increase in goodwill related to business combination

Increase in goodwill related to business combinations

Other adjustments (1)

Balance at December 31, 2025

(1) Includes measurement-period purchase accounting adjustments for Ascen recorded in the three months ended December 31, 2025.

See “Note 7—Business Combination” for additional information.

Net Intangible Assets

The Company’s intangible assets include identifiable, finite-lived intangible assets including developed technology and customer relationships, acquired as part of the Objective AI acquisition, and an assembled workforce, acquired as part of an asset acquisition in November 2023.

The following table summarizes the components of net intangible assets as of December 31, 2025 and 2024:

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$ 48,788 $ 11,627 $ 37,161 $ 15,188 $ 2,199 $ 12,989

For the year ended December 31, 2024, amortization expense of intangible assets was $ 2.1 million, which includes the amortization expense of intangible assets acquired in the Objective AI acquisition.

For the years ended December 31, 2025 and 2024, amortization expense of intangible assets was $ 9.4 million and $ 2.1 million, respectively.

For the year ended December 31, 2023, amortization expense of intangible assets was immaterial .

For the year ended December 31, 2022, there was no amortization expense.

As of December 31, 2025, the weighted average amortization periods for the finite-lived intangible assets are as follows:

Developed technology 3.9 years

Assembled workforce 0.9 years

Customer relationships 2.8 years

As of December 31, 2025, the estimated annual amortization expense for finite-lived intangible assets over the remaining useful life is as follows (in thousands):

Notes to Consolidated Financial Statements—Continued

(In thousands)

Year Ended December 31, Estimated Amortization Expense

Notes to Consolidated Financial Statements—Continued

2026 $ 11,720

Note 9— Commitments and Contingencies

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The Company has indemnification agreements with its officers, directors, and certain key employees to indemnify them while they are serving in good faith in their respective positions.

In the ordinary course of business, the Company enters into contractual arrangements under which it agrees to provide indemnification of varying scope and terms to clients, business partners, vendors, and other parties, including, but not limited to, losses arising out of the Company’s breach of such agreements, claims related to potential data or information security breaches, intellectual property infringement claims made by third parties, and other liabilities relating to or arising from the Company’s products and services or its acts or omissions.

In addition, subject to the terms of the applicable agreement, as part of the Company’s Enterprise Solutions and certain other premium offerings, the Company indemnifies clients that subscribe to worker classification services for losses arising from worker misclassification.

In the ordinary course of business, the Company and its operating subsidiaries enter into contractual arrangements under which they agree to provide indemnification of varying scope and terms to clients, business partners, vendors, and other parties, including, but not limited to, losses arising out of the Company’s or its operating subsidiaries’ breach of such agreements, claims related to potential data or information security breaches, intellectual property infringement claims made by third parties, and other liabilities relating to or arising from their products and services or their acts or omissions.

In addition, subject to the terms of the applicable agreement, as part of the Enterprise Solutions and certain other premium offerings, the Company and its operating subsidiaries indemnify clients that subscribe to worker classification services for losses arising from worker misclassification.

It is not possible to determine the maximum potential loss under these indemnification provisions due to the Company’s limited history of prior indemnification claims and the facts and circumstances involved in each particular provision.

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Unamortized debt issuance costs ( 1,228 ) ( 3,070 )

Balance $ 359,770 $ 357,928

Debt, current $ 359,770 $ —

Debt, noncurrent $ — $ 357,928

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The Notes were offered and sold in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended.

In March 2023, the Company entered into separate, privately negotiated repurchase agreements with a limited number of institutional holders of the Notes to effect the Note Repurchases, resulting in the repurchase of $ 214.0 million aggregate principal amount of the Notes for an aggregate cash payment of $ 170.8 million.

As a result, during the year ended December 31, 2023, the Company recognized a gain on the early extinguishment of debt of $ 38.9 million, which is net of $ 3.7 million related to the pro-rata write-off of unamortized issuance costs associated with the sale of the Notes in August 2021, and $ 0.6 million of other fees incurred to effect the Note Repurchases.

The resulting gain on early extinguishment of debt is included in other income, net in the Company’s consolidated statement of operations and comprehensive income (loss).

In March 2023, the Company repurchased a portion of the outstanding Notes in privately negotiated transactions.

As a result, the Company recognized a gain on the early extinguishment of debt of $ 38.9 million during the year ended December 31, 2023, which is included in Other income, net in the Company’s consolidated statement of operations and comprehensive income.

As of each of December 31, 2025 and 2024, $ 361.0 million aggregate principal amount of the Notes remained outstanding.

The Notes are senior, unsecured obligations of the Company and bear interest at a rate of 0.25 % per year.

Interest will accrue from August 10, 2021 and is payable semiannually in arrears on February 15 and August 15 of each year, beginning on February 15, 2022, and the principal amount of the Notes will not accrete.

Interest began to accrue on August 10, 2021, and is payable semiannually in arrears on February 15 and August 15 of each year, beginning on February 15, 2022, and the principal amount of the Notes will not accrete.

The Notes will mature on August 15, 2026, unless earlier redeemed, repurchased, or converted in accordance with the terms of the Notes.

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The Notes have an initial conversion rate of 15.1338 shares of common stock per $1,000 principal amount of Notes, which is subject to adjustment in certain circumstances.

This is equivalent to an initial conversion price of approximately $ 66.08 per share of the Company’s

This is equivalent to an initial conversion price of approximately $ 66.08 per share of the Company’s common stock.

