ZoomInfo Technologies Inc.: Form 10-Q for the period ended Sep 30, 2025

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and related notes included in our 2024 Form 10-K, the information included under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our 2024 Form 10-K, and the unaudited consolidated financial statements and related notes included in Part I, Item 1 of this Form 10-Q. In addition to historical data, the following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed in our forward-looking statements as a result of various factors, including but not limited to those discussed under “Cautionary Statement Regarding Forward-Looking Statements” in this Form 10-Q and under “Risk Factors” in Part I, Item 1A of our 2024 Form 10-K. Numerical figures included in this Form 10-Q have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in various tables may not be arithmetic aggregations of the figures that precede them.

Overview

ZoomInfo is a global leader in modern go-to-market software, data, and intelligence for sales, marketing, operations, and recruiting teams. Our go-to-market intelligence platform empowers businesses with AI-ready insights, trusted data, and advanced automation providing sales, marketing, operations, and recruiting professionals accurate information and insights on the organizations and professionals they target. This enables our customers to shorten sales cycles and increase win rates by empowering sellers, marketers, and recruiters to efficiently deliver the right message to the right person at the right time in the right way.

ZoomInfo is the modern go-to-market intelligence platform, consisting of three distinct layers that build upon each other:

• Our Intelligence Layer is the foundation of our data-driven strategy. Our best-in-class data, curated through first- and third-party sources, includes billions of data points about companies and contacts, such as intent, hierarchy, location, and financial information.
• Our Orchestration Layer integrates and enriches our data sources. At this stage, our products assign and route data, leads, and insights to the appropriate people. This creates a dataset that is continuously updated and can be used to power automated business workflows. Our services connect with major CRM system providers enabling sales operations professionals to access a suite of products, services, and solutions to ingest, match, enrich, and connect data feeds into multiple systems.
• Our Engagement Layer allows sales, marketing, operations, and recruiting professionals to put data-driven insights into action to identify and communicate with prospects and customers. Go-to-market professionals use our engagement layer for multi-touch and multi-channel sales engagement, web meeting recording, transcription, insight generation, and coaching. Marketers drive awareness, lead generation, and deal acceleration campaigns through account-based marketing, advertising, and onsite conversion optimization solutions including chat functionality. Recruiters and talent acquisition professionals can locate and reach more better suited candidates, use pipeline management tools to collaborate and organize the hiring process, and automate aspects of the candidate outreach process by more efficiently finding and engaging candidates.

We are able to deliver high-quality intelligence at scale by leveraging an artificial intelligence (“AI”) and machine learning (“ML”) powered engine that gathers data from millions of sources and standardizes, matches to entities, verifies, cleans, and applies the processed data to companies and people at scale. This data engine along with our team of research analysts and data scientists enrich our platform by providing deep insights. Our customers access insights directly in our platform and can also integrate our data and insights directly into their CRM system or sales and marketing automation systems, to improve their existing go-to-market processes.

We generate substantially all of our revenue from sales of subscriptions to our platform. Subscriptions include the use of our platform and access to customer support. Subscriptions generally range from one to three years in length. About 53% of customer contracts (based on annualized value) are multi-year agreements. We typically bill our customers at the beginning of each annual, semi-annual, or quarterly period and recognize revenue ratably over the term of the subscription period.

We sell access to our platform to both new and existing customers. We price our subscriptions based on the functionality, users, and records under management that are included in each product edition. Our core paid products are ZoomInfo Copilot, ZoomInfo Sales, ZoomInfo Marketing, ZoomInfo Operations, and ZoomInfo Talent (with add-on options for some products), and we have a free community edition, ZoomInfo Lite.

Recent Developments

Impact of Macroeconomic Conditions

Our business and financial condition have and may continue to be impacted by adverse macroeconomic conditions. See “Risk Related to Geopolitical and Macroeconomic Factors” in Part I, Item 1A of our 2024 Form 10-K for further discussion of the possible impact of these issues on our business.

Key Factors Affecting Our Performance

We believe that the growth and future success of our business depends on many factors, including the following:

Acquiring New Customers

We are focused on continuing to grow the number of customers using our platform in the United States and around the world, and efficiently transacting with those customers. Acquiring new customers while optimizing the profile of those customers and the go-to-market channels we use to attract these customers will play a part in determining our operating results and growth prospects in the future. Acquiring new customers also strengthens the power of our contributory networks. We plan to continue to invest in our efficient go-to-market effort to expand our customer base.

Increasing Usage of Our Platform

We believe that expanding the value that we provide to our customers and the corresponding revenue generated as a result is an important measure of the health of our business. We monitor net revenue retention to measure that growth. Net revenue retention is a metric that we calculate based on customers of ZoomInfo at the beginning of the twelve-month period, and is calculated as: (a) the total annual contract value ("ACV") for those customers at the end of the twelve-month period, divided by (b) the total ACV for those customers at the beginning of the twelve-month period. Our net revenue retention rate was 90% and 85% as of September 30, 2025 and 2024, respectively. In the near term, we expect our net retention rate to be impacted by macroeconomic conditions. See the caption above entitled “—Recent Developments — Impact of Macroeconomic Conditions.” Over the long term, we expect our net revenue retention rate to be influenced by our ability to move upmarket, as larger customers have historically exhibited higher net revenue retention. We also measure our success in expanding relationships with existing customers by the number of customers that contract for more than $100,000 in ACV. As of September 30, 2025 and 2024, our number of customers with over $100,000 in ACV was 1,887 and 1,809, respectively.

Factors Affecting the Comparability of Our Results of Operations

Our historical results of operations are not comparable from period to period and may not be comparable to our financial results of operations in future periods. Set forth below is a brief discussion of the key factors impacting the comparability of our results of operations.

Changing the Mix of Our Customer Base and Reducing Write-offs and Bad Debts

During the second quarter of 2024, we deployed a new business risk model to flag and require upfront prepayment from prospects at the greatest risk of non-payment. This process was implemented to mitigate the risk of future write-offs and to invest in the long-term health of the Company. Concurrently, our efforts have shifted to customers more likely to pay, renew, and grow with us over time.

As a result, we recorded an incremental charge during the second quarter of 2024 impacting our reported Revenue and General and administrative expenses on our Consolidated Statements of Operations. The charge represents a revision to our reserves for uncollectible accounts receivable, made up primarily of historical transactions with our SMB customers.

Components of Our Results of Operations

Revenue

We derive primarily all of our revenue from subscription services and the remainder from recurring usage-based services and other revenue. Our subscription services consist of our SaaS applications. Pricing of our subscription contracts are generally based on the functionality provided, the number of users that access our applications, and the amount of data that the customer integrates into their systems. Our subscription contracts typically have a term ranging from one to three years and are non-cancelable. We typically bill for services in advance either annually, semi-annually, or quarterly, and we typically require payment at the beginning of each annual, semi-annual, or quarterly period.

