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 appearing elsewhere in this Quarterly Report. As discussed in the section entitled “Forward-Looking Statements,” the following discussion and analysis contain forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and elsewhere in this Quarterly Report, and those set forth under the section entitled "Risk Factors" in the Form 10-K for the fiscal year ended March 31, 2026.
Overview
8x8, Inc. is a global provider of integrated customer experience and business communications solutions, purpose-built to unify customer and employee engagement across the enterprise. Our 8x8 Platform for CX combines contact center, business communications, and application programmable interfaces ("APIs") for communications into a single, secure system powered by artificial intelligence ("AI") that delivers seamless, data-driven interactions. Designed for agility and scale, our platform helps businesses eliminate silos, improve operational efficiency, and turn every conversation into actionable intelligence. By aligning technology with measurable outcomes, we empower organizations to transform how they connect, serve, and grow from first interactions to lasting relationships.
We serve a broad customer base, from small businesses to large global enterprises across every major industry. We reach customers through a combination of direct sales and an expanding global network of channel partners. To serve diverse organizations of all sizes, we invest in retaining and growing customers across segments through a service model that scales from AI-powered support for smaller accounts to dedicated customer success resources for our most complex enterprise relationships.
We generate service revenue from subscriptions to our UCaaS and CCaaS offerings, as well as usage of our platform. Our service subscription plans are sold on a per-user basis and are structured with increasing levels of functionality, based on the specific communication needs and customer engagement profile of each user. Platform usage revenue is revenue recognized from sales of products on an as-used basis and includes the use of our communications APIs, digital and voice AI interactions and telephony minutes. Usage revenue increased by 63% in the first quarter of fiscal 2027 as customers increased inbound and outbound engagement strategies using our communication APIs and AI-based interactions.
We generate other revenue from professional services and the sale of office phones and other hardware equipment. We define a “customer” as one or more legal entities to which we provide services pursuant to a single contractual arrangement. In some cases, we may have multiple billing relationships with a single customer (for example, where we establish separate billing accounts for a parent company and each of its subsidiaries).
Macroeconomic and Other Factors
We are subject to risks and exposures, including those caused by adverse economic conditions. Macroeconomic conditions that could adversely affect our business include geopolitical instability, tariffs, inflationary pressures, increased interest rates, supply chain disruptions, decreased economic output, and currency volatility. We continuously monitor the impacts of these factors, as well as the overall global economy and geopolitical landscape, on our business and financial results.
While the implications of macroeconomic events on our business, results of operations, and overall financial position remain uncertain, we expect that difficult economic conditions could negatively impact our business in future periods. For example, our installed base includes small businesses, which tend to be disproportionately affected by macroeconomic headwinds. International revenue grew from approximately 38% of total revenue in the first quarter of fiscal 2026 to approximately 44% in the first quarter of fiscal 2027, increasing our exposure to foreign currency fluctuations. However, a significant portion of our international operating expenses is denominated in the same currencies as our international revenue, which partially mitigates the impact of currency movements on profitability. We also continue to monitor the pace of AI adoption across our customer base, which represents both an evolving competitive dynamic and a direct driver of demand for our platform capabilities and usage-based revenue.
Summary and Outlook
In the first quarter of fiscal 2027, we delivered the following financial results:
•Service revenue increased 5% to $185.3 million, compared to $176.3 million in the first quarter of fiscal 2026.
•Gross margin was 61.2%, compared to 66.4% in the first quarter of fiscal 2026.
•Operating income was $4.4 million, compared to $0.6 million in the first quarter of fiscal 2026.
•Net loss was $1.2 million, compared to $4.3 million in the first quarter of fiscal 2026.
•Cash provided by operating activities was $17.0 million, compared to $11.9 million in the first quarter of fiscal 2026.
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As part of our objectives to grow our revenue and increase profitability and cash flow, we are focused on retaining our existing customers and driving multi-product adoption within our installed base, as well as expanding our base with new customers. We believe that continued innovation is a critical factor in attracting and retaining our customers and is an important variable in achieving sustainable growth. We are committed to continuing our investment in research and development to deliver innovation across our Platform for CX, expand our ecosystem of integrated third-party applications, and maintain the high platform availability that our customers require.
