CCC Intelligent Solutions Holdings Inc.: Form 10-Q for the period ended Sep 30, 2026

The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from the forward-looking statements included herein. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled “Cautionary Statement Regarding Forward-Looking Statements” and “Risk Factors” as set forth elsewhere in this Quarterly Report on Form 10-Q.

Unless otherwise indicated or the context otherwise requires, references to “CCC,” the “Company,” “we,” “us,” “our” and other similar terms refer to CCC Intelligent Solutions Holdings Inc. and its consolidated subsidiaries.

Business Overview

Founded in 1980, CCC is a leading Software as a Service (“SaaS”) and Artificial Intelligence (“AI”) platform provider for the multi-trillion-dollar insurance economy powering operations for insurers, repairers, automakers, part suppliers, and more. CCC cloud technology connects more than 35,000 businesses digitizing mission-critical workflows, commerce, and customer experiences. A trusted leader in AI, customer experience, network and workflow management, CCC delivers technology that turns crucial moments into intelligent experiences, with the goal of shaping a world where life just works.

Our business has been built upon two foundational pillars: automotive insurance claims and automotive collision repair. For decades we have delivered leading software solutions to both the insurance and repair industries, including pioneering Direct Repair Programs (“DRP”) in the United States (“U.S.”) beginning in 1992. DRP connects auto insurers and collision repair shops to create business value for both parties, and requires digital tools to facilitate interactions and manage partner programs. Insurer-to-shop DRP connections have created a strong network effect for CCC’s platform, as insurers and repairers both benefit by joining the largest network to maximize opportunities. This has led to a virtuous cycle in which more insurers on the platform drives more value for the collision shops on the platform, and vice versa.

We believe we have become a leading insurance and repair SaaS and AI provider in the U.S. by increasing the depth and breadth of our SaaS offerings over many years. Our insurance solutions help insurance carriers manage mission-critical workflows across the claims lifecycle, while building intelligent experiences for their customers. Our software integrates seamlessly with both legacy and modern systems and enables insurers to rapidly innovate on our platform. Our repair solutions help collision repair facilities achieve better performance throughout the collision repair cycle by digitizing processes to drive business growth, streamline operations, and improve repair quality. We have more than 300 insurers on our network, connecting with more than 30,500 repair facilities through our multi-tenant cloud platform. We believe our software is the architectural backbone of insurance DRP systems and is a primary driver of material revenue for our collision repair shop customers and a source of material efficiencies for our insurance carrier customers.

Our platform is designed to solve the “many-to-many” problem faced by the insurance economy. There are numerous internally and externally developed insurance software solutions in the market today, with the vast majority of applications focused on insurance-only use cases and not on serving the broader insurance ecosystem. We have prioritized building a leading network around our automotive insurance and collision repair pillars to further digitize interactions and maximize value for our customers. We have tens of thousands of companies on our platform that participate in the insurance economy, including insurers, repairers, parts suppliers, and automotive manufacturers. Our solutions create value for each of these parties by enabling them to connect to our vast network to collaborate with other companies, streamline operations, and reduce processing costs and dollars lost through claims management inefficiencies, or claims leakage. Expanding our platform has added new layers of network effects, further accelerating the adoption of our software solutions.

We have processed more than $2 trillion of historical data across our network, allowing us to build proprietary data assets that leverage insurance claims, vehicle repair, automotive parts and other vehicle-specific information. We believe we are uniquely positioned to provide data-driven insights, analytics, and AI-enhanced workflows that strengthen our solutions and improve business outcomes for our customers. Our AI solutions streamline existing insurance and repair processes including vehicle damage detection, claim triage, claim handling, repair estimating, intelligent claim review, and claim subrogation. We deliver real-world AI with more than 125 U.S. insurers and more than 15,000 U.S. collision repairers actively using AI-powered solutions in production environments.

One of the primary obstacles facing the insurance economy is increasing complexity which is driven by technological advancements, supply-chain disruption, social inflation, medical inflation, and Internet-of-Things (“IOT”) data. We believe digitization plays a critical role in managing this growing complexity while meeting consumer expectations. Our technology investments are focused on digitizing complex processes and interactions across our ecosystem, and we believe we are well positioned to power the insurance economy of the future with our data, network, and platform.

While our position in the insurance economy is grounded in the automotive insurance sector, the largest Property & Casualty (“P&C”) insurance sector in the U.S. representing nearly half of P&C Direct Written Premium (“DWP”), we believe our integrations and cloud platform are capable of driving innovation across the broader insurance economy. Our customers are increasingly looking for CCC to expand its solutions to other parts of their business where they can benefit from our technology, service, and partnership. In response, we are investing in new solutions that we believe will enable us to digitize the entire automotive claims lifecycle, and over time expand into adjacencies including other insurance lines. For example, CCC’s acquisition of EvolutionIQ, Inc. (“EvolutionIQ”) in January 2025 added claims solutions in disability and workers’ compensation insurance lines to CCC’s solution suite.