The conversion rate is subject to customary adjustments under certain circumstances in accordance

Notes to Consolidated Financial Statements—Continued

common stock.

The conversion rate is subject to customary adjustments under certain circumstances in accordance with the terms of the Indenture.

with the terms of the Indenture.

In addition, if certain corporate events that constitute a make-whole fundamental change (as defined in the Indenture) occur or if the Company issues a notice of redemption with respect to the Notes prior to the maturity date, then the conversion rate will, in certain circumstances, be increased for a specified period of time.

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and structurally junior to all existing and future indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries.

For the year ended December 31, 2024, interest expense was $ 0.9 million and amortization of the issuance costs was $ 1.8 million related to the Notes.

For the year ended December 31, 2023, interest expense was $ 1.0 million and amortization of the issuance costs was $ 2.1 million related to the Notes.

As of December 31, 2024 and December 31, 2023, the if-converted value of the Notes did not exceed the outstanding principal amount.

As of December 31, 2024 and December 31, 2023, the total estimated fair value of the Notes was $ 333.5 million and $ 307.3 million, respectively, and was determined based on a market approach using actual bids and offers of the Notes in an over-the-counter market on the last trading day of the period.

For each of the years ended December 31, 2025 and 2024, interest expense was $ 0.9 million and amortization of the issuance costs was $ 1.8 million related to the Notes, respectively.

As of December 31, 2025 and 2024, the if-converted value of the Notes did not exceed the outstanding principal amount.

As of December 31, 2025 and 2024, the total estimated fair value of the Notes was $ 352.5 million and $ 333.5 million, respectively, and was determined based on a market approach using actual bids and offers of the Notes in an over-the-counter market on the last trading day of the period.

The Company considers these assumptions to be Level II inputs in accordance with the fair value hierarchy described in “Note 4—Fair Value Measurements.”

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Preferred Stock

Notes to Consolidated Financial Statements—Continued

As of December 31, 2025 and 2024, the Company was authorized to issue up to 10,000,000 shares of undesignated preferred stock, $ 0.0001 par value per share.

The Company did not have any outstanding shares of preferred stock as of December 31, 2025 and 2024.

Notes to Consolidated Financial Statements—Continued

Holders of common stock are entitled to one vote per share and are entitled to receive dividends, if any, on a pro rata basis whenever funds are legally available and when, as, and if declared by the Company’s board of directors.

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As of December 31, 2024, the Company had no remaining balance available for repurchases under the 2023 Share Repurchase Authorization.

In October 2024, the Company’s board of directors authorized a share repurchase program for the repurchase of up to $ 100.0 million of shares of the Company’s outstanding common stock, which is referred to as the 2024 Repurchase Authorization.

The Company did not repurchase any shares under the 2024 Share Repurchase Authorization.

The Company repurchased and subsequently retired 7.2 million shares of its common stock under the 2024 Share Repurchase Authorization between February 2025 and September 2025, for an aggregate amount of $ 100.0 million at an average price of $ 13.83 per share, including fees associated with the repurchases and excluding excise tax.

As of December 31, 2025, the Company had no remaining balance available for repurchases under the 2024 Share Repurchase Authorization.

In September 2025, the Company’s board of directors authorized a share repurchase program for the repurchase of up to $ 100.0 million of shares of the Company’s outstanding common stock, which is referred to as the 2025 Share Repurchase Authorization.

The Company repurchased and subsequently retired 2.1 million shares of its common stock under the 2025 Share Repurchase Authorization between September 2025 and December 2025, for an aggregate amount of $ 36.0 million at an average price of $ 17.33 per share.

As of December 31, 2025, the Company had $ 64.0 million available for repurchases under the 2025 Share Repurchase Authorization.

As was the case with the 2023 Share Repurchase Authorization, repurchases of the Company’s common stock under the 2024 Share Repurchase Authorization may be made from time to time on the open market (including through the use of trading plans intended to qualify under Rule 10b5-1 under the Exchange Act), in privately negotiated transactions, or by other methods, at the Company’s discretion, and in accordance with applicable securities laws and other restrictions.

The 2024 Share Repurchase Authorization has no expiration date and will continue until otherwise suspended, terminated, or modified at any time for any reason.

Repurchases of the Company’s common stock under the 2025 Share Repurchase Authorization may be made from time to time on the open market (including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended), in privately negotiated transactions, or by other methods, at the Company’s discretion, and in accordance with applicable securities laws and other restrictions.

The 2025 Share Repurchase Authorization does not have an expiration date and will continue until otherwise suspended, terminated, or modified at any time for any reason.

The 2025 Share Repurchase Authorization does not obligate the Company to repurchase any dollar amount or number of shares, and the timing and amount of any repurchases will depend on market and business conditions.

Notes to Consolidated Financial Statements—Continued

Common Stock Warrant

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This warrant is exercisable as to 1/10th of the shares on each anniversary of the IPO, with proceeds from the sale of such shares to be donated in accordance with the Company’s directive.

In 2024, the holder of the warrant exercised 67,000 of the then-vested and exercisable shares.

In 2023, this warrant was exercised as to all 50,000 of the then-vested and exercisable shares.

The holder of the warrant did no t exercise in 2022.

In lieu of a cash payment, the holder of the warrant surrendered shares of common stock to cover the

Notes to Consolidated Financial Statements—Continued

exercise price.

