RPD

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with (1) our unaudited condensed 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 fiscal year ended December 31, 2025 included in our Annual Report on Form 10-K, filed with the SEC on February 19, 2026. Forward-looking statements in this review are qualified by the cautionary statement included under the next sub-heading, “Special Note Regarding Forward-Looking Statements”. Special Note Regarding Forward-Looking Statements This Quarterly Report on Form 10-Q, including the sections entitled “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Statements that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “seek,” “should,” “target,” “will,” “would” and similar expressions or variations intended to identify forward-looking statements. These forward-looking statements include, but are not limited to, statements concerning the following: • our ability to continue to add new customers, maintain existing customers and sell new products and professional services to new and existing customers; • uncertain impacts that prolonged economic uncertainty may have on our business, strategy, operating results, financial condition and cash flows, as well as changes in overall level of software spending and volatility in the global economy; • the effects of increased competition as well as innovations by new and existing competitors in our market; • our ability to effectively restructure our business in alignment with our strategic priorities; • our ability to adapt to technological change and effectively enhance, integrate, innovate and scale our solutions and platform capabilities, including our Command Platform; • our ability to capitalize on customer demand for consolidated security platforms and vendor consolidation trends, including our ability to deliver an integrated, open security operations platform; • our ability to deliver, scale and operate managed services (including managed detection and response (“MDR”) and related offerings, including with respect to service quality, staffing, operating efficiency, and the integration of technology and expertise; • our ability to effectively manage or sustain our growth and to sustain profitability; • our ability to diversify our sources of revenue; • potential acquisitions and our ability to successfully integrate acquired businesses, technologies and personnel, including the realization of anticipated benefits from such acquisitions; • our expected use of proceeds from future issuances of equity or convertible debt securities; • our ability to maintain, or strengthen awareness of, our brand; • perceived or actual security, integrity, reliability, quality or compatibility problems with our solutions, including problems related to systems, unscheduled downtime, outages or security breaches in our customers; • statements regarding future revenue, hiring plans, expenses, capital expenditures, capital requirements and stock performance; • our ability to meet publicly announced guidance or other expectations about our business, key metrics and future operating results; • our ability to maintain an adequate annualized recurring revenue growth; • our ability to attract and retain qualified employees and key personnel and further expand our overall headcount; • our ability to grow, both domestically and internationally; • our ability to stay abreast of new or modified laws and regulations that currently apply or become applicable to our business both in the United States and internationally; • our ability to maintain, protect and enhance our intellectual property; 26 • the outcomes of our initiatives that use artificial intelligence (“AI”), including the development, integration and effectiveness of AI-driven and autonomous (“agentic”) security capabilities within our solutions; • the evolving threat landscape, including the increasing sophistication and frequency of cyberattacks, including those leveraging AI; • costs associated with defending intellectual property infringement and other claims; and • the future trading prices of our common stock and the impact of securities analysts’ reports on these prices. These statements represent the beliefs and assumptions of our management based on information currently available to us. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified above, and those discussed in the section titled “Risk Factors” included under Part II, Item 1A. 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 that occur after the date of this report. As used in this report, the terms “Rapid7,” the “company,” “we,” “us,” and “our” mean Rapid7, Inc. and its subsidiaries unless the context indicates otherwise. Overview Rapid7 is a global leader in AI-powered managed cybersecurity operations, trusted to advance organizations’ cyber resilience. Open and extensible, the Rapid7 Command Platform integrates security data, enriching it with AI, threat intelligence, and 25 years of expertise and innovation to reduce risk and disrupt attackers. As a recognized leader in preemptive managed detection and response (MDR), Rapid7 unifies exposure and detection to transform the cybersecurity operations of customers worldwide. In today's rapidly evolving IT environment, customers are encountering escalating challenges due to the widening spectrum of attackers and techniques, including the proliferation of cyberattacks leveraging AI. We empower security professionals to manage a modern attack surface through our AI-driven technology, research, and broad, strategic expertise. Rapid7’s comprehensive security solutions, including our MDR services, next-gen security information and event management ("SIEM"), and exposure management help our global customers unify exposure management with threat detection and response to prioritize and reduce material risk, and eliminate threats with greater speed, precision, and consistency. We believe that Rapid7 is poised to expand the capabilities of today's SecOps teams through our integrated, open data security operations platform which is powered by our AI-assisted workflows to AI-driven, machine-speed security operations. Rapid7 enables the Security Operations Center (“SOC”) to understand their fragmented attack surface through an attacker's perspective, thereby allowing them to proactively reduce exposures and better detect and respond to threats. Enriched by years of industry-leading risk research and managed services expertise, our integrated platform replaces reactive security with a preemptive, risk-aware approach that reduces attack surfaces and enables faster, more confident response through contextually rich insights and deep operational visibility. In recent years, security leaders have increasingly prioritized consolidating fragmented point products into unified security operations platforms to improve visibility, operational efficiency, and risk outcomes. In 2022, Gartner reported that approximately 75% of organizations were pursuing security vendor consolidation as part of their SecOps strategies. This shift reflects mounting challenges associated with managing expanding attack surfaces, disconnected exposure data, escalating alert volume, and the need to continuously prioritize and respond to risk across complex environments. As a result, customers