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The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025 ("2025 Annual Report"). This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under Part I, Item 1A. "Risk Factors" in our 2025 Annual Report and included elsewhere in this Quarterly Report on Form 10-Q. See "Special Note Regarding Forward-Looking Statements." OVERVIEW Expensify is a leading cloud-based expense management software platform that helps the smallest to the largest businesses simplify the way they manage money. Every day, people from all walks of life in organizations around the world use Expensify to scan and reimburse receipts from flights, hotels, coffee shops, office supplies and ride shares. Since our founding in 2008, we have added over 15 million members to our community and processed and automated 1.9 billion expense transactions on our platform as of June 30, 2026, freeing people to spend less time managing expenses and more time doing the things they love. For the quarter ended June 30, 2026, an average of 640,000 paid members across an average of 45,700 companies and over 200 countries and territories used Expensify to make money easy. MACROECONOMIC TRENDS Our business and the operations of our customers, the majority of which are small and medium-sized businesses, depend on the overall state of the economy, and we and they could be negatively impacted by slower economic growth and a potential for a recession. The economy continues to be impacted by elevated inflation rates and faces further inflation risk. Tariff and trade issues, as well as geopolitical uncertainty and instability, including the conflict in the Middle East, also continue to cause overall uncertainty with respect to the economy. See Part I, Item 1A. "Risk Factors" in our 2025 Annual Report and our subsequent filings for further discussion of the possible impact of such macroeconomic trends on our business. Additionally, other potential challenging macroeconomic conditions, and the resulting impact on business continuity and travel, could negatively impact our business. 29 Table of Contents Components of Results of Operations Revenue, Net We generate revenue from subscription fees based on the usage of our cloud-based expense management software platform under arrangements paid monthly in arrears that are either (i) month-to-month and can be terminated by either party without penalty at any time or (ii) annual arrangements based on a minimum number of monthly members. Annual subscription customers who wish to terminate their contracts before the end of the term are required to pay the remaining obligation in full plus any fees or penalties set forth in the agreement. We charge our customers subscription fees for access to our platform based on the number of monthly active members and level of service. The contractual price is based on either negotiated fees or rates published on our website. We generate most of our revenue from customers who have a credit card or debit card on file with us that is automatically charged each month. Virtually all of our customers have a standard terms of service contract, with the few exceptions for customers on bespoke service contracts. Our contracts with our customers include two performance obligations: access to the hosted software service, inclusive of all features available within the platform, and the related customer support. We account for the platform access and the support as a combined performance obligation because they have the same pattern of transfer over the same period and are therefore delivered concurrently. We satisfy our performance obligation over time each month as we provide platform access and support services to customers and as such recognize revenue over time. We recognize revenue net of applicable taxes imposed on the related transaction. Revenue earned from subscription fees was $30.8 million and $32.9 million for the three months ended June 30, 2026 and 2025, respectively. Revenue earned from subscription fees was $61.7 million and $66.1 million for the six months ended June 30, 2026 and 2025, respectively. We also offer an Expensify charge card (the "Expensify Card"), which operates under an agreement with the issuing bank, The Bancorp Bank, N.A. ("Bancorp"), to issue Expensify Cards to customers and authorize and settle transactions on the Visa card network. Under the Expensify Card program, we generate revenue from the authorization and settlement of Expensify Card transactions and are contractually entitled to all interchange generated on Expensify Card transactions based on our agreement with Bancorp. We are the principal in the transaction and recognize interchange as revenue on a gross basis within Revenue, net on the Condensed Consolidated Statements of Operations. Interchange revenue was $5.9 million and $5.3 million for the three months ended June 30, 2026 and 2025, respectively. Interchange revenue was $11.5 million and $10.3 million for the six months ended June 30, 2026 and 2025, respectively. We offer a cashback rewards program to all customers under the Expensify Card program based on volume of Expensify Card