Subscription revenue is generally recognized ratably over the contract term starting with when our service is made available to the customer. Recurring usage-based revenue is recognized in the period services are utilized by our customers. Other revenue, comprised largely of implementation and professional services fees, is recognized as services are delivered. The amount of revenue recognized reflects the consideration we expect to be entitled to receive in exchange for these services. We record a contract asset when revenue recognized on a contract exceeds the billings to date for that contract.

Unearned revenue results from cash received or amounts billed to customers in advance of revenue recognized upon the satisfaction of performance obligations. The unearned revenue balance is influenced by several factors, including seasonality, the compounding effects of renewals, invoice duration, invoice timing, dollar size, and contract timing within the period. The unearned revenue balance does not represent the total contract value of annual or multi-year, non-cancelable subscription agreements.

Cost of revenue

Cost of service. Cost of service includes direct expenses related to the support and operations of our services and research teams including salaries, benefits, equity-based compensation, and related expenses, such as employer taxes, allocated overhead for facilities, technology, third-party hosting fees, third-party data costs, amortization of internally developed capitalized software, and restructuring and transaction-related expenses.

We anticipate continued investment in cost of service, with cost of service as a percentage of revenue expected to slightly increase in the near term. This is driven by rising AI consumption costs and customer onboarding expenses for offerings such as ZoomInfo Copilot and ZoomInfo GTM Studio.

Amortization of acquired technology. Amortization of acquired technology includes amortization expense for technology acquired in business combinations.

We anticipate that amortization of acquired technology will increase if we make additional acquisitions in the future.

Gross profit and Gross margin

Gross profit is revenue less cost of revenue, and gross margin is gross profit as a percentage of revenue. Gross profit has been and will continue to be affected by various factors, including leveraging economies of scale, the costs associated with third-party hosting services and third-party data, the level of amortization of acquired technology, and the extent to which we expand our customer support and research organizations. We expect that our gross margin will fluctuate from period to period depending on the interplay of these various factors.

Operating expenses

Our operating expenses consist of sales and marketing, research and development, general and administrative, and amortization of other acquired intangibles. The most significant component of our operating expenses is personnel costs, which consists of salaries, bonuses, sales commissions, equity-based compensation, and other employee-related benefits. Operating expenses also include overhead costs for facilities, technology, professional fees, depreciation and amortization expense, marketing, litigation settlements, and restructuring and transaction-related expenses. We anticipate that restructuring and transaction-related expenses, including potential impairments, will be influenced by activities related to potential future acquisitions, strategic restructuring efforts, and leased spaces that we plan to sublease, which could cause these costs to vary, potentially significantly, from our historic levels.

Sales and marketing. Sales and marketing expenses primarily consist of employee compensation such as salaries, bonuses, sales commissions, equity-based compensation, and other employee-related benefits for our sales and marketing teams, as well as overhead costs, technology, marketing programs, and restructuring and transaction-related expenses. Sales commissions and related payroll taxes directly related to contract acquisition are capitalized and recognized as expenses over the estimated period of benefit.

We anticipate that we will continue to invest in sales and marketing capacity to enable future growth. We anticipate that sales and marketing expense excluding equity-based compensation and restructuring and transaction-related expenses as a percentage of revenue will fluctuate from period to period depending on the interplay of our growing investments in sales and marketing capacity, the recognition of revenue, and the amortization of deferred commissions costs.

Research and development. Research and development expenses support our efforts to enhance our existing platform and develop new software products. Research and development expenses primarily consist of employee compensation such as salaries, bonuses, equity-based compensation, and other employee-related benefits for our engineering and product management teams, as well as overhead costs, technology, and restructuring and transaction-related expenses. Research and development expenses do not reflect amortization of internally developed capitalized software. We believe that our core technologies and ongoing innovation represent a significant competitive advantage for us.

We anticipate that we will continue to invest in research and development in order to develop new features and functionality to drive incremental customer value in the future and that research and development expense as a percentage of revenue will modestly increase in the short-term, but will modestly decrease in the long-term as we drive efficiencies in that organization.

General and administrative. General and administrative expenses primarily consist of employee-related costs such as salaries, bonuses, equity-based compensation, and other employee related benefits for our executive, finance, legal, human resources, IT, and business operations and administrative teams, as well as overhead costs. Additionally, we incur expenses related to bad debt and collections, as well as for professional fees including legal services, accounting, banking, and other consulting services. General and administrative expenses also include restructuring and transaction-related expenses, such as impairment charges associated with our leasing activity. We also incur charges associated with litigation settlements, such as the settlement of the Class Action (as defined in the Company’s 2024 Form 10-K), which are presented within General and administrative on the Consolidated Statements of Operations.

General and administrative expenses as a percentage of revenue may fluctuate during periods when we incur non-recurring restructuring and transaction-related expenses, such as those associated with acquisitions or impairments. Excluding these non-recurring items, we expect a more stable or declining trend over time.

Amortization of other acquired intangibles. Amortization of acquired intangibles consists of amortization of customer relationships and brand portfolios.

We anticipate that amortization of other acquired intangibles will increase if we make additional acquisitions in the future.

Interest expense, net

Interest expense, net represents the interest payable on our debt obligations and the amortization of debt discounts and debt issuance costs, less interest income.

We anticipate that interest expense could be impacted by changes in variable interest rates, the issuance of additional debt, or changes in our interest rate hedging strategies, such as entering into new hedging arrangements or the expiration of existing interest rate swaps.

Loss on debt modification and extinguishment

Loss on debt modification and extinguishment consists of prepayment penalties and impairment of deferred financing costs associated with the modification or extinguishment of debt, as well as new fees incurred with third parties in connection with debt modifications.

We anticipate that losses related to debt modification and extinguishment will only occur if we extinguish indebtedness before the contractual repayment dates or amend our existing financing arrangements.

Other income, net

Other income, net consists primarily of the remeasurement of TRA liabilities, investment income, and realized and unrealized gains and losses related to the impact of transactions denominated in a foreign currency.

Changes to existing tax law, including changes to corporate income tax rates or the Company’s state tax footprint could lead to substantial remeasurement of the TRA liability recorded through Other income, net. Additionally, the magnitude of Other income, net may increase as we expand operations internationally and add complexity to our operations. Refer to the Provision for income taxes section below for further information regarding remeasurement of TRA liability and deferred tax assets.

Provision for income taxes

The Company recognizes deferred tax assets and liabilities based on temporary differences between the financial statement and tax basis of assets and liabilities, as well as from net operating loss and tax credit carryforwards. We evaluate the recoverability of these future deductible temporary differences, net operating losses and credits by assessing the carryforward period and adequacy of future expected taxable income from all sources, including reversing taxable temporary differences, future growth, and forecasted earnings, as well as historical earnings, taxable income in prior years, whether carryback is permitted under the law, and prudent and feasible tax planning strategies. A valuation allowance is established only if it is more likely than not that all or a portion of the deferred tax asset will not be realized.

