The following discussion and analysis of our financial condition and results of operations should be read in conjunction with (1) our consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and (2) the audited consolidated financial statements and the related notes and management’s discussion and analysis of financial condition and results of operations for the year ended December 31, 2025 included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission, or SEC, on February 19, 2026. This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These statements are often identified by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “will,” “would,” or the negative or plural of these words or similar expressions or variations, including statements regarding our expectations regarding customer renewals and our future financial and operating performance, expansion of the usage of partners to perform professional services, the fluctuation of gross margin on a quarterly basis, our future capital requirements, and our ability to meet our financial covenants under our Credit Agreement. Such forward-looking statements are subject to a number of risks, uncertainties, assumptions, and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified herein and those discussed in the section titled “Risk Factors,” set forth in Part I, Item 1A of our Annual Report on Form 10-K filed with the SEC on February 19, 2026 and in our other filings with the SEC. Forward-looking statements should not be relied on as predictions of future events. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. Overview Appian provides process automation technology. For over 25 years, our highly reliable and scalable platform has been leveraged by large enterprises and governments. Combining leading edge process orchestration and intelligence, we provide everything an organization needs to design, automate, and optimize critical processes, facilitating continuous adaptation in changing environments. Appian provides capabilities to tackle any process challenge. These capabilities are unified and scalable, meeting enterprise demands and easy to change as requirements evolve. •Comprehensive Automation Platform. The Appian platform provides a complete set of features and tools, allowing our customers to apply the right tool to each step of their process. Our capabilities include business rules engines, pre-built connections, application program interface (API) integrations, intelligent document processing (IDP), robotic process automation (RPA), and artificial intelligence (AI). •Unified Data Fabric. Appian’s patented data fabric is an integrated layer that unifies data across the enterprise without requiring companies to migrate their data, eliminating the need for additional systems and tools and accelerating time to insight. Our data fabric allows every worker, system, and agent to have the context it needs to act with confidence. •Enterprise-Grade Controls. Appian delivers best-in-class security, auditability, and enterprise guardrails to support even the most mission critical workloads and most sensitive and confidential data. In addition, Appian provides process mining functionality that allows organizations to identify bottlenecks and compliance risks. •Interactive Design. Our visual design tools allow business users, technical experts, and implementation specialists to collaborate on the automation, improvement, and streamlining of existing processes, assisted by AI. This iterative process continues after the initial implementation, allowing our customers to seamlessly evolve and optimize their processes over time. 26 •Implementation Excellence. Appian has an elite team of implementation and process specialists with a 25-year track record of partnering with our customers to ensure the success of their applications. Advances in AI offer the promise of unprecedented innovation in business productivity. Despite this potential, currently most business implementations of AI fail, and the technology is frequently sidelined as an assistant rather than integrated as a digital worker within core business operations. This presents a unique opportunity for Appian, since we provide the process framework that organizations need to drive value from AI investments. We believe in order to fully realize the value of AI, organizations need to embed AI capabilities directly into workflows. To be effective, AI requires strict controls and defined guardrails that eliminate errors and hallucinations, ensuring AI activities are guided by organizational policies and regulations. As a leader in process automation, we provide the tools and guardrails necessary for AI to deliver repeatable and scalable business value. The impact of AI also depends on data. Without proprietary data, AI lacks the internal context necessary to help solve specific business problems. Most enterprises today struggle to provide AI with relevant data across systems while still ensuring privacy and maintaining access privileges. Our data fabric is designed to provide the data AI needs, grant secure and performant access to information from across the enterprise, and obviate the need for complex and slow data migrations. We generate the majority of our revenue from sales of subscriptions, which include (1) cloud subscriptions bundled with maintenance and support and hosting services and (2) other subscriptions, which include self-managed licenses bundled with maintenance and support. Our subscription contracts are priced based primarily on the number of users who access and utilize the applications built on our platform, non-user-based single application licenses, or consumption-based pricing. Our subscription contract terms generally vary from one to three years with most providing for payment in advance on an annual, quarterly, or monthly basis. We have invested in our professional services organization to help ensure customers are able to build and deploy applications on our platform. We also have several strategic partnerships, including with Accenture, Capgemini, Deloitte, Indra Group, KPMG, PwC, and TCS, which allow them to refer customers to us in order to purchase software subscriptions. Our partners then provide professional services directly to the customers using our software. Additionally, they often go to market with their own pre-built solutions using our platform, delivering software license revenue to us. We intend to continue to invest in both our professional services group and strategic partnerships to drive increased adoption of our platform. We believe our investment in professional services, including strategic partners building their practices around Appian, will drive increased adoption of our platform. Our customers primarily include financial services, government, life sciences, insurance, manufacturing, energy, healthcare, telecommunications, and transportation organizations. Generally, our sales team targets its efforts at organizations