StubHub Holdings, Inc.: Form 10-Q for the period ended Mar 31, 2026

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report and our audited consolidated financial statements and related notes for the year ended December 31, 2025 included in our Annual Report on Form 10-K for the year ended December 31, 2025. The following discussion contains forward-looking statements that are based on current plans, expectations and beliefs that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to, those identified below and those discussed in the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 and including the “Special Note Regarding Forward-Looking Statements” of this Quarterly Report, and in the other filings we make with the SEC from time to time. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.

Overview

We are a leading global ticketing marketplace for live events. StubHub services customers in over 200 countries and territories, supporting over 30 languages and accepting payments in over 45 currencies – from sports to music, comedy to dance, festivals to theater. StubHub offers a safe and convenient way to buy or sell tickets to live events across the world for memorable live experiences.

Highlights for First Quarter 2026

Key Business Metrics

• Gross Merchandise Sales (“GMS”) was $2.2 billion for the three months ended March 31, 2026, as compared to $2.1 billion in the three months ended March 31, 2025

Financial Results

• Revenue was $446.0 million for the three months ended March 31, 2026, as compared to $397.6 million in the three months ended March 31, 2025
• Gross margin was 85% for the three months ended March 31, 2026, as compared to 84% in the three months ended March 31, 2025
• Total costs and expenses were $420.2 million for the three months ended March 31, 2026, as compared to $370.8 million in the three months ended March 31, 2025
• Net income (loss) was $48.0 million for the three months ended March 31, 2026, as compared to $(22.2) million in the three months ended March 31, 2025
• Adjusted EBITDA was $72.1 million for the three months ended March 31, 2026, as compared to $47.9 million in the three months ended March 31, 2025
• Net cash provided by operating activities was $298.4 million for the three months ended March 31, 2026, as compared to $158.3 million in the three months ended March 31, 2025
• Free cash flow was $290.6 million for the three months ended March 31, 2026, as compared to $151.1 million in the three months ended March 31, 2025
• Cash and cash equivalents were $1.5 billion as of March 31, 2026

Results of Operations

The following tables set forth our results of operations for the periods presented:

(in thousands)

(1) Includes stock-based compensation as follows:

(in thousands)

31

Comparison of the Three Months Ended March 31, 2026 and 2025

Revenue

(in thousands, except percentages)

The overall increase in our revenue in the amount of $48.4 million for the three months ended March 31, 2026 as compared to the same period in 2025 is primarily attributable to an increase of $27.0 million due to a higher average transaction fee rate we charge to buyers and sellers on each transaction, and growth in GMS, which was primarily due to an increase in GMS per transaction on our platform.

Cost of Revenue (Exclusive of Depreciation and Amortization)

(in thousands, except percentages)

The overall increase in our cost of revenue (exclusive of depreciation and amortization) in the amount of $3.4 million for the three months ended March 31, 2026 as compared to the same period in 2025 was primarily attributable to an increase of $11.4 million in payment processing costs related to the volume of transactions we facilitated during the three months ended March 31, 2026. This is partially offset by a reduction of $5.0 million in ticket substitution and replacement costs and a decrease of $4.3 million in inventory costs.

Operations and Support

(in thousands, except percentages)

The overall increase in operations and support expenses in the amount of $2.8 million for the three months ended March 31, 2026 as compared to the same period in 2025 was primarily attributable to an increase of $2.8 million in outsourced customer support.

Sales and Marketing

(in thousands, except percentages)

The overall increase in sales and marketing expenses in the amount of $7.0 million for the three months ended March 31, 2026 as compared to the same period in 2025 was primarily attributable to an increase of $2.4 million related to stock-based compensation expense, an increase of $2.2 million in sponsorship fees paid to certain content rights holders, and an increase of $1.5 million in advertising expenses driven by an increase in transaction volume.

General and Administrative

(in thousands, except percentages)

The overall increase in general and administrative expense in the amount of $34.7 million for the three months ended March 31, 2026 as compared to the same period in 2025 was primarily attributable to an increase of $22.3 million related to stock-based compensation expense, an increase of $8.0 million in professional services fees and an increase of $3.4 million in personnel-related costs.