transactions. Cashback rewards are earned on a monthly basis and are applied against outstanding customer receivables or are paid out in the following month. We consider our cashback rewards as consideration payable to a customer, and they are recorded as contra revenue within Revenue, net on the Condensed Consolidated Statements of Operations. Cashback rewards applied against outstanding customer receivables are reflected as a reduction to Accounts receivable, net on the Condensed Consolidated Balance Sheets. Cashback rewards liability is recorded within Accrued expenses and other liabilities on the Condensed Consolidated Balance Sheets. The cashback rewards fluctuate over time as customers meet eligibility requirements and based on the timing of payments made to customers. The cost of cashback rewards was $3.0 million and $2.5 million for the three months ended June 30, 2026 and 2025, respectively. The cost of cashback rewards was $5.6 million and $4.8 million for the six months ended June 30, 2026 and 2025, respectively. 30 Table of Contents Cost of Revenue, Net Cost of revenue, net primarily consists of personnel-related expenses, including stock-based compensation, attributable to supporting our customers and maintenance of our platform, amortization expense on capitalized software development costs, expenses related to hosting our service, including the costs of data center capacity, credit card processing fees, third-party software license fees, amortization of finance lease right-of-use assets, outsourcing engineering costs to maintain our platform, and outsourcing costs to support customer service, net of consideration from a vendor under the Expensify Card program for certain volume-based incentives from Visa. Under the Expensify Card program, we receive consideration from a vendor for certain volume-based incentives from Visa, which are included as a reduction to Cost of revenue, net on the Condensed Consolidated Statements of Operations as they are earned. Amounts earned under these volume-based incentives were $0.2 million and $0.8 million for the three months ended June 30, 2026 and 2025, respectively. Amounts earned under these volume-based incentives were $0.5 million and $1.0 million for the six months ended June 30, 2026 and 2025, respectively. OPERATING EXPENSES Research and Development Research and development expenses consist primarily of personnel-related expenses, including stock-based compensation, and external contributor costs incurred related to the planning and preliminary project stage of new products or enhancing existing products or services. We capitalize certain software development costs that are attributable to developing or adding significant functionality to our internal-use software during the application development stage of the projects. All research and development expenses, excluding capitalized software development costs, are expensed as incurred. We believe delivering new functionality is critical to attract new customers and expand our relationships with existing customers. We expect to continue to make investments in and expand our product and service offerings to enhance our customers’ experience and satisfaction and to attract new customers. General and Administrative General and administrative expenses primarily consist of personnel-related expenses, including stock-based compensation, for any employee time allocated to administrative functions, including finance and accounting, legal and compliance, and human resources. In addition to personnel-related expenses, general and administrative expenses consist of business insurance, rent, utilities, depreciation on property and equipment, amortization of operating lease right-of-use assets, information technology, external professional services, including finance and accounting, audit, tax, legal and compliance, and human resources, third-party software license fees, and settlement losses, net of recoveries. Sales and Marketing Sales and marketing expenses primarily consist of personnel-related expenses, including stock-based compensation, advertising expenses, depreciation on property and equipment, outsourcing costs for sales and product demos, branding and public relations expenses, referral fees for strategic partners and other benefits that we provide to our referral and affiliate partners. Other Income, Net Other income, net, consists primarily of interest income. It also includes the results of operations of our Fifth & Harvey, LLC subsidiary, which holds title to and manages operations of the operating lease for lots in Portland, Oregon that are currently used to host multiple portable food vendors open to the general public, as well as realized gains and losses on foreign currency transactions and foreign currency remeasurement. 