Our primary focus involves the following: (i) expanding the features and functionality of our Platform for CX, (ii) increasing the use of our agentic AI solutions and communication APIs, (iii) growing our community of value-added resellers and technology partners as a means to expand distribution, especially in international regions, and (iv) increasing the efficiency of our operations through process improvements, automation, and self-service. We are embracing the use of AI internally to accelerate innovation and the introduction of new products, improve our sales productivity and conversion rates, increase the efficiency and security of our global network infrastructure, and simplify our back-office operations.
Our investment in research and development has enabled us to introduce new products like 8x8 Engage and 8x8 AI Studio, add capabilities that allow our customers to enhance their employee and customer experiences, and expand integrations within our Technology Partner Ecosystem. We also invested in our global network infrastructure to ensure continued high availability, enhance security, and lower the cost to deliver our services. Our combined investments in our platform and process improvements allow us to deliver tightly integrated solutions around the world that prioritize ease-of-use, out-of-the-box functionality, and rapid deployment. We expect the costs of delivering our communication services and communication APIs, both in total dollars and as a percentage of service revenue, to vary with the amount of service revenue and the mix of subscription and usage revenue within service revenue.
To improve our sales efficiency over time, we are investing in marketing programs to drive awareness for our solutions, training programs and tools to increase productivity in our direct sales, and partner enablement solutions to drive increased cross-sell and new business. We are also devoting resources to expand our community of value-added resellers, who provide implementation services and Tier 1 customer support in addition to sales capacity.
We continue to monitor factors that could have an impact on customer buying behavior and demand, including technological changes in AI-related developments, macroeconomic conditions, the competitive environment, contract duration, churn, upsell and down-sell, renewals, and payment terms, all of which have caused variability in our results and may continue to do so in the future.
Key GAAP Operating Results
To assess the success of our strategies to achieve growth and increase our cash flow, our management reviews our financial performance as presented in our condensed consolidated financial statements, including trends in revenue, gross profit margin, income (loss) from operations, and cash flow generated by operations in absolute dollars and as a percentage of revenue as presented in the following table:
Fiscal 2027 Fiscal 2026
Three Months Ended Three Months Ended
(In thousands, except percentages) June 30, 2026 March 31, 2026 December 31, 2025 September 30, 2025 June 30, 2025
Service revenue $ 185,346 $ 180,175 $ 179,682 $ 179,094 $ 176,308
% of Total Revenue 97.5 % 97.3 % 97.1 % 97.3 % 97.2 %
Gross profit $ 116,371 $ 117,053 $ 118,216 $ 119,340 $ 120,440
% of Total Revenue 61.2 % 63.2 % 63.9 % 64.8 % 66.4 %
Income from operations $ 4,379 $ 3,330 $ 9,694 $ 5,349 $ 565
% of Total Revenue 2.3 % 1.8 % 5.2 % 2.9 % 0.3 %
Net income (loss) $ (1,200) $ 106 $ 5,090 $ 767 $ (4,315)
% of Total Revenue (0.6) % 0.1 % 2.8 % 0.4 % (2.4) %
Net cash provided by operating activities $ 17,034 $ 14,386 $ 20,692 $ 8,835 $ 11,873
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Components of Results of Operations
Service Revenue
Service revenue consists of communication services subscriptions, platform usage revenue, and related fees from our UCaaS, CCaaS and CPaaS offerings. We plan to increase service revenue through a combination of new customer acquisition, cross-selling of additional products to existing customers, including new products resulting from our increased investment in innovation, artificial intelligence, geographic expansion of our customer base outside the United States, innovation in our products and technologies, and strategic acquisitions of technologies and businesses.
Other Revenue
Other revenue consists of revenue from professional services, primarily in support of deployment of our solutions and platform, and revenue from sales and rentals of IP telephones in conjunction with our cloud telephony service. Other revenue is dependent on the number of customers who choose to purchase or rent IP telephone hardware in conjunction with our service instead of using the solution on their cell phone, computer, or other compatible device, and/or choose to engage our professional services organization for implementation and deployment of our cloud services.