with over 2,000 employees and $2.0 billion in annual revenue. For the three and six months ended June 30, 2026, revenue generated from U.S. federal government agencies was 26.1% and 26.0% of total revenue, respectively. For the three and six months ended June 30, 2025, revenue generated from U.S. federal government agencies was 25.9% and 24.9% of total revenue, respectively. No single end-customer accounted for more than 10% of our total revenue in the three and six months ended June 30, 2026 or 2025. We offer our platform globally. Our platform supports multiple languages to facilitate collaboration and address challenges in multinational organizations. In the three and six months ended June 30, 2026, 38.2% and 37.9%, respectively, of our total revenue was generated from customers outside of the United States as compared to 38.4% and 37.3% in the three and six months ended June 30, 2025, respectively. As of June 30, 2026, we operated in 16 countries. We believe we have a significant opportunity to continue to grow our international footprint, and we are investing in new geographies, including through investment in direct and indirect sales channels, professional services, and customer support and implementation partners. 27 Our business model focuses on maximizing the lifetime value of customer relationships, which is a function of the duration of a customer’s deployment of our platform as well as the price and number of subscriptions of our platform that a customer purchases. We incur significant customer acquisition costs, including expenses associated with hiring new sales representatives, who can take anywhere from six months to a year to become productive given the length of our sales cycle, and marketing costs which, with the exception of certain types of sales commissions, are expensed as incurred. At the same time, we believe the costs we incur to retain customers and drive additional purchases of software are lower than our customer acquisition costs on a relative basis. Over time, we expect a large portion of our customers to renew their subscriptions and purchase additional subscriptions as they continue to build more applications and add more users to our platform. Key Factors Affecting Our Performance The following are several key factors that affect our performance: •Market Adoption of Our Platform - Our ability to grow our customer base and drive market adoption of our platform is affected by the pace at which organizations automate processes. We expect our revenue growth will be primarily driven by the pace of adoption and penetration of our platform. We offer a leading process automation platform and intend to continue to invest to expand our customer base. The degree to which prospective customers recognize the need for our software platform and its ability to enable their organizations to automate processes, and subsequently allocate budget dollars to purchase our software, will drive our ability to acquire new customers and increase sales to existing customers, which, in turn, will affect our future financial performance. •Growth of Our Customer Base - We believe we have a substantial opportunity to grow our customer base. We have invested, and intend to continue to invest, in our sales team in order to drive sales to new customers. We continue to make investments to enhance the expertise of our sales and marketing organization within our key industry verticals of financial services, government, life sciences, insurance, and manufacturing. In addition, we have established relationships with strategic partners who work with organizations undergoing process automations. Our ability to continue to grow our customer base is dependent, in part, upon our ability to differentiate ourselves within the increasingly competitive markets in which we participate. •Further Penetration of Existing Customers - Our sales team seeks to generate additional revenue from existing customers by adding new users or application licenses. In addition, we encourage our customers to upgrade to higher service tiers in order to take advantage of incremental functionality. We offer three service tiers ranging from a standard package with entry level features to our premium offering that includes access to features such as process mining and full AI integration. Many of our customers establish Appian as a platform for process automation and expand their use to include application consolidation and legacy application modernization. Generally, the development of new applications on our platform results in the expansion of our user base within an organization and a corresponding increase in revenue. As a result of this “land and expand” strategy, we have generated significant additional revenue from our customer base. Our ability to increase sales to existing customers will depend on a number of factors, including the size of our sales and professional services teams, customers’ level of satisfaction with our platform and professional services, pricing, economic conditions, and our customers’ overall spending levels. •Investments in Growth - We have made, and plan to continue to make, investments for long-term growth, including investing in our platform and infrastructure to continuously maximize their power and speed, meet the evolving needs of our customers, and take advantage of our market opportunity. In addition, we may pursue strategic acquisitions that enhance our product offerings. We also intend to continue to invest in sales and marketing as we further expand our sales teams, increase our marketing activities, and grow our international operations. 28 Key Metrics We monitor the following metrics to help us measure and evaluate the effectiveness of our operations. All dollar amounts are presented in thousands. Cloud Subscriptions Revenue Three Months Ended June 30, Six Months Ended June 30, 2026 2025 % Change 2026 2025 % Change Cloud subscriptions revenue $ 131,667 $ 106,915 23.2 % $ 256,178 $ 206,741 23.9 % Cloud subscriptions revenue includes cloud subscriptions bundled with maintenance and support and hosting services. Our cloud subscriptions revenue is primarily determined by the number of users who access and utilize the applications built on our platform or by the number of application licenses purchased, as well as the price paid. We believe increasing cloud subscriptions revenue is an indicator of the demand for our platform, the pace at which the market for our solutions is growing, the productivity of our sales team and strategic relationships in growing our customer base, and our ability to further penetrate our existing customer base. Cloud Net Annualized Recurring Revenue (“ARR”) Expansion As of June 30, 2026 2025 Cloud net ARR expansion 115 % 113 % We believe cloud net ARR expansion provides real-time insight into the growth of our existing customer base and is indicative of our success in the renewal and expansion of cloud subscription agreements with existing