31 Table of Contents (Provision for) Benefit from Income Taxes Income taxes primarily consist of income taxes in the United States, United Kingdom, Australia, Netherlands and Canada, as well as states within the United States in which we do business. On July 4, 2025, H.R.1 was enacted into law, which introduced provisions that modified the Internal Revenue Code (“IRC”), including the immediate expensing of domestic research and development expenditures for tax purposes. As previously required under the Tax Cuts and Jobs Act, we capitalized and amortized research and experimental (“R&D”) expenditures under IRC Section 174 for tax years beginning after December 31, 2021. With the enactment of H.R.1 in 2025, we began deducting domestic Section 174 costs in the year they were incurred. We will continue to capitalize and amortize R&D costs over 15 years for R&D performed outside of the U.S. 32 Table of Contents Results of Operations The results of operations presented below should be reviewed in conjunction with the condensed consolidated financial statements and notes included elsewhere in this Quarterly Report on Form 10-Q. The following table sets forth our results of operations for each of the periods presented (in thousands, except percentages, share and per share data): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Revenue, net $ 33,866 $ 35,764 $ 67,835 $ 71,838 Cost of revenue, net(1) 17,536 17,187 35,333 35,019 Gross margin 16,330 18,577 32,502 36,819 Operating expenses: Research and development(1) 4,983 5,158 10,248 10,516 General and administrative(1) 9,591 9,411 18,709 20,240 Sales and marketing(1) 4,677 14,346 8,438 17,888 Total operating expenses 19,251 28,915 37,395 48,644 Loss from operations (2,921) (10,338) (4,893) (11,825) Other income, net 202 889 373 1,213 Loss before income taxes (2,719) (9,449) (4,520) (10,612) (Provision for) benefit from income taxes (1,132) 661 (1,668) (1,345) Net loss $ (3,851) $ (8,788) $ (6,188) $ (11,957) Net loss per share: Basic and diluted $ (0.04) $ (0.10) $ (0.07) $ (0.13) Weighted average shares of common stock used to compute net loss per share: Basic and diluted 95,441,380 92,271,924 94,585,048 91,888,633 Net loss margin (11) % (25) % (9) % (17) % (1)Includes stock-based compensation expense as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Cost of revenue, net $ 2,420 $ 2,770 $ 4,731 $ 5,809 Research and development 2,058 2,018 3,920 4,421 General and administrative 1,391 1,178 2,427 2,749 Sales and marketing 1,342 961 2,110 1,938 Total stock-based compensation expense $ 7,211 $ 6,927 $ 13,188 $ 14,917 33 Table of Contents COMPARISON OF THE THREE MONTHS ENDED JUNE 30, 2026 AND 2025 Revenue, Net Three Months Ended June 30, Change 2026 2025 Amount % (in thousands, except percentages) Revenue, net $ 33,866 $ 35,764 $ (1,898) (5) % Revenue, net decreased $1.9 million, or 5%, for the three months ended June 30, 2026 compared to the same period in 2025, primarily due to (i) a decrease in billable activity across our user base, and (ii) an increase in contra revenue related to cashback payments driven by the increased adoption and spend captured from members using the Expensify Card. This decrease was partially offset by an increase in interchange revenue driven by the adoption of the Expensify Card program. Cost of Revenue, Net and Gross Margin Three Months Ended June 30, Change 2026 2025 Amount % (in thousands, except percentages) Cost of revenue, net $ 17,536 $ 17,187 $ 349 2 % Gross margin $ 16,330 $ 18,577 $ (2,247) (12) % Gross margin % 48 % 52 % Cost of revenue, net increased $0.3 million or 2% for the three months ended June 30, 2026 compared to the same period in 2025, primarily due to an increase in amortization expense related to capitalized software. The increase was partially offset by savings generated from the increased use of artificial intelligence ("AI") in place of human agents. Gross margin decreased to 48% for the three months ended June 30, 2026 compared to 52% in the same period in 2025 due to the factors described in the preceding paragraphs for Revenue, Net and Cost of revenue, net. Research and Development Three Months Ended June 30, Change 2026 2025 Amount % (in thousands, except percentages) Research and development $ 4,983 $ 5,158 $ (175) (3) % Research and development expenses decreased by $0.2 million, or 3%, for the three months ended June 30, 2026 compared to the same period in 2025, primarily due to a decrease in internal employee time spent on project initiatives and new product features. 34 Table of Contents General and Administrative Three Months Ended June 30, Change 2026 2025 Amount % (in thousands, except percentages) General and administrative $ 9,591 $ 9,411 $ 180 2 % General and administrative expenses increased $0.2 million, or 2%, for the three months ended June 30, 2026 compared to the same period in 2025, primarily due to an increase in employee time spent on general and administrative activities. Sales and Marketing Three Months Ended June 30, Change 2026 2025 Amount % (in thousands, except percentages) Sales and marketing $ 4,677 $ 14,346 $ (9,669) (67) % Sales and marketing expenses decreased $9.7 million, or 67%, for the three months ended June 30, 2026 compared to the same period in 2025, primarily due to elevated advertising spend in 2025 related to our title sponsorship of F1® The Movie, which was released in theaters in June 2025. Other Income, Net Three Months Ended June 30, Change 2026 2025 Amount % (in thousands, except percentages) Other income, net $ 202 $ 