The Company has significant U.S. federal and state deferred tax assets, including deferred tax assets created by various historical restructuring events. The preponderance of our deferred tax assets have long lives or are otherwise indefinite. We regularly review whether it is more likely than not that our deferred tax assets will be realizable. As of September 30, 2025, a valuation allowance continues to be recorded against certain state-level attributes.

The value of our deferred tax assets are regularly remeasured to consider the impact of statutory changes and other guidance, such as the One Big Beautiful Bill Act (OBBBA) passed on July 4, 2025, as well as changes in our state income apportionment factors. Given the amount of our deferred tax assets, minor changes can materially affect our Provision for income taxes. A significant portion of our deferred tax assets are associated with our TRA, and upon a remeasurement of our deferred tax assets, the TRA liability is typically concurrently remeasured with a partially offsetting impact within Other income, net on the Consolidated Statements of Operations.

We have regularly taken tax positions, including with respect to our various corporate events and restructurings, in the ordinary course of determining our Provision for income taxes. We recognize the tax benefit of an uncertain tax position only if it is more likely than not the position will be sustainable upon examination by the taxing authority based on the technical merits of the position. We regularly review our tax positions with consideration of a number of factors, including changes in facts or circumstances, changes in tax law or guidance, correspondence with tax authorities during the course of audits and effective settlement of audit issues. Changes in the recognition or measurement of uncertain tax positions could result in material increases or decreases in our Provision for income taxes in the period in which we make the change, which could have a material impact on our effective tax rate.

Results of Operations

The following table presents our results of operations for the three and nine months ended September 30, 2025 and 2024:

(in millions)

46

(1) Amounts include equity-based compensation expense, as follows:

(in millions)

Three Months Ended September 30, 2025 and 2024

Revenue. Revenue was $318.0 million for the three months ended September 30, 2025, an increase of $14.4 million, or 5%, as compared to $303.6 million for the three months ended September 30, 2024. The increase was primarily due to the effects of shifting the mix of business upmarket and the resulting improvement in net revenue retention.

Cost of revenue. Cost of revenue was $51.7 million for the three months ended September 30, 2025, an increase of $4.4 million, or 9%, as compared to $47.3 million for the three months ended September 30, 2024. Excluding equity-based compensation expense, cost of revenue was $48.8 million for three months ended September 30, 2025, an increase of $4.2 million, or 9%, as compared to $44.6 million for three months ended September 30, 2024, primarily due to increased hosting and infrastructure expense and depreciation expense on internally developed capitalized software.

Gross profit. Gross profit for the three months ended September 30, 2025 was $266.3 million and represented a gross margin of 84%. Gross profit for the three months ended September 30, 2024 was $256.3 million and represented a gross margin of 84%. The increase in gross profit in the three months ended September 30, 2025 relative to the three months ended September 30, 2024 was $10.0 million, or 4%, primarily due to higher revenues, partially offset by increased hosting and infrastructure expense and depreciation expense on internally developed capitalized software.

Operating expenses. Operating expenses were $198.8 million for the three months ended September 30, 2025, a decrease of $14.0 million, or 7%, as compared to $212.8 million for the three months ended September 30, 2024. Excluding equity-based compensation expense, operating expenses were $171.8 million for the three months ended September 30, 2025, a decrease of $7.1 million, or 4%, as compared to $178.9 million for the three months ended September 30, 2024.

• Sales and marketing for the three months ended September 30, 2025 was $101.6 million, representing an increase of $2.5 million, or 3%, as compared to $99.1 million for the three months ended September 30, 2024. Sales and marketing, excluding equity-based compensation expense, for the three months ended September 30, 2025 was $91.2 million, representing an increase of $4.4 million, or 5%, as compared to $86.8 million for the three months ended September 30, 2024, primarily due to increased employee compensation expense, technology expenses, and payroll tax and benefits expense, partially offset by lower restructuring facilities expense and marketing expense.
• Research and development for the three months ended September 30, 2025 was $44.1 million representing a decrease of $3.6 million, or 8%, as compared to $47.7 million for the three months ended September 30, 2024. Research and development, excluding equity-based compensation expense, for the three months ended September 30, 2025 was $35.6 million, representing a decrease of $1.6 million, or 4%, as compared to $37.2 million for the three months ended September 30, 2024, primarily due to increased capitalization of employee compensation expense, partially offset by increased technology expense.
• General and administrative for the three months ended September 30, 2025 was $47.9 million representing a decrease of $12.7 million, or 21%, as compared to $60.6 million for the three months ended September 30, 2024. General and administrative, excluding equity-based compensation expense, for the three months ended September 30, 2025 was $39.8 million, representing a decrease of $9.7 million, or 20%, as compared to $49.5 million for the three months ended September 30, 2024, primarily due to charges incurred in the comparative period related to lease impairment charges, partially offset by increased payroll tax and benefits expense.
• Amortization of other acquired intangibles was $5.2 million for the three months ended September 30, 2025, relatively flat as compared to $5.4 million for the three months ended September 30, 2024.

Equity-based compensation expense. Equity-based compensation expense was $29.9 million for the three months ended September 30, 2025, a decrease of $6.7 million, or 18%, as compared to $36.6 million for the three months ended September 30, 2024, primarily due to lower weighted average grant date fair values of shares being amortized in the current period compared to those that were amortized in the prior period.

Income from operations. Income from operations was $67.5 million for the three months ended September 30, 2025, an increase of $24.0 million, as compared to income from operations of $43.5 million for the three months ended September 30, 2024. The increase is primarily due to charges incurred in the comparative period related to lease impairment and abandonment charges, as well as lower equity-based compensation expense and higher revenues in the current period. Operating income margin was 21% for three months ended September 30, 2025 as compared to operating income margin of 14% for the three months ended September 30, 2024.

Interest expense, net. Interest expense, net was $11.5 million for the three months ended September 30, 2025, an increase of $1.9 million, or 20%, as compared to $9.6 million for the three months ended September 30, 2024, primarily due to both lower interest income and increase expense from incremental borrowings, partially offset by lower interest rates.

Other income, net. Other income, net was $0.4 million for the three months ended September 30, 2025, which primarily consists of $0.8 million of TRA remeasurement gain and a $0.5 million loss on foreign currency transactions, as compared to other income, net of $1.0 million for the three months ended September 30, 2024, which primarily consists of $2.2 million of investment income and $0.7 million of TRA remeasurement loss.

Provision for income taxes. The Company is subject to income taxes in the United States and various foreign jurisdictions. Provision for income taxes for the three months ended September 30, 2025 was $17.7 million, representing an effective tax rate of 31.5%, as compared to income tax provision of $11.1 million, representing an effective tax rate of 31.7%, for the three months ended September 30, 2024. The effective tax rate differed from the U.S. federal statutory rate of 21.0% due to non-deductible equity compensation costs, U.S. state taxes, foreign taxes, partially offset by research and development credits.