In each of the years ended December 31, 2024, 2023, and 2022, the Company recorded $ 0.8 million of expense related to this warrant, which is included in general and administrative expense in the Company’s consolidated statement of operations and comprehensive income (loss).

During 2025, the holder of the warrant exercised 83,000 of the then-vested and exercisable shares.

During 2024, the holder of the warrant exercised 67,000 of the then-vested and exercisable shares.

During 2023, this warrant was exercised as to all 50,000 of the then-vested and exercisable shares.

In lieu of a cash payment, the holder of the warrant surrendered shares of common stock to cover the exercise price.

In each of the years ended December 31, 2025, 2024, and 2023, the Company recorded $ 0.8 million of expense related to this warrant, which is included in general and administrative expense in the Company’s consolidated statement of operations and comprehensive income.

Note 12— Stock-Based Compensation

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For awards containing only service conditions, the Company determines the expected term using the simplified method as the Company did not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior at the time of grant.

The simplified method deems the term to be the average of the time-to-vesting and the contractual life of the options.

The simplified method deems the term to be the average of the time-to-vesting and the contractual life of the

Notes to Consolidated Financial Statements—Continued

For performance-based awards, the Company uses relevant data, including past exercise patterns, if available, to determine the expected term.

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Expected Volatility —Since the Company did not have a sufficient trading history of its common stock at the time of grant, the expected volatility is derived from the average historical stock volatilities of several unrelated public companies within the Company’s industry that the Company considers to be comparable to its business over a period equivalent to the expected term of the stock option grants.

Fair Value of Common Stock —Given the absence of a public trading market prior to the IPO, the Company’s board of directors considered numerous objective and subjective factors to determine the fair value of its common stock at

Notes to Consolidated Financial Statements—Continued

each grant date.

These factors included, but were not limited to:

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Number of Shares

Outstanding Options Weighted-Average

Exercise Price Weighted-Average

Outstanding Options

Weighted-Average

Exercise Price

Weighted-Average

Remaining Contractual

Term (Years) Aggregate

Intrinsic Value

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The Market Condition period and the valuation of each tranche of the CEO Award were determined using a Monte Carlo simulation.

In the event the Market Condition is met prior to the expected achievement period, any then-unrecognized compensation expense associated with the shares that have vested with respect to both the Market Condition and the Service Condition will be recognized immediately in the Company’s consolidated statements of operations and comprehensive income (loss).

For the years ended December 31, 2024, 2023 and 2022, the Company recorded stock-based compensation expense related to the CEO Award of $ 1.3 million , $ 5.1 million, and $ 11.0 million, respectively.

Stock-based compensation expense for the CEO Award is recorded as a component of general and administrative expense in the Company’s consolidated statement of operations and comprehensive income (loss).

For the year ended December 31, 2025, stock-based compensation expense related to the CEO award was immaterial and was recognized in the three months ended March 31, 2025.

For the years ended December 31, 2024 and 2023, the Company recorded stock-based compensation expense related to the CEO Award of $ 1.3 million and $ 5.1 million, respectively.

Stock-based compensation expense for the CEO Award is recorded as a component of general and administrative expense in the Company’s consolidated statement of operations and comprehensive income.

The Company estimates the expected term based on a future exercise assumption.

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The aggregate intrinsic value represents the difference between the exercise price of the options and the closing price of the Company’s common stock on The Nasdaq Global Select Market on the day prior to the date of exercise.

For the year ended December 31, 2021, the weighted average grant date fair value of options granted was $ 19.19 .

The Company did not grant any stock option awards during the years ended December 31, 2025 and 2024.

As of December 31, 2024, total unrecognized stock-based compensation expense is immaterial and will be recognized over a brief period.

As of December 31, 2025, no unrecognized stock-based compensation expense remained.

RSU and PSU Awards

The following table summarizes the RSU and PSU activity and related information under the 2018 EIP:

Outstanding Weighted-Average

Notes to Consolidated Financial Statements—Continued

Weighted-Average

Grant Date Fair Value

Unvested balance - January 1, 2025 (1)

8,019,048 $ 13.08

Granted 6,123,930 15.07

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Unvested balance - December 31, 2025 8,892,471 $ 13.96

(1) The unvested balance as of January 1, 2025 has been updated to reflect target performance attainment for the outstanding PSU awards.

The fair value of RSUs awarded to employees is determined based on the closing price of the Company’s common stock, as reported on The Nasdaq Global Select Market on the date of grant.

For the years ended

Notes to Consolidated Financial Statements—Continued

December 31, 2024, 2023, and 2022, the weighted-average grant-date fair value of RSUs granted was $ 11.90 , $ 11.73 , and $ 19.66 , respectively.

For the years ended December 31, 2025, 2024, and 2023, the weighted-average grant-date fair value of RSUs granted was $ 14.95 , $ 11.90 , and $ 11.73 , respectively.

For the years ended December 31, 2025, 2024, and 2023, the fair value of RSUs vested was $ 52.0 million, $ 66.2 million, and $ 61.9 million, respectively.

As of December 31, 2025, the Company had $ 91.3 million of unrecognized stock-based compensation expense related to outstanding RSUs to employees that is expected to be recognized over a weighted-average period of 2.3 years.

In March 2024, the compensation committee of the Company’s board of directors, which is referred to as the compensation committee, approved the grant of PSU awards to certain members of the Company’s leadership team under the 2018 EIP, which are referred to as the 2024 PSU Awards.

These awards were granted on March 18, 2024, which is referred to as the 2024 PSU Grant Date.