are seeking platforms that unify exposure management with threat detection and response, enabling them to identify where they are most vulnerable, anticipate how attackers may exploit those exposures, and respond with speed and precision. At the same time, customers are increasingly relying on MDR and adjacent managed services to deliver continuous expertise, higher-fidelity detection, and faster response outcomes that extend and augment internal SOC teams. In this context, organizations are prioritizing open, integrated security operations platforms that pair technology with expertise to deliver risk-aware detection and response across on-premise, cloud, identity, and external attack surfaces. We have been an active participant in advancing this shift toward consolidated SecOps by innovating across our open platform architecture, strengthening our exposure management and AI SOC capabilities, and expanding our managed services portfolio. As we continue to execute on our SecOps consolidation strategy, we are advancing innovation across our core platform capabilities and managed services to accelerate customer value and deliver a frictionless, integrated security operations experience. As the threat landscape continues to grow in complexity, customers are demonstrating demand for integrated expertise to support them in effectively managing their security technologies. The convergence of these key trends – security consolidation, AI SOC capabilities, integrated cloud security, and expertise driven outcomes – forms the foundation of what our customers require for the modern SOC. Our focus is to be the leading provider of integrated, AI-driven security solutions infused with 27 human expertise for the modern SOC by providing risk-aware detection and response that outpaces attackers and strengthens security program maturity. We market and sell our products and professional services to organizations of all sizes globally, including mid-market businesses, enterprises, non-profits, educational institutions and government agencies. Our customers span a wide variety of industries such as technology, energy, financial services, healthcare and life sciences, manufacturing, media and entertainment, retail, education, real estate, transportation, government and professional services. As of June 30, 2026, we had over 11,500 customers in 149 countries, including 34% of the Fortune 100. Our revenue was not concentrated with any individual customer and no customer represented more than 1% of our revenue for the three and six months ended June 30, 2026 and 2025. Recent Developments Restructuring Plan In June 2026, we executed a limited restructuring activity designed to improve operational efficiencies and better align our workforce with current business needs. The restructuring included a reduction of our workforce primarily within our sales and marketing departments and, to a lesser degree, within our general and administrative business support departments. The restructuring activities are expected to be substantially completed by the end of the third quarter of 2026 with some payments continuing into the fourth quarter of 2026, subject to local law and consultation requirements. For further information, refer to Note 15, Restructuring, in the Notes to our Consolidated Financial Statements. On August 7, 2026, our board of directors approved a restructuring plan that is designed to simplify our operations, align resources and investments with our core platform, and create capacity to reinvest in capabilities and solutions that improve the customer experience and strengthen our competitive position (collectively, the “2026 Restructuring Plan”). The 2026 Restructuring Plan includes reduction of the Company’s workforce by approximately 12%. For further information, refer to Note 16, Subsequent events, in the Notes to our Consolidated Financial Statements. The actions associated with the Restructuring Plan are expected to be completed by the end of fiscal 2026, subject to local law and consultation requirements. Leadership Transition Effective June 1, 2026, Wael Mohamed was appointed Chief Executive Officer, Corey Thomas was appointed Executive Chairman, and Marc Brown was appointed Lead Independent Director. Our Business Model We offer our products through a variety of delivery models to meet the needs of our diverse customer base, including: •Cloud-based subscriptions, which provide our software capabilities to our customers through cloud access and on a subscription basis. Our Incident Command, Exposure Command, and Threat Command products are offered as cloud-based subscriptions, with an option for a one or multi-year term. •Managed services, through which we operate our products and provide our capabilities on behalf of our customers. Our Managed Vulnerability Management, Managed Detection and Response, and Managed Application Security products are offered on a managed service basis, pursuant to one or multi-year agreements. •Licensed on-premise software consists of term licenses. When licensed on-premise software is purchased, maintenance and support and content subscriptions, as applicable, are bundled with the license for the term period. Our Nexpose and Metasploit products are offered through term software licenses with an option for one or multi-year terms. Our maintenance and support provides our customers with telephone and web-based support and ongoing bug fixes and repairs during the term of the maintenance and support agreement, and our customers who purchase our Nexpose and Metasploit products also purchase content subscriptions, which provide them with real-time access to the latest vulnerabilities and exploits. Additionally, we offer our products through our consolidation offerings, which unify our products and services to our customers in a single package. Our Threat Complete and Cloud Risk Complete packages are offered as cloud based subscriptions, with an option for a one or multi-year term. Our Managed Threat Complete Offering is offered on a managed service basis, generally pursuant to one or multi-year agreements. For each of the three and six months ended June 30, 2026 and 2025, recurring revenue, defined as revenue from term software licenses, content subscriptions, managed services, cloud-based subscriptions and maintenance and support, was 97% of total revenue. 