Cost of Service Revenue
Cost of service revenue consists primarily of costs associated with network operations and related personnel, technology licenses, amortization of intangible assets and capitalized internal use software, other communication origination and termination services provided by third-party carriers, outsourced customer service call center operations, and other costs such as customer service costs and technical support costs. We allocate overhead costs, such as information technology and facilities, to cost of service revenue, as well as to each of the operating expense categories, generally based on relative headcount. Our information technology costs include costs for information technology infrastructure and personnel. Facilities costs primarily consist of office leases and related expenses.
Cost of Other Revenue
Cost of other revenue consists primarily of costs associated with the purchase and shipping and handling of IP telephone hardware, as well as scheduling, personnel costs, and other expenditures incurred in connection with the professional services associated with the deployment and implementation of our products, and allocated information technology and facilities costs.
Research and Development
Research and development expenses consist primarily of personnel and related costs, stock-based compensation, third-party development, software and equipment costs necessary to conduct our product, platform development and engineering efforts, as well as allocated information technology and facilities costs.
Sales and Marketing
Sales and marketing expenses consist primarily of personnel and related costs, stock-based compensation, sales commissions, including those to the channel, trade shows, advertising and other marketing, demand generation, and promotional expenses, as well as allocated information technology and facilities costs.
General and Administrative
General and administrative expenses consist primarily of personnel and related costs, professional services fees, corporate administrative costs, tax and regulatory fees, stock-based compensation and allocated information technology and facilities costs.
Interest Expense
Interest expense consists primarily of interest expense related to our term loan and convertible notes, and amortization of debt discount and issuance costs.
Other Income (Expense), Net
Other income (expense), net, consists primarily of losses on debt extinguishment, gain on warrant remeasurement, interest income, gains or losses on foreign exchange transactions, as well as other income.
Provision for Income Taxes
Provision for income taxes consists primarily of foreign income taxes and state taxes in the United States. As we expand the scale of our international business activities, any changes in the United States and foreign taxation of such activities may increase our overall provision for income taxes in the future. We have a valuation allowance for our U.S. deferred tax assets, including federal and state net operating loss carryforwards. We expect to maintain this valuation allowance until it becomes more likely than not that the benefit of our federal and state deferred tax assets will be realized by way of expected future taxable income in the United States.
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Results of Operations
Revenue
Service revenue
Three Months Ended June 30,
(In thousands, except percentages) 2026 2025 Change
Service revenue $ 185,346 $ 176,308 $ 9,038 5.1 %
Percentage of total revenue 97.5 % 97.2 %
Three Months Ended
Service revenue increased by $9.0 million, or 5.1%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. This change was driven by an increase of $18.5 million in platform usage revenue generated primarily in the Asia-Pacific region, resulting from higher customer consumption volumes of our usage-based offerings, reflecting expanded customer adoption and usage of messaging, minutes and AI-based solutions during the period. This increase was partially offset by a decrease in subscription revenue of $9.5 million related to customer churn and down-sell.
Other revenue
Three Months Ended June 30,
(In thousands, except percentages) 2026 2025 Change
Other revenue $ 4,824 $ 5,053 $ (229) (4.5) %
Percentage of total revenue 2.5 % 2.8 %
Three Months Ended
Other revenue decreased by $0.2 million, or 4.5%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, due to a decrease in professional service revenue of $0.8 million, partially offset by an increase in product revenue of $0.6 million.
Cost of Revenue
Cost of service revenue
Three Months Ended June 30,
(In thousands, except percentages) 2026 2025 Change
Cost of service revenue $ 67,635 $ 53,822 $ 13,813 25.7 %
Percentage of service revenue 36.5 % 30.5 %
Three Months Ended
Cost of service revenue increased by $13.8 million, or 25.7%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to an increase of $15.8 million in network and carrier service provider costs to deliver our platform usage services and support our capacity needs. These increases were partially offset by decreases of $1.6 million in salaries, benefits and consulting costs, $0.2 million in amortization of intangible assets, and $0.2 million in stock-based compensation.
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Cost of other revenue
Three Months Ended June 30,
(In thousands, except percentages) 2026 2025 Change
Cost of other revenue $ 6,164 $ 7,099 $ (935) (13.2) %
Percentage of other revenue 127.8 % 140.5 %
Three Months Ended
Cost of other revenue decreased by $0.9 million, or 13.2%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to a decrease in salaries, benefits, and consulting costs to deliver our professional services.
