VERX

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and related notes as disclosed in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 24, 2026 (the “2025 Annual Report”). In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, beliefs, and expectations that involve risks and uncertainties. Our actual results and the timing of events could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in the section titled “Special Note Regarding Forward-Looking Statements” above, and in Part I, Item 1A of the 2025 Annual Report and as may be subsequently updated by our other SEC filings. Overview Vertex is the Decision-to-Defense™ global indirect tax and compliance company. Vertex helps enterprises bring control to indirect tax and compliance across the full transaction lifecycle — from tax determination and e-invoicing through reporting, filing, and audit defense — to make outcomes easier to prove and improve over time. Trusted by more than 60% of the Fortune 500, Vertex combines decades of tax expertise, deep global tax and compliance knowledge, and embedded integrations to help organizations operate globally with confidence. With headquarters in North America and offices in South America and Europe, Vertex's purpose is to ensure businesses and communities thrive through trusted transactions. Vertex employs approximately 2,000 professionals and serves companies across the globe. Vertex provides cloud-based and on-premise solutions that can be tailored to specific industries for every major line of indirect tax, including sales and consumer use, value added (including e-invoicing), and payroll. We derive the majority of our revenue from software subscriptions. These subscriptions include use of our software and ongoing monthly content updates. Our software is offered on a subscription basis to our customers, regardless of their deployment preferences. On-premise subscriptions and cloud-based subscriptions are typically sold through one- to three-year contracts. We bill the majority of our customers annually in advance of the subscription period. Our customers include the majority of the Fortune 500, as well as a majority of the top 10 companies by revenue in multiple industries such as retail, technology, and manufacturing, in addition to leading marketplaces. Our customer base also includes many of Europe’s largest companies in the industrial and chemical manufacturing, pharmaceutical, medical device and metals and mining industries. As our customers expand geographically and pursue omnichannel business models, their tax determination and compliance requirements increase and become more complex, providing sustainable organic growth opportunities for our business. Our flexible, tiered transaction-based pricing model also results in our customers growing their spend with us as they grow and continue to use our solutions. We principally price our solutions based on a customer’s revenue base, in addition to a number of other factors. We employ a hybrid deployment model to align to our customers’ technology preferences for their core financial management software across on-premise, cloud deployments or any combination of these models. Over time, we expect both existing and newly acquired customers to continue to shift towards cloud deployment models. Cloud-based subscription sales to new customers have grown at a faster rate than on-premise software subscription sales, which is a trend that we expect to continue over time. We generated 58% and 55% of software subscription revenue from cloud-based subscriptions during the three months ended June 30, 2026 and 2025, respectively, and 58% and 54% for the six months ended June 30, 2026 and 2025, respectively. While our on-premise software subscription revenue comprised 42% and 45% of our software subscription revenue during the three months ended June 30, 2026 and 2025, respectively, and 42% and 46% during the six months ended June 30, 2026 and 2025, respectively, it continues to decrease as a percentage of total software subscriptions revenues as cloud-based subscriptions grow. 37 Table of Contents ​ We license our solutions primarily through our direct sales force, which focuses on selling to qualified leads provided by our marketing efforts, and through our network of referral partners. We also utilize indirect sales to a lesser extent to efficiently grow and scale our enterprise and mid-market revenues. Our partner ecosystem is a differentiating, competitive strength in both our software development and our sales and marketing activities. We integrate with key technology partners that span Enterprise Resource Planning (“ERP”), Customer Relationship Management, procurement, billing, Point of Sale and e-commerce. These partners include Adobe/Magento, Coupa, Kintsugi AI, Inc., Microsoft Dynamics, NetSuite, Oracle, Salesforce, SAP, SAP Ariba, Shopify, Workday and Zuora. We also collaborate with numerous accounting firms who have built implementation practices around our software to serve their customer base. We believe that global commerce and the compliance environment provides durable and accelerating growth opportunities for our business. We generated revenue of $204.0 million and $184.6 million for the three months ended June 30, 2026 and 2025, respectively, and $400.6 million and $361.6 million for the six months ended June 30, 2026 and 2025, respectively. We had net income (loss) of $9.0 million and $(1.0) million for the three months ended June 30, 2026 and 2025, respectively, and $6.5 million and $10.2 million for the six months ended June 30, 2026 and 2025, respectively. These amounts are presented in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”). We define Adjusted EBITDA as net loss or income before interest, taxes, depreciation, and amortization, as adjusted to exclude charges for stock-based compensation expense, amortization of cloud computing arrangement implementation costs, severance expense, acquisition contingent consideration, changes in the fair value of acquisition contingent earn-outs, acquisition-related retained employee compensation, and transaction costs. Adjusted EBITDA was $51.0 million and $38.4 million for the three months ended June 30, 2026 and 2025, respectively, and $95.1 million and $75.6 million for the six months ended June 30, 2026 and 2025, respectively. Adjusted EBITDA is a non-GAAP financial measure. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Business Metrics” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Use and Reconciliation of Non-GAAP Financial Measures” for further discussion of key business metrics and non-GAAP financial measures and their comparison to GAAP financial measures. We believe that we currently have ample liquidity and capital resources to continue to meet our operating needs, and our ability to continue to service our debt or other financial obligations is not currently impaired. For a further description of our liquidity, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” Recent Developments Brinta Acquisition On March 2, 2026 (the “Acquisition Date”), we completed our acquisition of 100% of the equity interests of Finta Inc. and its subsidiaries (collectively, “Brinta” or the “Acquisition”). Headquartered in Uruguay, Brinta is a Latin American provider of business-to-business integration services, specializing in indirect tax calculation, tax filing, and e-invoicing. We plan to fully integrate Brinta, leveraging its e-invoicing capabilities to immediately expand the Company’s coverage across the Latin American region. Total purchase consideration for the Acquisition was $22.1 million, net of $0.04 million of cash acquired. For further information, refer to Note 3, “Acquisitions” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. Value Creation Plan On April 28, 2026, we announced that our Board approved a global Value Creation Plan (the “Plan”) with the intention to become a more AI-enabled company, focusing investments on key growth opportunities and driving operational efficiency to better align our workforce and resources with our long-term strategic priorities. The Plan includes a reduction in force of approximately 170 employees along with a significant reduction of third party spend across the Company. In 38 Table of Contents ​ connection with the Plan, we recognized pre-tax charges of $1.7 million and $7.9 million in the three and six months ended June 30, 2026, respectively. These charges consist primarily of cash expenditures related to employee severance, notice pay, statutory termination indemnities, and other employee separation benefits. All related cash payments are expected to be made during 2026. Any changes to our estimates or timing of the Plan will be reflected in our results of operations in future periods. Components of Our Results of Operations Revenue We generate revenue from software subscriptions and services. Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration expected to be received in exchange for those products or services. We enter into contracts that include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net of allowance for subscription and non-renewal cancellations and any taxes collected from customers that are subsequently remitted to governmental authorities. Software Subscriptions Licenses for on-premise software subscriptions provide the customer with a right to use the software as it exists when made available to the customer. Customers purchase a subscription to these licenses, which includes the related software and tax content updates and product support. The updates and support, which are part of the subscription agreement, are essential to the continued utility of the software; therefore, we have determined the software and the related updates and support to be a single performance obligation. Accordingly, when on-premise software is licensed, the revenue associated with this combined performance obligation is recognized ratably over the license term as these subscriptions are provided for the duration of the license term. Revenue recognition begins on the later of the beginning of the subscription period or the date the software is made available to the customer to download. Our cloud-based subscriptions allow customers to use Vertex-hosted software over the contract period without taking possession of the software. The contracts are generally for one to three years and are generally billed annually in advance of the subscription