We have strong customer relationships in the end-markets we serve, and these relationships are a key component of our success given the long-term nature of our contracts and the interconnectedness of our network. We have customer agreements with more than 300 insurers (including carriers, self-insurers and other entities processing insurance claims), including 27 of the top 30 automotive insurance carriers and 9 of the top 15 disability insurance carriers in the U.S., based on DWP, and hundreds of regional carriers. We have more than 35,000 total customers, including more than 30,500 automotive collision repair facilities (including repairers and other entities that estimate damaged vehicles), more than 6,500 parts and diagnostics suppliers, 15 of the top 15 automotive manufacturers based on vehicles in operation, and numerous other companies that participate in the insurance economy.

Pending Take-Private Merger

On October 14, 2026, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Mozart Parent, LLC (“Parent”), and Mozart Merger Sub (DE), Inc., a wholly owned subsidiary of Parent (“Merger Sub”). Pursuant to the terms of the Merger Agreement, Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly owned subsidiary of Parent.

At the effective time of the Merger, each issued and outstanding share of the Company’s common stock, other than certain excluded shares specified in the Merger Agreement, will be converted into the right to receive $7.75 in cash, without interest and subject to applicable withholding taxes. The Company’s board of directors unanimously approved the Merger Agreement, with respect to all directors present, and resolved to recommend that the Company’s stockholders adopt the Merger Agreement.

The consummation of the Merger is subject to customary closing conditions, including adoption of the Merger Agreement by the holders of a majority of the outstanding shares of the Company’s common stock entitled to vote thereon, the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the absence of any law, injunction or order prohibiting the consummation of the Merger. The Merger is not subject to a financing condition and is expected to close in the first quarter of 2027. Upon completion of the Merger, the Company’s common stock will no longer be listed on The Nasdaq Stock Market LLC, and the Company will become a privately held company.

Key Performance Measures and Operating Metrics

In addition to our GAAP and non-GAAP financial measures, we rely on Software Net Dollar Retention Rate (“Software NDR”) and Software Gross Dollar Retention Rate (“Software GDR”) to measure and evaluate our business and to make strategic decisions. Software NDR and Software GDR may not be comparable to or calculated in the same way as other similarly titled measures used by other companies.

Software NDR

We believe that Software NDR provides our management and our investors with insight into our ability to retain and grow revenue from our existing customers, as well as their potential long-term value to us. We also believe the results shown by this metric reflect the stability of our revenue base, which is one of our core competitive strengths. We calculate Software NDR by dividing (a) annualized software revenue recorded in the last month of the measurement period, for example, March for a quarter ending March 31, for unique billing accounts that generated revenue during the corresponding month of the prior year by (b) annualized software revenue as of the corresponding month of the prior year. The calculation includes changes for these billing accounts, such as changes in the solutions purchased, changes in pricing and transaction volume, but does not reflect revenue for new customers added. The calculation excludes: (a) changes in estimates related to the timing of one-time revenue and other revenue, including professional services, and (b) annualized software revenue for smaller customers with annualized software revenue below the threshold of $100,000 for carriers and $4,000 for shops. The customers that do not meet the revenue threshold are small carriers and shops that tend to have different buying behaviors, with a narrower solution focus, and different tenure compared to our core customers (excluded small carriers and shops represent less than 5% of total revenue within these sales channels). Our Software NDR includes carriers and shops who subscribe to our auto physical damage solutions, and carriers who subscribe to our claims synthesis and claims guidance solutions, which account for most of the Company’s revenue, and excludes revenue from smaller emerging solutions with international subsidiaries or other ecosystem solutions, such as parts suppliers and other automotive manufacturers, and also excludes CCC casualty solutions which are largely usage and professional service based.

Software GDR

We believe that Software GDR provides our management and our investors with insight into the value our solutions provide to our customers as represented by our ability to retain our existing customer base. We believe the results shown by this metric reflect the strength and stability of our revenue base, which is one of our core competitive strengths. We calculate Software GDR by dividing (a) annualized software revenue recorded in the last month of the measurement period in the prior year, reduced by annualized software revenue for unique billing accounts that are no longer customers as of the current period end by (b) annualized software revenue as of the corresponding month of the prior year. The calculation reflects only customer losses and does not reflect customer expansion or contraction for these billing accounts and does not reflect revenue for new customer billing accounts added. Our Software GDR calculation represents our annualized software revenue that is retained from the prior year and demonstrates that the vast majority of our customers continue to use our solutions and renew their subscriptions. The calculation excludes: (a) changes in estimates related to the timing of one-time revenue and other revenue, including professional services, and (b) annualized software revenue for smaller customers with annualized software revenue below the threshold of $100,000 for carriers and $4,000 for shops. The customers that do not meet the revenue threshold are small carriers and shops that tend to have different buying behaviors, with a narrower solution focus, and different tenure compared to our core customers (excluded small carriers and shops which represent less than 5% of total revenue within these sales channels). Our Software GDR includes carriers and shops who subscribe to our auto physical damage solutions, and carriers who subscribe to our claims synthesis and claims guidance solutions, which account for most of the Company’s revenue, and excludes revenue from smaller emerging solutions with international subsidiaries or other ecosystem solutions, such as parts suppliers and other automotive manufacturers, and excludes CCC casualty solutions which are largely usage and professional service based.