Gross Profit
Three Months Ended June 30,
(In thousands, except percentages) 2026 2025 Change
Gross profit $ 116,371 $ 120,440 $ (4,069) (3.4) %
Percentage of total revenue 61.2 % 66.4 %
Three Months Ended
Gross profit decreased by $4.1 million, or 3.4%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, driven by the shift in revenue mix toward usage-based offerings as growth in cost of service revenue outpaced service revenue growth. Generally, usage-based offerings generate higher network and carrier service provider costs per dollar of revenue relative to our subscription-based offerings, resulting in lower gross margin.
Research and development
Three Months Ended June 30,
(In thousands, except percentages) 2026 2025 Change
Research and development $ 28,406 $ 28,364 $ 42 0.1 %
Percentage of total revenue 14.9 % 15.6 %
Three Months Ended
Research and development expenses were flat for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to decreases of $2.4 million in combined salaries, benefits, and consulting costs necessary to conduct our product, platform development and engineering efforts and $0.5 million in stock-based compensation. These decreases were offset by increases of $2.4 million in capitalization of internally-developed software, software licenses and other costs and $0.5 million in amortization of capitalized software.
Sales and marketing
Three Months Ended June 30,
(In thousands, except percentages) 2026 2025 Change
Sales and marketing $ 58,750 $ 68,184 $ (9,434) (13.8) %
Percentage of total revenue 30.9 % 37.6 %
Three Months Ended
Sales and marketing expenses decreased by $9.4 million, or 13.8%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to decreases of $4.1 million in salaries, benefits, and consulting costs, $3.5 million in channel commissions and amortization of deferred contract acquisition costs, $1.0 million in paid media and other marketing services costs, and $0.8 million in stock-based compensation expense.
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General and administrative
Three Months Ended June 30,
(In thousands, except percentages) 2026 2025 Change
General and administrative $ 24,836 $ 23,327 $ 1,509 6.5 %
Percentage of total revenue 13.1 % 12.9 %
Three Months Ended
General and administrative expenses increased by $1.5 million, or 6.5%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to increases of $2.4 million in transaction-related and general corporate costs and $0.5 million in personnel and consulting costs. These increases were partially offset by decreases of $0.9 million in stock-based compensation and $0.5 million in legal and regulatory costs.
Other expense, net
Interest expense
Three Months Ended June 30,
(In thousands, except percentages) 2026 2025 Change
Interest expense $ (4,179) $ (3,968) $ (211) 5.3 %
Percentage of total revenue (2.2) % (2.2) %
Three Months Ended
Interest expense increased by $0.2 million, or 5.3%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to capitalized interest related to property, plant and equipment from general borrowing costs recorded in fiscal 2026. This increase was partially offset by reduced debt interest due to a lower interest rate and principal balance on the 2024 Term Loan. See Note 8, Convertible Senior Notes and Term Loan, for further details.
Other income (expense), net
Three Months Ended June 30,
(In thousands, except percentages) 2026 2025 Change
Other income (expense), net $ (408) $ 364 $ (772) (212.1) %
Percentage of total revenue (0.2) % 0.2 %
Three Months Ended
We recognized $0.4 million of other expense, net during the three months ended June 30, 2026, compared to $0.4 million of other income, net during the three months ended June 30, 2025, primarily due to an increase of $0.7 million in foreign exchange losses and a reduced gain of $0.1 million on the remeasurement of the Warrants issued in connection with the 2022 Term Loan.
Provision for income taxes
Three Months Ended June 30,
(In thousands, except percentages) 2026 2025 Change
Provision for income taxes $ 992 $ 1,276 $ (284) (22.3) %
Percentage of total revenue 0.5 % 0.7 %
Three Months Ended
Provision for income taxes decreased by $0.3 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily driven by the effects of the OBBBA on federal and state taxes for the three months ended June 30, 2026.