Depreciation and Amortization

(in thousands, except percentages)

Depreciation and amortization expenses increased $1.5 million for the three months ended March 31, 2026 as compared to the same period in 2025, primarily due to increased depreciation and amortization for new assets placed into service.

Interest Income

(in thousands, except percentages)

Interest income increased $2.2 million for the three months ended March 31, 2026 as compared to the same period in 2025, primarily due to higher cash and cash equivalent balances throughout the quarter, partially offset by lower interest rates.

Interest Expense

(in thousands, except percentages)

Interest expense decreased $25.2 million for the three months ended March 31, 2026 as compared to the same period in 2025 primarily due to a decrease of $22.3 million due to lower variable interest rates for our outstanding term loans and repayments of principal of our 2024 USD Term Loan.

Foreign Currency Gains (Losses)

(in thousands, except percentages)

Foreign currency gains increased $44.6 million for the three months ended March 31, 2026 as compared to the same period in 2025, which is primarily attributable to the remeasurement of our 2024 Euro Term Loan obligation, litigation reserves and indirect tax contingencies primarily driven by changes in exchange rates.

* Not meaningful

Gains on Derivatives

(in thousands, except percentages)

Gains on derivatives increased $4.9 million for the three months ended March 31, 2026 as compared to the same period in 2025, primarily as a result of an increase in the settlements received related to interest rate swap derivatives, which were not designated as a cash flow hedge.

Benefit for Income Taxes

(in thousands, except percentages)

Benefit for income taxes decreased $5.7 million for the three months ended March 31, 2026 as compared to the same period in 2025, primarily due to current period pre-tax income, net of the benefit recognized for the changes in the U.S. valuation allowances and tax benefits on the interest rate swap reclassified from AOCI, whereas the tax benefit for the three months ended March 31, 2025 was primarily attributable to the pre-tax loss.

Key Business Metric and Non-GAAP Financial Measures

We regularly review the following key business metric and non-GAAP financial measures to evaluate our business, measure our performance, identify trends, prepare financial projections and make business decisions. The measures set forth below should be considered in addition to, not as a substitute for or in isolation from, our financial results prepared in accordance with GAAP. Other companies, including companies in our industry, may calculate these measures differently or not at all, which reduces their usefulness as comparative measures. A reconciliation of the non-GAAP financial measures, Adjusted EBITDA and free cash flow, to the most directly comparable financial measures calculated in accordance with GAAP is set forth below under “—Non-GAAP Financial Measures.”

The following table summarizes our key business metric and non-GAAP financial measures (along with the most directly comparable GAAP measures) for the periods indicated:

(in thousands)

* Not meaningful

(1) See “—Key Business Metric—Gross Merchandise Sales” below for more information.

(2) See “—Non-GAAP Financial Measures—Adjusted EBITDA” below for more information.

(3) See “—Non-GAAP Financial Measures—Free Cash Flow” below for more information.

Key Business Metric

Gross Merchandise Sales

GMS represents the total dollar value paid by buyers for ticket transactions and fulfillment. GMS includes fees we charge buyers and sellers that can vary by transaction, as well as the net proceeds we remit to sellers. Our definition of GMS does not include applicable sales, value-added and other indirect taxes, shipping costs and the impact of discounts and coupons as well as event cancellations or expected cancellations after the initial transaction on our platform. We believe it is useful to exclude these items, primarily refunds due to event cancellations, as GMS is a key metric used by management to measure business performance.

Our revenue depends significantly on the dollar value of GMS flowing through our platform and our ability to generate fees from such transactions. We believe that GMS is useful to management and investors as it serves as an important indicator of our ability to attract and satisfy buyers and sellers, the overall health of our marketplace and the scale and growth of our business.

Other marketplaces may not present GMS or may calculate this measure differently, which would reduce its usefulness as comparative measure. GMS is an operating metric and does not represent revenue earned by us calculated in accordance with GAAP.

During the three months ended March 31, 2026, our GMS grew 7% year-over-year due to ongoing market growth in international and North American secondary markets.

Non-GAAP Financial Measures

Adjusted EBITDA

We calculate Adjusted EBITDA as net income (loss) excluding results from non-operating sources including interest income and expense, provision (benefit) for income taxes, foreign currency losses (gains), gains on derivatives, depreciation and amortization, acquisition-related costs, stock-based compensation expense, indirect tax contingency costs, litigation reserves and other costs and expenses.