28 Components of Results of Operations Revenue We generate revenue primarily from selling products and professional services through a variety of delivery models to meet the needs of our diverse customer base. Product Subscriptions We generate product subscriptions revenue from the sale of (1) cloud-based subscriptions, (2) managed services offerings, which utilize our products and (3) software licenses with related maintenance and support and content subscription, as applicable. Software license revenue consists of revenues from term licenses. When software licenses are purchased, maintenance and support and content subscription, as applicable, are bundled with the license for the term period. Professional Services We generate professional service revenue from the sale of deployment and training services related to our products, incident response services and security advisory services. Cost of Revenue Our total cost of revenue consists of the costs of product subscriptions and professional services, as noted below. In addition, cost of revenue includes overhead costs for depreciation, facilities, IT, information security, and recruiting. Our IT overhead costs include IT personnel compensation costs and costs associated with our IT infrastructure. All overhead costs are allocated based on relative headcount. Cost of Product Subscriptions Cost of product subscriptions consists of personnel and related costs for our content, support, managed service and cloud operations teams, including salaries and other payroll related costs, bonuses, stock-based compensation and allocated overhead costs. Also included in cost of product subscriptions are software license fees, cloud computing costs and internet connectivity expenses directly related to delivering our products, amortization of contract fulfillment costs, as well as amortization of certain intangible assets including internally developed software. Cost of Professional Services Cost of professional services consists of personnel and related costs for our professional services team, including salaries and other payroll related costs, bonuses, stock-based compensation, costs of contracted third-party vendors, travel and entertainment expenses and allocated overhead costs. We expect our cost of revenue to fluctuate on an absolute dollar basis as we continue to grow our revenue over time. Gross Margin Gross margin, or gross profit as a percentage of revenue, has been and will continue to be affected by a variety of factors, including the average sales price of our products and services, transaction volume growth, the mix of revenue between software licenses, cloud-based subscriptions, managed services and professional services and changes in cloud computing costs. We expect our gross margins to fluctuate over time depending on the factors described above. Operating Expenses Operating expenses consist of research and development, sales and marketing, general and administrative expenses, impairment of long-lived assets, and restructuring costs. Operating expenses include overhead costs for depreciation, facilities, IT, information security and recruiting. Our IT overhead costs include IT personnel compensation costs and costs associated with our IT infrastructure. All overhead costs are allocated based on relative headcount. In the near term, we are taking restructuring actions that are expected to reduce the absolute amount of our expenses while continuing to prioritize investments to drive growth. Research and Development Expense Research and development expense consists of personnel costs for our research and development team, including salaries and other payroll related costs, bonuses and stock-based compensation. Additional expenses include third-party infrastructure costs, 29 travel and entertainment, consulting and professional fees for third-party development resources as well as allocated overhead costs. Sales and Marketing Expense Sales and marketing expense consists of personnel costs for our sales and marketing team, including salaries and other payroll related costs, commissions, including amortization of deferred commissions, bonuses and stock-based compensation. Additional expenses include marketing activities and promotional events, travel and entertainment, training costs, amortization of certain intangible assets and allocated overhead costs. General and Administrative Expense General and administrative expense consists of personnel costs for our executive, legal, human resources, and finance and accounting departments, including salaries and other payroll related costs, bonuses and stock-based compensation. Additional expenses include travel and entertainment, professional fees, litigation-related expenses, insurance, acquisition-related expenses, amortization of certain intangible assets and allocated overhead costs. Restructuring Expense Restructuring expense consists of charges related to a restructuring plan such as employee transition, notice period and severance payments and employee benefits and related facilitation costs. For further information, refer to Note 15, Restructuring, in the Notes to our unaudited condensed consolidated financial statements. Interest Income Interest income consists primarily of interest income on our cash and cash equivalents and our short and long-term investments. Interest Expense Interest expense consists primarily of contractual interest expense, amortization of debt issuance costs related to our convertible senior notes and revolving credit facility and induced conversion expense. We expect interest expense in the near term to represent contractual interest expense and amortization of debt issuance costs related to our convertible senior notes. Other (Expense) Income, Net Other (expense) income, net consists primarily of the change in fair value of derivative assets and unrealized and realized gains and losses related to changes in foreign currency exchange rates. Provision for Income Taxes Provision for income taxes consists of domestic and foreign taxes on income and withholding taxes. We maintain a substantially full valuation allowance for domestic and certain foreign deferred tax assets, including net operating loss carryforwards and tax credits. We determined as of June 30, 2026 that it was more likely than not that these deferred tax assets will not be realized. However, we may release some of these valuation allowances in future periods if positive evidence, such as projection of sustained future profitability, supports the realization of such deferred tax assets. Release of all or a portion of these valuation allowances would result in a decrease in the provision for income taxes in the period of the release. 30 Results of Operations The following table presents the consolidated statement of operations data (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Revenue: Product subscriptions $ 205,051 $ 208,097 $ 409,100 $ 412,032 Professional services 5,832 6,096 11,474 12,414 Total revenue 210,883 214,193 420,574 424,446 Cost of revenue(1): Product subscriptions 59,925 57,236 119,079 111,604 Professional services 5,620 5,823 11,215 10,935 Total cost of revenue 65,545 63,059 130,294 122,539 Operating expenses(1): Research and development 47,073 47,227 95,427 95,115 Sales and marketing 76,186 79,247 155,120 158,647 General and administrative 17,385 21,166 35,597 44,752 Restructuring 1,675 — 1,675 — Total operating expenses 142,319 147,640 287,819 298,514 Income from operations 3,019 3,494 2,461 3,393 Interest income 5,539 5,514 11,151 11,272 Interest expense (2,533) (2,627) (5,031) (5,281) Other (expense) income, net (162) 3,957 (888) 5,759 Income before income taxes 5,863 10,338 7,693 15,143 (Benefit) provision for income taxes (210) 2,000 490 4,700 Net income $ 6,073 $ 8,338 $ 7,203 $ 10,443 (1) Cost of revenue and operating expenses include stock-based compensation expense and depreciation and amortization expense as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Stock-based compensation expense: Cost of revenue $ 1,586 $ 2,580 $ 3,302 $ 4,844 Research and development 9,242 10,250 17,648 20,636 Sales and marketing 4,443 7,451 9,514 14,692 General and administrative 4,554 7,300 9,251 14,560 Total