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Liquidity and Capital Resources
We believe that our existing cash, cash equivalents and our anticipated cash flows from operations will be sufficient to meet our working capital, expenditure, and contractual obligation requirements for a minimum of the next twelve months and the foreseeable future. Although we believe we have adequate sources of liquidity for at least the next twelve months and for the foreseeable future, the success of our operations, the global economic outlook, and the pace of growth in our markets could impact our business and liquidity.
Cash and Cash Equivalents
The following is a summary of our cash and cash equivalents (in thousands):
June 30, 2026 March 31, 2026
Cash and cash equivalents $ 90,595 $ 93,260
Restricted cash, current1 1,707 1,702
Total $ 92,302 $ 94,962
(1) Restricted cash is related to accrued holdbacks for business combinations.
Our primary requirements for liquidity and working capital include delivery of our various products to customers, research and development, sales and marketing activities, principal and interest payments on our outstanding debt and other general corporate needs. Historically, these cash requirements have been met from cash provided by operating activities and our cash and cash equivalents balances. Our current capital deployment strategy for fiscal 2027 is to maintain sufficient liquidity to fund our operations and growth initiatives, including planned software development activities, and to pay down our outstanding debt. As of June 30, 2026, we are not party to any off-balance sheet arrangements that have had or are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures, or capital resources. Significant cash requirements for the fiscal year include our operating lease obligations, principal and interest payments related to our debt obligations, and operating and capital purchase commitments. For information regarding our expected cash requirements and timing of payments related to leases and noncancelable purchase commitments, see Note 6, Leases, and Note 7, Commitments and Contingencies, respectively, to the condensed consolidated financial statements. Additionally, refer to Note 8, Convertible Senior Notes and Term Loan, to the condensed consolidated financial statements for more information related to our debt obligations.
Our outstanding 2024 Term Loan allows for voluntary prepayments. In order to reduce future cash interest payments, as well as future amounts due at maturity or upon redemption, we may, from time to time, make prepayments. The Company evaluates opportunities for stock repurchases, and may utilize cash and cash equivalents to repurchase shares under the 2017 Repurchase Plan. During the three months ended June 30, 2025, the Company repurchased 1.0 million shares of common stock in the open market for approximately $1.8 million at an average price of $1.83 per share. For more information, see Note 9, Stock-Based Compensation and Stockholders' Equity.
As of June 30, 2026, our 2028 Notes were trading at a discount to their respective principal amount. We may seek to retire, refinance or purchase our outstanding debt through open-market purchases, privately negotiated transactions or otherwise, which may have an impact on our liquidity requirements. Any such transactions will be dependent upon several factors, including our liquidity requirements, contractual restrictions, prevailing market conditions, and other factors. Whether or not we engage in any such transactions will be determined at our discretion. For historical debt payments, see Note 8, Convertible Senior Notes and Term Loan.
Cash Flows
The following is a summary of our cash flows provided by (used in) operating, investing and financing activities (in thousands):
Three Months Ended June 30,
2026 2025
Net cash provided by operating activities $ 17,034 $ 11,873
Net cash used in investing activities (3,148) (4,416)
Net cash used in financing activities (16,184) (17,337)
Effect of exchange rate changes on cash (362) 2,788
Net decrease in cash and cash equivalents $ (2,660) $ (7,092)
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Cash provided by operating activities increased by $5.2 million to $17.0 million for the three months ended June 30, 2026, primarily due to an increase in cash collected from customers, a decrease in cash paid to vendors, employees and interest on outstanding debt and an increase in other accrued liabilities primarily in the APAC region. Cash used in investing activities decreased by $1.3 million to $3.1 million for the three months ended June 30, 2026, mainly due to a decrease in capitalized internal-use software costs partially offset by an increase in purchases of property and equipment. Cash used in financing activities decreased by $1.2 million to $16.2 million for the three months ended June 30, 2026, mainly due to a repurchase of common stock completed in fiscal 2026 and repayment of the 2024 Term Loan, partially offset by an increase in payments for other activities.
Debt Obligations
See Note 8, Convertible Senior Notes and Term Loan, in the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for information regarding our debt obligations.
2024 Delayed Draw Term Loan
On July 11, 2024, we entered into a new term loan credit agreement with Wells Fargo Bank, National Association, as administrative agent, and the lenders thereto (the “2024 Credit Agreement”). The 2024 Credit Agreement establishes a delayed draw term loan facility in an aggregate principal amount of up to $200.0 million maturing on August 15, 2027.