Adjusted EBITDA is a key performance measure that our management team uses to assess our operating performance. We present Adjusted EBITDA because management believes it is helpful in highlighting trends in our operating results as it excludes certain items, such as stock-based compensation expense, which are non-cash or whose fluctuations from period-to-period do not necessarily correspond to changes in the operating results of our business. Moreover, it is frequently used by analysts, investors and other interested parties to evaluate companies in our industry.

Adjusted EBITDA has limitations as an analytical measure and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.

In addition, other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, net income (loss) and our other GAAP results.

The following table presents a reconciliation of net income (loss), the most directly comparable financial measure presented in accordance with GAAP, to Adjusted EBITDA.

(in thousands, except percentages)

1. During the three months ended March 31, 2026 and 2025, we incurred zero and $0.1 million of transaction and integration costs, respectively. We do not consider these costs to be representative of the ongoing financial performance of our core business, and we do not expect these costs to be significant going forward.

2. During the three months ended March 31, 2026 and 2025, we recognized $31.0 million and $5.5 million of stock-based compensation expense, net of $6.7 million and $0.2 million capitalized for internally developed software, associated with RSUs, stock options and restricted stock, respectively.

3. During the three months ended March 31, 2026 and 2025, we incurred $2.4 million and $8.4 million of expenses, respectively, associated with potential indirect tax contingencies for withholding obligations and $0.2 million and $0.6 million of professional service costs, respectively.

4. During the three months ended March 31, 2026 and 2025, we incurred $4.5 million and zero, respectively, for expenses due to a litigation-related loss contingency for specific matters for which we deemed loss to be probable as described in Note 12, “Commitments and Contingencies” to our interim condensed consolidated financial statements.

5. Represents a one-time expense related to our initial public offering of $0.3 million during the three months ended March 31, 2026, and personnel-related costs related to our customer service office closure of $0.2 million for the three months ended March 31, 2025. We do not consider these expenses to be representative of the ongoing financial performance of our core business.

During the three months ended March 31, 2026, the increase in Adjusted EBITDA, compared to the prior year, was driven by higher average transaction fee rates, increased marketing efficiency, and growth in GMS per transaction, partially offset by higher direct costs related to growth in GMS and certain general and administrative costs.

Free Cash Flow

We define free cash flow as net cash provided by (used in) operating activities less capital expenditures, which includes purchases of property and equipment, purchases of intangible assets and capitalized software development costs (excluding capitalized stock-based compensation expense). We believe that free cash flow is a meaningful indicator of liquidity for management and investors and, in particular, the amount of cash generated from operations that, after capital expenditures, can be used for strategic initiatives, including continuous investment in our business and strengthening our balance sheet. A limitation of the use of free cash flow is that it does not represent the total increase or decrease in our cash balance for the period. Free cash flow should not be considered in isolation or as an alternative to cash flows from operations and should be considered alongside our other financial liquidity measures, such as net cash provided by (used in) operating activities and our other GAAP results.

The following table presents a reconciliation of net cash provided by operating activities, the most directly comparable financial measure presented in accordance with GAAP, to free cash flow:

(in thousands)

(1) Includes $22.6 million and $37.4 million of interest payments on our outstanding debt, net of cash received on the settlement of interest rate swap derivatives, for the three months ended March 31, 2026 and 2025, respectively.

(2) Seasonal trends in our GMS and the timing of major events throughout the year impact free cash flow for any given quarter and can vary year to year. Trailing 12 months (“TTM”) free cash flow provides a longer-term view of our business that is less impacted by the seasonality of GMS and seller payments.

Liquidity and Capital Resources

As of March 31, 2026, we had cash and cash equivalents of $1,526.2 million. Cash and cash equivalents consist of short-term, highly liquid investments with original maturities of three months or less when purchased, and are primarily comprised of cash in banks, money market funds and cash held at online payment companies, which excludes $17.3 million of restricted cash.