28

Results of Operations

Comparison of the three months ended September 30, 2026 to the three months ended September 30, 2025

(dollar amounts in thousands, except share and per share data)

Revenues

Revenues increased by $27.0 million to $294.1 million, or 10.1%, for the three months ended September 30, 2026, compared to the three months ended September 30, 2025. The Company’s software subscription revenues accounted for $281.5 million and $256.7 million, or 96% of total revenue, during the three months ended September 30, 2026 and 2025, respectively.

The increase in revenue was primarily a result of approximately 8% growth from existing customer upgrades and expanding solution offerings to these existing customers and approximately 2% growth from new customers.

Cost of Revenues

Cost of revenues increased by $1.9 million to $76.1 million, or 2.6%, for the three months ended September 30, 2026, compared to the three months ended September 30, 2025.

Cost of Revenues, exclusive of amortization of acquired technologies

Cost of revenues, exclusive of amortization of acquired technologies, increased by $1.9 million to $71.7 million, or 2.8%, for the three months ended September 30, 2026, compared to the three months ended September 30, 2025. The increase was primarily due to a $2.4 million increase in personnel-related costs and a $1.0 million increase in third-party fees and direct costs associated with revenue growth, partially offset by a $2.1 million decrease in depreciation expense.

Amortization of Acquired Technologies

Amortization of acquired technologies was $4.4 million for the three months ended September 30, 2026 and three months ended September 30, 2025.

Gross Profit

Gross profit increased by $25.0 million to $218.0 million, or 13.0%, for the three months ended September 30, 2026, compared to the three months ended September 30, 2025. Our gross profit margin was 74.1% for the three months ended September 30, 2026, compared to 72.2% for the three months ended September 30, 2025. The increase in gross profit was due to increased software subscription revenues and economies of scale resulting from fixed cost arrangements.

Research and Development

Research and development expense increased by $0.1 million to $53.0 million, or 0.2%, for the three months ended September 30, 2026, compared to the three months ended September 30, 2025. The increase was primarily due to a $2.9 million increase in personnel-related costs and a $1.2 million increase in information technology ("IT") related costs, partially offset by a $2.5 million decrease in stock-based compensation expense and a $1.6 million increase in the amount of capitalized time on platform and customer solution enhancements.

Selling and Marketing

Selling and marketing expense decreased by $6.2 million to $38.0 million, or 14.0%, for the three months ended September 30, 2026, compared to the three months ended September 30, 2025. This decrease was primarily due to a $2.7 million decrease in stock-based compensation, a $2.0 million decrease in personnel-related costs, and a $1.1 million decrease in professional service costs.

General and Administrative

General and administrative expense increased by $3.7 million to $51.0 million, or 7.9%, for the three months ended September 30, 2026, compared to the three months ended September 30, 2025. The increase was primarily due to a $3.7 million increase in professional service costs, a $2.3 million increase in personnel-related costs, and a $1.4 million increase in IT related costs, partially offset by a $2.6 million decrease in stock-based compensation and a $1.1 million decrease in other business taxes.

Amortization of Intangible Assets

Amortization of intangible assets was $18.5 million for the three months ended September 30, 2026 and 2025.

Interest Expense

Interest expense increased by $2.8 million to $20.9 million, or 15.5%, for the three months ended September 30, 2026, compared to the three months ended September 30, 2025. The increase was primarily due to the interest incurred on an additional $300 million term loan as part of the Fifth Amendment to the 2021 Credit Agreement entered into in December 2025.

Interest Income

Interest income increased by $0.3 million to $1.4 million, or 28.2%, for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, primarily reflecting higher interest earned on interest-bearing deposits and money market funds during the three months ended September 30, 2026 compared to the three months ended September 30, 2025.