Up to fifty percent of the total number of shares subject to the 2024 PSU Awards are eligible to vest based on the Company’s achievement of certain financial performance targets in the fiscal year ending December 31, 2025 and up to the remaining fifty percent of the total number of shares subject to the 2024 PSU Awards are eligible to vest based on the Company’s achievement of certain financial performance targets in the fiscal year ending December 31, 2026.

For each year, the financial performance targets consist of year-over-year revenue growth and adjusted EBITDA margin targets that were established by the compensation committee at the time of grant, which is referred to as the 2024 PSU Performance Condition.

In order to receive the vested PSUs, a recipient must remain in continuous service with the Company until the compensation committee certifies the achievement of the 2024 PSU Performance Condition for the applicable year, which is referred to as the 2024 PSU Service Condition.

The dates on which such certification takes place are referred to as Certification Dates.

The Company classifies the 2024 PSU Awards as equity awards.

Stock-based compensation expense related to the 2024 PSU Awards is a component of operating expenses in the Company’s consolidated statements of operations and comprehensive income (loss) and is recognized over the longer of the expected achievement period for the 2024 PSU Performance Condition and the 2024 PSU Service Condition, which is 23 months and 35 months for the shares eligible to vest under the 2024 PSU Awards based on performance in each of the years ending December 31, 2025 and 2026, respectively.

The grant date fair value of the 2024 PSU Awards was determined using the Company’s closing common stock price on the 2024 PSU Grant Date multiplied by the number of 2024 PSU Awards that were probable of vesting on the 2024 PSU Grant Date.

At each reporting date prior to the Certification Dates, the number of 2024 PSU Awards that are probable of vesting will be reassessed and any changes are reflected in stock-based compensation expense for the period.

In 2023, the compensation committee approved PSU grants to certain members of the Company’s leadership team under the 2018 EIP, which are referred to as the 2023 PSU Awards.

These awards were granted on February 18, 2023, which is referred to as the 2023 PSU Grant Date.

The number of shares subject to the 2023 PSU Awards that were earned by the recipients, which are referred to as 2023 Earned PSUs, was determined based on the Company’s revenue achievement during the year ended December 31, 2023, which is referred to as the 2023 PSU Performance Condition.

Pursuant to the 2023 PSU Performance Condition, the 2023 Earned PSUs are subject to a time-based vesting requirement conditioned on the recipient of the 2023 PSU Award continuing to provide service to the Company for four years from the 2023 PSU Grant Date, which is referred to as the 2023 PSU Service Condition.

The 2023 Earned PSUs will vest with respect to 25 % of the 2023 Earned PSUs on the one-year anniversary of the 2023 PSU Grant Date and 1/16th of the 2023 Earned PSUs on a quarterly basis thereafter.

Stock-based compensation expense associated with the 2023 PSU Awards is a component of operating expenses in the Company’s consolidated statements of operations and comprehensive income (loss) and will be recognized over the longer of the expected achievement period for the 2023 PSU Performance Condition and the 2023 PSU Service Condition.

The grant date fair value of the 2023 PSU Awards was determined using the Company’s closing common stock price on the 2023 PSU Grant Date multiplied by the number of PSUs that were probable of being earned on the 2023 PSU Grant Date.

At each interim reporting date prior to the date on which the compensation committee certified the 2023 PSU Performance Condition, the number of PSUs that were probable of being earned was reassessed and any changes were reflected in the total stock-based compensation expense associated with the 2023 PSU Awards.

For all PSU awards granted under the 2018 EIP, the number of PSUs that become earned and eligible to vest is based on the Company’s achievement of performance conditions established at the time of grant by the compensation committee of the Company’s board of directors, which is referred to as the compensation committee, relating to one or more performance periods, which is referred to as the PSU Performance Condition.

Following the completion of the applicable performance period, the compensation committee certifies the Company’s achievement of the applicable PSU Performance Condition, and the dates on which such certifications occur are referred to as Certification Dates.

In order for any PSUs to be earned and vest, recipients must remain in continuous service with the Company through the applicable Certification Date, which is referred to as the PSU Service Condition.

The Company classifies all PSU awards as equity awards.

Stock-based compensation expense related to PSUs is recognized as a component of operating expenses in the Company’s consolidated statements of operations and comprehensive income and is recognized over the longer of the expected achievement period of the applicable PSU Performance Condition or the applicable PSU Service Condition.

The grant-date fair value of PSU awards is determined using valuation techniques appropriate for the specific award terms, including valuation models that incorporate the impact of market-based conditions, as applicable.

At each reporting date prior to certification, the Company reassesses the number of PSUs that are probable of vesting, and any changes are reflected in stock-based compensation expense in the period of change.

2025 PSU Awards

In March 2025, the compensation committee approved the grant of PSU awards to certain members of the Company’s leadership team under the 2018 EIP, which awards are referred to as the 2025 PSU Awards.

These awards were granted on March 18, 2025.

Up to fifty percent of the maximum number of shares subject to the 2025 PSU Awards are eligible to vest based on the Company’s achievement of certain financial performance metrics over a two-year performance period consisting of the Company’s fiscal years ending December 31, 2025 and 2026, and up to the remaining fifty percent of the maximum number of shares subject to the 2025 PSU Awards are eligible to vest based on the Company’s achievement of certain financial performance targets over a three-year performance period consisting of the Company’s fiscal years ending December 31, 2025, 2026, and 2027.