On September 29, 2025, we made an early principal payment related to the 2024 USD Term Loan of $750.0 million in connection with, and using proceeds from, the IPO. Additionally, on December 16, 2025, we made an early principal payment on the 2024 USD Term Loan of $150.0 million. The paydown on September 29, 2025 was applied first to eliminate all remaining principal amortization payments that were scheduled to be paid on the principal balance of the 2024 USD Term Loan, beginning on September 30, 2025.

We expect our existing cash and cash equivalents will be sufficient to fund anticipated cash requirements for at least the next 12 months. We amended our Credit Facilities in March 2024 to extend their maturities. Our Credit Facilities mature in 2030. We expect we will be required to refinance our Credit Facilities at some point in the future. There is no assurance we would be able to obtain such funding or refinancing on acceptable terms and conditions, or at all. If we are unable to raise additional capital when desired, our business, results of operations and financial condition will be adversely affected.

Our primary requirements for liquidity are for general corporate purposes and servicing our indebtedness. To date, we have financed our operations principally through cash from operations, private placements of our redeemable preferred stock and proceeds from our credit facilities.

Credit Facilities

On March 15, 2024, we entered into the fourth amendment to the Credit Agreement to refinance the USD Term Loan B, USD Term Loan B2, Euro Term Loan B and Revolving Credit Facility (the “Refinancing”). As a result of the Refinancing, the refinanced Euro Term Loan B (the “2024 Euro Term Loan”) has a maturity date of March 2030, aggregate principal balance €452.4 million and an interest rate equal to EURIBOR, subject to a floor of 0.00%, plus 5.00%. As of March 31, 2026, the interest rate for the 2024 Euro Term Loan was 6.89%. In addition, as a result of the Refinancing, the outstanding principal balance of each of the USD Term Loan B and USD Term Loan B2 were consolidated into one loan (the “2024 USD Term Loan” and together with the 2024 Euro Term Loan and the Revolving Credit Facility, the “Credit Facilities”). The 2024 USD Term Loan has a maturity date of March 2030, initial aggregate principal balance of $1,952.6 million and an interest rate equal to SOFR, subject to a floor of 0.00%, plus 4.75%. As of March 31, 2026, the interest rate for the 2024 USD Term Loan was 8.42%. After six months following the effective date of the Refinancing, we have an option to prepay part or all of both the 2024 USD Term Loan and the 2024 Euro Term Loan prior to maturity without penalty. On June 24, 2024, we repaid $24.0 million of the outstanding principal of the 2024 USD Term Loan. On September 29, 2025, we made an early principal payment related to the 2024 USD Term Loan of $750.0 million in connection with, and using proceeds from, the IPO. Additionally, on December 16, 2025, the Company made an early principal payment on the 2024 USD Term Loan of $150.0 million. The paydown on September 29, 2025 was applied first to eliminate all remaining principal amortization payments that were scheduled to be paid on the principal balance of the 2024 USD Term Loan, beginning on September 30, 2025. The principal balance of the 2024 USD Term Loan was $1,004.2 million as of March 31, 2026.

The Revolving Credit Facility initially allowed for an initial aggregate principal amount of $125.0 million, including: (i) a $30.0 million letter of credit sublimit and (ii) a $30.0 million swingline loans sublimit. On March 13, 2023, as part of the SOFR Amendment, the interest rate per annum for the Revolving Credit Facility was amended to equal to SOFR, subject to a floor of 0.00%, plus 3.61448%. On March 15, 2024, as part of the Refinancing, we extended the maturity date of the Revolving Credit Facility from February 2025 to March 2028. On June 27, 2024, we entered into the fifth amendment (as amended) to the Credit Agreement to increase the commitment under the Revolving Credit Facility, subject to certain conditions, including the occurrence of an initial public offering. On September 29, 2025, the Company met the conditions, including the occurrence of a Qualified IPO, under Amendment No. 5 related to the Revolving Credit Facility that increased the aggregate principal amount to $565.0 million, including: (i) a $120.0 million letter of credit sublimit and (ii) a $60.0 million swingline loan sublimit. The maturity date for the Revolving Credit Facility was also extended from March 2028 to September 2030. As of March 31, 2026, there were outstanding standby letters of credit in an aggregate amount of $43.0 million under the Revolving Credit Facility that we issued in connection with our appeal bond for a litigation matter and office leases. During and as of the three months ended March 31, 2026, no amounts have been drawn on the letters of credit. The available balance under the letter of credit sublimit for Revolving Credit Facility was $77.0 million as of March 31, 2026.