Other Income (Expense)—Net

We recognized other income—Net of $2.1 million for the three months ended September 30, 2026 compared to other income—Net of $0.5 million for the three months ended September 30, 2025. The income recognized during the three months ended September 30, 2026 was primarily due to the increase in the fair value of derivative instrument assets, driven by the fair value of the Company’s three interest rate swap agreements. The income recognized during the three months ended September 30, 2025 was primarily due to the increase in the fair value of derivative instruments of the Company's three interest rate swap agreements entered into during the three months ended September 30, 2025.

Income Tax (Provision) Benefit

The Company recognized an income tax provision of $9.7 million and $15.4 million for the three months ended September 30, 2026 and 2025, respectively. The income tax provision during the three months ended September 30, 2026 was primarily due to the Company's pre-tax book income, as well as the tax impact related to stock-based compensation expense, partially offset by the tax impact related to estimated research and development credits. The income tax provision during the three months ended September 30, 2025 was primarily due to the Company’s pre-tax book income, as well as the tax impact related to stock-based compensation expense, partially offset by the tax impact related to estimated research and development credits.

Comparison of the nine months ended September 30, 2026 to the nine months ended September 30, 2025

(dollar amounts in thousands, except share and per share data)

Revenues

Revenues increased by $82.2 million to $861.3 million, or 10.5%, for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025. The Company’s software subscription revenues accounted for $825.6 million and $749.8 million, or 96% of total revenue, during the nine months ended September 30, 2026 and 2025, respectively.

The increase in revenue was primarily a result of approximately 8% growth from existing customer upgrades and expanding solution offerings to these existing customers and approximately 2% growth from new customers.

Cost of Revenues

Cost of revenues increased by $16.6 million to $223.8 million, or 8.0% for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025.

Cost of Revenues, exclusive of amortization of acquired technologies

Cost of revenues, exclusive of amortization of acquired technologies, increased by $16.6 million to $210.7 million, or 8.6%, for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025. The increase was primarily due to an $8.6 million increase in IT related costs, a $7.5 million increase in personnel-related costs, a $3.8 million increase in third-party fees and direct costs associated with revenue growth, partially offset by a decrease of $2.4 million in stock-based compensation and a decrease of $1.7 million in depreciation expense.

Amortization of acquired technologies was $13.1 million for the nine months ended September 30, 2026 and nine months ended September 30, 2025.

Gross Profit

Gross profit increased by $65.5 million to $637.5 million, or 11.5%, for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025. Our gross profit margin was 74.0% for the nine months ended September 30, 2026, compared to 73.4% for the nine months ended September 30, 2025. The increase in gross profit was due to increased software subscription revenues and economies of scale resulting from fixed cost arrangements.

Research and Development

Research and development expense decreased by $16.1 million to $158.6 million, or 9.2%, for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025. The decrease was primarily due to a $11.5 million decrease in stock-based compensation expense, a $5.7 million increase in the amount of capitalized time on platform and customer solution enhancements, and a $3.7 million decrease in IT related costs partially offset by a $5.9 million increase in personnel related costs.

Selling and Marketing

Selling and marketing expense decreased by $15.0 million to $120.9 million, or 11.1%, for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025. The decrease was due to a $12.0 million decrease in stock-based compensation and a $1.8 million decrease in personnel-related costs.

General and Administrative

General and administrative expense decreased by $13.4 million to $148.7 million, or 8.3%, for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025. The decrease was primarily due to a $26.6 million decrease in stock-based compensation, partially offset by a $6.9 million increase in personnel related costs and $4.8 million increase in IT related costs.

Amortization of Intangible Assets

Amortization of intangible assets was $55.5 million for the nine months ended September 30, 2026 and 2025.

Interest Expense

Interest expense increased by $8.7 million to $61.6 million, or 16.4%, for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025. The increase was primarily due to the interest incurred on an additional $300 million term loan as part of the Fifth Amendment to the 2021 Credit Agreement entered into in December 2025.

Interest Income

Interest income decreased by $1.2 million to $3.1 million, or 27.9%, for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, due to lower average balances on interest-earning deposits and money market funds during the nine months ended September 30, 2026 as compared to the same period in the prior year.

Other Income (Expense)—Net

We recognized other income—net of $8.6 million for the nine months ended September 30, 2026 compared to other expense—net of $6.7 million for the nine months ended September 30, 2025. The income recognized during the nine months ended

September 30, 2026 was primarily due to the increase in the fair value of derivative instruments, driven by the fair value increase of the Company’s three interest rate swap agreements. The expense recognized during the nine months ended September 30, 2025 was primarily due to the change in fair value and decrease in income of derivative instruments during the nine months ended September 30, 2025.

Income Tax (Provision) Benefit

The Company recognized an income tax provision of $37.5 million and an income tax benefit of $5.1 million for the nine months ended September 30, 2026 and 2025, respectively. The income tax provision during the nine months ended September 30, 2026 was primarily due to the Company's pre-tax book income, as well as the tax impact related to stock-based compensation expense. The income tax benefit during the nine months ended September 30, 2025 was primarily due to the Company’s pre-tax book loss, as well as the tax rate impact of non-deductible stock-based compensation expense.