The performance targets consist of adjusted EBITDA margin and relative total shareholder return compound annual growth rate targets established by the compensation committee at the time of grant.

Stock-based compensation expense related to the 2025 PSU Awards is recognized over the longer of the expected achievement period for the PSU Performance Condition and the PSU Service Condition, which is approximately 23 months and 35 months for the portions of the awards eligible to vest based on performance for the performance periods ending December 31, 2026 and December 31, 2027, respectively.

Notes to Consolidated Financial Statements—Continued

2024 PSU Awards

In March 2024, the compensation committee approved the grant of PSU awards to certain members of the Company’s leadership team under the 2018 EIP, which are referred to as the 2024 PSU Awards.

These awards were granted on March 18, 2024.

Up to fifty percent of the maximum number of shares subject to the 2024 PSU Awards are eligible to vest based on the Company’s achievement of certain financial performance targets in the fiscal year ending December 31, 2025, and up to the remaining fifty percent of the maximum number of shares subject to the 2024 PSU Awards are eligible to vest based on the Company’s achievement of certain financial performance targets in the fiscal year ending December 31, 2026.

The performance targets consist of year-over-year revenue growth and adjusted EBITDA margin targets established by the compensation committee at the time of grant.

Stock-based compensation expense related to the 2024 PSU Awards is recognized over the longer of the expected achievement period for the PSU Performance Condition and the PSU Service Condition, which is approximately 23 months and 35 months for the portions of the awards eligible to vest based on performance for the performance periods ending December 31, 2025 and December 31, 2026, respectively.

2023 PSU Awards

In February 2023, the compensation committee approved the grant of PSU awards to certain members of the Company’s leadership team under the 2018 EIP, which are referred to as the 2023 PSU Awards.

These awards were granted on February 18, 2023.

PSUs earned based on achievement of the PSU Performance Condition are subject to a time-based vesting requirement, pursuant to which 25 % vested on the one-year anniversary of the grant date and the remaining balance vests in equal quarterly installments over the subsequent four-year service period, subject to continued service.

Stock-based compensation expense related to the 2023 PSU Awards is recognized over the longer of the expected achievement period for the PSU Performance Condition and the PSU Service Condition associated with the time-based vesting requirement.

For the years ended December 31, 2025, 2024, and 2023, the weighted-average grant-date fair value of PSUs granted was $ 15.66 , $ 12.06 , and $ 11.72 , respectively.

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As of December 31, 2025, unrecognized stock-based compensation cost was $ 23.3 million, which is expected to be recognized over a weighted-average period of 1.6 years.

Notes to Consolidated Financial Statements—Continued

2018 Employee Stock Purchase Plan

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Pursuant to the terms of the 2018 ESPP, in January 2025, the number of shares of common stock available for issuance was increased by 1,082,787 shares.

Notes to Consolidated Financial Statements—Continued

For the years ended December 31, 2025, 2024, and 2023, the assumptions used to determine the fair value of the shares to be awarded was estimated on the grant date using the Black-Scholes valuation model with the following assumptions:

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Stock-Based Compensation

The following table summarizes the components of stock-based compensation expense recognized in the consolidated statements of operations and comprehensive income (loss) for the years ended December 31, 2024, 2023, and 2022:

The following table summarizes the components of stock-based compensation expense recognized in the consolidated statements of operations and comprehensive income for the years ended December 31, 2025, 2024, and 2023:

(In thousands) 2025 2024 2023

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Total $ 65,390 $ 68,391 $ 74,195

For the year ended December 31, 2024, the Company recorded $ 12.8 million of tax benefit on total stock-based compensation expense, which is reflected in the benefit from income taxes in the consolidated statement of operations and comprehensive income (loss).

Tax benefits on total stock-based compensation for the years ended December 31, 2023 and 2022 were not material.

For the years ended December 31, 2025 and 2024, the Company recorded $ 10.1 million and $ 12.8 million, respectively, of tax benefit on total stock-based compensation expense.

The amounts are reflected in income taxes (provision) benefit in the consolidated statement of operations and comprehensive income.

Tax benefits on total stock-based compensation for the year ended December 31, 2023 was not material.

Stock-Based Compensation to Employees

Stock-based compensation expense related to employees for the year ended December 31, 2024 was $ 1.3 million, $ 66.2 million, and $ 2.6 million related to stock options, RSU and PSU grants, and the 2018 ESPP, respectively.

Stock-based compensation expense related to employees for the year ended December 31, 2025 was $ 68.4 million and $ 1.8 million related to RSU and PSU grants and the 2018 ESPP, respectively.

Stock-based compensation expense related to employees for the year ended December 31, 2025 for stock options was immaterial and no unrecognized stock-based compensation expense related to employee stock options remained as of December 31, 2025.

Notes to Consolidated Financial Statements—Continued

Stock-based compensation expense related to employees for the year ended December 31, 2023 was $ 5.1 million, $ 65.1 million, and $ 5.0 million related to stock options, RSUs, and the 2018 ESPP, respectively.