Net income. Net income was $38.7 million for three months ended September 30, 2025, an increase of $14.9 million, as compared to net income of $23.8 million for the three months ended September 30, 2024. The increase was primarily due to charges incurred in the comparative period related to lease impairment and abandonment charges, as well as lower equity-based compensation expense and higher revenues in the current period, partially offset by increased income tax expense.

Nine Months Ended September 30, 2025 and 2024

Revenue. Revenue was $930.4 million for the nine months ended September 30, 2025, an increase of $25.2 million, or 3%, as compared to $905.2 million for the nine months ended September 30, 2024. The increase was primarily due to the effects of the operational changes implemented during the second quarter of 2024. Refer to the “Factors Affecting the Comparability of Our Results of Operations” section above.

Cost of revenue. Cost of revenue was $148.5 million for the nine months ended September 30, 2025, an increase of $11.9 million, or 9%, as compared to $136.6 million for the nine months ended September 30, 2024. Excluding equity-based compensation expense, cost of revenue was $140.0 million for the nine months ended September 30, 2025, an increase of $11.3 million, or 9%, as compared to $128.7 million for the nine months ended September 30, 2024, primarily due to increased hosting and infrastructure expense and depreciation expense on internally developed capitalized software.

Gross profit. Gross profit for the nine months ended September 30, 2025 was $781.9 million and represented a gross margin of 84%. Gross profit for the nine months ended September 30, 2024 was $768.6 million and represented a gross margin of 85%. The increase in gross profit in the nine months ended September 30, 2025 relative to the nine months ended September 30, 2024 was $13.3 million, or 2%, primarily due to lower revenues in the comparative period as described above, partially offset by increased hosting and infrastructure expense and depreciation expense on internally developed capitalized software.

Operating expenses. Operating expenses were $610.4 million for the nine months ended September 30, 2025, a decrease of $91.7 million, or 13%, as compared to $702.1 million for the nine months ended September 30, 2024. Excluding equity-based compensation expense, operating expenses were $529.7 million for the nine months ended September 30, 2025, a decrease of $76.1 million, or 13%, as compared to $605.8 million for the nine months ended September 30, 2024.

• Sales and marketing for the nine months ended September 30, 2025 was $313.9 million, representing an increase of $14.7 million, or 5%, as compared to $299.2 million for the nine months ended September 30, 2024. Sales and marketing, excluding equity-based compensation expense, for the nine months ended September 30, 2025 was $280.7 million, representing an increase of $19.6 million, or 8%, as compared to $261.1 million for the nine months ended September 30, 2024, primarily due to increased employee compensation expense, payroll tax and benefits expense, and technology expense.
• Research and development for the nine months ended September 30, 2025 was $139.8 million, relatively flat compared to $139.7 million for the nine months ended September 30, 2024. Research and development, excluding equity-based compensation expense, for the nine months ended September 30, 2025 was $114.3 million, representing an increase of $4.1 million, or 4%, as compared to $110.2 million for the nine months ended September 30, 2024, primarily due to increased severance costs, technology expense, hosting and infrastructure expense, and payroll tax and benefits expense, partially offset by the increased capitalization of employee compensation expense.
• General and administrative for the nine months ended September 30, 2025 was $141.0 million representing a decrease of $106.0 million, or 43%, as compared to $247.0 million for the nine months ended September 30, 2024. General and administrative, excluding equity-based compensation expense, for the nine months ended September 30, 2025 was $119.0 million, representing a decrease of $99.3 million, or 45%, as compared to $218.3 million for the nine months ended September 30, 2024, primarily due to charges incurred in the comparative period related to lease impairment and abandonment charges, charges related to Class Actions, as well as incremental bad debt expense resulting from the change in accounting estimate.
• Amortization of other acquired intangibles was $15.7 million for the nine months ended September 30, 2025, relatively flat as compared to $16.2 million for the nine months ended September 30, 2024.

Equity-based compensation expense. Equity-based compensation expense was $89.2 million for the nine months ended September 30, 2025, a decrease of $15.0 million, or 14%, as compared to $104.2 million for the nine months ended September 30, 2024, due to lower weighted average grant date fair values of shares being amortized in the current period compared to those that were amortized in the prior period, partially offset by increased amortization of expenditures for internal use developed software which were previously capitalized.

Income from operations. Income from operations was $171.5 million for the nine months ended September 30, 2025, an increase of $105.0 million, as compared to income from operations of $66.5 million for the nine months ended September 30, 2024. The increase is primarily due to charges incurred in the comparative period related to lease impairment and abandonment charges, Class Actions, and incremental bad debt expense resulting from a change in the accounting estimate. Operating income margin was 18% for nine months ended September 30, 2025 as compared to operating income margin of 7% for the nine months ended September 30, 2024.

Interest expense, net. Interest expense, net was $32.0 million for the nine months ended September 30, 2025, an increase of $2.5 million, or 8%, as compared to $29.5 million for the nine months ended September 30, 2024, primarily due to both lower interest income and increase expense from incremental borrowings, partially offset by lower interest rates.

Other income, net. Other income, net was $13.5 million for the nine months ended September 30, 2025, which consists of $14.2 million of TRA remeasurement gain, $0.2 million of investment income, and a $0.9 million of loss on foreign currency transactions, as compared to other income, net of $3.5 million for the nine months ended September 30, 2024, which primarily consists of $9.5 million of investment income, $1.4 million of foreign currency gain, and $9.9 million of TRA remeasurement loss.

Provision for income taxes. The Company is subject to income taxes in the United States and various foreign jurisdictions. Provision for income taxes for the nine months ended September 30, 2025 was $63.5 million, representing an effective tax rate of 41.5%, as compared to provision for income taxes of $25.3 million, representing an effective tax rate of 63.4%, for the nine months ended September 30, 2024. The effective tax rate differed from the U.S. federal statutory rate of 21.0% due to non-deductible equity compensation costs, U.S. state taxes, foreign taxes, partially offset by research and development credits.

Net income. Net income was $89.5 million for nine months ended September 30, 2025, an increase of $75.0 million, as compared to net income of $14.5 million for the nine months ended September 30, 2024. The increase was primarily due to charges incurred in the comparative period related to lease impairment and abandonment charges, Class Actions, and incremental bad debt expense resulting from the change in accounting estimate, partially offset by increased income tax expense.

Non-GAAP Financial Measures

In addition to our results determined in accordance with U.S. GAAP, we believe certain non-GAAP measures are useful in evaluating our operating performance. These measures include, but are not limited to, Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, and Adjusted Net Income and are used by management in making operating decisions, allocating financial resources, internal planning and forecasting, and for business strategy purposes. We believe that non-GAAP financial information is useful to investors because it eliminates certain items that affect period-over-period comparability, and it provides consistency with past financial performance and additional information about our underlying results and trends by excluding certain items that may not be indicative of our business, results of operations, or outlook.