Non-GAAP Financial Measures

In addition to our results determined in accordance with GAAP, we believe that Adjusted Gross Profit, Adjusted Operating Expenses, Adjusted Operating Income, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings Per Share, and Free Cash Flow, which are each non-GAAP measures, are useful in evaluating our operational performance. We use this non-GAAP financial information to evaluate our ongoing operations and for internal planning, budgeting and forecasting purposes and setting management bonus programs. We believe that non-GAAP financial information, when taken collectively with GAAP measures, may be helpful to investors in assessing our operating performance and comparing our performance with competitors and other comparable companies, which may present similar non-GAAP financial measures to investors. Our computation of these non-GAAP measures may not be comparable to other similarly titled measures computed by other companies, because all companies may not calculate these measures in the same fashion. We endeavor to compensate for the limitation of the non-GAAP measure presented by also providing the most directly comparable GAAP measure and a description of the reconciling items and adjustments to derive the non-GAAP measure. These non-GAAP measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using non-GAAP measures on a supplemental basis.

Adjusted Gross Profit

We believe that Adjusted Gross Profit, as defined below, provides meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our recurring core business operating results. Adjusted Gross Profit is defined as gross profit, adjusted for amortization of acquired technologies and stock-based compensation and related employer payroll tax, which are not indicative of our recurring core business operating results. Adjusted Gross Profit Margin is defined as Adjusted Gross Profit divided by Revenue.

The following table reconciles Gross Profit to Adjusted Gross Profit for the three and nine months ended September 30, 2026 and 2025:

(amounts in thousands, except percentages)

Adjusted Operating Expenses

We believe that Adjusted Operating Expenses, as defined below, provides meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our recurring core business operating results. Adjusted Operating Expenses is defined as operating expenses adjusted for amortization of intangible assets, stock-based compensation expense and related employer payroll tax, costs associated with the acquisition and integration of completed and potential mergers and acquisitions (“M&A”), costs related to equity transactions, including secondary offerings, litigation expenses (proceeds), net for matters in which we are the plaintiff and related antitrust matters and debt refinancing costs.

The following table reconciles operating expenses to Adjusted Operating Expenses for the three and nine months ended September 30, 2026 and 2025:

(dollar amounts in thousands)

Adjusted Operating Income

We believe that Adjusted Operating Income, as defined below, provides meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our recurring core business operating results. Adjusted Operating Income is defined as operating income (loss) adjusted for amortization of intangible assets and acquired technologies, stock-based compensation expense and related employer payroll tax, costs associated with the acquisition and integration of completed and potential M&A, costs related to equity transactions, including secondary offerings, litigation expenses (proceeds), net, and debt refinancing costs.

The following table reconciles operating income (loss) to Adjusted Operating Income for the three and nine months ended September 30, 2026 and 2025:

(dollar amounts in thousands)

Adjusted EBITDA

We believe that Adjusted EBITDA, as defined below, is useful in evaluating our operational performance distinct and apart from financing costs, certain expenses and non-operational expenses. Adjusted EBITDA is defined as net income (loss) adjusted for interest, taxes, amortization of intangible assets and acquired technologies, depreciation, stock-based compensation expense and related employer payroll tax, costs associated with the acquisition and integration of completed and potential M&A, litigation expenses (proceeds), net, debt refinancing costs, costs related to equity transactions, including secondary offerings, change in fair value of derivative instruments, and income from derivative instruments. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by Revenue.

The following table reconciles net income (loss) to Adjusted EBITDA for the three and nine months ended September 30, 2026 and 2025:

(dollar amounts in thousands)

Adjusted Net Income and Adjusted Earnings Per Share

We believe that Adjusted Net Income, as defined below, and Adjusted Earnings Per Share are useful in evaluating our operational performance distinct and apart from financing costs, certain expenses and non-operational expenses. Adjusted Net Income is defined as net income (loss) adjusted for the after-tax effects of amortization of intangible assets and acquired technologies, stock-based compensation expense and related employer payroll tax, costs associated with the acquisition and integration of completed and potential M&A, litigation expenses (proceeds), net for matters in which we are the plaintiff and related antitrust matters, debt refinancing costs, costs related to equity transactions, including secondary offerings and the change in fair value of derivative instruments.

The following table reconciles net income (loss) to Adjusted Net Income and Adjusted Earnings per Share for the three and nine months ended September 30, 2026 and 2025:

(dollar amounts in thousands)

Free Cash Flow

We believe that Free Cash Flow, as defined below, provides meaningful supplemental information regarding our ability to generate cash and fund our operations and capital expenditures. Free Cash Flow is defined as net cash provided by operating activities less cash used for the purchases of software, equipment, and property.