Note 13— Net Income (Loss) per Share

The following table sets forth the computation of the Company’s basic and diluted net income (loss) per share for the years ended December 31, 2024, 2023, and 2022:

Notes to Consolidated Financial Statements—Continued

Note 13— Net Income per Share

The following table sets forth the computation of the Company’s basic and diluted net income per share for the years ended December 31, 2025, 2024, and 2023:

(In thousands, except share and per share data) 2025 2024 2023

net income (loss) $ 215,586 $ 46,887 $ ( 89,885 )

$ 115,425 $ 215,586 $ 46,887

Gain on early extinguishment of debt, net of tax — ( 38,525 )

Interest expense related to convertible senior notes, net of tax 2,069 2,239 389

net income (loss) $ 217,825 $ 8,751 $ ( 89,885 )

Weighted-average shares used to compute net income (loss) per share, basic and diluted

$ 117,494 $ 217,825 $ 8,751

Weighted-average shares used to compute net income per share, basic and diluted

Basic 132,485,498 133,620,612 134,774,189

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Diluted 140,659,603 143,152,029 137,263,230

Net income (loss) per share:

Net income per share:

Basic $ 0.87 $ 1.61 $ 0.35

Diluted $ 0.84 $ 1.52 $ 0.06

For the years ended December 31, 2024, 2023, and 2022, the following potentially dilutive shares were excluded from the computation of diluted net income (loss) per share because including them would have been anti-dilutive:

For the years ended December 31, 2025, 2024, and 2023, the following potentially dilutive shares were excluded from the computation of diluted net income per share because including them would have been anti-dilutive:

2025 2024 2023

Options to purchase common stock 1,500,000 1,500,000 1,859,807

Common stock issuable upon exercise of common stock warrants — — 350,000

Common stock issuable upon vesting of RSUs and PSUs 6,853,777 6,403,843 10,348,892

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Total 9,015,397 8,461,287 18,781,762

Notes to Consolidated Financial Statements—Continued

Note 14— Income Taxes

For the years ended December 31, 2024, 2023, and 2022, income (loss) before income taxes consisted of the following:

For the years ended December 31, 2025, 2024, and 2023, income before income taxes consisted of the following:

(In thousands) 2025 2024 2023

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Foreign 580 871 215

Total income (loss) before income taxes

Total income before income taxes

$ 153,176 $ 90,427 $ 48,877

For the years ended December 31, 2024, 2023, and 2022, the components of the income tax provision were as follows:

For the years ended December 31, 2025, 2024, and 2023, the components of the income tax benefit (provision) were as follows:

Notes to Consolidated Financial Statements—Continued

(In thousands) 2025 2024 2023

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$ ( 37,751 ) $ 125,159 $ ( 1,990 )

For the years ended December 31, 2025, 2024, and 2023, the components of the income taxes paid (net of refunds) were as follows:

(In thousands) 2025 2024 2023

$ 10,300 $ 1,816 $ 1,300

State and Local

Illinois — 339 181

Pennsylvania — — 179

Florida — 303 —

New York — 614 —

New York City — 542 —

2,955 918 317

Foreign 234 58 7

$ 13,489 $ 4,590 $ 1,984

The Company had an effective tax rate of 24.6 %, ( 138.4 )%, and 4.1 % for the years ended December 31, 2025, 2024, and 2023, respectively.

The reconciliation of the statutory federal income tax rate to the Company’s effective tax rate for the years ended December 31, 2025, 2024, and 2023 were as follows:

Notes to Consolidated Financial Statements—Continued

2025 2024 2023

Tax at federal statutory rate 21.00 % 21.00 % 21.00 %

State tax, net of federal benefit 2.03 1.42 ( 0.38 )

Stock-based compensation 1.63 10.85 ( 4.02 )

Officer’s compensation limitation 1.23 6.81 ( 1.51 )

Foreign-derived intangible income benefit

in millions (except for percentages)

Amount % Amount % Amount %

federal statutory rate $ 32.20 21.0 % $ 19.00 21.0 % $ 10.30 21.0 %

State and local income taxes, net of federal income tax effect (1)

14.90 9.7 % ( 16.70 ) ( 18.5 ) % ( 0.10 ) ( 0.2 ) %

Other items 0.16 ( 0.79 ) ( 0.60 )

Research and development credits ( 5.50 ) ( 9.43 ) 4.36

Net operating loss expiration — 9.91 —

Change in valuation allowance ( 155.20 ) ( 30.14 ) ( 19.45 )

Foreign tax effects

Acquisition integration 1.50 1.0 % — — % — — %

Other foreign jurisdictions 0.40 0.2 % — — % — — %

Effect of cross-border tax laws

Foreign-derived intangible income ( 11.20 ) ( 7.3 ) % ( 3.40 ) ( 3.8 ) % ( 2.70 ) ( 5.6 ) %

Research & development credit ( 4.90 ) ( 3.2 ) % ( 5.80 ) ( 6.4 ) % ( 5.00 ) ( 10.3 ) %

Changes in valuation allowances — — % ( 122.70 ) ( 135.7 ) % ( 14.70 ) ( 30.1 ) %

Nontaxable or nondeductible items

Stock based and non-deductible employee compensation 3.50 2.3 % 2.60 2.9 % 8.60 17.7 %

Other 1.30 0.9 % 0.20 0.2 % ( 0.40 ) ( 0.8 ) %

Changes in unrecognized tax benefits 1.25 0.8 % 1.64 1.8 % 1.19 2.5 %

Other adjustments

Other ( 1.20 ) ( 0.8 ) — — % 4.80 9.9 %

Effective tax rate $ 37.75 24.6 % $ ( 125.16 ) ( 138.4 ) % $ 1.99 4.1 %

Notes to Consolidated Financial Statements—Continued

(1) State taxes in California made up the majority (greater than 50%) of the tax effect in this category for 2025 and 2024.