We view Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, and Adjusted Net Income as operating performance measures. We believe that the most directly comparable U.S. GAAP financial measure to Adjusted Operating Income is U.S. GAAP operating income. We believe that the most directly comparable U.S. GAAP financial measure to Adjusted Operating Income Margin is U.S. GAAP operating income divided by U.S. GAAP revenue. We believe that the most directly comparable U.S. GAAP financial measure to Adjusted EBITDA and Adjusted Net Income is U.S. GAAP Net Income.

Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for the comparable GAAP measures, but rather as supplemental information to our business results. This information should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. There are limitations to these non-GAAP financial measures because they are not prepared in accordance with U.S. GAAP and may not be comparable to similarly titled measures of other companies due to potential differences in methods of calculation and items or events being adjusted. In addition, other companies may use different measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with U.S. GAAP.

Adjusted Operating Income and Adjusted Operating Income Margin

We define Adjusted Operating Income as income (loss) from operations adjusted for, as applicable, (i) amortization of acquired technology and other acquired intangibles, (ii) equity-based compensation expense, (iii) restructuring and transaction-related expenses, (iv) integration costs and acquisition-related expenses, (v) and legal settlement. We exclude the impact of amortization of acquired technology and other acquired intangibles, as well as equity-based compensation expense, because these are non-cash expenses and we believe that excluding these items provides meaningful supplemental information regarding performance and ongoing cash-generation potential. We exclude restructuring and transaction-related expenses, as well as integration costs and acquisition-related compensation, because such expenses are episodic in nature and have no direct correlation to the cost of operating our business on an ongoing basis. We have also excluded charges associated with litigation settlements related to class actions because we believe it represents an extraordinary litigation expense outside of our ordinary course of business and is not indicative of our operative performance. Adjusted Operating Income is presented because it is used by management to evaluate our financial performance and for planning and forecasting purposes. Additionally, we believe that it and similar measures are widely used by securities analysts and investors as a means of evaluating a company’s operating performance. We define Adjusted Operating Income Margin as Adjusted Operating Income divided by revenue.

The following table presents a reconciliation of Income from operations to Adjusted Operating Income for the periods presented:

(in millions)

51

(1) Represents costs directly associated with acquisition or disposal activities, including employee severance and termination benefits, contract termination fees and penalties, and other exit or disposal costs. For the three and nine months ended September 30, 2025, this expense is primarily related to employee severance and termination benefits and lease restructuring activities. For the three and nine months ended September 30, 2024, this expense is primarily related to lease impairment and abandonment charges as well as lease restructuring activities. This expense is included in cost of service, sales and marketing, research and development, and general and administrative as follows:

(in millions)

(2) Represents charges associated with certain legal settlements. For the three and nine months ended September 30, 2024, these charges are related to costs incurred due to the Class Actions.

Adjusted Operating Income for the three months ended September 30, 2025 was $117.7 million and represented an Adjusted Operating Income Margin of 37%. Adjusted Operating Income for the three months ended September 30, 2024 was $111.7 million and represented an Adjusted Operating Income Margin of 37%. The increase of $6.0 million, or 5%, in Adjusted Operating Income was primarily due to increased revenue partially offset by increased hosting and infrastructure expense, technology expense, and payroll tax and benefits expense.

Adjusted Operating Income for the nine months ended September 30, 2025 was $323.3 million and represented an Adjusted Operating Income Margin of 35%. Adjusted Operating Income for the nine months ended September 30, 2024 was $312.6 million and represented an Adjusted Operating Income Margin of 35%. The increase of $10.7 million, or 3%, in Adjusted Operating Income was primarily due to charges incurred in the comparative period related to a change in the accounting estimate of collectability of accounts receivable, and higher revenue in the current period, mostly offset by increased employee compensation expense, technology expense, hosting and infrastructure expense, and payroll tax and benefits expense.

Adjusted Net Income

We define Adjusted Net Income as net income (loss) adjusted for, as applicable, (i) loss on debt modification and extinguishment, (ii) amortization of acquired technology and other acquired intangibles, (iii) equity-based compensation expense, (iv) restructuring and transaction-related expenses, (v) integration costs and acquisition-related expenses, (vi) legal settlement, (vii) TRA liability remeasurement (benefit) expense, (viii) other (income) loss, net and (ix) tax impacts of adjustments to net income (loss). Adjusted Net Income is presented because it is used by management to evaluate our financial performance and for planning and forecasting purposes. Additionally, we believe that it and similar measures are widely used by securities analysts and investors as a means of evaluating a company’s operating performance. Adjusted Net Income should not be considered as an alternative to cash flows from operating activities as a measure of liquidity or as an alternative to operating income or net income as indicators of operating performance.

The following table presents a reconciliation of Net income to Adjusted Net Income for the periods presented:

(in millions)

(1) Represents costs directly associated with acquisition or disposal activities, including employee severance and termination benefits, contract termination fees and penalties, and other exit or disposal costs. For the three and nine months ended September 30, 2025, this expense is primarily related to employee severance and termination benefits and lease restructuring activities. For the three and nine months ended September 30, 2024, this expense is primarily related to lease impairment and abandonment charges as well as lease restructuring activities. This expense is included in cost of service, sales and marketing, research and development, and general and administrative as follows:

(in millions)

(2) Represents charges associated with certain legal settlements. For the three and nine months ended September 30, 2024, these charges are related to costs incurred due to the Class Actions.

(3) Represents tax expense associated with Net income (GAAP) excluded from Adjusted Net Income (Non-GAAP). The Company calculates the tax impacts of adjustments to net income (loss) by taking the total gross value of the adjustments and multiplying it by the Company’s U.S. federal and state statutory tax rate. We then recalculate the tax impact of book-tax differences related to equity compensation, the tax receivable agreements, restructuring and transaction-related expenses, and items that are deemed to be unrelated to current year operating income or are one-time in nature, such as provision to return true-ups. For the three months ended September 30, 2025, these primarily relate to recognizing $15.8 million of tax benefit related to the amortization of costs associated with corporate structure simplification, adjusting out $0.1 million of tax expense from the effects of changes in state tax law and apportionment, and adjusting out $2.8 million of tax expense from non-deductible stock-based compensation. For three months ended September 30, 2024, these primarily relate to recognizing $20.6 million of tax benefit related to the amortization of costs associated with corporate structure simplification, and adjusting out $4.7 million of tax expense from non-deductible stock-based compensation, and adjusting out $0.3 million of tax expense from the effects of changes in state tax law and apportionment. For the nine months ended September 30, 2025, these primarily relate to recognizing $44.6 million of tax benefit related to the amortization of costs associated with corporate structure simplification, adjusting out $13.5 million of tax expense from the effects of changes in state tax law and apportionment, and adjusting out $9.8 million of tax expense from non-deductible stock-based compensation. For nine months ended September 30, 2024, these primarily relate to recognizing $45.1 million of tax benefit related to the amortization of costs associated with corporate structure simplification, adjusting out $13.0 million of tax expense from non-deductible stock-based compensation, and adjusting out $1.8 million of tax expense from the effects of changes in state tax law and apportionment. We believe the exclusion of these adjustments provides investors with useful information about the Company’s underlying results and trends, allowing them to better understand and compare net income (loss) related to ongoing operations and the related current and deferred income tax expense.