customers. To calculate this metric, we define ARR on a customer level as monthly recurring cloud subscriptions revenue multiplied by 12. We then compare the period-end ARR of the previous year’s customer cohort to their ARR at the end of the current period. The cloud net ARR expansion represents the ratio between these two periods. The cloud net ARR expansion calculation is performed on a constant currency basis. Key Components of Results of Operations Revenue We generate revenue primarily through sales of subscriptions to our platform as well as professional services. We typically sell our software on a per-user basis, through non-user-based single application licenses, or consumption-based pricing. We generally bill customers and collect payment for subscriptions to our platform in advance on an annual, quarterly, or monthly basis. In certain instances, we have had customers pay their entire contract value up front. Our revenue is comprised of the following: Subscriptions Subscriptions revenue is primarily derived from cloud subscriptions bundled with maintenance and support and hosting services, license subscriptions, and maintenance and support for license subscriptions. Our maintenance and support agreements provide customers with the right to unspecified software upgrades, maintenance releases and patches released during the term of the maintenance and support agreement on a when-and-if-available basis, and rights to technical support. License subscriptions are offered when the customer prefers to self-manage the deployment of our platform within their own infrastructure. When our platform is delivered as a cloud subscription, we manage operational needs in third-party hosted data centers. 29 Professional Services Our professional services revenue is comprised of fees for consulting services, including application development, deployment assistance, and training related to our platform. Cost of Revenue Subscriptions Cost of subscriptions revenue consists primarily of fees paid to our third-party managed hosting providers and other third-party service providers, personnel costs, including payroll and benefits for our technology operations, customer support, and portions of our information security teams, amortization of acquired technology, and allocated overhead costs. We expect cost of revenue to continue to increase in absolute dollars for the foreseeable future as our customer base grows. Professional Services Cost of professional services revenue includes all direct and indirect costs to deliver our professional services and training, including employee compensation for our global professional services and training personnel, third-party contractor costs, allocated overhead costs, and the costs of billable expenses such as travel and lodging. The unpredictability of the timing of providing services related to significant professional services agreements sold on a standalone basis may cause significant fluctuations in our cost of professional services which, in turn, may impact our quarterly financial results. Gross Profit and Gross Margin Gross profit and gross margin (defined as gross profit as a percentage of total revenue), have been, and will continue to be, affected by various factors, including the mix of cloud subscriptions and license subscriptions, the mix of total subscriptions revenue and professional services revenue, subscription pricing, the costs associated with third-party hosting providers, and the extent to which we expand or reduce our professional services to support future changes in our growth. Our gross margin may fluctuate from period to period based on the aforementioned factors. Subscriptions Gross Margin Subscriptions gross margin is primarily affected by the growth in our subscriptions revenue as compared to the growth in, and timing of, costs to support such revenue. We expect to continue to invest in customer support and cloud operations to support growth in our business, and the timing of those investments is expected to cause subscriptions gross margin to fluctuate on a quarterly basis. Professional Services Gross Margin Professional services gross margin is affected by the growth in our professional services revenue as compared to the growth in, and timing of, the costs of our professional services organization. Professional services gross margin is also impacted by consultant utilization rates and the amount of services performed by subcontractors and partners as opposed to internal resources. The professional services margins for individual quarters remain subject to fluctuation based on the factors discussed above. 30 Operating Expenses Operating expenses consist of sales and marketing, research and development, and general and administrative expenses. Personnel-related costs such as salaries, bonuses, commissions, payroll tax payments, and stock-based compensation expense are the most significant components of each of these expense categories. Other components of these categories include, as applicable, professional fees for third-party services such as legal, software development, subcontracting, and cloud computing in addition to allocated overhead costs, which are primarily comprised of rent, employee medical benefits, employee relations expense, and information technology costs. In general, our operating expenses are expected to continue to increase in absolute dollars as we invest resources in enhancing our product and growing our business. Sales and Marketing Expense Sales and marketing expense primarily includes personnel costs, including salaries, bonuses, commissions, stock-based compensation, and other personnel costs related to sales teams. Additional major expenses in this category include travel and entertainment, marketing activities and promotional events, subcontracting fees, and allocated overhead costs. We are focused on increasing the efficiency of our sales force and marketing activities by enhancing account targeting, messaging, field sales operations, and sales training in order to accelerate the adoption of our platform. We expect sales and marketing expense to increase in absolute dollars as we continue to grow the size of our sales force, invest in acquiring new customers, further expand usage of our platform within our existing customer base, and broaden our efforts to build on our brand reputation as well as increase market awareness of our platform. Research and Development Expense Research and development expense consists primarily of personnel costs for our employees who develop and enhance our platform, including salaries, bonuses, stock-based compensation, and other personnel costs. Also included are non-personnel costs such as subcontracting, consulting, professional fees to third party development resources, cloud computing and software expenses, and allocated overhead costs. Our research and development efforts are focused on enhancing the capabilities, speed, and power of our software platform. We also have a product development center in India. Although we expect research and development expense to continue to increase in absolute dollars, as such costs are critical to maintain and improve the quality of applications and our competitive position, we believe our product development center will continue to result in cost savings over time. General and Administrative Expense General and administrative expense consists primarily of personnel costs, including salaries, bonuses, stock-based compensation, and other personnel costs for our administrative, legal, human resources, finance, and accounting teams as well as our senior executives. Additional expenses included in this category are non-personnel costs such as travel-related expenses, information security costs related to the protection of our internal systems, contracting and professional fees for such services as audits, taxation, and legal, insurance and other corporate expenses, including allocated overhead costs, and bad debt expenses. 