period. Our cloud-based offerings also include related updates and support. Revenue recognition begins on the later of the beginning of the subscription period or the date the customer is provided access to the cloud-based solutions. All services within the cloud-based contracts consistently provide a benefit to the customer during the subscription period; thus, the associated revenue is recognized ratably over the subscription period. Revenue is impacted by the timing of sales and our customers’ growth or contractions resulting in their need to expand or contract their subscription usage, the purchase of new solutions, or the non-renewal of existing solutions. In addition, revenue will fluctuate with the cessation of extended product support fees charged for older versions of our software subscription solutions when they are retired and these fees are no longer charged. Contracts for on-premise licenses permit cancellations at the end of the license term. Legacy cloud-based subscription contracts for multi-year periods previously provided customers the right to terminate their contract for services prior to the end of the subscription period at a significant penalty. This penalty requires the payment of a percentage of the remaining months of the then-current contract term. Current cloud-based contracts do not contain such termination rights. Terminations of cloud-based subscriptions prior to the end of the subscription term have occurred infrequently, and the impact has been immaterial. The allowance for subscription and non-renewal cancellations reflects an estimate of the amount of such cancellations and non-renewals based on past experience, current information, and forward-looking economic considerations. Services Revenue We generate services revenue primarily in support of our customers’ needs associated with our software and to enable them to realize the full benefit of our solutions. These software subscription-related services include configuration, data migration and implementation, and premium support and training. In addition, we generate services revenue through our 39 Table of Contents ​ managed services offering which allows customers to outsource all or a portion of their indirect tax operations to us. These services include indirect tax return preparation, filing and tax payment, and notice management. We generally bill for services on a per-transaction or time and materials basis, and we recognize revenue from deliverable-based professional services as services are performed. Fluctuations in services revenue are directly correlated to fluctuations in our subscription revenues with respect to implementation and training services as we have historically experienced an attachment rate to subscription sales for these services of approximately 60%. In addition, our managed services offering has continued to experience increased revenues associated with returns processing volume increases attributable to regulatory changes, as customers expanded their tax filings into more jurisdictions. Cost of Revenue Software Subscriptions Cost of software subscriptions revenue consists of costs related to providing and supporting our software subscriptions and includes personnel and related expenses, including salaries, benefits, bonuses, and stock-based compensation. In addition, cost of revenue includes direct costs associated with information technology, such as data center and software hosting costs, and tax content maintenance. Cost of software subscriptions revenue also includes amortization associated with capitalized internal-use software for cloud-based subscription solutions and software developed for sale for new products and enhancements to existing products, and costs associated with the amortization of certain acquired intangible assets. We plan to continue to significantly expand our infrastructure and personnel to support our future growth and increases in transaction volumes of our cloud-based solutions, including through acquisitions. We expect growth in our business will result in an increase in cost of software subscriptions revenue in absolute dollars. Services Cost of services revenue consists of direct costs of software subscription-related services and our managed services offering. These costs include personnel and related expenses, including salaries, benefits, bonuses, stock-based compensation, and the cost of third-party contractors and other direct expenses. We plan to continue to expand our infrastructure and personnel as necessary to support our future growth in our managed service offerings and related increases in our service revenue. We expect growth in our business will result in an increase in the cost of services revenue in absolute dollars. Research and Development Research and development expenses consist primarily of personnel and related expenses for our research and development activities, including salaries, benefits, bonuses and stock-based compensation, and the cost of third-party developers and other contractors. Research and development costs, other than software development expenses qualifying for capitalization, are expensed as incurred. We devote substantial resources to developing new products and enhancing existing products, conducting quality assurance testing, improving our core technology, and integrating acquired technology with our products. We believe continued investments in research and development are critical to attain our strategic objectives and expect research and development costs to increase in absolute dollars. These investments include enhancing our solution offerings to address changing customer needs to support their growth, as well as implementing changes required to keep pace with our partners’ technology to ensure the continued ability of our solutions to work together and deliver value to our customers. The market for our solutions is characterized by rapid technological change, frequent new product and service introductions and enhancements, changing customer demands, and evolving industry standards. As a result, although we are making significant research and development expenditures, certain of which may be capitalized, there is no guarantee these solutions will be accepted by the market. This could result in increased costs or an impairment of capitalized development costs with no resulting future revenue benefit. 40 Table of Contents ​ Selling and Marketing Expenses Selling and marketing expenses consist primarily of personnel and related expenses in support of sales and marketing efforts. These costs include salaries, benefits, bonuses and stock-based compensation. In addition, selling and marketing expenses include costs related to advertising and promotion efforts, branding costs, partner-based commissions, costs associated with our annual customer conferences and amortization of certain acquired intangible assets. We intend to continue to invest in our sales and marketing capabilities in the future to continue to increase our brand awareness and expect these costs to increase on an absolute dollar basis as we grow our business and continue to expand our market and partner ecosystem penetration. Sales and marketing expense in absolute dollars and as a percentage of total revenue may fluctuate from period-to-period based on total revenue levels and the timing of our investments in our sales and marketing functions, as these investments will occur in advance of experiencing the benefits from such investments and may vary in scope and scale over future periods. General and Administrative General and administrative expenses consist primarily of personnel and related expenses for administrative, finance, information technology, legal, risk management, facilities, and human resources staffing, including salaries, benefits, bonuses, severance, stock-based compensation, professional fees, insurance premiums, facility costs, amortization of cloud computing arrangement implementation costs, and other internal support and infrastructure costs. The three and six months ended June 30, 2026 periods include severance and other costs related to the Plan. For further information, refer to Note 15, “Restructuring” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. Additionally, the three and six months ended June 30, 2026 periods include compensation expense recognized related to the Additional Cash Consideration (as defined in the notes to the condensed consolidated financial statements) to the obligation associated with the acquisition of Brinta. For further information, refer to Note 3, “Acquisitions” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. We expect our general and administrative expenses to increase in absolute dollars as we continue to expand our operations, hire additional personnel, and integrate current and future acquisitions. Depreciation and Amortization Depreciation and amortization expense consists of the allocation of purchased and developed asset costs over the future periods benefited by the use of these assets. These assets include leasehold improvements for our facilities, computers and equipment needed to support our customers and our internal infrastructure and capitalized internal-use software associated with our internal tools. Depreciation and amortization will fluctuate in correlation with our ongoing investment in internal infrastructure costs to support our growth. Change in Fair Value of Acquisition Contingent Earn-Outs The change in fair value of acquisition contingent earn-outs consists of fair value adjustments to our Cash Earn-outs (as defined below) and Stock Earn-outs (as defined below) (collectively with the Cash Earn-outs, the “Earn-outs”) related to our 2024 acquisition of ecosio GmbH (“ecosio”). The Earn-outs will be revalued and adjusted quarterly until the end of the Earn-out periods. Other Operating Expense (Income), net Other operating expense (income), net consists primarily of transactions costs associated with merger and acquisition activities, periodic remeasurement of contingent consideration associated with completed acquisitions, realized gains and losses on foreign currency changes, and other operating gains and losses. These amounts will fluctuate as a result of ongoing merger and acquisition activities and for changes in foreign currency rates. 