In connection with the Refinancing, we incurred underwriting fees of 1.00% on the principal balance and other issuance costs of $4.1 million and each of the extended loans had an original issue discount of 1.00% of the principal balances.

The Credit Facilities contain customary representations and warranties, affirmative covenants, reporting obligations and negative covenants. The Credit Facilities are secured by (i) a first priority lien on substantially all of our and our domestic subsidiaries’ tangible and intangible personal property, including but not limited to intellectual property and accounts receivable and (ii) a first priority pledge of 100% of our equity interests and each of our material direct, wholly owned subsidiaries limited to 65% of the voting capital stock and 100% of the non-voting stock of certain foreign subsidiaries, in each case, subject to certain exceptions.

As of March 31, 2026, we had $1,523.0 million outstanding under our term loan Credit Facilities. As of March 31, 2026, there were no outstanding amounts drawn on the Revolving Credit Facility.

Our Credit Facilities are subject to variable interest rates. Although we believe our interest rate risk management strategy will continue to mitigate any potential material impacts on our liquidity and capital resources, future interest rate increases could materially impact our business, financial condition and results of operations. For more information, see “Risk Factors—Risks Relating to Our Financial Condition and Indebtedness—Our variable rate indebtedness subjects us to interest rate risk, which could cause our indebtedness service obligations to increase significantly” in our Annual Report on Form 10-K for the year ended December 31, 2025.

Cash Flows

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

(in thousands)

Cash Flows from Operating Activities

For the three months ended March 31, 2026, net cash provided by operating activities was $298.4 million, primarily resulting from net income of $48.0 million, after consideration of non-cash charges of $2.5 million. Net cash inflows from the change in net operating assets and liabilities of $247.9 million were primarily due to a $273.6 million increase in payments due to buyers and sellers driven by improvements in GMS and increase in the time period between ticket sales and event dates. The non-cash items included in our net income for the three months ended March 31, 2026 relate primarily to stock-based compensation charges of $31.0 million, partially offset by unrealized foreign exchange gains of $21.7 million and fair value change for Series M of $8.0 million.

For the three months ended March 31, 2025, net cash provided by operating activities was $158.3 million, which consisted of a net loss of $22.2 million, after consideration of non-cash charges of $37.2 million. Net cash inflows from the change in net operating assets and liabilities of $143.3 million were primarily due to a $191.6 million increase in payments due to buyers and sellers driven by improvements in GMS, a $23.8 million increase in other non-current liabilities, and a $21.8 million increase in accrued expenses partially offset by a $74.0 million decrease in accounts payable, a $9.3 million decrease in prepaid expenses and other current assets and a $6.5 million decrease in other non-current assets. The non-cash items included in our net loss for the three months ended March 31, 2025 relate primarily to unrealized foreign exchange losses of $27.7 million, amortization of intangibles of $5.7 million and stock-based compensation expense of $5.5 million, which was partially offset by $10.0 million of increase in deferred income tax assets.

Cash Flows from Investing Activities

Net cash used in investing activities during the three months ended March 31, 2026 was $7.8 million, which was primarily related to capitalized software development costs.

Net cash used in investing activities during the three months ended March 31, 2025 was $7.2 million, which was primarily related to capitalized software development costs.

Cash Flows from Financing Activities

Net cash used in financing activities during the three months ended March 31, 2026 was $4.6 million, which was primarily comprised of payment of tax withholding obligations on vested equity awards of $2.6 million and payments of deferred offering costs of $2.1 million.

Net cash used in financing activities during the three months ended March 31, 2025 was $5.8 million, which was primarily comprised of repayment of long-term debt obligations of $4.9 million and repurchase of Class A common stock of $1.0 million.

Contractual Obligations

There were no material changes in commitments under contractual obligations, compared to the contractual obligations disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.

Off-Balance Sheet Arrangements

As of March 31, 2026, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Critical Accounting Estimates

Our condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report are prepared in accordance with GAAP. The preparation of condensed consolidated financial statements in accordance with GAAP requires us to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the financial statements, as well as the reported amounts of revenue and expenses during the period presented. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from our estimates. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows could be affected.