Adjusted Net Income for the three months ended September 30, 2025 was $95.0 million compared to $103.7 million, representing a decrease of $8.7 million, or 8%, relative to the three months ended September 30, 2024. This decrease was primarily due to higher income tax expense and increased interest expense.

Adjusted Net Income for the nine months ended September 30, 2025 was $263.0 million compared to $270.2 million, representing a decrease of $7.2 million, or 3%, relative to the nine months ended September 30, 2024. This decrease was primarily due to higher income tax expense and increased interest expense.

Adjusted EBITDA

EBITDA is defined as earnings before interest, taxes, depreciation, and amortization. Management further adjusts EBITDA to exclude certain items of a significant or unusual nature, including, as applicable, other (income) expense, net, loss on debt modification and extinguishment, impact of certain non-cash items, such as equity-based compensation expense, restructuring and transaction-related expenses, integration costs and acquisition-related expenses, and litigation settlement. We exclude these items because these are either non-cash expenses which we do not consider indicative of performance and ongoing cash-generation potential or are episodic in nature and have no direct correlation to the cost of operating our business on an ongoing basis. Adjusted EBITDA is presented because it is used by management to evaluate our financial performance and for planning and forecasting purposes. Additionally, we believe that it and similar measures are widely used by securities analysts and investors as a means of evaluating a company’s operating performance. Adjusted EBITDA should not be considered as an alternative to cash flows from operating activities as a measure of liquidity or as an alternative to operating income or net income as indicators of operating performance.

The following table presents a reconciliation of Net income to Adjusted EBITDA for the periods presented:

(in millions)

(1) The nine months ended September 30, 2025 and three and nine months ended September 30, 2024 exclude the accelerated depreciation associated with the Waltham Lease Restructuring. Refer to Note 5 - Property and Equipment and Note 13 - Leases in our 2024 Form 10-K for further information.

(2) Primarily represents revaluations on tax receivable agreement liability and foreign exchange remeasurement gains and losses.

(3) Represents costs directly associated with acquisition or disposal activities, including employee severance and termination benefits, contract termination fees and penalties, and other exit or disposal costs. For three and nine months ended September 30, 2025, this expense is primarily related to employee severance and termination benefits and lease restructuring activities. For the three and nine months ended September 30, 2024, this expense is primarily related to lease impairment and abandonment charges as well as lease restructuring activities. This expense is included in cost of service, sales and marketing, research and development, and general and administrative as follows:

(in millions)

(4) Represents charges associated with certain legal settlements. For the three and nine months ended September 30, 2024, these charges are related to costs incurred due to the Class Actions.

Adjusted EBITDA for the three months ended September 30, 2025 was $125.9 million compared to $118.0 million, representing an increase of $7.9 million, or 7%, relative to the three months ended September 30, 2024. This increase was primarily due to increased revenue partially offset by increased hosting and infrastructure expense, technology expense, and payroll tax and benefits expense.

Adjusted EBITDA for the nine months ended September 30, 2025 was $344.9 million compared to $329.9 million, representing an increase of $15.0 million, or 5%, relative to the nine months ended September 30, 2024. This increase was primarily due to charges incurred in the comparative period related to a change in the accounting estimate of collectability of accounts receivable, and higher revenue in the current period, mostly offset by increased employee compensation expense, technology expense, hosting and infrastructure expense, and payroll tax and benefits expense.

Liquidity and Capital Resources

As of September 30, 2025, we had $124.8 million of cash and cash equivalents, $10.2 million of short-term investments, $0.5 million of long-term investments, and $150.0 million available under our first lien revolving credit facility. We have financed our operations primarily through cash generated from operations and financed various acquisitions through cash generated from operations supplemented with debt offerings.

We believe that our cash flows from operations and existing available cash and cash equivalents, together with our other available external financing sources, will be adequate to fund our operating and capital needs for at least the next 12 months and for the foreseeable future. We are currently in compliance with the covenants under the credit agreements governing our secured credit facilities, and we expect to remain in compliance with our covenants.

We generally invoice our subscription customers for services annually, semi-annually, or quarterly in advance of delivery. Therefore, a substantial source of our cash is from such prepayments, which are included on our Consolidated Balance Sheets as unearned revenue. Unearned revenue consists of billed fees for our subscriptions, prior to satisfying the criteria for revenue recognition, which are subsequently recognized as revenue in accordance with our revenue recognition policy. As of September 30, 2025, we had unearned revenue of $431.9 million, of which $429.0 million was recorded as a current liability and is expected to be recorded as revenue in the next 12 months, provided all other revenue recognition criteria have been met.

Our cash flows from operations, borrowing availability, and overall liquidity are subject to risks and uncertainties. We may not be able to obtain additional liquidity on reasonable terms, or at all. In addition, our liquidity and our ability to meet our obligations and to fund our capital requirements are dependent on our future financial performance, which is subject to general economic, financial, and other factors that are beyond our control. Accordingly, our business may not generate sufficient cash flow from operations and future borrowings may not be available from additional indebtedness or otherwise to meet our liquidity needs. If we decide to pursue one or more significant acquisitions, we may incur additional debt or sell additional equity to finance such acquisitions, which would result in additional expenses or dilution. See “Risk Factors” in Part I, Item 1A of our 2024 Form 10-K.

Historical Cash Flows

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

(in millions)

56

Cash flows from operating activities

Net cash provided by operating activities was $321.9 million for the nine months ended September 30, 2025 as a result of net income of $89.5 million, adjusted by non-cash charges of $286.1 million and the net decrease in our operating assets and liabilities of $53.7 million. The non-cash charges are primarily comprised of equity-based compensation of $89.2 million, amortization of deferred commission costs of $66.5 million, depreciation and amortization of $66.1 million, and a decrease in deferred tax assets of $59.0 million. The net change in operating assets and liabilities was primarily the result of an increase in deferred costs and other assets of $54.7 million and a decrease in unearned revenue of $46.1 million, as well as a decrease in accounts receivable of $53.2 million.