stock-based compensation expense $ 19,825 $ 27,581 $ 39,715 $ 54,732 Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Depreciation and amortization expense: Cost of revenue $ 9,178 $ 8,832 $ 18,475 $ 17,506 Research and development 799 648 1,515 1,558 Sales and marketing 868 1,557 1,709 3,223 General and administrative 386 353 742 768 Total depreciation and amortization expense $ 11,231 $ 11,390 $ 22,441 $ 23,055 31 The following table sets forth our consolidated statements of operations data expressed as a percentage of revenue: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Revenue: Product subscriptions 97.2 % 97.2 % 97.3 % 97.1 % Professional services 2.8 % 2.8 % 2.7 % 2.9 % Total revenue 100.0 % 100.0 % 100.0 % 100.0 % Cost of revenue: Product subscriptions 28.4 % 26.7 % 28.3 % 26.3 % Professional services 2.7 % 2.7 % 2.7 % 2.6 % Total cost of revenue 31.1 % 29.4 % 31.0 % 28.9 % Operating expenses: Research and development 22.3 % 22.0 % 22.7 % 22.4 % Sales and marketing 36.1 % 37.0 % 36.9 % 37.4 % General and administrative 8.2 % 9.9 % 8.5 % 10.5 % Restructuring 0.8 % — % 0.4 % — % Total operating expenses 67.5 % 68.9 % 68.5 % 70.3 % Income from operations 1.4 % 1.5 % 0.6 % 0.8 % Interest income 2.6 % 2.6 % 2.7 % 2.7 % Interest expense (1.2) % (1.2) % (1.2) % (1.2) % Other (expense) income, net (0.1) % 1.8 % (0.2) % 1.4 % Income before income taxes 2.8 % 4.8 % 1.9 % 3.7 % (Benefit) provision for income taxes (0.1) % 0.9 % 0.1 % 1.1 % Net income 2.9 % 3.9 % 1.8 % 2.6 % Comparison of the Three and Six Months Ended June 30, 2026 and 2025 All numbers presented below are in thousands, except for percentages. Revenue Three Months Ended June 30, Change Six Months Ended June 30, Change 2026 2025 $ % 2026 2025 $ % Revenue: Product subscriptions $ 205,051 $ 208,097 $ (3,046) (1.5) % $ 409,100 $ 412,032 $ (2,932) (0.7) % Professional services 5,832 6,096 (264) (4.3) % 11,474 12,414 (940) (7.6) % Total revenue $ 210,883 $ 214,193 $ (3,310) (1.5) % $ 420,574 $ 424,446 $ (3,872) (0.9) % Total revenue decreased by $3.9 million for the six months ended June 30, 2026 as compared to the corresponding period in 2025, primarily driven by a decrease in our non-core standalone products, partially offset by an increase in our managed detection and response revenue. The decrease in professional services revenue was primarily driven by lower penetration-testing revenue. The year-over-year trends for the three-month period were aligned with the year-over-year trends for the six-month period discussed above. 32 Three Months Ended June 30, Change Six Months Ended June 30, Change 2026 2025 $ % 2026 2025 $ % Cost of revenue: Product subscriptions $ 59,925 $ 57,236 $ 2,689 4.7 % $ 119,079 $ 111,604 $ 7,475 6.7 % Professional services 5,620 5,823 (203) (3.5) % 11,215 10,935 280 2.6 % Total cost of revenue $ 65,545 $ 63,059 $ 2,486 3.9 % $ 130,294 $ 122,539 $ 7,755 6.3 % Gross margin %: Products 70.8 % 72.5 % 70.9 % 72.9 % Professional services 3.6 % 4.5 % 2.3 % 11.9 % Total gross margin % 68.9 % 70.6 % 69.0 % 71.1 % The increase in total cost of revenue for the six months ended June 30, 2026 compared with the corresponding period in 2025 was primarily driven by an increase of personnel expenses of $4.5 million, inclusive of a $6.1 million increase in wages and wage-related expenses primarily driven by an increase in headcount, partially offset by a $1.5 million decrease in stock-based compensation expense, which was driven by stock awards granted at lower stock prices and fewer awards granted than in the same period in 2025; a $1.1 million increase in cloud computing costs; a $1.0 million increase in facilities related expenses; and $0.8 million increase in amortization expense related to acquired developed technologies and capitalized internally-developed software. The year-over-year trends for the three-month period were aligned with the year-over-year trends for the six-month period discussed above. Operating Expenses Research and Development Expense Three Months Ended June 30, Change Six Months Ended June 30, Change 2026 2025 $ % 2026 2025 $ % Research and development $ 47,073 $ 47,227 $ (154) (0.3) % $ 95,427 $ 95,115 $ 312 0.3 % % of revenue 22.3 % 22.0 % 22.7 % 22.4 % Research and development expenses slightly increased for the six months ended June 30, 2026 as compared to the same period in 2025, primarily driven by a $3.3 million increase in personnel costs, including a $6.2 million increase in wages and wage-related expenses, partially offset by a $3.0 million decrease in stock-based compensation expense which was driven by stock awards granted at lower stock prices and fewer awards granted than in the same period in 2025; a $1.0 million decrease related to professional fees as we used less third-party services; a $0.9 million decrease in hosting and cloud computing expenses; a $0.6 million decrease in impairment of internally-developed software expense; and a $0.8 decrease in expenses driven by a gain from hedging activities related to international research and development wages and wage-related costs. These expenses were offset by a $0.2 million increase to engineering costs as we continue to develop new and enhance existing products. The year-over-year trends for the three-month period were aligned with the year-over-year trends for the six-month period discussed as there were no material drivers for the reduction of expense in comparative three-month period as opposed to the slight increase in expense in comparative six-month periods. Sales and Marketing Expense Three Months Ended June 30, Change Six Months Ended June 30, Change 2026 2025 $ % 2026 2025 $ % Sales and marketing $ 76,186 $ 79,247 $ (3,061) (3.9) % $ 155,120 $ 158,647 $ (3,527) (2.2) % % of revenue 36.1 % 37.0 % 36.9 % 37.4 % Sales and marketing expenses decreased for the six months ended June 30, 2026 compared with the corresponding period in 2025, primarily driven by a $6.7 million decrease in personnel related expenses, which was substantially driven by the $0.7 33 million restructuring charges which reduced personnel related expenses for the quarter and a $5.2 million decrease in stock-based compensation which was driven by stock awards granted at lower stock prices and fewer awards granted than in the same period in 2025. Sales and marketing expense was further reduced by a $1.2 million decrease in amortization expense as the customer relationships intangible asset was completely amortized as of April 2026. The decrease was offset by a $2.4 million increase in professional fees for consulting, a $1.7 million increase expenses from sales related events, and a $0.8 million increase in marketing expenses. The year-over-year trends for the three-month period were aligned with the year-over-year trends for the six-month period discussed above except for the impact of the $0.7 million restructuring charges which reduced personnel related expenses for the three months ended June 30, 2026 as compared to the same period in 2025. General and Administrative Expense Three Months Ended June 30, Change Six Months Ended June 30, Change 2026 2025 $ % 2026 2025 $ % General and administrative $ 17,385 $ 21,166 $ (3,781) (17.9) % $ 35,597 $ 44,752 $ (9,155) (20.5) % % of revenue 8.2 % 9.9 % 8.5 % 10.5 % General and administrative expenses decreased