The following table reconciles net cash provided by operating activities to Free Cash Flow for the three and nine months ended September 30, 2026 and 2025:

(dollar amounts in thousands)

Liquidity and Capital Resources

We have financed our operations with cash flows from operations. The Company generated $259.5 million of cash flows from operating activities during the nine months ended September 30, 2026. As of September 30, 2026, the Company had cash and cash equivalents of $202.9 million, a working capital surplus of $218.1 million and an accumulated deficit totaling $1,729.1 million. As of September 30, 2026, the Company had $1,281.2 million aggregate principal outstanding on its term loan.

We believe that our existing cash and cash equivalents, our cash flows from operating activities and our borrowing capacity under our 2021 Revolving Credit Facility will be sufficient to fund our operations, fund required long-term debt repayments and meet our commitments for capital expenditures for at least the next twelve months.

Although we are not currently a party to any material definitive agreement regarding potential investments in, or acquisitions of, complementary businesses, applications or technologies, subject to the restrictions in the Merger Agreement, which limit, among other things, certain acquisitions, investments, capital expenditures and incurrences of indebtedness without Parent’s prior written consent, we may enter into these types of arrangements, which could reduce our cash and cash equivalents or require us to seek additional equity or debt financing. Additional funds from financing arrangements may not be available on terms favorable to us or at all.

Debt

Our debt capital structure remained stable during the third quarter of 2026. As of September 30, 2026, we had $1,281.2 million outstanding under our senior secured term loan (“Term Loan”), compared to $1,291.0 million as of December 31, 2025. The reduction reflects approximately $10 million of principal repayments made during the first nine months of 2026, consisting of quarterly payments of approximately $3.3 million made in each of the first three quarters of the year. We did not incur any new borrowings in 2026. The Term Loan, which matures in January 2032, is part of our 2021 Credit Agreement and requires only modest quarterly payments (approximately $13 million per year) until maturity. We also have a $250.0 million revolving credit facility under the 2021 Credit Agreement that was undrawn at September 30, 2026, providing approximately $249.0 million of additional liquidity net of outstanding letters of credit. Our nearest significant debt maturity is the 2021 Revolving Credit Facility’s expiration in September 2029 (subject to a springing maturity in June 2028 if the Term Loan balance remains above $234.0 million at that time), giving us a long-dated maturity profile.

The interest rates on our Term Loan and any 2021 Revolving Credit Facility borrowings are variable and tied to market rates (Secured Overnight Financing Rate ("SOFR") or base rate) plus an applicable margin. We have proactively managed our floating interest rate exposure by using interest rate swaps to effectively fix the rate on $750.0 million of our Term Loan at approximately 3.94% through July 2027. These actions helped keep our weighted-average interest rate for the quarter ended September 30, 2026 at about 5.8%, slightly lower than the weighted-average interest rate of 6.4% in the same period last year. The weighted-average interest rate represents the average rate on our outstanding borrowings during the period and is calculated based on actual interest incurred and time-weighted average principal balances. A portion of our debt remains unhedged and subject to interest rate fluctuations, so we continue to monitor interest rate trends and consider additional risk management strategies as needed to contain our borrowing costs.

We believe our current liquidity position and cash flow generation are sufficient to meet our ongoing debt service obligations and other funding requirements. At September 30, 2026, we held $202.9 million in cash and cash equivalents, and the full capacity of our $250.0 million 2021 Revolving Credit Facility (minus letters of credit) remained available, bolstering our liquidity. Our indebtedness is secured by substantially all of our assets and is governed by customary affirmative, negative, and financial covenants. We were in full compliance with all covenants as of September 30, 2026. Notably, the 2021 Credit Agreement’s springing financial covenant (a first lien net leverage ratio test) did not apply at quarter-end because utilization of the Revolver was below the 35% threshold. While the Merger is pending, our use of cash, including for strategic opportunities and share repurchases, is subject to the restrictions in the Merger Agreement.

For further details of our long-term debt obligations and related terms, refer to Note 14, “Long-Term Debt,” in the Notes to Condensed Consolidated Financial Statements of this Form 10-Q, and to the “Long-Term Debt” disclosure in our Annual Report on Form 10-K for the year ended December 31, 2025.

Cash Flows

The following table provides a summary of cash flow data for the nine months ended September 30, 2026 and 2025:

(dollar amounts in thousands)

Net cash provided by operating activities was $259.5 million for the nine months ended September 30, 2026. Net cash provided by operating activities consists of a net income of $66.4 million, adjusted for $216.5 million of non-cash items, partially offset by a $23.1 million decrease in working capital. Significant non-cash adjustments include stock-based compensation expense of $93.8 million, depreciation and amortization of $110.8 million and deferred income taxes of $17.9 million, partially offset by a change in fair value of derivative instruments of $10.0 million. The change in working capital was primarily a result of a decrease in deferred revenue of $17.9 million due to the timing of revenue recognition.