Net cash provided by operating activities was $260.4 million for the nine months ended September 30, 2024 as a result of net income of $14.5 million, adjusted by non-cash charges of $335.5 million and the net change in our operating assets and liabilities of $89.6 million. The non-cash charges are primarily comprised of equity-based compensation of $104.2 million, depreciation and amortization of $63.3 million, asset impairments and lease abandonment charges of $57.4 million, amortization of deferred commission costs of $49.5 million, provision for bad debt expense of $39.3 million, a decrease in deferred tax assets net of deferred tax liabilities of $11.0 million, and TRA remeasurement of $9.9 million. The net change in operating assets and liabilities was primarily the result of a decrease in accrued expenses and other liabilities of $64.7 million, an increase in deferred costs and other assets of $30.4 million, a decrease in unearned revenue of $22.6 million, an increase in prepaid and other current assets of $21.1 million, and a decrease in accounts payable of $17.6 million, partially offset by a decrease in accounts receivable of $69.7 million.

We may continue to make future acquisitions as part of our business strategy which may require the use of capital resources and drive additional future restructuring and transaction-related cash expenditures as well as integration and acquisition-related cash costs. During the nine months ended September 30, 2025 and 2024, we incurred the following cash expenditures:

(in millions)

(1) Represents cash payments directly associated with acquisition or disposal activities, including employee severance and termination benefits, contract termination fees and penalties, and other exit or disposal costs. For the nine months ended September 30, 2025, these payments related primarily to employee severance and termination benefits payments and Waltham Lease Restructuring charges. For the nine months ended September 30, 2024, these payments related primarily to Waltham lease restructuring charges.

(2) Represents cash payments directly associated with integration activities for acquisitions and acquisition-related compensation, which includes transaction bonuses and retention awards. For the nine months ended September 30, 2024, these payments related to deferred compensation from the acquisition of Insent.

(3) Represents cash payments for legal fees associated with legal settlements. For the nine months ended September 30, 2024, these payments related to legal costs incurred due to the Class Actions.

Future demands on our capital resources associated with our debt facilities may also be impacted by changes in reference interest rates and the potential that we incur additional debt in order to fund additional acquisitions or for other corporate purposes. Future demands on our capital resources associated with transaction expenses and restructuring activities and integration costs and transaction-related compensation will be dependent on the frequency and magnitude of future acquisitions and restructuring and integration activities that we pursue. As part of our business strategy, we expect to continue to pursue acquisitions of, or investments in, complementary businesses from time to time; however, we cannot predict the magnitude or frequency of such acquisitions or investments.

Cash flows from investing activities

Net cash used in investing activities for the nine months ended September 30, 2025 was $71.1 million, primarily consisting of purchases of property and equipment and other assets of $59.7 million and purchases of investments of $14.2 million.

Net cash provided by investing activities for the nine months ended September 30, 2024 was $36.8 million, primarily consisting of maturities of investments of $82.2 million, as well as purchases of property and equipment and other assets of $41.5 million and payments of initial direct costs of $3.4 million.

As we continue to grow and invest in our business, we expect to continue to invest in property and equipment and opportunistically pursue acquisitions.

Cash flows from financing activities

Net cash used in financing activities for the nine months ended September 30, 2025 was $265.4 million and comprised of payments relating to the repurchase of common stock of $331.3 million, TRA payments of $23.1 million, payments of taxes related to net share settlement of equity awards of $6.6 million, and repayment of debt of $4.4 million, as well as proceeds from revolving credit loans of $100.0 million.

Net cash used in financing activities for the nine months ended September 30, 2024 was $596.8 million and primarily comprised of payments relating to the repurchase of common stock of $542.6 million, TRA payments of $31.6 million, and payments of taxes related to net share settlement of equity awards of $18.1 million.

Refer to Note 6 - Financing Arrangements of our unaudited consolidated financial statements included in Part I, Item 1 of this Form 10-Q for additional information related to each of our borrowings.

Debt Obligations

As of September 30, 2025, the aggregate balance of $100.0 million under the First Lien Revolver is due, in its entirety, at the contractual maturity date of February 28, 2028. As of September 30, 2025, the aggregate remaining balance of $650.0 million of 3.875% Senior Notes is due, in its entirety, at the contractual maturity date of February 1, 2029. Interest on the Senior Notes is payable semi-annually in arrears. As of September 30, 2025, the Company has a remaining balance of $583.6 million with respect to its First Lien Term Loan. The Company is obligated to make principal payments each quarter in the amount of 0.25% of the aggregate initial outstanding amount as of the latest amendment, with the remaining balance due at the contractual maturity date of February 28, 2030. The foregoing currently represent the only existing required future debt principal repayment obligations that will require future uses of the Company’s cash.

The First Lien Term Loan has a variable interest rate whereby the Company can elect to use a Base Rate or SOFR plus an applicable rate. The applicable rate is 0.75% for Base Rate loans or 1.75% for SOFR loans. The effective interest rate on the first lien debt was 6.16% and 6.56% as of September 30, 2025 and December 31, 2024, respectively.

The First Lien Revolver, which has $100.0 million outstanding as of September 30, 2025, has a variable interest rate whereby the Company can elect to use a Base Rate or SOFR plus an applicable rate. The applicable margin is 1.00% to 1.25% for Base Rate loans. The applicable margin for SOFR loans is 2.10% to 2.35%, which includes the credit spread adjustment of 0.1%, depending on the Company’s Consolidated First Lien Net Leverage Ratio. The effective interest rate on the First Lien Revolver was 6.53% as of September 30, 2025. There was no outstanding balance under the First Lien Revolver as of December 31, 2024.

Our total net leverage ratio to Adjusted EBITDA is defined as total contractual maturity of outstanding indebtedness less cash, cash equivalents, and investments (as applicable), divided by trailing twelve months Adjusted EBITDA. Adjusted EBITDA for the twelve months ended September 30, 2025 was $467.3 million. Our total net leverage ratio to Adjusted EBITDA as of September 30, 2025 was 2.6x.

(in millions, except leverage ratios)

Our Consolidated First Lien Net Leverage Ratio is defined in the agreement governing our existing first lien credit facilities (the “First Lien Credit Agreement”) as total contractual maturity of outstanding First Lien indebtedness less cash, cash equivalents and investments (as applicable), divided by trailing twelve months Cash EBITDA (defined as Consolidated EBITDA in our Credit Agreements). Cash EBITDA differs from Adjusted EBITDA due to certain defined add-backs, including cash generated from changes in unearned revenue; see table below for reconciliation. Cash EBITDA for the twelve months ended September 30, 2025 was $490.7 million. Our Consolidated First Lien Net Leverage Ratio as of September 30, 2025 was 1.1x.

(in millions, except leverage ratios)

Our total net leverage ratio to Cash EBITDA (defined as Consolidated EBITDA in our Credit Agreements) is defined as total contractual maturity of outstanding indebtedness less cash, cash equivalents, and investments (as applicable), divided by trailing twelve months Cash EBITDA. Cash EBITDA for the twelve months ended September 30, 2025 was $490.7 million. Our total net leverage ratio to Cash EBITDA as of September 30, 2025 was 2.4x.

(in millions, except leverage ratios)

59

(in millions)

(1) Amounts for the trailing twelve months ended September 30, 2025 exclude the accelerated depreciation associated with the Waltham Lease Restructuring. Refer to Note 5 - Property and Equipment and Note 13 - Leases in our 2024 Form 10-K.