State taxes in Illinois, Pennsylvania, and Texas made up the majority (greater than 50%) of the tax effect in this category for 2023.

Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

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Accrued liabilities, reserves and other 7,950 7,080

Acquired intangible assets 1,637 —

Capitalized research and development 96,888 78,606

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Acquired intangibles

( 4,749 ) ( 2,639 )

Total deferred tax liabilities ( 5,914 ) ( 4,205 )

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The change in valuation allowance for deferred tax assets was as follows for the periods presented:

Notes to Consolidated Financial Statements—Continued

(In thousands)

Year Ended December 31,

Beginning of Year Additions Charged to

Beginning of Year

Additions Charged to

Costs & Expenses

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2023 157,353 ( 16,262 ) ( 752 ) — 140,339

The Company has released the valuation allowance of $ 140.3 million as of December 31, 2024.

This release reflects the Company’s determination that it is more likely than not that its U.S.

federal and state deferred tax assets will be realized.

As a result, the income tax benefit for the year was primarily attributable to the release of this valuation allowance.

Previously, the Company recorded a full valuation allowance of $ 140.3 million as of December 31, 2023.

The Company regularly evaluates the realizability of its deferred tax assets and establishes a valuation allowance when it is more likely than not that some or all of its deferred tax assets will not be realized.

This assessment considers all available positive and negative evidence, including cumulative pre-tax income, anticipated future earnings, and the impact of permanent differences and other comprehensive losses.

As of December 31, 2024, the Company achieved cumulative U.S.

pre-tax income during the prior three years, adjusted for permanent differences and other comprehensive losses, which provided objective and verifiable evidence supporting the release of the valuation allowance.

This sustained profitability, combined with anticipated future taxable income, led the Company to conclude, based on the weight of all available evidence, that it is more likely than not that its U.S.

federal and state deferred tax assets will be realized.

The Company has federal net operating loss, which is referred to as NOL, carryforwards of approximately $ 18.9 million and $ 181.2 million as of December 31, 2024 and 2023, respectively.

The federal NOL carryforwards of $ 18.9 million generated after December 31, 2017 can be carried forward indefinitely with utilization in any year limited to 80% of the Company’s taxable income.

This assessment is based on the weight of all available positive and negative evidence, including cumulative pre-tax income or losses, anticipated future earnings, the impact of permanent differences, and items recorded in other comprehensive income or losses.

As of December 31, 2024, the Company released its U.S.

federal and state valuation allowance after concluding that it was more likely than not that its deferred tax assets would be realized.

This conclusion was supported by the achievement of cumulative U.S.

pre-tax income over the prior three-year period, adjusted for permanent differences and other comprehensive losses, which provided objective and verifiable evidence of sustained profitability.

The Company recorded a valuation allowance of $ 15.9 million as of December 31, 2025 against its California deferred tax assets due to the uncertainty regarding realizability of these deferred tax assets as they have not met “more likely than not” realization criteria.

The valuation allowance increase during 2025 was primarily driven by additional California research and development tax credit generated during the year, following the full release of the Company’s valuation allowance in 2024.

The Company expects research and development tax credit generation to exceed its ability to utilize the credits in future years.

The Company will continue to monitor the need for a valuation allowance against its deferred tax assets on a quarterly basis.

The Company had federal net operating loss, which is referred to as NOL, carryforwards of approximately $ 2.0 million and $ 18.9 million as of December 31, 2025 and 2024, respectively.

The federal NOL carryforwards of $ 2.0 million generated after December 31, 2017 can be carried forward indefinitely with utilization in any year limited to 80% of the Company’s taxable income or any limitation under Section 382.

The Company has California NOL carryforwards of approximately $ 90.9 million and $ 91.0 million as of December 31, 2025 and 2024, respectively.

California NOLs will begin to expire in 2032 if not utilized.

Notes to Consolidated Financial Statements—Continued

The Company has federal research and development credits of approximately $ 31.1 million and $ 29.1 million as of December 31, 2024 and 2023, respectively.

The Company had federal research and development credits of approximately $ 4.4 million and $ 31.1 million as of December 31, 2025 and 2024, respectively.

The federal research and development credits will begin to expire in 2045 if not utilized.

1 unchanged sentence

California research and development credits have an infinite carryforward period.

The Tax Reform Act of 1986 and similar California legislation impose substantial restrictions on the utilization of NOLs and tax credit carryforwards in the event that there is a change in ownership as provided by Section 382 of the Internal Revenue code and similar state provisions.

Such a limitation could result in the expiration of the NOL carryforwards and tax credits before utilization, which could result in increased future tax liabilities.

Uncertain Tax Positions

As of December 31, 2024, the Company’s total amount of unrecognized tax benefits was $ 20.0 million, which would impact the Company’s effective tax rate, if recognized.

As of December 31, 2025, the Company’s total amount of unrecognized tax benefits was $ 22.8 million, of which $ 13.5 million would impact the Company’s effective tax rate, if recognized.

For the years ended December 31, 2025, 2024, and 2023, the activity related to the unrecognized tax benefits were as follows:

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Increase related to tax positions taken during current year 2,161 1,716 1,263

Decrease related to expiration of unrecognized tax benefit — — ( 153 )

Gross unrecognized tax benefits—ending balance $ 22,754 $ 19,966 $ 18,157

Notes to Consolidated Financial Statements—Continued

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense.

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As of December 31, 2025, the Company was not under examination by the Internal Revenue Service.

The Company is subject to ongoing audits by state and foreign tax authorities.