for the six months ended June 30, 2026 compared with the corresponding period in 2025, primarily driven by a $5.8 million decrease in personnel costs, which included a $5.3 million decrease in stock-based compensation expense due to more recent grants valued at a lower grant price and fewer awards granted. Additionally, professional fees decreased by $2.7 million, primarily related to legal and accounting services, and a $0.9 million decrease in bad debt expense. The decrease was partially offset by an increase in hosting expenses of $0.8 million associated with enterprise software and cloud computing costs. The year-over-year trends for the three-month period were aligned with the year-over-year trends for the six-month period discussed above, except for bad debt expense which increased by $0.3 million for the three months ended June 30, 2026 as compared to the same period in 2025. Restructuring Expense Three Months Ended June 30, Change Six Months Ended June 30, Change 2026 2025 $ % 2026 2025 $ % Restructuring $ 1,675 $ — $ 1,675 100.0 % $ 1,675 $ — $ 1,675 100.0 % % of revenue 0.8 % — % 0.4 % — % Restructuring expenses increased for the six months ended June 30, 2026 compared with the corresponding period in 2025, primarily driven by a restructuring primarily from our reduction in force as we realign our workforce to focus on our core platform and create capacity to reinvest in capabilities and solutions that improve the customer experience and strengthen our competitive position.s whereas, there were no restructuring expenses in 2025 The year-over-year trends for the three-month period were aligned with the year-over-year trends for the six-month period discussed above. Interest Income Three Months Ended June 30, Change Six Months Ended June 30, Change 2026 2025 $ % 2026 2025 $ % Interest income $5,539 $5,514 $25 0.5% $11,151 $11,272 $(121) (1.1)% % of revenue 2.6 % 2.6 % 2.7 % 2.7 % Interest income slightly decreased for the six months ended June 30, 2026 compared with the corresponding period in 2025, primarily driven by lower investment balances partially offset by interest income generated from higher cash and cash equivalent balances compared to the prior year. 34 Interest income was relatively flat for the three months ended June 30, 2026 compared to the same period in 2025, primarily driven by higher cash and cash equivalent balances partially offset by the lower investment balance in the three-month period ended June 30, 2026 as compared to the cash and cash equivalent balances in the comparative period. Interest Expense Three Months Ended June 30, Change Six Months Ended June 30, Change 2026 2025 $ % 2026 2025 $ % Interest expense $ (2,533) $ (2,627) $ 94 (3.6) % $ (5,031) $ (5,281) $ 250 (4.7) % % of revenue (1.2) % (1.2) % (1.2) % (1.2) % Interest expense decreased by $0.3 million for the six months ended June 30, 2026 compared with the corresponding period in 2025 primarily because the prior-year period included interest on the 2025 Notes prior to their maturity in May 2025. The year-over-year trends for the three-month period were aligned with the year-over-year trends for the six-month period discussed above. Other (Expense) Income, Net Three Months Ended June 30, Change Six Months Ended June 30, Change 2026 2025 $ % 2026 2025 $ % Other (expense) income, net $ (162) $ 3,957 $ (4,119) (104.1) % $ (888) $ 5,759 $ (6,647) (115.4) % % of revenue (0.1) % 1.8 % (0.2) % 1.4 % Other (expense) income, net decreased for the six months ended June 30, 2026 compared with the corresponding period in 2025 primarily due to realized and unrealized losses on foreign currency transactions primarily related to transactions in the British Pound Sterling, the Euro, and the Israeli Shekel during the six months ended June 30, 2026 as compared to unrealized gains in the same period in 2025. The year-over-year trends for the three-month period were aligned with the year-over-year trends for the six-month period discussed above. (Benefit) provision for income taxes Three Months Ended June 30, Change Six Months Ended June 30, Change 2026 2025 $ % 2026 2025 $ % (Benefit) provision for income taxes $ (210) $ 2,000 $ (2,210) (110.5) % $ 490 $ 4,700 $ (4,210) (89.6) % % of revenue (0.1) % 0.9 % 0.1 % 1.1 % Provision for income taxes decreased for the six months ended June 30, 2026 compared with the corresponding period in 2025. The decrease was primarily driven by a $3.2 million net favorable change in foreign provisions primarily from foreign return to provision adjustments, $0.6 million discrete tax benefit from the Kenzo acquisition, and a lower domestic tax expense due to OBBBA. The year-over-year trends for the three-month period were aligned with the year-over-year trends for the six-month period discussed above except for the impact from the $0.6 million discrete tax benefit which was recorded in the first quarter of 2026. 35 Key Metrics We monitor the following key metrics to help us measure and evaluate the effectiveness of our operations and as a means to evaluate period-to-period comparisons. We believe that both management and investors benefit from referring to these key metrics as supplemental information in assessing our performance and when planning, forecasting, and analyzing future periods. These key metrics also facilitate management's internal comparisons to our historical performance as well as comparisons to certain competitors' operating results. We believe these key metrics are useful to investors both because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and also because they are used by institutional investors and the analyst community to help evaluate the health of our business (in thousands, except percentages): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Total revenue $ 210,883 $ 214,193 $ 420,574 $ 424,446 Year-over-year growth (1.5) % 3.0 % (0.9) % 2.7 % Income from operations $ 3,019 $ 3,494 $ 2,461 $ 3,393 Non-GAAP income from operations $ 28,885 $ 36,348 $ 53,317 $ 68,701 Operating margin 1.4 % 1.6 % 0.6 % 0.8 % Non-GAAP operating margin 13.7 % 17.0 % 12.7 % 16.2 % Net cash provided by operating activities $ 36,988 $ 47,542 $ 76,805 $ 77,299 Free cash flow $ 31,925 $ 42,280 $ 65,342 $ 66,957 As of June 30, 2026 2025 Annualized recurring revenue (“ARR”) $ 824,020 $ 840,610 Year-over-year change (2.0) % 3.1 % Number of customers 11,772 11,643 Year-over-year change 1.1 % 1.4 % ARR per customer $ 70.0 $ 72.2 Year-over-year change (3.0) % 1.7 % Total Revenue and Growth. We are focused on driving continued revenue growth through increased sales of our products and professional services to new and existing customers. We monitor total revenue and believe it is useful to investors as a measure of the overall success of our business. Non-GAAP Income from Operations and Non-GAAP Operating Margin. We monitor non-GAAP income from operations and non-GAAP operating margin, which are non-GAAP financial measures, to analyze our financial results. We believe non-GAAP income from operations and non-GAAP operating margin are useful to investors, as supplements to U.S. GAAP measures, in evaluating our ongoing operational performance and enhancing an overall understanding of our past financial performance and allowing for greater transparency with respect to metrics used by our management in its financial and operational decision-making. See "Non-GAAP Financial Results" below for further information on non-GAAP income from operations and a reconciliation of non-GAAP income from operations to the comparable GAAP financial measure. Free Cash Flow. Free cash flow is a non-GAAP measure that we define as cash provided by operating activities less purchases of property and equipment and capitalization of internal-use software costs. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after necessary capital expenditures. See "Non-GAAP Financial Results" below for a reconciliation of non-GAAP free cash flow to the comparable GAAP financial measure. 36 Annualized Recurring Revenue and Growth. ARR is defined as the annual value of all recurring revenue related to active contracts as of the last day of the period. ARR is measured at a specific point in time and does not incorporate consideration of any anticipated contract terminations or other prospective events, regardless of whether such events may exert a favorable or adverse influence on the metric. ARR should be viewed independently of revenue and deferred revenue, as ARR is an operating metric and is not intended to be combined with or replace these items. ARR is not a forecast of future revenue, which can be impacted by contract start and end dates and renewal rates and does not include revenue reported as professional services revenue in our consolidated statement of operations. We use ARR and believe it is useful to investors as a measure of the overall success of our business. Number of Customers. We believe that the size of our customer base is an indicator of our global market penetration and that our net customer additions are an indicator of the growth of our business. We define a customer as any entity that has an active Rapid7 recurring revenue contract as of the specified measurement date, excluding only InsightOps and Logentries customers with a contract value less than $2,400 per year. ARR per Customer. ARR per customer is defined as ARR divided by the number of customers at the end of the period. Non-GAAP Financial Results To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we may provide investors with certain non-GAAP financial measures from time to time, including non-GAAP gross profit, non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income, non-GAAP net income per share, adjusted EBITDA and free cash flow. The presentation of the non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. We use these non-GAAP financial measures for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons, and use certain non-GAAP financial measures as performance measures under our executive bonus plan. We believe that these non-GAAP financial measures provide useful information about our operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to metrics used by our management in its financial and operational decision-making. While our non-GAAP financial measures are an important tool for financial and operational decision-making and for evaluating our own operating results over different periods of time, you should review the reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures included below, and not rely on any single financial measure to evaluate our business. We define non-GAAP gross profit, non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income and non-GAAP net income per share as the respective GAAP balances excluding the effect of stock-based compensation expense, amortization of acquired intangible assets, amortization of debt issuance costs and certain other items such as acquisition-related expenses, non-ordinary course litigation-related expenses, impairment of long-lived assets, induced conversion expense, change in the fair value of derivative assets, restructuring expense and discrete tax items. Non-GAAP net income per basic and diluted share is calculated as non-GAAP net income divided by the weighted average shares used to compute net income per share, with the number of weighted average shares decreased, when applicable, to reflect the anti-dilutive impact of the capped call transactions entered into in connection with our convertible senior notes. We believe these non-GAAP financial measures are useful to investors in assessing our operating performance due to the following factors: •Stock-based compensation expense. We exclude stock-based compensation expense because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact our expense. We believe that providing non-GAAP financial measures that exclude stock-based compensation expense allows for more meaningful comparisons between our operating results from period to period. •Amortization of acquired intangible assets. We believe that excluding the impact of amortization of acquired intangible assets allows for more meaningful comparisons between operating results from period to period as the intangible assets are valued at the time of acquisition and are amortized over several years after the acquisition. •Amortization of debt issuance costs. The expense for the amortization of debt issuance costs related to our convertible senior notes and revolving credit facility is a non-cash item and we believe the exclusion of this interest expense provides a more useful comparison of our operational performance in different periods. •Acquisition-related expenses. We exclude acquisition-related expenses that are unrelated to the current operations and neither are comparable to the prior period nor predictive of future results. 37 •Restructuring expense. We exclude non-ordinary course restructuring expenses related to the restructuring activities because we do not believe these charges are indicative of our core operating performance and we believe the exclusion of the restructuring expense provides a more useful comparison of our performance in different periods. •Discrete tax items. We exclude certain discrete tax items such as income tax expenses or benefits that are not related to ongoing business operations in the current year and adjustments to uncertain tax position reserves as these charges are not indicative of our ongoing operating results, and they are not considered when we are forecasting our future results. We define adjusted EBITDA as net income before (1) interest income, (2) interest expense, (3) other (income) expense, net, (4) provision for income taxes, (5) depreciation expense, (6) amortization of intangible assets, (7) stock-based compensation expense, (8) acquisition-related expenses, and (9) restructuring expense. We believe that the use of adjusted EBITDA is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods. Our non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in our industry, as other companies in our industry may calculate non-GAAP financial results differently, particularly related to non-recurring, unusual items. In addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by other companies and exclude expenses that may have a material impact upon our reported financial results. Further, stock-based compensation expense has been and will continue to be for the foreseeable future a significant recurring expense in our business and an important part of the compensation provided to our employees. The