31 Other Non-Operating Expense (Income) Other Expense (Income), Net Other expense (income), net consists primarily of gains and losses related to changes in foreign currency exchange rates, interest income on our cash and cash equivalents and investments, and other sources of income or expense not related to our core business operations. Interest Expense Interest expense consists primarily of interest on our debt, amortization of deferred financing fees, unused credit facility fees, and commitment fees on our letters of credit. Results of Operations The following table sets forth our consolidated statements of operations (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Revenue Subscriptions $ 157,682 $ 132,657 $ 317,993 $ 267,009 Professional services 45,574 37,983 87,443 70,057 Total revenue 203,256 170,640 405,436 337,066 Cost of revenue Subscriptions 25,409 20,707 48,313 39,228 Professional services 33,104 28,247 64,611 53,766 Total cost of revenue(1) 58,513 48,954 112,924 92,994 Gross profit 144,743 121,686 292,512 244,072 Operating expenses Sales and marketing 70,113 62,157 134,732 118,467 Research and development 47,305 42,655 93,629 84,485 General and administrative 32,765 27,858 66,435 52,938 Total operating expenses(1) 150,183 132,670 294,796 255,890 Operating loss (5,440) (10,984) (2,284) (11,818) Other non-operating expense (income) Other expense (income), net 827 (17,564) 743 (23,280) Interest expense 3,780 5,319 7,952 10,637 Total other non-operating expense (income) 4,607 (12,245) 8,695 (12,643) (Loss) income before income taxes (10,047) 1,261 (10,979) 825 Income tax expense 1,770 1,573 2,363 2,314 Net loss $ (11,817) $ (312) $ (13,342) $ (1,489) (1) Certain prior period operating expenses have been reclassified to conform to the current period presentation. These changes have been reflected in the table above as well as within our results from operation discussion below. For further information, refer to Note 2 of our consolidated financial statements. 32 The following table sets forth our consolidated statements of operations data expressed as a percentage of total revenue: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Revenue Subscriptions 77.6 % 77.7 % 78.4 % 79.2 % Professional services 22.4 22.3 21.6 20.8 Total revenue 100.0 100.0 100.0 100.0 Cost of revenue Subscriptions 12.5 12.1 11.9 11.6 Professional services 16.3 16.6 15.9 16.0 Total cost of revenue 28.8 28.7 27.9 27.6 Gross profit 71.2 71.3 72.1 72.4 Operating expenses Sales and marketing 34.5 36.4 33.2 35.1 Research and development 23.3 25.0 23.1 25.1 General and administrative 16.1 16.3 16.4 15.7 Total operating expenses 73.9 77.7 72.7 75.9 Operating loss* (2.7) (6.4) (0.6) (3.5) Other non-operating expense (income) Other expense (income), net 0.4 (10.3) 0.2 (6.9) Interest expense 1.9 3.1 2.0 3.2 Total other non-operating expense (income)* 2.3 (7.2) 2.1 (3.8) (Loss) income before income taxes* (4.9) 0.7 (2.7) 0.2 Income tax expense 0.9 0.9 0.6 0.7 Net loss* (5.8) % (0.2) % (3.3) % (0.4) % * Totals may not foot due to rounding. 33 Comparison of the Three Months Ended June 30, 2026 and 2025 Revenue Three Months Ended June 30, 2026 2025 $ Change % Change (dollars in thousands) Revenue Subscriptions $ 157,682 $ 132,657 25,025 18.9 % Professional services 45,574 37,983 7,591 20.0 % Total revenue $ 203,256 $ 170,640 $ 32,616 19.1 % Total revenue increased $32.6 million, or 19.1%, in the three months ended June 30, 2026 compared to the same period in 2025 due to an increase in our subscriptions revenue of $25.0 million coupled with an increase in our professional services revenue of $7.6 million. The increase in subscriptions revenue was driven by a $24.8 million increase in cloud subscriptions revenue and a $0.3 million increase in other subscriptions revenue. With respect to new versus existing customers, there was a $4.7 million increase in subscriptions revenue from sales to new customers, while the remaining $20.4 million of the increase was attributable to expanded deployments, price increases on renewals, and corresponding sales of additional subscriptions to existing customers. The increase in professional services revenue was due primarily to a $5.1 million increase in revenue from sales to new customers along with a $2.5 million increase in sales to existing customers. Cost of Revenue Three Months Ended June 30, 2026 2025 $ Change % Change (dollars in thousands) Cost of revenue Subscriptions $ 25,409 $ 20,707 $ 4,702 22.7 % Professional services 33,104 28,247 4,857 17.2 Total cost of revenue $ 58,513 $ 48,954 $ 9,559 19.5 % Gross Profit: Subscriptions $ 132,273 $ 111,950 Professional services 12,470 9,736 Total gross profit $ 144,743 $ 121,686 Subscriptions gross margin 83.9 % 84.4 % Professional services gross margin 27.4 % 25.6 % Total gross margin 71.2 % 71.3 % Cost of revenue increased $9.6 million, or 19.5%, in the three months ended June 30, 2026 compared to the same period in 2025, primarily due to a $5.0 million increase in professional services and product support personnel costs coupled with a $2.7 million increase in hosting costs and a $1.2 million increase in contractor costs. Professional services and product support personnel costs increased due to an increase in salaries and a 19% increase in headcount from June 30, 2025 to June 30, 2026. Hosting costs increased due to an increase in sales of our cloud offering during the three months ended June 30, 2026, while contractor costs increased due to an increase in the usage of subcontractors for professional services engagements. 