889 $ (687) (77) % Other income, net decreased by $0.7 million, or 77%, for the three months ended June 30, 2026 compared to the same period in 2025, primarily due to the net impact of period-over-period foreign currency gains and losses. (Provision for) Benefit from Income Taxes Three Months Ended June 30, Change 2026 2025 Amount % (in thousands, except percentages) (Provision for) benefit from income taxes $ (1,132) $ 661 $ (1,793) (271) % We recorded a provision for income taxes of $1.1 million for the three months ended June 30, 2026 compared to a benefit from income taxes of $0.7 million for the same period in 2025. During the three months ended June 30, 2026 and 2025, our effective income tax rate was (41.6)% and 7.0%, respectively. The effective income tax rate differs from the statutory rate in 2026 primarily due to non-deductible stock-based compensation and Section 162(m) of the Internal Revenue Code compensation limitations, partially offset by the change in the valuation allowance. The effective income tax rate differs from the statutory rate in 2025 primarily due to non-deductible stock-based compensation and the change in the valuation allowance. 35 Table of Contents COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025 Revenue, Net Six Months Ended June 30, Change 2026 2025 Amount % (in thousands, except percentages) Revenue, net $ 67,835 $ 71,838 $ (4,003) (6) % Revenue, net decreased $4.0 million, or 6%, for the six months ended June 30, 2026 compared to the same period in 2025, primarily due to (i) a decrease in billable activity across our user base, and (ii) an increase in contra revenue related to cashback payments driven by the increased adoption and spend captured from members using the Expensify Card. This decrease was partially offset by an increase in interchange revenue driven by the adoption of the Expensify Card program. Cost of Revenue, Net and Gross Margin Six Months Ended June 30, Change 2026 2025 Amount % (in thousands, except percentages) Cost of revenue, net $ 35,333 $ 35,019 $ 314 1 % Gross margin $ 32,502 $ 36,819 $ (4,317) (12) % Gross margin % 48 % 51 % Cost of revenue, net increased by $0.3 million, or 1%, for the six months ended June 30, 2026 compared to the same period in 2025, primarily due to an increase in amortization expense related to capitalized software. The increase was partially offset by savings generated from the increased use of AI in place of human agents. Gross margin decreased to 48% for the six months ended June 30, 2026 compared to 51% in the same period in 2025 due to the factors described in the preceding paragraphs for Revenue, net and Cost of revenue, net. Research and Development Six Months Ended June 30, Change 2026 2025 Amount % (in thousands, except percentages) Research and development $ 10,248 $ 10,516 $ (268) (3) % Research and development expenses decreased by $0.3 million, or 3%, for the six months ended June 30, 2026 compared to the same period in 2025, primarily due to an increase in internal employee time spent in the application development stage of projects capitalized as software development costs. 36 Table of Contents General and Administrative Six Months Ended June 30, Change 2026 2025 Amount % (in thousands, except percentages) General and administrative $ 18,709 $ 20,240 $ (1,531) (8) % General and administrative expenses decreased $1.5 million, or 8%, for the six months ended June 30, 2026 compared to the same period in 2025, primarily due to (i) a decrease in settlement losses, net of recoveries, and (ii) a decrease in accounting and audit fees. Sales and Marketing Six Months Ended June 30, Change 2026 2025 Amount % (in thousands, except percentages) Sales and marketing $ 8,438 $ 17,888 $ (9,450) (53) % Sales and marketing expenses decreased $9.5 million, or 53%, for the six months ended June 30, 2026 compared to the same period in 2025, primarily due to elevated advertising spend in 2025 related to our title sponsorship of F1® The Movie, which was released in theaters in June 2025. Other Income, Net Six Months Ended June 30, Change 2026 2025 Amount % (in thousands, except percentages) Other income, net $ 373 $ 1,213 $ (840) (69) % Other income, net decreased $0.8 million, or 69%, for the six months ended June 30, 2026 compared to the same period in 2025, primarily due to the net impact of period-over-period foreign currency gains and losses. Provision for Income Taxes Six Months Ended June 30, Change 2026 2025 Amount % (in thousands, except percentages) Provision for income taxes $ (1,668) $ (1,345) $ (323) 24 % We recorded a provision for income taxes of $1.7 million for the six months ended June 30, 2026 compared to a provision for income taxes of $1.3 million for the same period in 2025. During the six months ended June 30, 2026 and 2025, our effective income tax rate was (36.9)% and (12.7)%, respectively. The effective income tax rate differs from the statutory rate in 2026 and 2025 primarily due to non-deductible stock-based compensation and the change in valuation allowance in 2025. 