On August 5, 2024, we drew upon the entire facility of $200.0 million under the delayed draw term loan facility (the "2024 Term Loan") and used the proceeds of the 2024 Term Loan and cash on hand of approximately $29.0 million to repay in full the $225.0 million of outstanding principal amount and accrued interest of the 2022 Term Loan and the fees incurred in connection with the Repayment.
The 2024 Term Loan bears interest at an annual rate equal to the Term SOFR, plus a margin of either 2.50%, 2.75% or 3.00% based on the consolidated total net leverage ratio of the Company and its subsidiaries. The initial margin was 3.00% for the fiscal quarter ending September 30, 2024 and remained 3.00% as of June 30, 2026. We have the option to pay interest monthly, quarterly, or semi-annually. During the three months ended June 30, 2026, we elected monthly interest payment terms which resulted in cash payments of $1.8 million. For the three months ending September 30, 2026, we have elected monthly interest payment terms, which will result in cash payments of approximately $1.8 million. As of June 30, 2026, the debt issuance costs were amortized to interest expense over the term of the 2024 Term Loan at an effective interest rate of 8.61%.
Under the terms of the 2024 Credit Agreement, we have the right to prepay the 2024 Term Loan at any time without any premium or penalty. We completed three principal repayments of the 2024 Term Loan during fiscal 2026 for a total of $30.0 million in aggregate principal amount. We completed one principal repayment of the 2024 Term Loan during fiscal 2027 for $14.5 million in aggregate principal amount.
As of June 30, 2026, the scheduled minimum principal repayments are $25.0 million in fiscal 2027 (comprised of $12.5 million on each of December 31, 2026 and March 31, 2027) and $82.5 million fiscal 2028 (comprised of $12.5 million on June 30, 2027 and $70.0 million due upon maturity on August 15, 2027). As of June 30, 2026, we have paid $22.5 million, $37.5 million, $22.5 million, and $10.0 million of the originally scheduled principal repayments due in fiscal 2025, 2026, 2027, and 2028 respectively, and the remaining principal amount of the 2024 Term Loan after the payments is $107.5 million.
These short-term principal debt repayments are accounted for as partial debt extinguishment transactions. The carrying value of the 2024 Term Loan, including the unamortized debt discount and issuance costs, was derecognized. The difference between the cash consideration paid to partially extinguish the 2024 Term Loan and the carrying value of the 2024 Term Loan was recognized as a loss on debt extinguishment included in the loss on debt extinguishment line item recorded in other expense in the condensed consolidated statement of operations and comprehensive income (loss). See Note 4, Financial Statement Components, for further details.
Material Cash Requirements and Other Obligations
As of March 31, 2026, our material cash requirements and other obligations were $69.6 million. During the fiscal year ended March 31, 2026, we increased our noncancelable three-year hosting service contract commitment from $24.1 million to $54.0 million. Under this agreement, $6.7 million remains due in fiscal 2027 and $10.0 million will be due in fiscal 2028. During the three months ended June 30, 2026, we entered into a $74.0 million noncancelable five-year hosting service contract with a cloud service provider. Under this agreement, $8.1 million remains due during fiscal 2027, $13.9 million will be due during fiscal 2028, $15.8 million will be due during fiscal 2029 and $36.2 million will be due for the remaining contractual term. For information regarding our material cash requirements and other obligations, see Item 7, "Management's Discussion and Analysis" in the Form 10-K.
During the three months ended June 30, 2026, we reduced the 2024 Term Loan contractual principal by $14.5 million to $107.5 million. See Note 8, Convertible Senior Notes and Term Loan, for further details.
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Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures of assets and liabilities. On an ongoing basis, we evaluate our critical accounting policies and estimates. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). See Note 1, The Company and Significant Accounting Policies, in the notes to the unaudited condensed consolidated financial statements included in this Quarterly Report, which describes the significant accounting policies and methods used in the preparation of our consolidated financial statements. There have been no significant changes during the three months ended June 30, 2026 to our critical accounting policies and estimates previously disclosed in the Form 10-K.