There have been no material changes to our critical accounting estimates as described in our Annual Report on Form 10-K for the year ended December 31, 2025, as well as Note 2, “Basis of Presentation and Summary of Significant Accounting Policies” in the notes to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report.

Recent Accounting Pronouncements

See Note 2, “Basis of Presentation and Summary of Significant Accounting Policies” to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information.

We are exposed to certain market risks in the ordinary course of business. These risks primarily result from fluctuations in interest rate and foreign currency exchange rates.

Interest Rate Risk

Our exposure to interest rate risk is influenced primarily by changes in interest rates on interest payments related to our Credit Facilities. We had $1,523.0 million outstanding under our Credit Facilities as of March 31, 2026. See Note 9, “Long-Term Debt Obligations” to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information. Management periodically reviews our exposure to interest rate fluctuations and periodically implements strategies to manage the exposure. When deemed appropriate, we manage our risk from interest rate fluctuations through the use of derivative instruments, such as interest rate swaps to establish fixed rates on variable rate debt.

We entered into several fixed interest rate swap contracts to address the variable interest rate risk on our term loan debt. These interest rate swaps had the economic effect of modifying the variable interest obligations based on SOFR and EURIBOR, each plus a spread associated with $1,523.0 million of the long-term debt so that the interest payable on these effectively became fixed. These fixed interest rate swap contracts are due to mature in February 2027. See Note 11, “Interest Rate Derivatives” to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information.

As of March 31, 2026, after taking into account the effect of our interest rate swap agreements that were in effect as of such date, all of our long-term debt then outstanding was at a fixed interest rate. A hypothetical 10% change in interest rates would not have had a material impact on our condensed consolidated financial statements.

We had cash and cash equivalents of $1,526.2 million as of March 31, 2026. Cash and cash equivalents consist primarily of cash in banks, money market funds and cash held at online payment companies. Our cash and cash equivalents are held for working capital purposes and such interest-earning instruments carry a degree of interest rate risk. The primary objectives of our investment activities are the preservation of capital, the fulfillment of liquidity needs and the fiduciary control of cash. We do not enter into investments for trading or speculative purposes. Due to the short-term nature of these instruments, a hypothetical 10% change in interest rates during any of the periods presented would not have had a material impact on our condensed consolidated financial statements.

Foreign Currency Exchange Risk

We report our financial results in U.S. dollars. We conducted a substantial portion of our business outside of the U.S. The financial position and operating results of our foreign operations are consolidated using USD or the local currency as the functional currency. We have experienced and will continue to experience fluctuations in our financial results due to foreign currency exchange transaction risk and translation risk.

Transaction Risk

Movements in currency exchange rates affect the remeasurement of monetary assets to be received or liabilities to be paid for the settlement of a transaction denominated in a currency other than the functional currency, commonly referred to as foreign currency transaction risk. Remeasurement of such amounts are reported as foreign currency gains (losses) in our condensed consolidated statements of operations. Our 2024 Euro Term Loan obligation is exposed to foreign currency transaction risk, thus changes in the euro to U.S. dollar exchange rate will cause foreign currency gains or losses. A hypothetical 10% change in the euro to U.S. dollar exchange rate applied to the 2024 Euro Term Loan obligation as of March 31, 2026 would have resulted in a $51.9 million change to foreign currency losses or gains as reported in our condensed consolidated statement of operations for the three months ended March 31, 2026. Excluding the impact to our 2024 Euro Term Loan, a hypothetical 10% change in foreign currency exchange rates applied to net monetary assets and liabilities as of March 31, 2026 denominated in currencies other than their functional currencies would not have had a material impact on our condensed consolidated financial results. At this time, we do not, but we may in the future enter into derivatives or other financial instruments in an attempt to hedge our foreign currency transaction risk. Accordingly, we expect foreign currency transaction risk to continue to impact our financial results, especially as it relates to our euro denominated 2024 Euro Term Loan.

Translation Risk

Movements in currency exchange rates affect the remeasurement of net asset or liability positions of our foreign operations from their functional currency to our U.S. dollar reporting currency. The consequences of translating such amounts are reported as a component of accumulated other comprehensive income on our condensed consolidated balance sheets.