34 Sales and Marketing Expense Three Months Ended June 30, 2026 2025 $ Change % Change (dollars in thousands) Sales and marketing $ 70,113 $ 62,157 7,956 12.8 % % of revenue 34.5 % 36.4 % Sales and marketing expense increased $8.0 million, or 12.8%, in the three months ended June 30, 2026 compared to the same period in 2025, primarily due to a $5.2 million increase in sales and marketing personnel costs, a $1.1 million increase in marketing expenses, and a $1.0 million increase in travel and entertainment costs. Sales and marketing personnel costs increased due to a 13% increase in headcount from June 30, 2025 to June 30, 2026. Marketing expenses increased due to higher spend on marketing materials and events relative to the prior year. In addition, travel and entertainment expenses increased due to increases in airfare and lodging associated with a higher number of in-person events and engagements relative to the prior year. Research and Development Expense Three Months Ended June 30, 2026 2025 $ Change % Change (dollars in thousands) Research and development $ 47,305 $ 42,655 4,650 10.9 % % of revenue 23.3 % 25.0 % Research and development expense increased $4.7 million, or 10.9%, in the three months ended June 30, 2026 compared to the same period in 2025. This change is primarily attributable to a $4.1 million increase in research and development personnel costs and a $1.0 million increase in cloud computing and software costs. Research and development personnel costs increased due to a 7% increase in headcount period over period. General and Administrative Expense Three Months Ended June 30, 2026 2025 $ Change % Change (dollars in thousands) General and administrative $ 32,765 $ 27,858 $ 4,907 17.6 % % of revenue 16.1 % 16.3 % General and administrative expense increased $4.9 million, or 17.6%, in the three months ended June 30, 2026 compared to the same period in 2025 primarily due to a $4.6 million increase in professional fees and a $0.7 million increase in general and administrative personnel costs. These increases were partially offset by a $1.6 million decrease in insurance expense. The increase in professional fees was the result of a $3.8 million increase in legal fees associated with our litigation against Pegasystems. Personnel costs increased largely due to an increase in salaries and a 17% increase in headcount from June 30, 2025 to June 30, 2026. Insurance expense decreased due to a $1.2 million decrease in amortization expense related to our judgment preservation insurance policy due to a change in the estimated amortization period. 35 Other Expense (Income), Net Three Months Ended June 30, 2026 2025 $ Change % Change (dollars in thousands) Other expense (income), net $ 827 $ (17,564) $ 18,391 *** % of revenue 0.4 % (10.3) % *** - Indicates a percentage that is not meaningful. Other expense, net was $0.8 million in the three months ended June 30, 2026 compared to other income, net $17.6 million in the three months ended June 30, 2025. This change was primarily due to $2.3 million in foreign exchange losses in the three months ended June 30, 2026 as compared to $15.6 million in foreign exchange gains in the three months ended June 30, 2025. Interest Expense Three Months Ended June 30, 2026 2025 $ Change % Change (dollars in thousands) Interest expense $ 3,780 $ 5,319 $ (1,539) (28.9) % % of revenue 1.9 % 3.1 % Interest expense decreased by $1.5 million in the three months ended June 30, 2026 as compared to the corresponding period in 2025 primarily due to a lower effective interest rate and lower outstanding principal compared to the prior year period. Income Tax Expense Three Months Ended June 30, 2026 2025 $ Change % Change (dollars in thousands) Income tax expense $ 1,770 $ 1,573 $ 197 12.5 % % of revenue 0.9 % 0.9 % Income tax expense increased by $0.2 million in the three months ended June 30, 2026 as compared to the corresponding period in 2025. This change was primarily driven by increased U.S. state taxes during the three months ended June 30, 2026. 36 Comparison of the Six Months Ended June 30, 2026 and 2025 Revenue Six Months Ended June 30, 2026 2025 $ Change % Change (dollars in thousands) Revenue Subscriptions $ 317,993 $ 267,009 50,984 19.1 % Professional services 87,443 70,057 17,386 24.8 % Total revenue $ 405,436 $ 337,066 $ 68,370 20.3 % Total revenue increased $68.4 million, or 20.3%, in the six months ended June 30, 2026 compared to the same period in 2025 due to an increase in our subscriptions revenue of $51.0 million as well as an increase in our professional services revenue of $17.4 million. The increase in subscriptions revenue was driven by a $49.4 million increase in cloud subscriptions revenue and a $1.5 million increase in other subscriptions revenue. With respect to new versus existing customers, there was a $7.7 million increase in subscriptions revenue from sales to new customers, while the remaining $43.3 million of the increase was attributable to expanded deployments, price increases on renewals, and corresponding sales of additional subscriptions to existing customers. The increase in professional services revenue was due primarily to a $9.7 million increase in revenue from sales to new customers, along with a $7.6 million increase in sales to existing customers. Cost of Revenue Six Months Ended June 30, 2026 2025 $ Change % Change (dollars in thousands) Cost of revenue Subscriptions $ 48,313 $ 39,228 $ 9,085 23.2 % Professional services 64,611 53,766 10,845 20.2 Total cost of revenue $ 112,924 $ 92,994 $ 19,930 21.4 % Gross Profit: Subscriptions $ 269,680 $ 227,781 Professional services 22,832 16,291 Total gross profit $ 292,512 $ 244,072 Subscriptions gross margin 84.8 % 85.3 % Professional services gross margin 26.1 % 23.3 % Total gross margin 72.1 % 72.4 % Cost of revenue increased $19.9 million, or 21.4%, in the six months ended June 30, 2026 compared to the same period in 2025, primarily due to a $8.6 million increase in professional services and product support personnel costs coupled with a $6.2 million increase in hosting costs and a $3.5 million increase in contractor costs. Professional services and product support personnel costs increased due to an increase in salaries and a 19% increase in headcount from June 30, 2025 to June 30, 2026. Hosting costs increased due to an increase in sales of our cloud offering during the six months ended June 30, 2026, while contractor costs increased due to an increase in the usage of subcontractors for professional services engagements. 