Net cash used in investing activities was $53.0 million for the nine months ended September 30, 2026 due to $53.0 million of capitalized internally developed software projects and purchases of software, equipment, and property.

Net cash used in financing activities was $114.9 million for the nine months ended September 30, 2026 primarily due to $100.2 million for repurchases of common stock, $18.6 million of payments for employee tax liabilities related to the net share settlement of employee equity awards, and $9.8 million of principal payments of long-term debt, partially offset by proceeds received related to the exercise of stock options of $9.3 million.

Recent Accounting Pronouncements

See Note 2 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one, of their potential impact on our financial condition and our results of operations.

Critical Accounting Estimates

Our condensed consolidated financial statements are prepared in accordance with GAAP. The preparation of these financial statements requires our management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenue, costs, and expenses and related disclosures. Our estimates are based on our historical experience, trends and various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these judgments and estimates under different assumptions or conditions and any such differences may be material.

There have been no material changes to our critical accounting estimates as compared to the critical accounting policies and estimates disclosed in our audited consolidated financial statements and notes thereto for the year ended December 31, 2025, in our Annual Report on Form 10-K.

There have been no material changes in our market risk compared to the disclosures in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2025.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”)), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our principal executive officer and principal financial officer have concluded that as of September 30, 2026, our disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the three months ended September 30, 2026 identified in management’s evaluation pursuant to Rules 13a-15(d) and 15d-15(d) of the Exchange Act that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

For the nine months ended September 30, 2026, there were no material changes to the risk factors that were presented in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, other than as reflected in the risk factors below. For further discussion on our risk factors, which could materially affect our business, financial condition and/or results of operations, refer to the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025. Any of these factors could result in a significant or material adverse effect on the results of our operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.

Uncertainties associated with the Merger could adversely affect our business, results of operations, financial condition and the trading price of our common stock.

On October 14, 2026, the Company entered into the Merger Agreement with Parent and Merger Sub. Pursuant to the Merger Agreement, Merger Sub shall be merged with and into the Company, with the Company continuing as the surviving corporation and a wholly owned subsidiary of Parent. At the effective time of the Merger, each outstanding share of our common stock (other than certain shares held by the Company as treasury stock, owned by Parent or any of its subsidiaries, including Merger Sub, subject to Company restricted stock awards, or as to which appraisal rights have been properly exercised in accordance with Delaware law) will automatically be canceled, extinguished and converted into the right to receive a cash payment equal to the per-share price specified in the Merger Agreement, our common stock will be delisted from The Nasdaq Stock Market LLC, and we will cease to be a reporting company under the Exchange Act.

Completion of the Merger is subject to various customary closing conditions and regulatory approvals, including (i) the adoption of the Merger Agreement by the affirmative vote (in person or by proxy) of the holders of a majority of the outstanding shares of our common stock entitled to vote at a special meeting of our stockholders; (ii) the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; and (iii) other customary conditions for a transaction of this type. The parties to the Merger Agreement may not receive the necessary approvals for the transaction or may not receive them within the expected timeframe. The failure to satisfy these and other closing conditions could jeopardize, delay or prevent the consummation of the Merger.

The pendency of the Merger, as well as any delays in the expected timeframe, could cause disruption to our ongoing operations and create uncertainties, any of which could have an adverse effect on our business, results of operations, financial condition and the trading price of our common stock, regardless of whether the Merger is completed. These risks include, but are not limited to:

• An adverse effect on our relationships with business partners, customers and employees, including if our business partners, customers or others attempt to negotiate changes in existing business relationships, consider entering into business relationships with parties other than us, delay or defer decisions concerning their business with us, or terminate their existing business relationships with us during the pendency of the Merger;
• A diversion of a significant amount of management time and resources toward the completion of the Merger;
• Being subject to certain restrictions on the conduct of our business without Parent’s prior written consent;
• Possibly foregoing certain business opportunities that we might otherwise pursue absent the pending Merger; and
• Difficulties attracting and retaining key employees.

The adverse effects of the pendency of the Merger could be exacerbated by any delays in completion of the Merger or by termination of the Merger Agreement. Even if successfully completed, there are certain risks to our stockholders from the Merger, including:

• The per-share price is fixed and will not be adjusted (other than for stock splits, stock dividends, reclassifications and similar changes with respect to our common stock) for changes in our business, assets, liabilities, prospects, outlook,

financial condition or operating results, or in the event of any change in the market price of, analyst estimates of, or projections relating to our common stock;

• The fact that the exchange of common stock for cash pursuant to the Merger will be a taxable transaction for U.S. federal income tax purposes; and
• The fact that, if the Merger is completed, our stockholders will not participate in any future growth potential or benefit from any future increase in our value.