Management’s Evaluation of Disclosure Controls and Procedures

The Company’s disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by us in our reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Because of the inherent limitations, disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report. Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were not effective as of March 31, 2026 due to material weaknesses in our internal control over financial reporting described below.

Previously Reported Material Weaknesses

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

As disclosed in Part II, Item 9A “Controls and Procedures” in our Annual Report on Form 10-K for the year ended December 31, 2025, we have identified material weaknesses in our internal control over financial reporting, which continued to exist as of March 31, 2026. In particular:

• we did not design or maintain an effective control environment commensurate with our financial reporting requirements; specifically, we did not maintain a sufficient complement of personnel with an appropriate degree of accounting knowledge, experience and training to appropriately analyze, record and disclose accounting and reporting requirements; and
• we did not effectively design and maintain effective controls in response to the risks of material misstatement; specifically, changes to existing controls or the implementation of new controls have not been sufficient to respond to changes to the risks of material misstatement to financial reporting.

These material weaknesses contributed to the following additional material weaknesses:

• we did not design and maintain formal accounting policies, procedures and controls over significant accounts and disclosures to achieve complete, accurate and timely financial accounting, reporting and disclosures, including segregation of duties and adequate controls related to the preparation and review of journal entries and account reconciliations; and
• we did not design and maintain controls over the accounting for revenue and associated reserves, income taxes, indirect taxes and the preparation of the consolidated financial statements, including the consolidated statements of cash flows and related disclosures.

The material weaknesses described above resulted in the restatement of our consolidated financial statements as of and for the years ended December 31, 2022 and 2021 and audit adjustments to revenue and associated reserves, indirect tax contingencies, income taxes, interest expense, goodwill, and classification of financial statement accounts in our consolidated financial statements as of and for the years ended December 31, 2024, 2023 and 2022. Additionally, these material weaknesses could result in a misstatement of substantially all of our accounts or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

In addition to the above, we did not design and maintain effective controls over IT general controls for information systems that are relevant to the preparation of the consolidated financial statements. Specifically, we did not design and maintain: (i) program change management controls for financial systems to ensure that IT program and data changes affecting financial IT applications and underlying accounting records are identified, tested, authorized and implemented appropriately, (ii) user access controls to ensure appropriate segregation of duties and that adequately restrict user and privileged access to financial applications, programs, and data to appropriate personnel, (iii) computer operations controls to ensure that critical batch jobs are monitored and data backups are authorized and monitored and (iv) testing and approval controls for program development to ensure that new software development is aligned with business and IT requirements. These IT deficiencies did not result in any misstatements to the consolidated financial statements; however, the deficiencies, when aggregated, could impact our ability to maintain effective segregation of duties, as well as the effectiveness of IT-dependent controls (such as automated controls that address the risk of material misstatement to one or more assertions, along with the IT controls and underlying data that support the effectiveness of system-generated data and reports) that could result in misstatements potentially impacting all financial statement accounts and disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected on a timely basis. Accordingly, we have determined these deficiencies in the aggregate constitute a material weakness.

Management’s Remediation Plan

We are in the process of implementing a plan to remediate the material weaknesses described above. Our remediation plan includes the hiring of additional accounting and financial reporting personnel and implementing additional policies, procedures and controls, all of which have and will continue to cause us to incur additional costs. We have performed a risk assessment and begun identifying control activities to be implemented in response to the identified risks, which will include, among others, improving our IT general controls, segregation of duties controls, period-end financial reporting controls, journal entry controls and additional procedures and controls within the areas of revenue and associated reserves, income taxes, indirect taxes and the preparation of the financial statements including the consolidated statements of cash flows and related disclosures. In addition, we have engaged a third-party provider to help us assess and improve our internal control over financial reporting in preparation for compliance with Section 404, which requires management to provide an assessment of the effectiveness of internal control over financial reporting under Section 404(a), and requires our independent registered public accounting firm to attest to the effectiveness of our internal control over financial reporting under Section 404(b).

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the three months ended March 31, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

The Company has disclosed under the heading “Risk Factors” in its Annual Report on Form 10-K for the year ended December 31, 2025 risk factors which materially affect its business, financial condition, or results of operations. There have been no material changes from the risk factors previously disclosed.