(2) Primarily represents revaluations on TRA liability and investment income.

(3) Represents costs directly associated with acquisition or disposal activities, including employee severance and termination benefits, contract termination fees and penalties, and other exit or disposal costs. For the trailing twelve months ended September 30, 2025, this expense related primarily to lease restructuring, impairment and abandonment charges and employee severance and termination benefits.

(4) Represents charges associated with legal settlements and associated legal fees.

In addition, the credit agreement governing our First Lien Term Loan contains restrictive covenants that may limit our ability to engage in activities that may be in our long-term best interest. These restrictive covenants include, among others, limitations on our ability to pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock, prepay, redeem, or repurchase certain debt, make acquisitions, investments, loans, and advances, or sell or otherwise dispose of assets. Our failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of substantially all of our debt. The Company may be able to incur substantial additional indebtedness in the future. The terms of the credit agreements governing our first lien term loan limit, but do not prohibit, the Company from incurring additional indebtedness, and the additional indebtedness incurred in compliance with these restrictions could be substantial. These restrictions will also not prevent the Company from incurring obligations that do not constitute “Indebtedness” as defined in the agreements governing our indebtedness.

Capital Expenditures

Capital expenditures increased by $18.2 million, or 44%, to $59.7 million for nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, as a result of increased capitalization of internal use developed software and increased expenditures related to new facilities.

Tax Receivable Agreements

For information related to our TRA, refer to Note 16 - Tax Receivable Agreements in our 2024 Form 10-K.

As of September 30, 2025, the Company had a liability of $2,725.1 million related to its projected obligations under the TRA. During the nine months ended September 30, 2025 and 2024, $23.1 million and $31.6 million, respectively, was paid to TRA Holders pursuant to the TRA.

Contractual Obligations and Commitments

Except as set forth above and in Note 9 - Commitments and Contingencies of the notes to our unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, there have been no material changes outside of the ordinary course of business in the contractual obligations and commitments disclosed in our 2024 Form 10-K.

Critical Accounting Policies and Estimates

Our consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Our critical accounting policies are those that we believe have the most significant impact to the presentation of our financial position and results of operations and that require the most difficult, subjective, or complex judgments. In many cases, the accounting treatment of a transaction is specifically dictated by U.S. GAAP with no need for the application of judgment.

There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described under “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our 2024 Form 10-K.

Recently Issued Accounting Pronouncements

Refer to Note 1 - Business, Basis of Presentation, and Summary of Significant Accounting Policies of our unaudited consolidated financial statements included in Part I, Item 1 of this Form 10-Q regarding recently issued accounting pronouncements.

We have operations in the United States and internationally, and we are exposed to market risk in the ordinary course of business.

Inflation

We do not believe that inflation has had a material direct effect on our business, financial condition, or results of operations. Our business, financial condition, or results of operations may be impacted by macroeconomic conditions, including underlying factors such as inflation. See “Risks Related to Geopolitical and Macroeconomic Factors” in Part I, Item 1A of our 2024 Form 10-K for further discussion of the possible impact of these issues on our business. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset higher costs through price increases and our inability or failure to do so could potentially harm our business, financial condition, and results of operations.

Interest Rate Risk

Our operating results are subject to market risk from interest rate fluctuations on both our First Lien Term Loan and First Lien Revolving Credit Facility, which bear a variable interest rate based on SOFR. As of September 30, 2025, the total principal balance outstanding was $683.6 million. We have implemented a hedging strategy to mitigate the interest rate risk on our First Lien Term Loan by entering into certain derivative instruments (refer to Note 7 - Derivatives and Hedging Activities of our unaudited consolidated financial statements included in Part I, Item 1 of this Form 10-Q). Based on the outstanding balances and interest rates of our debt as of September 30, 2025, a hypothetical relative increase or decrease in our effective interest rate by 100 basis points or 1% would have caused an immaterial corresponding change over the next 12 months.

Additionally, from time to time, we have dedesignated certain cash flow hedging relationships due to repricing of the terms and partial prepayment of the outstanding principal of our First Lien Term Loan since loan inception. As of September 30, 2025, all cash flow hedging relationships are designated as accounting hedges.

Foreign Currency Exchange Rate Risk

To date, our sales contracts have primarily been denominated in U.S. dollars. We have foreign entities established in Israel, Canada, the United Kingdom, Ireland, and India. The functional currency of these foreign subsidiaries is the U.S. dollar. A stronger U.S. dollar could make our solution more expensive outside the United States and therefore reduce demand, while a weaker U.S. dollar could have the opposite effect. Such economic exposure to currency fluctuations is difficult to measure or predict because our sales are influenced by many factors in addition to the impact of currency fluctuations.

To manage the foreign currency exchange rate risk and to reduce the volatility associated with the fluctuation of foreign currencies, we may use foreign exchange forward contracts or other financial instruments from time to time. In the second quarter of 2025, the Company initiated a foreign currency hedging program (see Note 7 - Derivatives and Hedging Activities). This program aimed to mitigate potential adverse effects on our financial results from significant currency movements.

Monetary assets and liabilities of the foreign subsidiaries are re-measured into U.S. dollars at the exchange rates in effect at the reporting date, non-monetary assets and liabilities are re-measured at historical rates, and revenue and expenses are re-measured at average exchange rates in effect during each reporting period. Foreign currency transaction gains and losses are recorded to Other income, net on our Consolidated Statements of Operations. Although the impact of currency fluctuations on our financial results has been immaterial in the past and we believe that for the reasons cited above, currency fluctuations will not be significant in the future, there can be no guarantee that the impact of currency fluctuations or our hedging activities will not be material in the future.

Credit Risk

Our financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents, investments, and trade and other receivables. We hold cash with reputable financial institutions that often exceed federally insured limits. We manage our credit risk by concentrating our cash deposits with multiple high-quality financial institutions and periodically evaluating the credit quality of those institutions. The carrying value of cash approximates fair value.

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on such evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of September 30, 2025 to provide reasonable assurance that information to be disclosed by us in the 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 such information is accumulated and communicated to management, including our principal executive and principal financial officers or persons performing similar functions, as appropriate to allow timely decisions regarding disclosure. Our disclosure controls and procedures were developed through a process in which our management applied its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding the control objectives. You should note that the design of any system of disclosure controls and procedures is based in part upon various assumptions about the likelihood of future events, and we cannot assure you that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during the quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Due to the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

We are subject to various risks that could have a material adverse impact on our business, financial position, results of operations or cash flows. Although it is not possible to predict or identify all such risks and uncertainties, they may include, but are not limited to, the factors discussed under “Risk Factors” in Part I, Item 1A of our 2024 Form 10-K. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our financial position, results of operations or cash flows. There have been no material changes to the risk factors included in our 2024 Form 10-K.