Failure to complete the Merger could adversely affect our business and the price of our shares of common stock.

The closing of the Merger may not occur on the expected timeline or at all. The Merger Agreement contains certain customary termination rights for us and Parent, including, among others: (i) if the Merger is not consummated on or before April 14, 2027; (ii) if the requisite stockholder approval is not obtained at a meeting of Company stockholders (or any adjournment or postponement thereof) at which a vote is taken on the Merger; (iii) if the other party breaches its representations, warranties or covenants in a manner that would cause the conditions to the closing of the Merger to not be satisfied and fails to cure such breach within the applicable cure period; (iv) if any law, order or judgment prohibiting the Merger has become final and non-appealable; or (v) by mutual written agreement of Parent and the Company. If the Merger Agreement is terminated and the Merger is not consummated, the price of our common stock may decline, we may experience negative reactions from the financial markets, including adverse stock price impacts, or from our vendors, customers and other business partners, and our stockholders may not recover their investment or receive a price for their shares of common stock similar to what has been offered as a result of the Merger.

If the Merger Agreement is terminated under certain circumstances set forth in the Merger Agreement, including as a result of the Company’s entry into a definitive agreement related to an alternative business combination transaction providing for a superior proposal (as defined in the Merger Agreement), the Company will be required to pay Parent a termination fee of $149.52 million. If the Company is required to pay this termination fee, such fee, together with costs incurred to negotiate the Merger Agreement and pursue the Merger, could have a material adverse effect on the Company’s liquidity, financial condition and results of operations.

In addition, although Parent has represented that the proceeds of its financing, when funded, will be sufficient to consummate the Merger, if Parent fails to fund the equity financing or close on the debt or preferred equity financing contemplated by the Merger Agreement and thereby fails to have sufficient funds to consummate the Merger, we may be forced to pursue costly litigation to obtain payment of the termination fee of approximately $313.99 million that Parent would be required to pay us in that circumstance or pursue specific performance of the Merger Agreement and compel Parent to close, and we may be unable to obtain adequate relief.

The Merger Agreement contains provisions that limit our ability to pursue alternatives to the Merger.

Under the Merger Agreement, we are also subject to “no-shop” provisions which prohibit us from soliciting, initiating,

proposing or engaging in discussions or negotiations with respect to any alternative business combination transaction, except in limited circumstances to comply with our fiduciary duties. As described above, we are also required to pay a termination fee if we decide to pursue an alternative to the Merger. These provisions could discourage a third party that may otherwise have an interest in acquiring all or a significant part of our business from considering or proposing an acquisition, even if such third party were prepared to pay consideration with a higher value than that provided for in the Merger Agreement.

We are subject to certain restrictions on the conduct of our business under the terms of the Merger Agreement.

Under the terms of the Merger Agreement, we have agreed to certain restrictions on the operations of our business until the earlier of the consummation of the Merger and the termination of the Merger Agreement. We have agreed to use commercially reasonable efforts to conduct our business in all material respects in the ordinary course of business and, unless approved by Parent in writing, to refrain from, among other things, incurring certain debt; entering into certain material contracts; selling or transferring rights in owned real property; entering into, adopting, amending, modifying or terminating any Company employee benefit plan; increasing the compensation or employee benefits of any director or officer outside the ordinary course of business; paying dividends; settling certain legal proceedings; changing our methods, principles or practices of financial accounting, except as required by GAAP or applicable law; and incurring certain capital expenditures. Because of these restrictions, we may be prevented from undertaking certain actions with respect to the conduct of our business that we might otherwise have taken if not for the Merger Agreement.

We and our directors may be subject to litigation challenging the Merger, and an unfavorable judgment or ruling in any such lawsuit could prevent or delay the consummation of the Merger and/or result in substantial costs.

Putative stockholder complaints, including stockholder class action complaints and other demands that may be made against us or complaints that may be filed against us, our board of directors, parties involved in the Merger and others in connection with the transactions contemplated by the Merger Agreement, may delay or prevent the consummation of the Merger. The outcome of any such demands and complaints or any litigation is uncertain, and we may not be successful in defending against these claims. Whether or not any claims are successful, these types of demands and litigation could delay or prevent the Merger, divert the attention of our management and employees from our day-to-day business, and otherwise adversely affect our business, results of operations and financial condition. Additionally, if a plaintiff is successful in obtaining an injunction prohibiting completion of the Merger, then that injunction may delay or prevent the Merger from being completed, which may exacerbate the other risks described herein and adversely affect our business, operating results and financial condition.