37 Table of Contents Liquidity and Capital Resources Since our inception, we have financed our operations primarily through our cash flow from operations, sales of our equity securities and borrowings under our credit facilities. As of June 30, 2026, we had $65.8 million in cash and cash equivalents with no outstanding indebtedness and a $7.5 million letter of credit outstanding. Our future capital requirements will depend on many factors, including revenue growth and costs incurred to support growth in our business and our need to respond to business opportunities, challenges or unforeseen circumstances. We believe that our existing cash resources will be sufficient to finance our continued operations and growth strategy for the next 12 months and for the foreseeable future. CASH FLOWS The following table summarizes our cash flows for the periods indicated (in thousands): Six Months Ended June 30, 2026 2025 Net cash provided by operating activities $ 8,551 $ 16,040 Net cash used in investing activities (2,491) (1,672) Net cash used in financing activities (1,066) (2,774) Net increase in cash and cash equivalents and restricted cash $ 4,994 $ 11,594 CASH FLOWS FROM OPERATING ACTIVITIES Net cash provided by operating activities was $8.6 million for the six months ended June 30, 2026 as compared to $16.0 million for the same period in 2025. The decrease is primarily due to (i) a decrease in subscription revenue, and (ii) the settlement payment related to the Putative Class Action discussed under Part II, Item 1. "Legal Proceedings" and related legal fees. This was partially offset by a decrease in advertising spend due to elevated advertising spend in 2025 related to our title sponsorship of F1® The Movie, which was released in theaters in June 2025. CASH FLOWS FROM INVESTING ACTIVITIES Net cash used in investing activities was $2.5 million for the six months ended June 30, 2026, consisting of software development costs. Net cash used in investing activities increased for the six months ended June 30, 2026 compared to the same period in 2025, primarily due to an increase in employee and external contributor software development costs. CASH FLOWS FROM FINANCING ACTIVITIES Net cash used in financing activities was $1.1 million for the six months ended June 30, 2026, primarily consisting of the repurchase and retirement of common stock primarily due to the Tender Offer and additional share repurchases described below. This was partially offset by (i) the change in customer funds, net, and (ii) proceeds from common stock purchased under the 2021 Stock Purchase and Matching Plan ("Matching Plan"). Net cash used in financing activities decreased for the six months ended June 30, 2026 compared to the same period in 2025, primarily due to (i) the change in customer funds, net, and (ii) proceeds from common stock purchased under the Matching Plan, partially offset by the repurchase and retirement of common stock primarily due to the Tender Offer and additional share repurchases described below. 38 Table of Contents Share Repurchase Program On February 25, 2025, the Executive Committee approved a share repurchase program with authorization to purchase up to $50.0 million of shares of Class A common stock that expires on March 31, 2028 ("2025 Share Repurchase Program"). Under the 2025 Share Repurchase Program, we may repurchase shares from time to time through open market purchases, in privately negotiated transactions or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 of the Exchange Act, in accordance with applicable securities laws and other restrictions. The actual timing and total amount of future repurchases are subject to business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices, restrictions under the terms of our current and future debt agreements and other considerations. The 2025 Share Repurchase Program does not obligate us to acquire any particular amount of Class A common stock, and the program may be suspended or terminated by us at any time at our discretion without prior notice. As of June 30, 2026, we had $39.8 million remaining under the 2025 Share Repurchase Program, not including amounts used for net share settlement of vested equity incentive awards. Tender Offer On May 13, 2026, we announced the commencement of a modified “Dutch auction” tender offer to purchase shares of our Class A common stock for an aggregate purchase price of up to $25.0 million at a price per share of not less than $0.98 and not more than $1.20 (the “Tender Offer”). The Tender Offer was not conditioned upon any minimum number of shares being tendered and was not subject to a financing condition. The Tender Offer expired on June 10, 2026. We accepted 6,053,023 shares for purchase at the purchase price of $1.20 per share, for a total cost of $8.0 million, including $0.7 million of fees and expenses related to the Tender Offer. See Note 8 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further information about the Share Repurchase Program and Tender Offer. CREDIT FACILITIES Loan and Security Agreement In February 2024, we entered into a Second Amended and Restated Loan and Security Agreement (as subsequently amended, the "2024 Amended Loan and Security Agreement") with Canadian Imperial Bank of Commerce (“CIBC”). The 2024 