41 Table of Contents ​ Interest Expense (Income), net Interest expense (income), net reflects the net amount of our interest expense and interest income within the same period. Interest expense consists primarily of interest incurred related to the Notes (as defined below), a Credit Agreement (as defined below), and leases. Interest expense includes amortization of deferred financing fees over the term of the credit facility or write-downs of such costs upon redemption of debt. Interest expense will vary as a result of fluctuations in the level of debt outstanding as well as interest rates on such debt. Interest income reflects earnings on investments of our cash on hand and our investment securities. Interest income will vary as a result of fluctuations in the future level of funds available for investment and the rate of return available in the market on such funds. Income Tax Expense (Benefit) ​ Income tax expense (benefit) consists primarily of federal, foreign, state, and local taxes on our loss or income. In determining our annualized effective income tax rates, net deferred tax assets, valuation allowances, and cash paid for income taxes, we are required to make judgments and estimates about domestic and foreign profitability, the timing and usage of net operating loss and credit carryforwards, applicable tax rates, and transfer pricing methodologies. Judgments and estimates related to our projections and assumptions are inherently uncertain; therefore, actual results could materially differ from our projections. ​ 42 Table of Contents ​ Results of Operations You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q, and our consolidated financial statements and the notes thereto included in our 2025 Annual Report. The period-to-period comparison of financial results is not necessarily indicative of financial results to be achieved in future periods. The following table sets forth our condensed consolidated statements of comprehensive income (loss) for the periods indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended ​ ​ ​ ​ ​ ​ ​ For the six months ended ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ ​ ​ ​ ​ ​ ​ June 30, ​ ​ ​ ​ ​ ​ (Dollars in thousands) ​ ​ ​ 2026 ​ ​ ​ 2025 ​ Period-Over-Period Change ​ ​ 2026 ​ ​ ​ 2025 ​ Period-Over-Period Change ​ Revenues: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Software subscriptions ​ $ 174,753 $ 157,844 ​ $ 16,909 10.7 % ​ $ 341,899 $ 308,605 ​ $ 33,294 10.8 % Services ​ ​ 29,217 ​ ​ 26,715 ​ ​ 2,502 ​ 9.4 % ​ ​ 58,717 ​ ​ 53,016 ​ ​ 5,701 ​ 10.8 % Total revenues ​ ​ 203,970 ​ ​ 184,559 ​ ​ 19,411 ​ 10.5 % ​ ​ 400,616 ​ ​ 361,621 ​ ​ 38,995 ​ 10.8 % Cost of revenues: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Software subscriptions (1) ​ ​ 52,170 ​ ​ 44,459 ​ ​ 7,711 ​ 17.3 % ​ ​ 103,346 ​ ​ 88,704 ​ ​ 14,642 ​ 16.5 % Services (1) ​ ​ 20,500 ​ ​ 18,900 ​ ​ 1,600 ​ 8.5 % ​ ​ 41,101 ​ ​ 38,723 ​ ​ 2,378 ​ 6.1 % Total cost of revenues ​ ​ 72,670 ​ ​ 63,359 ​ ​ 9,311 ​ 14.7 % ​ ​ 144,447 ​ ​ 127,427 ​ ​ 17,020 ​ 13.4 % Gross profit ​ ​ 131,300 ​ ​ 121,200 ​ ​ 10,100 ​ 8.3 % ​ ​ 256,169 ​ ​ 234,194 ​ ​ 21,975 ​ 9.4 % Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Research and development (1) ​ ​ 24,805 ​ ​ 20,582 ​ ​ 4,223 ​ 20.5 % ​ ​ 49,355 ​ ​ 41,468 ​ ​ 7,887 ​ 19.0 % Selling and marketing (1) ​ ​ 51,899 ​ ​ 48,454 ​ ​ 3,445 ​ 7.1 % ​ ​ 104,534 ​ ​ 96,609 ​ ​ 7,925 ​ 8.2 % General and administrative (1) ​ ​ 51,142 ​ ​ 43,392 ​ ​ 7,750 ​ 17.9 % ​ ​ 105,481 ​ ​ 88,420 ​ ​ 17,061 ​ 19.3 % Depreciation and amortization ​ ​ 6,720 ​ ​ 6,187 ​ ​ 533 ​ 8.6 % ​ ​ 13,162 ​ ​ 12,067 ​ ​ 1,095 ​ 9.1 % Change in fair value of acquisition contingent earn-outs ​ ​ (100) ​ ​ 2,300 ​ ​ (2,400) ​ (104.3) % ​ ​ (5,838) ​ ​ (12,400) ​ ​ 6,562 ​ (52.9) % Other operating expense, net ​ ​ 1,277 ​ ​ 4,149 ​ ​ (2,872) ​ (69.2) % ​ ​ 4,524 ​ ​ 7,408 ​ ​ (2,884) ​ (38.9) % Total operating expenses ​ ​ 135,743 ​ ​ 125,064 ​ ​ 10,679 ​ 8.5 % ​ ​ 271,218 ​ ​ 233,572 ​ ​ 37,646 ​ 16.1 % Income (loss) from operations ​ ​ (4,443) ​ ​ (3,864) ​ ​ (579) ​ 15.0 % ​ ​ (15,049) ​ ​ 622 ​ ​ (15,671) ​ (2,519.5) % Interest income, net ​ ​ (344) ​ ​ (1,228) ​ ​ 884 ​ (72.0) % ​ ​ (1,301) ​ ​ (2,767) ​ ​ 1,466 ​ (53.0) % Income (loss) before income taxes ​ ​ (4,099) ​ ​ (2,636) ​ ​ (1,463) ​ 55.5 % ​ ​ (13,748) ​ ​ 3,389 ​ ​ (17,137) ​ (505.7) % Income tax benefit ​ ​ (13,142) ​ ​ (1,675) ​ ​ (11,467) ​ 684.6 % ​ ​ (20,281) ​ ​ (6,780) ​ ​ (13,501) ​ 199.1 % Net income (loss) ​ ​ 9,043 ​ ​ (961) ​ ​ 10,004 ​ (1,041.0) % ​ ​ 6,533 ​ ​ 10,169 ​ ​ (3,636) ​ (35.8) % Other comprehensive (income) loss: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign currency translation adjustments, net of tax ​ ​ 2,737 ​ ​ (29,734) ​ ​ 32,471 ​ (109.2) % ​ ​ 9,187 ​ ​ (44,839) ​ ​ 54,026 ​ (120.5) % Unrealized loss on investments, net of tax ​ ​ — ​ ​ — ​ ​ — ​ — % ​ ​ — ​ ​ 9 ​ ​ (9) ​ (100.0) % Total other comprehensive income (loss), net of tax ​ ​ 2,737 ​ ​ (29,734) ​ ​ 32,471 ​ (109.2) % ​ ​ 9,187 ​ ​ (44,830) ​ ​ 54,017 ​ (120.5) % Total comprehensive income (loss) ​ $ 6,306 ​ $ 28,773 ​ $ (22,467) ​ (78.1) % ​ $ (2,654) ​ $ 54,999 ​ $ (57,653) ​ (104.8) % (1) Includes stock-based compensation expenses as follows in the table below. ​ 43 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended ​ ​ For the six months ended ​ June 30, ​ June 30, (Dollars in thousands) 2026 ​ ​ ​ 2025 ​ 2026 ​ ​ ​ 2025 ​ (unaudited) ​ (unaudited) Stock-based compensation expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of revenues, software subscriptions $ 1,083 ​ $ 1,233 ​ $ 2,828 ​ $ 3,460 Cost of revenues, services 934 ​ 1,024 ​ 2,605 ​ 2,720 Research and development 2,440 ​ 2,512 ​ 6,306 ​ 6,864 Selling and marketing 4,297 ​ 3,235 ​ 9,640 ​ 9,041 General and administrative 5,008 ​ 3,986 ​ 10,891 ​ 10,949 Total stock-based compensation expense $ 13,762 ​ $ 11,990 ​ $ 32,270 ​ $ 33,034 ​ ​ The following table sets forth our results of operations as a percentage of our total revenues for the periods presented. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended June 30, ​ ​ For the six months ended June 30, ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ 2026 ​ ​ ​ 2025 ​ Revenues: ​ ​ ​ ​ ​ ​ ​ Software subscriptions 85.7 % 85.5 % ​ 85.3 % 85.3 % Services 14.3 % 14.5 % ​ 14.7 % 14.7 % Total revenues 100.0 % 100.0 % ​ 100.0 % 100.0 % Cost of revenues: ​ ​ ​ ​ ​ ​ ​ Software subscriptions 25.6 % 24.1 % ​ 25.8 % 24.5 % Services 10.1 % 10.2 % ​ 10.3 % 10.7 % Total cost of revenues 35.7 % 34.3 % ​ 36.1 % 35.2 % Gross profit 64.3 % 65.7 % ​ 63.9 % 64.8 % Operating expenses: ​ ​ ​ ​ ​ ​ ​ Research and development 12.2 % 11.2 % ​ 12.3 % 11.5 % Selling and marketing 25.4 % 26.3 % ​ 26.1 % 26.7 % General and administrative 25.1 % 23.5 % ​ 26.3 % 24.5 % Depreciation and amortization 3.3 % 3.4 % ​ 3.3 % 3.3 % Change in fair value of acquisition contingent earn-outs ​ — % 1.2 % ​ (1.5) % (3.4) % Other operating expense, net 0.6 % 2.2 % ​ 1.1 % 2.0 % Total operating expenses 66.6 % 67.8 % ​ 67.6 % 64.6 % Income (loss) from operations (2.3) % (2.1) % ​ (3.7) % 0.2 % Interest income, net (0.2) % (0.7) % ​ (0.3) % (0.8) % Income (loss) before income taxes (2.1) % (1.4) % ​ (3.4) % 1.0 % Income tax benefit (6.4) % (0.9) % ​ (5.1) % (1.9) % Net income (loss) 4.3 % (0.5) % ​ 1.7 % 2.9 % Other comprehensive (income) loss: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign currency translation adjustments, net of tax ​ 1.3 % (16.1) % ​ 2.3 % (12.4) % Unrealized loss on investments, net of tax ​ — % — % ​ — % — % Total other comprehensive income (loss), net of tax 1.3 % (16.1) % ​ 2.3 % (12.4) % Total comprehensive income (loss) 3.0 % 15.6 % ​ (0.6) % 15.3 % ​ ​ 44 Table of Contents ​ Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025 Revenues ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ ​ ​ ​ ​ ​ (Dollars in thousands) ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ Period-Over-Period Change ​ Revenues: ​ ​ ​ ​ ​ ​ ​ ​ Software subscriptions ​ $ 174,753 ​ $ 157,844 ​ $ 16,909 10.7 % Services ​ 29,217 ​ 26,715 ​ 2,502 9.4 % Total revenues ​ $ 203,970 ​ $ 184,559 ​ $ 19,411 ​ 10.5 % ​ Revenues increased $19.4 million, or 10.5%, to $204.0 million for the three months ended June 30, 2026 compared to $184.6 million for the same period in 2025. The increase in software subscriptions revenues of $16.9 million, or 10.7%, was primarily driven by increases from our existing customers through cross-selling new products, and to a lesser extent, increases due to expanded use and price increases. Software subscriptions revenues derived from new customers averaged 6.0% and 8.4% of total software subscriptions revenues in the three months ended June 30, 2026 and 2025, respectively. ​ The $2.5 million increase in services revenues was primarily driven by a $1.8 million increase in recurring services revenues due to returns processing volume increases related to customer business growth and regulatory changes as customers expanded their tax filings into more jurisdictions, as well as an increase in interest received from our funds held for customers. Additionally, our managed services offering experienced a $0.7 million increase in service revenues associated with the growth in subscription revenues, which includes new customers implementing our solutions and existing customers upgrading to newer versions of our solutions. ​ Cost of Software Subscriptions Revenues ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ ​ ​ ​ ​ ​ (Dollars in thousands) ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ Period-Over-Period Change ​ Cost of software subscriptions revenues ​ $ 52,170 ​ $ 44,459 ​ $ 7,711 17.3 % ​ Cost of software subscriptions revenues increased $7.7 million, or 17.3%, to $52.2 million for the three months ended June 30, 2026 compared to $44.5 million for the same period in 2025. The increase was primarily driven by a $5.2 million increase in depreciation and amortization of capitalized software and acquired intangible assets associated with our ongoing investments in internal-use software for cloud-based subscription solutions, software developed for sale for new products and enhancements to existing products, and costs associated with the increased amortization of acquired intangible assets. Additionally, there was a $2.5 million increase in costs of personnel supporting period-over-period growth of sales and customers, ongoing infrastructure investments and support costs to enable the continued expansion of customer transaction volumes for our cloud-based subscription customers. ​ Cost of Services Revenues ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ ​ ​ ​ ​ ​ (Dollars in thousands) ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ Period-Over-Period Change ​ Cost of services revenues ​ $ 20,500 ​ $ 18,900 ​ $ 1,600 8.5 % ​ Cost of services revenues increased $1.6 million, or 8.5%, to $20.5 million for the three months ended June 30, 2026, compared to $18.9 million for the same period in 2025. The increase was primarily due to an increase in costs of service delivery personnel to support revenue growth in software subscription-related services and our managed services offering. ​ 45 Table of Contents ​ Research and Development ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ ​ ​ ​ ​ ​ (Dollars in thousands) ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ Period-Over-Period Change ​ Research and development ​ $ 24,805 ​ $ 20,582 ​ $ 4,223 20.5 % ​ Research and development expenses increased $4.2 million, or 20.5%, to $24.8 million for the three months ended June 30, 2026 compared to $20.6 million for the same period in 2025. This increase in research and development expenses was primarily due to an increase in personnel costs related to development work associated with new solutions to address end-to-end data analysis and compliance needs of our customers, and continued expansion of connectors and application program interfaces to customer ERP and other software platforms. Additionally, this increase reflects additional research and development investments related to the commercialization of our AI-based Smart Categorization product, other AI-related internal tools and new product initiatives, and other emerging technologies. ​ Selling and Marketing ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ ​ ​ ​ ​ ​ (Dollars in thousands) ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ Period-Over-Period Change ​ Selling and marketing ​ $ 51,899 ​ $ 48,454 ​ $ 3,445 7.1 % ​ Selling and marketing expenses increased $3.4 million, or 7.1%, to $51.9 million for the three months ended June 30, 2026 compared to $48.5 million for the same period in 2025. This increase was primarily driven by a $3.4 million increase in payroll and related expenses associated with the growth in period-over-period subscription sales and services revenues and expansion of our partner and channel management programs. Advertising and promotional spending related to expanded brand awareness efforts was flat as compared to prior year. ​ General and Administrative ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ ​ ​ ​ ​ ​ (Dollars in thousands) ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ Period-Over-Period Change ​ General and administrative ​ $ 51,142 ​ $ 43,392 ​ $ 7,750 17.9 % ​ General and administrative expenses increased $7.8 million, or 17.9%, to $51.1 million for the three months ended June 30, 2026 compared to $43.4 million for the same period in 2025, primarily driven by planned strategic investments in information technology infrastructure, business process re-engineering and other initiatives to drive future operating leverage, as well as investments in employees, systems and other resources in support of our growth. Additionally, $1.7 million of severance expense and $6.3 million of execution costs related to our Value Creation Plan were recorded in the three months ended June 30, 2026. For further information, refer to Note 15, “Restructuring” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. The three months ended June 30, 2026 period also includes $1.3 million in compensation expense recognized related to the Additional Cash Consideration obligation associated with the acquisition of Brinta. For further information, refer to Note 3, “Acquisitions” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. ​ 46 Table of Contents ​ Depreciation and Amortization ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ ​ ​ ​ ​ ​ (Dollars in thousands) ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ Period-Over-Period Change ​ Depreciation and amortization ​ ​ ​ $ 6,720 ​ ​ ​ $ 6,187 ​ ​ ​ $ 533 ​ ​ ​ 8.6 % ​ Depreciation and amortization expenses increased $0.5 million, or 8.6%, to $6.7 million for the three months ended June 30, 2026 compared to $6.2 million for the same period in 2025. The increase was primarily due to the impact of infrastructure and technology purchases and other capitalized costs to support our growth. ​ ​ Change in Fair Value of Acquisition Contingent Earn-outs ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ ​ ​ ​ ​ ​ (Dollars in thousands) ​ ​ ​ ​ 2026 ​ ​ 2025 ​ ​ ​ Period-Over-Period Change ​ Change in fair value of acquisition contingent earn-outs ​ $ (100) ​ $ 2,300 ​ ​ ​ $ (2,400) ​ ​ ​ (104.3) % ​ Change in fair value of acquisition contingent earn-outs was $(0.1) million for the three months ended June 30, 2026 due to adjustments to the fair values of our ecosio acquisition contingent Cash Earn-outs and Stock Earn-outs of $0.3 million and $(0.4) million, respectively. Change in fair value of acquisition contingent earn-outs was $2.3 million for the three months ended June 30, 2025 due to adjustments to the fair values of our ecosio acquisition contingent Cash Earn-outs and Stock Earn-outs of $1.8 million and $0.5 million, respectively. For further information, refer to Note 4, “Financial Instruments and Fair Value Measurements” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. Other Operating Expense, Net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ ​ ​ ​ ​ ​ (Dollars in thousands) ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ Period-Over-Period Change ​ Other operating expense, net ​ ​ ​ $ 1,277 ​ ​ ​ $ 4,149 ​ ​ ​ $ (2,872) ​ ​ ​ 69.2 % ​ Other operating expense, net was $1.3 million for the three months ended June 30, 2026 compared to $4.1 million for the same period in 2025. Legal costs associated with a pending legal claim were $1.1 million and $2.9 million for the three months ended June 30, 2026 and 2025, respectively. For further information, refer to Note 12, “Commitments and Contingencies” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. Additionally, foreign currency transaction losses were $0.1 million and $1.0 million for the three months ended June 30, 2026 and 2025, respectively. ​ Interest Income, Net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ ​ ​ ​ ​ ​ (Dollars in thousands) ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ Period-Over-Period Change ​ Interest income, net ​ ​ ​ $ (344) ​ ​ ​ $ (1,228) ​ ​ ​ $ 884 ​ ​ ​ (72.0) % ​ Interest income, net was $(0.3) million for the three months ended June 30, 2026 compared to $(1.2) million for the same period in 2025. This change was mainly due to a $0.9 million decrease in interest income, driven by lower dollars invested and lower interest rates during the period. ​ 47 Table of Contents ​ Income Tax Benefit ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ ​ ​ ​ ​ ​ (Dollars in thousands) ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ Period-Over-Period Change ​ Income tax benefit ​ ​ ​ $ (13,142) ​ ​ ​ $ (1,675) ​ ​ ​ $ (11,467) ​ ​ ​ 684.6 % ​ Income tax benefit was $(13.1) million and $(1.7) million for the three months ended June 30, 2026 and 2025, respectively. The period-over-period change was primarily driven by increased tax benefits from fluctuations in valuation allowances on net deferred tax assets established for U.S. and certain foreign jurisdictions, as well as the impact from the estimated annual effective tax rate applied to pre-tax loss for the three months ended June 30, 2026. These income tax benefit increases were partially offset by fluctuations in tax credits, reserves, and non-deductible contingent consideration liabilities. ​ ​ ​ Six Months Ended June 30, 2026 Compared to the Six Months Ended June 30, 2025 Revenues ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the six months ended ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ ​ ​ ​ ​ ​ (Dollars in thousands) ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ Year-Over-Year Change ​ Revenues: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Software subscriptions ​ $ 341,899 ​ $ 308,605 ​ $ 33,294 10.8 % Services ​ 58,717 ​ 53,016 ​ 5,701 10.8 % Total revenues ​ $ 400,616 ​ $ 361,621 ​ $ 38,995 10.8 % ​ Revenues increased $39.0 million, or 10.8%, to $400.6 million for the six months ended June 30, 2026 compared to $361.6 million for the same period in 2025. The increase in software subscriptions revenues of $33.3 million, or 10.8%, was primarily driven by increases from our existing customers through cross-selling new products, and to a lesser extent, increases due to expanded use and price increases. Software subscriptions revenues derived from new customers averaged 6.0% and 8.3% of total software subscriptions revenues in the six months ended June 30, 2026 and 2025, respectively. ​ The $5.7 million increase in services revenues was primarily driven by a $3.3 million increase in recurring services revenues due to returns processing volume increases related to customer business growth and regulatory changes as customers expanded their tax filings into more jurisdictions, as well as an increase in interest received from our funds held for customers. Additionally, our managed services offering experienced a $2.4 million increase in service revenues associated with the growth in subscription revenues, which includes new customers implementing our solutions and existing customers upgrading to newer versions of our solutions. ​ Cost of Software Subscriptions Revenues ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the six months ended ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ ​ ​ ​ ​ (Dollars in thousands) ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ Year-Over-Year Change Cost of software subscriptions revenues ​ ​ ​ $ 103,346 ​ ​ ​ $ 88,704 ​ ​ ​ $ 14,642 ​ ​ ​ 16.5 % ​ Cost of software subscriptions revenues increased $14.6 million, or 16.5%, to $103.3 million for the six months ended June 30, 2026 compared to $88.7 million for the same period in 2025. The increase was primarily driven by a $9.4 million increase in depreciation and amortization of capitalized software and acquired intangible assets associated with our ongoing investments in internal-use software for cloud-based subscription solutions, software developed for sale for new products and enhancements to existing products, and costs associated with the increased amortization of acquired intangible assets. Additionally, there was a $5.2 million increase in costs of personnel supporting period-over-period growth of sales and customers, ongoing infrastructure investments and support costs to enable the continued expansion of customer transaction volumes for our cloud-based subscription customers. 