37 Sales and Marketing Expense Six Months Ended June 30, 2026 2025 $ Change % Change (dollars in thousands) Sales and marketing $ 134,732 $ 118,467 $ 16,265 13.7 % % of revenue 33.2 % 35.1 % Sales and marketing expense increased $16.3 million, or 13.7%, in the six months ended June 30, 2026 compared to the same period in 2025, primarily due to a $10.7 million increase in sales and marketing personnel costs, a $2.4 million increase in travel and entertainment costs, and a $2.2 million increase in marketing expenses. Sales and marketing personnel costs increased due to a 13% increase in sales and marketing headcount from June 30, 2025 to June 30, 2026. Travel and entertainment expense increased due to a higher number of in-person events and engagements relative to the prior year. In addition, marketing expenses increased due to higher spend on marketing materials and events relative to the prior year. Research and Development Expense Six Months Ended June 30, 2026 2025 $ Change % Change (dollars in thousands) Research and development $ 93,629 $ 84,485 $ 9,144 10.8 % % of revenue 23.1 % 25.1 % Research and development expense increased $9.1 million, or 10.8%, in the six months ended June 30, 2026 compared to the same period in 2025. This change is primarily attributable to a $6.8 million increase in research and development personnel costs, a $2.1 million increase in information technology costs, and a $0.9 million increase in contractor costs. Research and development personnel costs increased due to a 7% increase in headcount period over period. Information technology costs increased primarily due to higher spend on cloud computing services and computer software. General and Administrative Expense Six Months Ended June 30, 2026 2025 $ Change % Change (dollars in thousands) General and administrative $ 66,435 $ 52,938 $ 13,497 25.5 % % of revenue 16.4 % 15.7 % General and administrative expense increased $13.5 million, or 25.5%, in the six months ended June 30, 2026 compared to the same period in 2025 primarily due to a $10.5 million increase in professional fees, a $3.2 million increase in personnel costs, and a $0.8 million increase in information technology costs. These increases were partially offset by a $2.4 million decrease in insurance expense. The increase in professional fees was the result of a $9.0 million increase in legal fees associated with our litigation against Pegasystems. Personnel costs increased due to a 17% increase in headcount from June 30, 2025 to June 30, 2026, while information technology spending increased due to higher spend on computer software and cloud computing. Insurance expense decreased due to a $2.2 million decrease in amortization expense related to our judgment preservation insurance policy due to a change in the estimated amortization period. 38 Other Expense (Income), Net Six Months Ended June 30, 2026 2025 $ Change % Change (dollars in thousands) Other expense (income), net $ 743 $ (23,280) $ 24,023 *** % of revenue 0.2 % (6.9) % *** - Indicates a percentage that is not meaningful. Other expense, net was $0.7 million in the six months ended June 30, 2026 compared to other income, net of $23.3 million in the six months ended June 30, 2025. This change was primarily due to $3.8 million in foreign exchange losses in the six months ended June 30, 2026 as compared to $19.7 million in foreign exchange gains in the six months ended June 30, 2025. Interest Expense Six Months Ended June 30, 2026 2025 $ Change % Change (dollars in thousands) Interest expense $ 7,952 $ 10,637 (2,685) (25.2) % % of revenue 2.0 % 3.2 % Interest expense decreased by $2.7 million in the six months ended June 30, 2026 as compared to the corresponding period in 2025 primarily due to a lower effective interest rate and lower outstanding principal across the comparable periods. Income Tax Expense Six Months Ended June 30, 2026 2025 $ Change % Change (dollars in thousands) Income tax expense $ 2,363 $ 2,314 $ 49 2.1 % % of revenue 0.6 % 0.7 % Income tax expense was consistent between the six months ended June 30, 2026 and the corresponding period in 2025. Pre-tax book income in certain international subsidiaries decreased for the six months ended June 30, 2026, partially offset by increased U.S. state taxes and withholding taxes. 39 Non-GAAP Financial Measures To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we provide investors with certain non-GAAP financial performance measures. We use these non-GAAP financial performance measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Management believes these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenses that may not be indicative of our recurring core business operating results. We believe both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to historical performance as well as comparisons to competitors’ operating results. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to measures used by management in its financial and operational decision-making and (2) they are used by institutional investors and the analyst community to help them analyze the health of our business. Our non-GAAP financial performance measures include the following: non-GAAP subscriptions cost of revenue, non-GAAP professional services cost of revenue, non-GAAP total cost of revenue, non-GAAP sales and marketing expense, non-GAAP research and development expense, non-GAAP general and administrative expense, non-GAAP total operating expense, non-GAAP operating (loss) income, non-GAAP non-operating (expense) income, non-GAAP income tax expense (benefit), non-GAAP net (loss) income, and non-GAAP net (loss) income per share, basic and diluted. These non-GAAP financial performance measures exclude the effect of stock-based compensation expense, unrealized foreign exchange rate gains and losses, certain non-ordinary litigation-related expenses consisting of legal and other professional fees associated with the Pegasystems cases (net of insurance reimbursements), or Litigation Expense, amortization of the judgment preservation insurance policy, or JPI Amortization, and lease impairments and lease-related charges associated with actions taken to reduce the footprint of our leased office spaces, or Lease Impairment and Lease-Related Charges. While some of these items may be recurring in nature and should not be disregarded in the evaluation of our earnings performance, it is useful to exclude such items when analyzing current results and trends compared to other periods as these items can vary significantly from period to period depending on specific underlying transactions or events that may occur. Therefore, while we may incur or recognize these types of expenses in the future, we believe removing these items for purposes of calculating our non-GAAP financial measures provides investors with a more focused presentation of our ongoing operating performance. We also discuss adjusted EBITDA, a non-GAAP financial performance measure we believe offers a useful view of the overall operation of our business. We define adjusted EBITDA as net loss before (1) other expense (income), net, (2) interest expense, (3) income tax expense, (4) depreciation expense and amortization of intangible assets, (5) stock-based compensation expense, (6) Litigation Expense, (7) JPI Amortization, and (8) Lease Impairment and Lease-Related Charges. The most directly comparable GAAP financial measure to adjusted EBITDA is net loss. Users should consider the limitations of using adjusted EBITDA, including the fact this measure does not provide a complete depiction of our operating performance. Adjusted EBITDA is not intended to purport to be an alternative to net loss as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, as a substitute for, or superior to the financial information prepared and presented in accordance with GAAP, and our non-GAAP measures may be different from non-GAAP measures used by other companies. 