Due to differing interpretations of tax laws and regulations, tax authorities may dispute the Company’s tax filing positions.

The Company periodically evaluates its exposures associated with its tax filing positions and believes that adequate amounts have been reserved for adjustments that may result from tax examinations.

On July 4, 2025, Public Law 119-21 was enacted, introducing changes to U.S.

tax law, including 100% bonus depreciation and the expensing of domestic research costs.

In accordance with ASC 740, Income Taxes, the effects of enacted tax law changes must be recognized in the period in which the legislation is enacted.

Certain provisions became effective in the third quarter of 2025, and these impacts have been reflected in the Company’s 2025 results.

Note 15— Segment Information

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For information about how the Company derives revenue, as well as the Company’s accounting policies, refer to “Note 2—Basis of Presentation and Summary of Significant Accounting Policies.”

The CODM uses consolidated net income (loss) to assess performance, evaluate cost optimization, and allocate resources, including personnel-related and financial or capital resources, in the annual budget and forecasting process, as well as budget-to-actual variances on a monthly basis.

The CODM uses consolidated net income to assess performance, evaluate cost optimization, and allocate resources, including personnel-related and financial or capital resources, in the annual budget and forecasting process, as well as budget-to-actual variances on a monthly basis.

As such, the Company has determined that it operates as one operating and reportable segment.

The following tables set forth significant expense categories and other specified amounts included in consolidated net income (loss) that are otherwise regularly provided to the CODM for the years ended December 31, 2024, 2023, and 2022:

Notes to Consolidated Financial Statements—Continued

The following tables set forth significant expense categories and other specified amounts included in consolidated net income that are otherwise regularly provided to the CODM for the years ended December 31, 2025, 2024, and 2023:

2025 2024 2023

22 unchanged sentences

5,565 730 764

Segment net income (loss)

$ 215,586 $ 46,887 $ ( 89,885 )

GAAP net income (loss)

Segment net income

$ 115,425 $ 215,586 $ 46,887

Notes to Consolidated Financial Statements—Continued

(1) Years 2025, 2024, and 2023 exclude stock-based compensation and depreciation and amortization included in cost of revenue, research and development, sales and marketing, and general and administrative expenses, as these amounts are regularly provided to the CODM.

Additionally, year 2024 excludes restructuring charges.

(2) Year 2022 excludes certain incremental expenses associated with the Company’s humanitarian response to Russia’s invasion in Ukraine.

(2) Years 2025, 2024, and 2023 exclude expenses related to the Tides Foundation Warrant.

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Of this amount, $ 18.4 million is included in Restructuring charges while the remaining amount is allocated between Stock-based compensation expense and Other segment items.

See “Note 17—Restructuring Charges” for more information.

(5) During the year ended December 31, 2022, in response to Russia’s invasion of Ukraine, the Company incurred certain incremental expenses associated with its humanitarian response efforts of $ 4.3 million.

(4) During each of the years ended December 31, 2025, 2024, and 2023, the Company incurred $ 0.8 million of expenses related to the Tides Foundation Warrant.

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Note 17— Restructuring Charges

In October 2024, the Company announced the Restructuring Plan, intended to continue the Company’s profitable trajectory, increase efficiency, and accelerate innovation for its customers.

In October 2024, the Company announced the Restructuring Plan, which was intended to continue the Company’s profitable trajectory, increase efficiency, and accelerate innovation for its customers.

The Restructuring Plan included various cost-reduction measures, including workforce reductions, reductions in operating expenses, as well as decreases in capital expenditures.

As part of the Restructuring Plan, the Company reduced its total workforce by approximately 21 %.

Notes to Consolidated Financial Statements—Continued

The workforce reductions, including associated cash payments, were substantially completed by December 31, 2024.

The total restructuring charges for the fourth quarter of 2024 were $ 19.2 million and are presented within the respective functional line items in the Company's consolidated statement of operations and comprehensive (loss), as shown in the following table for the year ended December 31, 2024:

The workforce reductions and substantially all related actions were completed by December 31, 2024.

Total restructuring charges of $ 19.2 million were recorded during the fourth quarter of 2024 and were recognized within the respective functional line items in the Company's consolidated statement of operations and comprehensive income, as summarized in the table below for the year ended December 31, 2024:

(in thousands)

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$ 11,004 $ 6,878 $ 1,304 $ 19,186

Contract termination costs include expenses related to the reduction in force of the Company’s contracted workforce impacted by the Restructuring Plan, as well as vendor contract terminations.

Other charges include additional expenses incurred as part of the Restructuring Plan, such as lease termination costs and disposal of certain fixed assets.

Contract termination costs included expenses related to the reduction in force of the Company’s contracted workforce impacted by the Restructuring Plan, as well as vendor contract terminations.

Other charges included costs such as lease termination costs and disposal of certain fixed assets.

No restructuring charges were recorded for the years ended December 31, 2025 and 2023.

The following table summarizes the Company’s restructuring liability:

( in thousands )

Restructuring Liability

Beginning balance as of January 1, 2024

Restructuring charges incurred

Ending balance as of December 31, 2024

As of December 31, 2024, the remaining restructuring liability of $ 2.1 million consists primarily of accrued severance and benefit costs, and vendor termination costs, recorded within “Accrued expenses and other current liabilities” in the accompanying consolidated Balance Sheet.

The remaining liability is expected to be settled by the end of the first quarter 2025.

Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.

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 8. Financial Statements and Supplementary Data