Amended Loan and Security Agreement provided for a $25.0 million revolving credit facility, which was terminated in July 2025. At the time of such termination, we had no borrowings under the revolving credit facility, and certain terms of the 2024 Amended Loan and Security Agreement, including collateral security, survived the termination with respect to outstanding Contingent Obligations (as defined in the 2024 Amended Loan and Security Agreement) arising from Bank Services (as defined in the 2024 Amended Loan and Security Agreement). There were no penalties incurred by us as a result of the termination of the revolving credit facility. In April 2024, we entered into an irrevocable standby letter of credit (the "Letter of Credit") issued under the 2024 Amended Loan and Security Agreement to reduce cash collateral requirements in connection with the Expensify Card program. The Letter of Credit was issued in the amount of $1.0 million for the benefit of Bancorp. In April 2025, we entered into an amendment to the irrevocable standby letter of credit to increase the Letter of Credit to $7.5 million. The Letter of Credit remained outstanding following the termination of the revolving credit facility. 39 Table of Contents Letter of Credit Security Agreement In October 2025, we entered into a Letter of Credit Facility and Security Agreement (the “LOC Security Agreement”) with CIBC. The LOC Security Agreement, among other things, provides for the issuance of additional irrevocable standby letters of credit, governs the terms of the outstanding Letter of Credit originally issued under the 2024 Amended Loan and Security Agreement, grants to CIBC, for the ratable benefit of the lenders, a security interest in substantially all of our assets and our subsidiaries, and also replaces the 2024 Amended Loan and Security Agreement with respect to the Contingent Obligations (as defined in the LOC Security Agreement). Under the LOC Security Agreement, the Letter of Credit remained at $7.5 million and expires in March 2027. The Letter of Credit automatically renews for successive one-year periods unless we or the issuing bank provide notice of non-renewal prior to the expiration date. No amounts had been drawn on the Letter of Credit as of June 30, 2026. Certain Covenants We are subject to customary covenants under the LOC Security Agreement which, unless waived by CIBC, restrict our and our subsidiaries’ ability to, among other things, incur certain additional indebtedness, create or incur certain liens, permit a change of control, sell or transfer assets, pay dividends or make distributions, subject to certain exceptions. Key Business Metrics and Non-GAAP Financial Measures We supplement the reporting of our financial information determined under U.S. generally accepted accounting principles ("GAAP") with certain business metrics and non-GAAP financial measures which we regularly review to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions. Accordingly, we believe that these key business metrics and non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management team. These key business metrics and non-GAAP financial measures are presented for supplemental informational purposes only, should not be considered a substitute for our financial information presented in accordance with GAAP and may be different from similarly titled metrics or measures presented by other companies. KEY BUSINESS METRICS Paid Members We believe that our ability to increase the number of paid members on our platform drives our success as a business. Our customers pay for subscriptions on behalf of employees and contractors who use the platform, whom we refer to as paid members. We define paid members as the average number of users (employees, contractors, volunteers, team members, etc.) who are billed on Collect or Control plans during any particular quarter. For small and medium businesses or sole proprietors with only one employee, the business owner may also be the only paid member. The following table sets forth the average number of paid members for each of the periods presented (in thousands): Three Months Ended Paid members June 30, 2026 640 June 30, 2025 652 40 Table of Contents NON-GAAP FINANCIAL MEASURES Limitations of Non-GAAP Financial Measures Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as substitutes for financial information presented under GAAP. There are a number of limitations related to the use of non-GAAP financial measures versus comparable financial measures determined under GAAP. For example, other companies in our industry may calculate these non-GAAP financial measures differently or may use other measures to evaluate their performance. All of these limitations could reduce the usefulness of these non-GAAP financial measures as analytical tools. Investors are encouraged to review the related GAAP financial measures and the reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures and to not rely on any single financial measure to evaluate our business. Reconciliations of Non-GAAP Financial Measures The following tables reconcile the most directly comparable GAAP financial measure to each of these non-GAAP financial measures. Adjusted EBITDA and Adjusted EBITDA Margin We define adjusted EBITDA as net loss excluding provision for (benefit from) income taxes, other income, net, depreciation and amortization and stock-based compensation expense. We define adjusted EBITDA margin as adjusted EBITDA divided by revenue, net for the same period. We are focused on profitable growth and we consider adjusted EBITDA to be an important measure because it helps illustrate underlying trends in our business that could otherwise be masked by the effect of the income or expenses that are not indicative of the core operating performance of our business. Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (in thousands, except percentages) Net loss $ (3,851) $ (8,788) $ (6,188) $ (11,957) Net loss margin (11) % (25) % (9) % (17) % Add: Provision for (benefit from) income taxes 1,132 (661) 1,668 1,345 Other income, net (202) (889) (373) (1,213) Depreciation and amortization 2,301 2,018 4,517 3,961 Stock-based compensation expense 7,211 6,927 13,188 14,917 Adjusted EBITDA $ 6,591 $ (1,393) $ 12,812 $ 7,053 Adjusted EBITDA margin 19 % (4) % 19 % 10 % 41 Table of Contents Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) Margin We define non-GAAP net income (loss) as net loss excluding stock-based compensation expense. We define non-GAAP net income (loss) margin as non-GAAP net income (loss) divided by revenue, net for the same period. We are focused on profitable growth and we consider non-GAAP net income (loss) to be an important measure because it helps illustrate underlying trends in our business that could otherwise be masked by the effect of stock-based compensation expense, which is not considered indicative of the core operating performance of our business. Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (in thousands, except percentages) Net loss $ (3,851) $ (8,788) $ (6,188) $ (11,957) Net loss margin (11) % (25) % (9) % (17) % Add: Stock-based compensation expense 7,211 6,927 13,188 14,917 Non-GAAP net income (loss) $ 3,360 $ (1,861) $ 7,000 $ 2,960 Non-GAAP net income (loss) margin 10 % (5) % 10 % 4 % Free Cash Flow and Free Cash Flow Margin We define free cash flow as net cash provided by operating activities excluding changes in settlement assets, net and settlement liabilities, reduced by the purchases of property and equipment and software development costs. We define free cash flow margin as free cash flow divided by revenue, net for the same period. Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (in thousands, except percentages) Net cash provided by operating activities $ 8,433 $ 8,184 $ 8,551 $ 16,040 Operating cash flow margin 25 % 23 % 13 % 22 % Changes in settlement assets and liabilities: Settlement assets, net (1,160) 439 3,321 5,994 Settlement liabilities 252 (1,138) (478) (4,947) Less: Purchase of property and equipment — (17) — (17) Software development costs (1,079) (1,157) (2,491) (1,655) Free cash flow $ 6,446 $ 6,311 $ 8,903 $ 15,415 Free cash flow margin 19 % 18 % 13 % 21 % Contractual Obligations and Commitments As of June 30, 2026, there have been no material changes in our contractual obligations and commitments as disclosed in our 2025 Annual Report. 42 Table of Contents Indemnification Agreements In the ordinary course of business, we enter into agreements of varying scope and terms whereby we agree to indemnify customers, issuing banks, card networks, vendors and other parties with respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements, services to be provided by us or from intellectual property infringement claims made by third parties. In addition, we have entered into indemnification agreements with our directors and certain officers and employees that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or employees. No demands have been made upon us to provide indemnification under such agreements and there are no claims that we are aware of that could have a material effect on our Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Operations, Condensed Consolidated Statements of Changes in Stockholders’ Equity, or Condensed Consolidated Statements of Cash Flows. Off-Balance Sheet Arrangements During the periods presented, we did not have, and we do not currently have, any off-balance sheet financing arrangements or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. Critical Accounting Policies and Estimates Our condensed consolidated financial statements included elsewhere herein have been prepared in accordance with GAAP. The preparation of our condensed consolidated financial statements requires us to make estimates and judgments that affect our reported amounts of assets, liabilities, revenues and expenses. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. There have been no material changes to our critical accounting policies and estimates as compared to those described in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2025 Annual Report. Recent Accounting Pronouncements See Note 1 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for recently issued accounting pronouncements not yet adopted as of the date of this Quarterly Report.