following tables reconcile GAAP gross profit to non-GAAP gross profit 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 total gross profit $ 145,338 $ 151,134 $ 290,280 $ 301,907 Stock-based compensation expense 1,586 2,580 3,302 4,844 Amortization of acquired intangible assets 4,245 4,423 8,668 8,846 Non-GAAP total gross profit $ 151,169 $ 158,137 $ 302,250 $ 315,597 Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 GAAP gross profit – product subscriptions $ 145,126 $ 150,861 $ 290,021 $ 300,428 Stock-based compensation expense 1,282 2,054 2,651 3,785 Amortization of acquired intangible assets 4,245 4,423 8,668 8,846 Non-GAAP gross profit – product subscriptions $ 150,653 $ 157,338 $ 301,340 $ 313,059 Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 GAAP gross profit – professional services $ 212 $ 273 $ 259 $ 1,479 Stock-based compensation expense 304 526 651 1,059 Non-GAAP gross profit – professional services $ 516 $ 799 $ 910 $ 2,538 38 The following table reconciles GAAP income from operations to non-GAAP income from operations 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 income from operations $ 3,019 $ 3,494 $ 2,461 $ 3,393 Stock-based compensation expense 19,825 27,581 39,715 54,732 Amortization of acquired intangible assets 4,268 5,090 8,762 10,210 Acquisition-related expenses(1) 98 183 704 366 Restructuring expenses 1,675 — 1,675 — Non-GAAP income from operations $ 28,885 $ 36,348 $ 53,317 $ 68,701 (1) For the three and six months ended June 30, 2026 and 2025, acquisition-related expenses included $0.1 million and $0.2 million and $0.7 million and $0.4 million, respectively, of accretion expense related to contingent consideration recorded in connection with our July 2024 acquisition of Noetic. The following table reconciles GAAP net income to non-GAAP net income 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 income $ 6,073 $ 8,338 $ 7,203 $ 10,443 Stock-based compensation expense 19,825 27,581 39,715 54,732 Amortization of acquired intangible assets 4,268 5,090 8,762 10,210 Acquisition-related expenses 98 183 704 366 Amortization of debt issuance costs 1,077 999 2,122 2,018 Restructuring expense 1,675 — 1,675 — Discrete tax items — — (600) — Non-GAAP net income $ 33,016 $ 42,191 $ 59,581 $ 77,769 Interest expense of convertible senior notes(1) 1,312 1,399 2,625 2,625 Numerator for non-GAAP earnings per share calculation $ 34,328 $ 43,590 $ 62,206 $ 80,394 Weighted average shares used in GAAP earnings per share calculation, basic 67,024,154 64,441,000 66,601,615 64,140,087 Dilutive effect of convertible senior notes(1) 10,429,891 10,686,653 10,429,891 10,429,891 Dilutive effect of employee equity incentive plans(2) 895,807 255,992 842,964 322,231 Weighted average shares used in non-GAAP earnings per share calculation, diluted 78,349,852 75,383,645 77,874,470 74,892,209 Non-GAAP net income per share: Basic $ 0.49 $ 0.65 $ 0.89 $ 1.21 Diluted $ 0.44 $ 0.58 $ 0.80 $ 1.07 (1) We use the if-converted method to compute diluted earnings per share with respect to our Notes. There was no add-back of interest expense or additional dilutive shares related to the Notes where the effect was anti-dilutive. On an if converted basis, for the three and six months ended June 30, 2026, the 2029 Notes and 2027 Notes were dilutive, for the six months ended June 30, 2025 the 2029 Notes, 2027 Notes and 2025 Notes were dilutive. (2) We use the treasury method to compute the dilutive effect of employee equity incentive plan awards. 39 The following table reconciles GAAP net income 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 income $ 6,073 $ 8,338 $ 7,203 $ 10,443 Interest income (5,539) (5,514) (11,151) (11,272) Interest expense 2,533 2,627 5,031 5,281 Other expense (income), net 162 (3,957) 888 (5,759) Provision for income taxes (210) 2,000 490 4,700 Depreciation expense 2,651 2,349 5,025 5,140 Amortization of intangible assets 8,580 9,041 17,416 17,915 Stock-based compensation expense 19,825 27,581 39,715 54,732 Acquisition-related expenses 98 183 704 366 Restructuring expense 1,675 — 1,675 — Adjusted EBITDA $ 35,848 $ 42,648 $ 66,996 $ 81,546 The following table reconciles net cash provided by operating activities to free cash flow 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 Net cash provided by operating activities $ 36,988 $ 47,542 $ 76,805 $ 77,299 Less: Purchases of property and equipment (1,154) (948) (3,235) (2,309) Less: Capitalized internal-use software costs (3,909) (4,314) (8,228) (8,033) Free cash flow $ 31,925 $ 42,280 $ 65,342 $ 66,957 Liquidity and Capital Resources As of June 30, 2026, we had $425.6 million in cash and cash equivalents, $277.0 million in investments that have maturities ranging from one to eight months and an accumulated deficit of $957.5 million. Our principal sources of liquidity are cash and cash equivalents, investments, cash flow provided by operating activities and our Credit Agreement. To date, we have financed our operations primarily through private and public equity financings, issuance of convertible senior notes and through cash generated by operating activities. On June 25, 2025, we entered into a credit agreement (the "Credit Agreement") that establishes a senior secured revolving credit facility and provides for borrowings in an aggregate principal amount of up to $200 million (the “Revolving Facility”, the loans thereunder, the “Revolving Loans” and the commitments thereunder, the “Revolving Commitments”). The Credit Agreement allows for incremental facilities up to the greater of $141 million or 75% of Consolidated EBITDA (as defined in the Credit Agreement). Additional incremental facilities may be incurred, subject to certain conditions. The proceeds of the Revolving Facility can be used to finance working capital needs, capital expenditures, permitted acquisitions and other general corporate purposes. As of June 30, 2026, we were in compliance with all applicable covenants and had sufficient capacity under the affirmative covenants. Refer to Note 9, Debt, for additional information related to the credit agreement. We believe that our existing cash and cash equivalents, our investments, our cash generated by operating activities and our available borrowings under our Credit Agreement will be sufficient to meet our operating and capital requirements for at least the next 12 months. Our foreseeable cash needs, in addition to our recurring operating expenses, include our expected capital expenditures to support expansion of our infrastructure and workforce, office facilities lease obligations, purchase commitments, including our cloud infrastructure services, potential future acquisitions of technology businesses, any election we make to redeem our convertible senior notes, and the repayment of the $600 million 2027 Notes . Further, in January 2025, we entered into a cloud-services agreement with a cloud services provider that contains minimum spend commitments. The agreement provides for an annual commitment of $125.0 million per year over the next five years, with an additional $35.0 million obligation over the five-year period of the agreement, for an aggregate total commitment of $660.0 million. As a result of the repayment of the 2027 Notes, we expect a reduction to cash received from interest income. For more information regarding this commitment, see Note 15, Commitments and Contingencies, in the Notes to our consolidated financial statements 40 on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 19, 2026 . In preparation for the repayment of the 2027 Notes, due on March 15, 2027, we implemented the following measures: •Liquidity Management: Cash management procedures have been refined to ensure the availability of adequate liquidity, thereby supporting uninterrupted operations and facilitating the fulfillment of obligations related to the 2027 Notes without the incurrence of additional indebtedness. •Investment Policy: We revised our investment policy to restrict all new investments to instruments with maturities not exceeding twelve months. These actions collectively reinforce the organization’s commitment to prudent financial management and maintenance of a robust liquidity position. 