40 The following tables reconcile our non-GAAP measures to their nearest comparable GAAP measures (in thousands, except per share data): GAAP Measure Stock-Based Compensation Litigation Expense JPI Amortization Lease Impairment and Lease-Related Charges Unrealized Foreign Exchange Rate Gains and Losses Non-GAAP Measure Three Months Ended June 30, 2026 Subscriptions cost of revenue $ 25,409 $ (497) $ — $ — $ — $ — 24,912 Professional services cost of revenue 33,104 (1,520) — — — — 31,584 Total cost of revenue 58,513 (2,017) — — — — 56,496 Sales and marketing expense 70,113 (1,963) — — — — 68,150 Research and development expense 47,305 (3,382) — — — — 43,923 General and administrative expense 32,765 (3,198) (6,293) (1,957) (279) — 21,038 Total operating expense 150,183 (8,543) (6,293) (1,957) (279) — 133,111 Operating (loss) income (5,440) 10,560 6,293 1,957 279 — 13,649 Non-operating expense (income) 827 — — — — (2,523) (1,696) Income tax impact of above items 1,770 504 — — — 95 2,369 Net (loss) income (11,817) 10,056 6,293 1,957 279 2,428 9,196 Net (loss) income per share, basic $ (0.16) $ 0.14 $ 0.09 $ 0.03 $ — $ 0.03 $ 0.13 Net (loss) income per share, diluted(a) $ (0.16) $ 0.14 $ 0.09 $ 0.03 $ — $ 0.03 $ 0.13 Three Months Ended June 30, 2025 Subscriptions cost of revenue $ 20,707 $ (418) $ — $ — $ — $ — 20,289 Professional services cost of revenue 28,247 (1,400) — — — — 26,847 Total cost of revenue 48,954 (1,818) — — — — 47,136 Sales and marketing expense 62,157 (2,087) — — — — 60,070 Research and development expense 42,655 (3,357) — — — — 39,298 General and administrative expense 27,858 (3,431) (2,482) (3,118) (297) 18,530 Total operating expense 132,670 (8,875) (2,482) (3,118) (297) — 117,898 Operating (loss) income (10,984) 10,693 2,482 3,118 297 — 5,606 Non-operating (income) expense (17,564) — — — — 16,754 (810) Income tax impact of above items 1,573 295 — — — (1,059) 809 Net (loss) income (312) 10,398 2,482 3,118 297 (15,695) 288 Net (loss) income per share, basic $ (0.00) $ 0.14 $ 0.03 $ 0.04 $ — $ (0.21) $ 0.00 Net (loss) income per share, diluted(a) $ (0.00) $ 0.14 $ 0.03 $ 0.04 $ — $ (0.21) $ 0.00 (a) Accounts for the impact of 0.4 million shares of dilutive securities. 41 GAAP Measure Stock-Based Compensation Litigation Expense JPI Amortization Lease Impairment and Lease-Related Charges Unrealized Foreign Exchange Rate Gains and Losses Non-GAAP Measure Six Months Ended June 30, 2026 Subscriptions cost of revenue $ 48,313 $ (1,056) $ — $ — $ — $ — 47,257 Professional services cost of revenue 64,611 (3,158) — — — — 61,453 Total cost of revenue 112,924 (4,214) — — — — 108,710 Sales and marketing expense 134,732 (4,366) — — — — 130,366 Research and development expense 93,629 (7,117) — — — — 86,512 General and administrative expense 66,435 (6,752) (13,241) (4,012) (581) — 41,849 Total operating expense 294,796 (18,235) (13,241) (4,012) (581) — 258,727 Operating (loss) income (2,284) 22,449 13,241 4,012 581 — 37,999 Non-operating expense (income) 743 — — — — (3,371) (2,628) Income tax impact of above items 2,363 1,011 — — — 294 3,668 Net (loss) income (13,342) 21,438 13,241 4,012 581 3,077 29,007 Net (loss) income per share, basic(c) $ (0.18) $ 0.29 $ 0.18 $ 0.05 $ 0.01 $ 0.04 $ 0.40 Net (loss) income per share, diluted(a) $ (0.18) $ 0.29 $ 0.18 $ 0.05 $ 0.01 $ 0.04 $ 0.39 Six Months Ended June 30, 2025 Subscriptions cost of revenue $ 39,228 $ (916) $ — $ — $ — $ — 38,312 Professional services cost of revenue 53,766 (2,856) — — — — 50,910 Total cost of revenue 92,994 (3,772) — — — — 89,222 Sales and marketing expense 118,467 (4,333) — — — — 114,134 Research and development expense 84,485 (6,371) — — — — 78,114 General and administrative expense 52,938 (6,256) (4,194) (6,202) (609) — 35,677 Total operating expense 255,890 (16,960) (4,194) (6,202) (609) — 227,925 Operating (loss) income (11,818) 20,732 4,194 6,202 609 — 19,919 Non-operating (income) expense (23,280) — — — — 20,770 (2,510) Income tax impact of above items 2,314 750 — — — (1,326) 1,738 Net (loss) income (1,489) 19,982 4,194 6,202 609 (19,444) 10,054 Net (loss) income per share, basic $ (0.02) $ 0.27 $ 0.06 $ 0.08 $ 0.01 $ (0.26) $ 0.14 Net (loss) income per share, diluted(b,c) $ (0.02) $ 0.27 $ 0.06 $ 0.08 $ 0.01 $ (0.26) $ 0.13 (a) Accounts for the impact of 0.5 million shares of dilutive securities. (b) Accounts for the impact of 0.4 million shares of dilutive securities. (c) Per share amounts do not foot due to rounding. 42 The following table reconciles GAAP net loss to adjusted EBITDA for the three and six months ended June 30, 2026 and 2025 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 GAAP net loss $ (11,817) $ (312) $ (13,342) $ (1,489) Other expense (income), net 827 (17,564) 743 (23,280) Interest expense 3,780 5,319 7,952 10,637 Income tax expense 1,770 1,573 2,363 2,314 Depreciation expense and amortization of intangible assets 2,507 2,524 4,780 4,970 Stock-based compensation expense 10,560 10,693 22,449 20,732 Litigation Expense 6,293 2,482 13,241 4,194 JPI Amortization 1,957 3,118 4,012 6,202 Lease Impairment and Lease-Related Charges 279 297 581 609 Adjusted EBITDA $ 16,156 $ 8,130 $ 42,779 $ 24,889 Liquidity and Capital Resources The following table presents selected financial information and statistics pertaining to liquidity and capital resources as of June 30, 2026 and December 31, 2025: As of June 30, 2026 December 31, 2025 Cash and cash equivalents $ 121,111 $ 135,810 Short-term investments and marketable securities 46,755 51,415 Property and equipment, net 30,667 32,087 Working capital* (1,812) 67,317 * Defined as current assets net of current liabilities. Sources of Funds We believe our existing cash and cash equivalents and short-term investments and marketable securities, together with any positive cash flows from operations and available borrowings under our revolving credit facility, will be sufficient to support working capital and capital expenditure requirements for at least the next twelve months. To further help strengthen our financial position and support our growth initiatives, in November 2022 we entered into a Senior Secured Credit Facilities Credit Agreement, or the Credit Agreement, which, as amended to date, provides for a five-year term loan facility in an aggregate principal amount of $200.0 million and, in addition, up to $100.0 million for a revolving credit facility, including a letter of credit sub-facility in the aggregate availability amount of $20.0 million and a swingline sub-facility in the aggregate availability amount of $10.0 million (as a sublimit of the revolving loan facility). The Credit Agreement matures on November 3, 2027. We have been using the proceeds to fund the growth of our business and support our working capital requirements. We are currently in compliance with all covenants, had used borrowing capacity of $62.0 million under our $100.0 million revolving credit facility, and had outstanding letters of credit totaling $7.8 million in connection with securing our leased office space. 