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 service offerings, the cost of any future acquisitions of technology or businesses and any election we make to redeem our convertible senior notes. In the event that additional financing is required from outside sources, we may be unable to raise the funds on acceptable terms, if at all. If we are unable to raise additional capital on terms satisfactory to us when we require it, our business, operating results and financial condition could be adversely affected. Cash Flows The following table shows a summary of our cash flows for the six months ended June 30, 2026 and 2025 (in thousands): Six Months Ended June 30, 2026 2025 Cash, cash equivalents and restricted cash at beginning of period $ 246,664 $ 342,101 Net cash provided by operating activities 76,805 77,299 Net cash provided by (used in) investing activities 100,092 (120,530) Net cash provided by financing activities 2,587 (42,390) Effects of exchange rates on cash, cash equivalents and restricted cash (541) 4,847 Cash, cash equivalents and restricted cash at end of period $ 425,607 $ 261,327 Uses of Funds Our historical uses of cash have primarily consisted of cash used for operating activities such as expansion of our sales and marketing operations, research and development activities and other working capital needs, as well as cash used for business acquisitions and purchases of property and equipment, including leasehold improvements for our facilities. Operating Activities Operating activities provided $76.8 million of cash and cash equivalents for the six months ended June 30, 2026, which reflects our ability to generate cash from our operations. Cash provided by operating activities was primarily driven by a net income of $7.2 million in addition to significant beneficial adjustments to reconcile net income to net cash provided from operating activities including $39.7 million in stock-based compensation, $22.4 million of depreciation from our fixed assets, and amortization, primarily from our internally-developed software and acquired intangibles. Additionally, working capital contributed an additional $7.2 million of cash to operating activities primarily driven by increase to operating cash flow from accounts receivable of $25.2 million, partially offset by decreases in deferred revenue of $19.6 million and accrued expenses of $8.3 million. Operating activities provided $77.3 million of cash and cash equivalents for the six months ended June 30, 2025, which demonstrates our ability to generate cash from our operations partially offset by our continued investments in our operations and the timing of working capital adjustments. Cash provided by operating activities reflected our net income of $10.4 million and a decrease in our net operating assets and liabilities of $8.3 million, offset by non-cash charges of $75.1 million related primarily to depreciation and amortization, stock-based compensation expense, amortization of debt issuance costs and other non-cash charges. The change in our net operating assets and liabilities was primarily due to a $13.2 million decrease in accrued expenses, a $12.3 million decrease in deferred revenue, a $5.8 million increase in prepaid expenses, a $1.2 million decrease in other liabilities and a $3.0 million decrease in accounts payable, which each had a negative impact on operating cash flow. 41 These factors were offset by a $17.5 million decrease in accounts receivable and a $9.8 million decrease in deferred contract acquisition and fulfillment costs, which each had a positive impact on operating cash flow. Investing Activities Investing activities provided $100.1 million of cash for the six months ended June 30, 2026, primarily driven by $135.0 million of investment maturities, which was partially offset by $23.3 million in cash paid, net of cash acquired, in the acquisition of Kenzo to further strengthen our AI SOC capabilities and $8.2 million in capitalized internal-use software costs as we continue to invest and develop our product offering. Investing activities used $120.5 million of cash for the six months ended June 30, 2025, consisting of $111.5 million in purchases of investments, net of sales/maturities, $8.0 million for capitalization of internal-use software costs, and $2.3 million in capital expenditures to purchase computer equipment and leasehold improvements, partially offset by $1.3 million in proceeds from other investments. Financing Activities Financing activities provided $2.6 million for the six months ended June 30, 2026, which consisted primarily of $2.9 million in proceeds from our employee stock purchase plan and was partially offset by $0.3 million in withholding taxes paid for the net share settlement of equity awards. Financing activities used $42.4 million of cash for the six months ended June 30, 2025, which consisted primarily of $46.0 million in conversion of convertible senior notes, $1.9 million in withholding taxes paid for the net share settlement of equity awards, and $1.3 million in debt issuance costs, partially offset by $4.4 million in proceeds from the issuance of common stock purchased by employees under the Rapid7, Inc. 2015 Employee Stock Purchase Plan (“ESPP”) and $1.6 million in proceeds from the exercise of stock options. Contractual Obligations and Commitments As of June 30, 2026, there were no material changes 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 (the “Annual Report”). Off-Balance Sheet Arrangements We do not have 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. We do not engage in off-balance sheet financing arrangements. In addition, we do not engage in trading activities involving non-exchange traded contracts. We therefore believe that we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in these relationships. Critical Accounting Estimates Our unaudited condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The preparation of our unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and disclosures. We base our estimates and assumptions on historical experience and other factors that we believe to be reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates. Other than the new market-based PSU estimate discussed in Note 10, Stock-Based Compensation, there have been no material changes in our critical accounting estimates from those disclosed in our Annual Report.