43 On August 5, 2026, we entered into a new Senior Secured Credit Agreement by and among the Company, Silicon Valley Bank, a division of First-Citizens Bank & Trust Company, as administrative agent and collateral agent for the lenders party thereto (the “New Credit Agreement”), providing for aggregate commitments of $300.0 million, consisting of a $240.0 million revolving credit facility and a $60.0 million term loan facility. The proceeds from the new facility, which matures on August 5, 2031, were used to refinance the Company’s existing indebtedness and will provide ongoing liquidity for working capital requirements, general corporate purposes, and other strategic initiatives. In connection with the closing of the New Credit Agreement, we reduced our cash balance by $36.6 million to reduce our indebtedness. As of August 5, 2026, we had used borrowing capacity of $140.0 million under our $240.0 million revolving credit facility and had $60.0 million outstanding on the term loan facility. The foregoing description of the New Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the New Credit Agreement, to be filed as an exhibit to our Quarterly Report on Form 10-Q for the quarter ending September 30, 2026. We expect future sources of funds to consist primarily of cash generated from sales of subscriptions and the related professional services. We may also elect to raise additional sources of funding through entering into new debt financing arrangements or conducting additional public offerings. Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of spending to support research and development efforts, the expansion of sales and marketing activities, particularly internationally, the introduction of new and enhanced products and functions as well as platform enhancements and professional services offerings, and the level of market acceptance of our product. Uses of Funds Our current principal uses of cash are funding operations and other working capital requirements. Historically, we have also utilized cash to pay for the acquisition of businesses that were complementary to ours, and we may pursue similar opportunities in the future. Over the past several years, revenue has increased significantly from year to year and, as a result, cash flows from customer collections have also grown. However, as we continue to invest in growing our business, operating expenses have also increased. We have also initiated several share repurchase programs as follows (in thousands except average price paid per share): Value of shares authorized Number of shares repurchased Average price paid per share Value of shares repurchased February 2024 $ 50,000 1,321 $ 37.86 $ 49,999 May 2025 $ 10,000 313 $ 31.91 $ 10,000 August 2025 $ 10,000 327 $ 30.60 $ 10,000 February 20261 $ 100,000 2,691 $ 24.41 $ 65,736 1 On May 5, 2026, the Board of Directors approved an additional $50.0 million for the Share Repurchase Program, bringing the total aggregate authorization under the program to $100.0 million. All other terms and conditions of the Share Repurchase Program remain unchanged. Outside of the above items and cash used by operations, other uses of cash in 2026 to date have included capital expenditures related to the expansion of new leased facilities and principal repayments of our term loan debt. Furthermore, we have a non-cancellable cloud hosting arrangement with AWS that contains provisions for minimum purchase commitments. Specifically, purchase commitments under the agreement total $220.0 million over five years. The agreement, which was originated in July 2021 and amended in October 2024, currently contains minimum annual spending requirements of $44.0 million from November 2024 to October 2029. Spending under this agreement for the three and six months ended June 30, 2026 totaled $17.2 million and $33.4 million, respectively. Spending under this agreement for the three and six months ended June 30, 2025 totaled $12.9 million and $23.3 million, respectively. We expect to meet our minimum annual spending requirement during the term of the arrangement. 44 Historical Cash Flows Six Months Ended June 30, 2026 2025 $ Change % Change (dollars in thousands) Beginning cash and cash equivalents $ 135,810 $ 118,552 $ 17,258 14.6 % Operating activities: Net loss (13,342) (1,489) (11,853) *** Stock-based compensation and other non-cash adjustments 31,467 5,204 26,263 *** Changes in working capital 42,784 39,311 3,473 8.8 Net cash provided by operating activities 60,909 43,026 17,883 41.6 Investing activities: Net cash provided by (used by) investing activities 1,722 (33,093) 34,815 *** Financing activities: Net cash used by financing activities (76,255) (18,965) (57,290) *** Effect of exchange rates (1,075) 2,687 (3,762) *** Net decrease in cash and cash equivalents (14,699) (6,345) (8,354) *** Ending cash and cash equivalents $ 121,111 $ 112,207 $ 8,904 7.9 % *** Indicates a percentage that is not meaningful. Operating Activities Net cash provided by operating activities was $60.9 million for the six months ended June 30, 2026 as compared to $43.0 million of net cash provided by operating activities for the six months ended June 30, 2025. The increase in net cash provided by operating activities was primarily driven by increased cash collections stemming from strong contract bookings in the fourth quarter of 2025 and throughout the first six months of 2026, as well as our continuing cost management activities. Investing Activities Net cash provided by investing activities was $1.7 million for the six months ended June 30, 2026 as compared to $33.1 million in net cash used by investing activities for the six months ended June 30, 2025. This change was primarily driven by a $21.1 million increase in proceeds from the maturity of investments coupled with a $14.4 million decrease in purchases of short-term investments. Financing Activities Net cash used by financing activities was $76.3 million for the six months ended June 30, 2026 as compared to $19.0 million of net cash used by financing activities for the six months ended June 30, 2025. The increase in net cash used by financing activities was primarily due to a $55.7 million increase in repurchases of common stock and a $1.9 million increase in payments for employee taxes related to the net share settlement of equity awards during the six months ended June 30, 2026. 45 Critical Accounting Estimates There have been no material changes in our critical accounting estimates from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 19, 2026. We are not aware of any specific events or circumstances that would require us to update our estimates, assumptions, and judgments. Recent Accounting Pronouncements See Note 2 to the unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements. 46