48 Table of Contents ​ ​ Cost of Services Revenues ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the six months ended ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ ​ ​ ​ ​ ​ (Dollars in thousands) ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ Year-Over-Year Change ​ Cost of services revenues ​ ​ ​ $ 41,101 ​ ​ ​ $ 38,723 ​ ​ ​ $ 2,378 ​ ​ ​ 6.1 % ​ Cost of services revenues increased $2.4 million, or 6.1%, to $41.1 million for the six months ended June 30, 2026, compared to $38.7 million for the same period in 2025. The increase was primarily due to an increase in costs of service delivery personnel to support revenue growth in software subscription-related services and our managed services offering. ​ Research and Development ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the six months ended ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ ​ ​ ​ ​ (Dollars in thousands) ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ Year-Over-Year Change Research and development ​ ​ ​ $ 49,355 ​ ​ ​ $ 41,468 ​ ​ ​ $ 7,887 19.0 % ​ Research and development expenses increased $7.9 million, or 19.0%, to $49.4 million for the six months ended June 30, 2026 compared to $41.5 million for the same period in 2025. This increase in research and development expenses was primarily due to an increase in personnel costs related to development work associated with new solutions to address end-to-end data analysis and compliance needs of our customers, and continued expansion of connectors and application program interfaces to customer ERP and other software platforms. Additionally, this increase reflects additional research and development investments related to the commercialization of our AI-based Smart Categorization product, other AI-related internal tools and new product initiatives, and other emerging technologies. ​ Selling and Marketing ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the six months ended ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ ​ ​ ​ ​ (Dollars in thousands) ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ Year-Over-Year Change Selling and marketing ​ ​ ​ $ 104,534 ​ ​ ​ $ 96,609 ​ ​ ​ $ 7,925 ​ ​ ​ 8.2 % ​ Selling and marketing expenses increased $7.9 million, or 8.2%, to $104.5 million for the six months ended June 30, 2026 compared to $96.6 million for the same period in 2025. This increase was primarily driven by a $6.3 million increase in payroll and related expenses associated with the growth in period-over-period subscription sales and services revenues and expansion of our partner and channel management programs. Additionally, there was an increase of $1.6 million in advertising and promotional spending related to expanded brand awareness efforts. ​ General and Administrative ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the six months ended ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ ​ ​ ​ ​ ​ (Dollars in thousands) ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ Year-Over-Year Change ​ General and administrative ​ ​ ​ $ 105,481 ​ ​ ​ $ 88,420 ​ ​ ​ $ 17,061 ​ ​ ​ 19.3 % ​ General and administrative expenses increased $17.1 million, or 19.3%, to $105.5 million for the six months ended June 30, 2026 compared to $88.4 million for the same period in 2025, primarily driven by planned strategic investments in information technology infrastructure, business process re-engineering and other initiatives to drive future operating leverage, as well as investments in employees, systems and other resources in support of our growth. Additionally, $7.9 million of severance expense and $8.8 million of execution costs related to our Value Creation Plan were recorded in the six months ended June 30, 2026. For further information, refer to Note 15, “Restructuring” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. The six months ended June 30, 2026 period also includes $1.7 million in compensation expense recognized related to the Additional Cash Consideration obligation associated with the acquisition of Brinta. For further information, refer to Note 3, “Acquisitions” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. 49 Table of Contents ​ Depreciation and Amortization ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the six months ended ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ ​ ​ ​ ​ ​ (Dollars in thousands) ​ 2026 ​ ​ ​ 2025 ​ Year-Over-Year Change Depreciation and amortization ​ ​ ​ $ 13,162 ​ ​ ​ $ 12,067 ​ ​ ​ $ 1,095 ​ ​ ​ 9.1 % ​ Depreciation and amortization expenses increased $1.1 million, or 9.1%, to $13.2 million for the six months ended June 30, 2026 compared to $12.1 million for the same period in 2025. The increase was primarily due to the impact of infrastructure and technology purchases and other capitalized costs to support our growth. ​ Change in Fair Value of Acquisition Contingent Earn-outs ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the six months ended ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ ​ ​ ​ ​ ​ (Dollars in thousands) ​ 2026 ​ 2025 ​ ​ ​ Year-Over-Year Change Change in fair value of acquisition contingent earn-outs ​ $ (5,838) ​ $ (12,400) ​ ​ ​ $ 6,562 ​ ​ ​ (52.9) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change in fair value of acquisition contingent earn-outs was $(5.8) million for the six months ended June 30, 2026 due to adjustments to the fair value of our ecosio acquisition contingent Stock Earn-outs of $(5.8) million. Change in fair value of acquisition contingent earn-outs was $(12.4) million for the six months ended June 30, 2025 due to adjustments to the fair values of our ecosio acquisition contingent Cash Earn-outs and Stock Earn-outs of $3.5 million and $(15.9) million, respectively. For further information, refer to Note 4, “Financial Instruments and Fair Value Measurements” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. Other Operating Expense, Net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the six months ended ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ ​ ​ ​ ​ (Dollars in thousands) 2026 ​ ​ ​ 2025 Year-Over-Year Change ​ Other operating expense, net ​ ​ ​ $ 4,524 ​ ​ ​ $ 7,408 ​ ​ ​ $ (2,884) ​ ​ ​ 38.9 % ​ Other operating expense, net was $4.5 million for the six months ended June 30, 2026 compared to $7.4 million for the same period in 2025. Legal costs associated with a pending legal claim were $3.8 million and $5.3 million for the six months ended June 30, 2026 and 2025, respectively. For further information, refer to Note 12, “Commitments and Contingencies” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. Additionally, foreign currency transaction (gains) losses were $(0.03) million and $1.6 million for the six months ended June 30, 2026 and 2025, respectively. ​ Interest Income, Net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the six months ended ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ ​ ​ ​ ​ (Dollars in thousands) 2026 ​ ​ ​ 2025 Year-Over-Year Change ​ Interest income, net ​ ​ ​ $ (1,301) ​ ​ ​ $ (2,767) ​ ​ ​ $ 1,466 ​ ​ ​ (53.0) % ​ Interest income, net was $(1.3) million for the six months ended June 30, 2026 compared to $(2.8) million for the same period in 2025. This change was mainly due to a $1.6 million decrease in interest income driven by lower dollars invested and lower interest rates during the period, partially offset by a $0.1 million decrease in interest expense. 50 Table of Contents ​ ​ Income Tax Benefit ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the six months ended ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ ​ ​ ​ ​ (Dollars in thousands) 2026 ​ ​ ​ 2025 Year-Over-Year Change ​ Income tax benefit ​ ​ ​ $ (20,281) ​ ​ ​ $ (6,780) ​ ​ ​ $ (13,501) ​ ​ ​ 199.1 % ​ Income tax benefit was $(20.3) million and $(6.8) million for the six months ended June 30, 2026 and 2025, respectively. The year-over-year change was primarily driven by increased tax benefits from fluctuations in valuation allowances on net deferred tax assets established for U.S. and certain foreign jurisdictions, as well as the impact from the estimated annual effective tax rate applied to pre-tax loss for the six months ended June 30, 2026. These income tax benefit increases were offset partially by increased tax expense on exercises and vesting of stock awards, net of limitations on deductions of certain employees’ compensation as well as fluctuations in tax credits and non-deductible contingent consideration liabilities. ​ ​ Liquidity and Capital Resources As of June 30, 2026, we had unrestricted cash and cash equivalents of $230.5 million. Our primary sources of capital include sales of our solutions, proceeds from bank lending facilities, and the offering of existing or future classes of stock. ​ As of June 30, 2026, we had a credit agreement with a banking syndicate (the “Credit Agreement”) that provides a $300.0 million revolving facility (the “Line of Credit”). There were no outstanding borrowings under the Credit Agreement at June 30, 2026. ​ On April 26, 2024, we closed a private offering of $345.0 million aggregate principal amount of 0.750% Convertible Senior Notes due in 2029 (the “Notes”). The net proceeds from the offering of the Notes were $333.7 million, after deducting the initial purchasers’ discount and commissions, and other transaction and offering expenses. For further information on the Notes, refer to our 2025 Annual Report on Form 10-K. ​ We believe that our existing cash resources and our Line of Credit will be sufficient to meet our capital requirements and fund our operations for the next 12 months as well as our longer-term liquidity needs. If an early conversion notice occurs on our Notes, we have the option to pay cash, shares of our Class A common stock, or a combination of both. Also, we expect to have access to additional sources of funds in the capital markets, and we may, from time to time, seek additional capital through a combination of additional debt and/or equity financings. If we were to raise additional funds by issuing equity securities, our stockholders may experience dilution. Debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt. Any debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders. Additional financing may not be available at all, or in amounts or on terms unacceptable to us. ​ The following table presents a summary of our cash flows for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the six months ended ​ ​ ​ ​ ​ ​ ​ June 30, ​ ​ ​ ​ ​ (Dollars in thousands) ​ 2026 ​ 2025 ​ Year-Over-Year Change ​ Net cash provided by operating activities ​ ​ ​ $ 68,871 ​ ​ ​ $ 60,808 ​ $ 8,063 13.3 % Net cash used in investing activities ​ (80,447) ​ (59,262) ​ ​ (21,185) (35.7) % Net cash used in financing activities ​ (69,091) ​ (20,157) ​ ​ (48,934) (242.8) % Effect of foreign exchange rate changes ​ (642) ​ 3,307 ​ ​ (3,949) (119.4) % Net decrease in cash, cash equivalents and restricted cash ​ $ (81,309) ​ $ (15,304) ​ $ (66,005) (431.3) % ​ Operating Activities. Net cash provided by operating activities of $68.9 million for the six months ended June 30, 2026 consisted of net income of $6.5 million, adjusted for non-cash charges of $95.3 million, and cash outflows of $(32.9) million related to changes in operating assets and liabilities. The change in operating assets and liabilities was primarily 51 Table of Contents ​ driven by a decrease in accrued and deferred compensation and accrued expenses, and an increase in prepaid expenses and other current assets due to the timing of cash payments during the period. These changes were partially offset by a decrease in accounts receivable due to the timing of cash collections during the period. ​ Net cash provided by operating activities of $60.8 million for the six months ended June 30, 2025 consisted of net income of $10.2 million and adjustments for non-cash charges of $69.7 million, which were partially offset by cash outflows of $19.0 million related to changes in operating assets and liabilities. The change in operating assets and liabilities was primarily driven by a decrease in accrued and deferred compensation and an increase in prepaid expenses and other current assets due to the timing of cash payments during the period. These changes were partially offset by a decrease in accounts receivable due to the timing of cash collections during the period. ​ Investing Activities. Net cash used in investing activities of $80.4 million for the six months ended June 30, 2026 consisted of investments in property and equipment, and capitalized software of $47.8 million and $10.6 million, respectively, related to investments in infrastructure, new products, and enhancements to existing products. Additionally, we paid $22.0 million for our acquisition of Brinta. For further information on the Acquisition, refer to Note 3, “Acquisitions” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. ​ Net cash used in investing activities of $59.3 million for the six months ended June 30, 2025 consisted of investments in property and equipment, and capitalized software of $42.9 million and $10.6 million, respectively, related to investments in infrastructure, new products, and enhancements to existing products. During the second quarter of 2025, we invested $15.0 million in the Kintsugi Investment. Additionally, we invested $2.4 million in available-for-sale investment securities, which was more than offset by proceeds of $11.6 million received during the period for sales and maturities in our investment securities. For further information on the Kintsugi Investment, refer to Note 4, “Financial Instruments and Fair Value Measurements” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. ​ Financing Activities. Net cash used in financing activities of $69.1 million for the six months ended June 30, 2026 consisted of $46.6 million in payments for the repurchases of our Class A common stock under our Repurchase Program, $19.6 million in payments related to our ecosio Cash Earn-out, and $7.9 million in payments for taxes related to the net share settlement of stock-based awards. These uses of cash were partially offset by a $2.8 million increase in customer funds obligations, primarily due to timing differences between receipt of funds from customers and taxing jurisdiction withdrawals of these funds, $1.8 million in proceeds from the purchase of stock under our employee stock purchase plan (“ESPP”) and $0.4 million in proceeds from the exercise of stock options. For further information on the Cash Earn-outs, refer to Note 4, “Financial Instruments and Fair Value Measurements” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. ​ Net cash used in financing activities of $20.2 million for the six months ended June 30, 2025 consisted of $26.1 million in payments for taxes related to the net share settlement of stock-based awards as well as a $3.5 million decrease in customer funds obligations, primarily due to timing differences between receipt of funds from customers and taxing jurisdiction withdrawals of these funds, partially offset by $7.7 million in proceeds from the exercise of stock options, and $1.8 million in proceeds from the purchase of stock under our ESPP. ​ Debt. As of June 30, 2026, we had a $300.0 million Line of Credit with no outstanding borrowings in connection with our Credit Agreement. As of June 30, 2026, we had $345.0 million aggregate principal amount of debt outstanding related to our Notes. For further information on our debt obligations, refer to Note 8, “Debt” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. Repurchase Program. On October 30, 2025, the Board authorized a stock repurchase program for up to $150.0 million of our outstanding shares of Class A common stock (the “Repurchase Program”). During the six months ended June 30, 52 Table of Contents ​ 2026, we repurchased 3,383,744 shares of our Class A common stock for an aggregate amount of $46.5 million (excluding exercise taxes and commissions) and have $93.4 million remaining for purchases under our authorization. The timing and actual number of shares repurchased under the Repurchase Program depend on a variety of factors, including price, general business and market conditions, and other investment opportunities. Shares may be repurchased through open market purchases or privately negotiated transactions, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Exchange Act. Our Repurchase Program has no termination date and may be suspended, delayed, discontinued, or accelerated at any time. Any repurchased shares will be available for use in connection with our stock plans and for other corporate purposes. For further information on our Repurchase Program, refer to Note 9, “Stockholders’ Equity” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. Funds Held for Customers and Customer Funds Obligations We maintain trust accounts with financial institutions, which allow our customers to outsource their tax remittance functions to us. We have legal ownership over the accounts utilized for this purpose. Funds held for customers represent cash and cash equivalents that, based upon our intent, are restricted solely for satisfying the obligations to remit funds relating to our tax remittance services. Funds held for customers are not commingled with our operating funds. Customer funds obligations represent our contractual obligations to remit collected funds to satisfy customer tax payments. Customer funds obligations are included as a current liability on our condensed consolidated balance sheets as the obligations are expected to be settled within one year. Cash flows related to changes in customer funds obligations liability are presented as cash flows from financing activities. Contractual Obligations and Commitments As of June 30, 2026, we have no outstanding borrowings under our Line of Credit. Our Notes are due in May 2029. We expect to continue to fund debt maturities and interest payments with cash flows generated from operations, existing cash and cash equivalents, or proceeds from additional financing. For further information on our debt obligations, refer to Note 8, “Debt” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. ​ There have been no material updates or changes to our contractual obligations and commitments compared to contractual obligations and commitments described in our 2025 Annual Report. ​ Key Business Metrics We regularly review the metrics identified below to evaluate growth trends, measure our performance, formulate financial projections and make strategic decisions. Annual Recurring Revenue (“ARR”) and Average Annual Revenue Per Customer (“AARPC”). We derive the vast majority of our revenue from recurring software subscriptions. We believe ARR provides us with visibility to our projected software subscription revenue in order to evaluate the health of our business. Because we recognize subscription revenue ratably, we believe investors can use ARR to measure our expansion of existing customer revenues, new customer activity, and as an indicator of future software subscription revenues. ARR is based on monthly recurring revenue (“MRR”) from software subscriptions for the most recent month at period end, multiplied by twelve. MRR is calculated by dividing the software subscription price, inclusive of discounts, by the number of subscription covered months. MRR only includes direct customers with MRR at the end of the last month of the measurement period. 53 Table of Contents ​ AARPC represents average annual revenue per direct customer and is calculated by dividing ARR by the number of software subscription direct customers at the end of the respective period. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of June 30, ​ ​ ​ (Dollars in millions) ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ Year-Over-Year Change ​ Annual Recurring Revenue ​ $ 703.4 ​ $ 636.6 ​ $ 66.8 10.5 % ​ ARR increased by $66.8 million, or 10.5%, at June 30, 2026, as compared to June 30, 2025. The increase was primarily driven by $36.4 million in growth of subscriptions for our solutions to new customers, and $30.4 million in growth of revenues from existing customers through their expanded use of our solutions, as well as price increases. We had 4,919 direct customers and AARPC was approximately $142,997 at June 30, 2026. At June 30, 2025, we had 4,862 direct customers and approximately $130,934 of AARPC. The increase in AARPC was primarily due to expansion of usage by existing customers and adding new scaled customers through organic growth. Net Revenue Retention Rate (“NRR”). We believe that our NRR provides insight into our ability to retain and grow revenue from our customers, as well as their potential long-term value to us. We also believe it demonstrates to investors our ability to expand existing customer revenues, which is one of our key growth strategies. Our NRR refers to the ARR expansion during the 12 months of a reporting period for all customers who were part of our customer base at the beginning of the reporting period. Our NRR calculation takes into account any revenue lost from departing customers or those who have downgraded or reduced usage, as well as any revenue expansion from migrations, new licenses for additional products or contractual and usage-based price changes. ​ ​ ​ ​ ​ ​ ​ ​ As of June 30, ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ Net Revenue Retention Rate 105 % 108 % ​ ​ NRR decreased by 3%, at June 30, 2026, as compared to June 30, 2025. The decrease was largely due to lower growth of additional entitlements as our customers’ annual growth has slowed, keeping them within current bands of usage, as well as delayed deal activity seen for some of our large multinational customers due to the macroeconomic environment. ​ ​ Gross Revenue Retention Rate (“GRR”). ​ We believe our GRR provides insight into and demonstrates to investors our ability to retain revenues from our existing customers. Our GRR refers to how much of our MRR we retain each month after reduction for the effects of revenues lost from departing customers or those who have downgraded or reduced usage. GRR does not take into account revenue expansion from migrations, new licenses for additional products or contractual and usage-based price changes. GRR does not include revenue reductions resulting from cancellations of customer subscriptions that are replaced by new subscriptions associated with customer migrations to a newer version of the related software solution. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of June 30, ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ Gross Revenue Retention Rate 95 % 95 % ​ Adjusted EBITDA and Adjusted EBITDA Margin. We believe that Adjusted EBITDA is a measure widely used by securities analysts and investors to evaluate the 54 Table of Contents ​ financial performance of our company and other companies. We believe that Adjusted EBITDA and Adjusted EBITDA margin are useful as supplemental measures to evaluate our overall operating performance as they measure business performance focusing on cash related charges and because they are important metrics to lenders under our Credit Agreement. We define Adjusted EBITDA as net loss or income before interest, taxes, depreciation, and amortization, as adjusted to exclude charges for stock-based compensation expense, amortization of cloud computing arrangement implementation costs, severance expense, acquisition contingent consideration, changes in the fair value of acquisition contingent earn-outs, acquisition-related retained employee compensation, and transaction costs. Adjusted EBITDA margin represents Adjusted EBITDA divided by total revenues for the same period. For purposes of comparison, our net income (loss) was $9.0 million and $(1.0) million for the three months ended June 30, 2026 and 2025, respectively, while our net income (loss) margin was 4.4% and (0.5)% over the same periods, respectively. Additionally, our net income was $6.5 million and $10.2 million for the six months ended June 30, 2026 and 2025, respectively, while our net income margin was 1.6% and 2.8% over the same periods, respectively. We are unable to reconcile forward-looking Adjusted EBITDA to net income (loss), the most directly comparable GAAP financial measure, without unreasonable efforts because we are currently unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact net income (loss) for these periods but would not impact Adjusted EBITDA. 55 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended ​ For the six months ended ​ ​ ​ June 30, ​ June 30, ​ (Dollars in thousands) ​ ​ ​ 2026 ​ ​ ​ 2025 ​ 2026 ​ ​ ​ 2025 ​ ​ ​ ​ (unaudited) ​ ​ (unaudited) ​ Adjusted EBITDA: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) ​ $ 9,043 ​ $ (961) ​ $ 6,533 ​ $ 10,169 ​ Interest income, net ​ (344) ​ (1,228) ​ (1,301) ​ ​ (2,767) ​ Income tax benefit ​ (13,142) ​ (1,675) ​ (20,281) ​ ​ (6,780) ​ Depreciation and amortization – property and equipment ​ 6,720 ​ 6,187 ​ 13,162 ​ ​ 12,067 ​ Depreciation and amortization of capitalized software and acquired intangible assets – cost of subscription revenues ​ 21,882 ​ 16,670 ​ 41,968 ​ ​ 32,525 ​ Amortization of acquired intangible assets – selling and marketing expense ​ ​ 522 ​ ​ 571 ​ ​ 1,047 ​ ​ 1,102 ​ Amortization of cloud computing implementation costs – general and administrative expense ​ ​ 1,358 ​ ​ 1,018 ​ ​ 2,395 ​ ​ 2,024 ​ Stock-based compensation expense ​ 13,762 ​ 11,990 ​ 32,270 ​ ​ 33,034 ​ Severance expense (1) ​ ​ 2,689 ​ ​ 317 ​ ​ 10,097 ​ ​ 774 ​ Acquisition contingent consideration ​ ​ — ​ ​ 200 ​ ​ — ​ ​ 200 ​ Change in fair value of acquisition contingent earn-outs ​ ​ (100) ​ ​ 2,300 ​ ​ (5,838) ​ ​ (12,400) ​ Acquisition-related retained employee compensation (2) ​ ​ 1,250 ​ ​ — ​ ​ 1,667 ​ ​ — ​ Transaction costs (3) ​ 7,375 ​ 2,980 ​ 13,359 ​ ​ 5,640 ​ Adjusted EBITDA ​ $ 51,015 ​ $ 38,369 ​ $ 95,078 ​ $ 75,588 ​ Adjusted EBITDA Margin: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total revenues ​ $ 203,970 ​ $ 184,559 ​ $ 400,616 ​ $ 361,621 ​ Adjusted EBITDA margin ​ 25.0 % 20.8 % 23.7 % 20.9 % (1) The three and six months ended June 30, 2026 periods include $1,713 and $7,883, respectively, in severance costs related to the Value Creation Plan. For further information, refer to Note 15, “Restructuring” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. (2) The acquisition-related compensation expenses recorded for the three and six months ended June 30, 2026 are related to the Additional Cash Consideration obligation associated with the acquisition of Brinta. For further information, refer to Note 3, “Acquisitions” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. (3) The three and six months ended June 30, 2026 periods include $6,250 and $8,800, respectively, in costs incurred to support the execution of our Value Creation Plan. For further information, refer to Note 15, “ Restructuring” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. Amounts also include legal expenses associated with pending litigation related to claims the Company has made against a competitor. For further information, refer to Note 12, “Commitments and Contingencies” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. ​ The increase in Adjusted EBITDA for the three months ended June 30, 2026 of $12.6 million over the comparable period in 2025 was primarily driven by a $15.1 million increase in non-GAAP gross profit and a $3.5 million decrease in non-GAAP general and administrative expense, which was partially offset by increases of $4.3 million in non-GAAP research and development expense and $2.4 million in non-GAAP selling and marketing expense. Adjusted EBITDA margin increased to 25.0% for the three months ended June 30, 2026 compared to 20.8% for the comparable period in 2025, primarily due to the impact of our Value Creation Plan. ​ The increase in Adjusted EBITDA for the six months ended June 30, 2026 of $19.5 million over the comparable period in 2025 was primarily driven by a $30.7 million increase in non-GAAP gross profit and a $3.0 million decrease in non-GAAP general and administrative expense, which was partially offset by increases of $8.4 million in non-GAAP research and development expense and $7.4 million in non-GAAP selling and marketing expense. Adjusted EBITDA margin increased to 23.7% for the six months ended June 30, 2026 compared to 20.9% for the comparable period in 2025, primarily due to the impact of our Value Creation Plan, as well as increased operating leverage and realized efficiencies from prior year strategic investments in our global infrastructure and core business processes. ​ 56 Table of Contents ​ Free Cash Flow and Free Cash Flow Margin. ​ We use free cash flow as a critical measure in the evaluation of liquidity in conjunction with related GAAP amounts. We also use this measure when considering available cash, including for decision-making purposes related to dividends and discretionary investments. We consider free cash flow to be an important measure for investors because it measures the amount of cash we generate from our operations after our capital expenditures and capitalization of software development costs. In addition, we base certain of our forward-looking estimates and budgets on free cash flow and free cash flow margin. We define free cash flow as the total of net cash provided by operating activities less purchases of property and equipment and capitalized software. We define free cash flow margin as free cash flow divided by total revenues for the same period. Our net cash provided by operating activities was $30.9 million and $46.0 million for the three months ended June 30, 2026 and 2025, respectively, while our operating cash flow margin was 15.1% and 24.9% over the same periods, respectively. Our net cash provided by operating activities was $68.9 million and $60.8 million for the six months ended June 30, 2026 and 2025, respectively, while our operating cash flow margin was 17.2% and 16.8% over the same periods, respectively. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended ​ For the six months ended ​ ​ ​ June 30, ​ June 30, ​ (Dollars in thousands) ​ ​ ​ 2026 ​ ​ ​ 2025 ​ 2026 ​ ​ ​ 2025 ​ ​ ​ ​ (unaudited) ​ ​ (unaudited) ​ Free Cash Flow: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash provided by operating activities ​ $ 30,896 ​ $ 46,003 ​ $ 68,871 ​ $ 60,808 ​ Property and equipment additions ​ ​ (23,171) ​ ​ (21,512) ​ ​ (47,831) ​ ​ (42,906) ​ Capitalized software additions ​ ​ (4,992) ​ ​ (4,904) ​ ​ (10,648) ​ ​ (10,565) ​ Free cash flow ​ $ 2,733 ​ $ 19,587 ​ $ 10,392 ​ $ 7,337 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Free Cash Flow Margin: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total revenues ​ $ 203,970 ​ $ 184,559 ​ $ 400,616 ​ $ 361,621 ​ Free cash flow margin ​ 1.3 % ​ 10.6 % 2.6 % 2.0 % ​ Free cash flow decreased by $16.9 million for the three months ended June 30, 2026 as compared to the same period in 2025. This decrease was primarily driven by a $15.1 million decrease in cash provided by operating activities, primarily attributable to the timing of cash payments during the period, as well as $1.7 million in additional investments in property and equipment, and capitalized software related to investments in infrastructure, new products, and enhancements to existing products. Free cash flow margin decreased to 1.3% for the three months ended June 30, 2026 compared to 10.6% for the same period in 2025. ​ Free cash flow increased by $3.1 million for the six months ended June 30, 2026 as compared to the same period in 2025. This increase was primarily driven by a $8.1 million increase in cash provided by operating activities, resulting from favorable changes in working capital components and the timing of certain operational expenditures. The increase in cash provided by operating activities, was partially offset by $5.0 million in additional investments in property and equipment, and capitalized software related to investments in infrastructure, new products, and enhancements to existing products. Free cash flow margin increased to 2.6% for the six months ended June 30, 2026 compared to 2.0% for the same period in 2025. ​ Use and Reconciliation of Non-GAAP Financial Measures In addition to our results determined in accordance with GAAP, we have calculated Adjusted EBITDA, Adjusted EBITDA margin, free cash flow, free cash flow margin, non-GAAP cost of revenues, non-GAAP gross profit, non-GAAP gross margin, non-GAAP research and development expense, non-GAAP selling and marketing expense, non-GAAP general and administrative expense, non-GAAP operating income, and non-GAAP net income, which are each non-GAAP 57 Table of Contents ​ financial measures. We have provided tabular reconciliations of each of these non-GAAP financial measures to its most directly comparable GAAP financial measure. We use these non-GAAP financial measures to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, and to evaluate financial performance. We use non-GAAP financial measures of free cash flow and free cash flow margin to evaluate liquidity. Our non-GAAP financial measures are presented as supplemental disclosure as we believe they provide useful information to investors and others in understanding and evaluating our results, prospects, and liquidity period-over-period without the impact of certain items that do not directly correlate to our operating performance and that may vary significantly from period to period for reasons unrelated to our operating performance, as well as comparing our financial results to those of other companies. Our definitions of these non-GAAP financial measures may differ from similarly titled measures presented by other companies, and therefore, comparability may be limited. In addition, other companies may not publish these or similar metrics. Thus, our non-GAAP financial measures should be considered in addition to, not as a substitute for, or in isolation from, the financial information prepared in accordance with GAAP financial measures, and should be read in conjunction with the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. Additional Non-GAAP Financial Measures In addition to Adjusted EBITDA, Adjusted EBITDA margin, free cash flow, and free cash flow margin calculated and discussed in “Key Business Metrics,” the following additional non-GAAP financial measures are calculated and presented further below: ● Non-GAAP cost of revenues, software subscriptions is determined by adding back to GAAP cost of revenues, software subscriptions, the stock-based compensation expense, and depreciation and amortization of capitalized software and acquired intangible assets included in cost of subscription revenues for the respective periods. ● Non-GAAP cost of revenues, services is determined by adding back to GAAP cost of revenues, services, the stock-based compensation expense included in cost of revenues, services for the respective periods. ● Non-GAAP gross profit is determined by adding back to GAAP gross profit the stock-based compensation expense, and depreciation and amortization of capitalized software and acquired intangible assets included in cost of subscription revenues for the respective periods. ● Non-GAAP gross margin is determined by dividing non-GAAP gross profit by total revenues for the respective periods. ● Non-GAAP research and development expense is determined by adding back to GAAP research and development expense the stock-based compensation expense and transaction costs related to acquired technology included in research and development expense for the respective periods. ● Non-GAAP selling and marketing expense is determined by adding back to GAAP selling and marketing expense the stock-based compensation expense and the amortization of acquired intangible assets included in selling and marketing expense for the respective periods. ● Non-GAAP general and administrative expense is determined by adding back to GAAP general and administrative expense the stock-based compensation expense, amortization of cloud computing implementation costs, severance expense, acquisition-related retained employee compensation, and transaction costs included in general and administrative expense for the respective periods. ● Non-GAAP operating income is determined by adding back to GAAP loss or income from operations the stock-based compensation expense, depreciation and amortization of capitalized software and acquired intangible assets, amortization of cloud computing implementation costs, severance expense, acquisition 58 Table of Contents ​ contingent consideration, changes in the fair value of acquisition contingent earn-outs, acquisition-related retained employee compensation, and transaction costs included in GAAP loss or income from operations for the respective periods. ● Non-GAAP net income is determined by adding back to GAAP net income or loss income tax benefit or expense, stock-based compensation expense, depreciation and amortization of capitalized software and acquired intangible assets, amortization of cloud computing implementation costs, severance expense, acquisition contingent consideration, changes in the fair value of acquisition contingent earn-outs, acquisition-related retained employee compensation, and transaction costs included in GAAP loss or income from operations for the respective periods, to determine non-GAAP income or loss before income taxes. Non-GAAP income or loss before income taxes is then adjusted for income taxes calculated using the respective statutory tax rates for applicable jurisdictions, which for purposes of this determination were assumed to be 25.5%. We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure and to view these non-GAAP financial measures in conjunction with the related GAAP financial measures. ​ The following schedules reflect our additional non-GAAP financial measures and reconciles our additional non-GAAP financial measures to the related GAAP financial measures. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended ​ For the six months ended ​ ​ ​ June 30, ​ June 30, ​ ​ ​ 2026 ​ 2025 ​ 2026 ​ 2025 ​ (Dollars in thousands) ​ (unaudited) ​ (unaudited) ​ Non-GAAP cost of revenues, software subscriptions ​ ​ ​ $ 29,205 ​ $ 26,556 ​ $ 58,550 ​ ​ ​ $ 52,719 ​ ​ ​ Non-GAAP cost of revenues, services ​ $ 19,566 ​ $ 17,876 ​ $ 38,496 ​ $ 36,003 ​ Non-GAAP gross profit ​ $ 155,199 ​ $ 140,127 ​ $ 303,570 ​ $ 272,899 ​ Non-GAAP gross margin ​ 76.1 % ​ 75.9 % 75.8 % 75.5 % Non-GAAP research and development expense ​ $ 22,365 ​ $ 18,070 ​ $ 43,049 ​ $ 34,604 ​ Non-GAAP selling and marketing expense ​ $ 47,080 ​ $ 44,648 ​ $ 93,847 ​ $ 86,466 ​ Non-GAAP general and administrative expense ​ $ 34,587 ​ $ 38,071 ​ $ 71,631 ​ $ 74,673 ​ Non-GAAP operating income ​ $ 44,295 ​ $ 32,182 ​ $ 81,916 ​ $ 63,521 ​ Non-GAAP net income ​ $ 33,256 ​ $ 24,891 ​ $ 61,997 ​ $ 49,385 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended For the six months ended ​ ​ ​ June 30, June 30, ​ ​ ​ 2026 ​ 2025 2026 ​ 2025 ​ (Dollars in thousands) ​ (unaudited) ​ (unaudited) ​ Non-GAAP Cost of Revenues, Software Subscriptions: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of revenues, software subscriptions ​ $ 52,170 ​ $ 44,459 ​ $ 103,346 ​ $ 88,704 ​ Stock-based compensation expense ​ (1,083) ​ (1,233) ​ (2,828) ​ ​ (3,460) ​ Depreciation and amortization of capitalized software and acquired intangible assets – cost of subscription revenues ​ (21,882) ​ (16,670) ​ (41,968) ​ (32,525) ​ Non-GAAP cost of revenues, software subscriptions ​ $ 29,205 ​ $ 26,556 ​ $ 58,550 ​ $ 52,719 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-GAAP Cost of Revenues, Services: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of revenues, services ​ $ 20,500 ​ $ 18,900 ​ $ 41,101 ​ $ 38,723 ​ Stock-based compensation expense ​ (934) ​ (1,024) ​ (2,605) ​ ​ (2,720) ​ Non-GAAP cost of revenues, services ​ $ 19,566 ​ $ 17,876 ​ $ 38,496 ​ $ 36,003 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-GAAP Gross Profit: ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross profit ​ $ 131,300 ​ $ 121,200 ​ $ 256,169 ​ $ 234,194 ​ Stock-based compensation expense ​ 2,017 ​ 2,257 ​ 5,433 ​ 6,180 ​ Depreciation and amortization of capitalized software and acquired intangible assets – cost of subscription revenues ​ 21,882 ​ 16,670 ​ 41,968 ​ 32,525 ​ Non-GAAP gross profit ​ $ 155,199 ​ $ 140,127 ​ $ 303,570 ​ $ 272,899 ​ 59 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended ​ For the six months ended ​ ​ ​ June 30, ​ June 30, ​ ​ ​ 2026 ​ 2025 ​ 2026 ​ 2025 (Dollars in thousands) ​ ​ (unaudited) ​ ​ (unaudited) ​ Non-GAAP Gross Margin: ​ ​ ​ ​ ​ ​ ​ ​ ​ Total revenues ​ $ 203,970 ​ $ 184,559 ​ $ 400,616 ​ $ 361,621 ​ Non-GAAP gross margin ​ 76.1 % 75.9 % 75.8 % 75.5 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-GAAP Research and Development Expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ Research and development expense ​ $ 24,805 ​ $ 20,582 ​ $ 49,355 ​ $ 41,468 ​ Stock-based compensation expense ​ (2,440) ​ (2,512) ​ (6,306) ​ (6,864) ​ Non-GAAP research and development expense ​ $ 22,365 ​ $ 18,070 ​ $ 43,049 ​ $ 34,604 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-GAAP Selling and Marketing Expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ Selling and marketing expense ​ $ 51,899 ​ $ 48,454 ​ $ 104,534 ​ $ 96,609 ​ Stock-based compensation expense ​ ​ (4,297) ​ (3,235) ​ ​ (9,640) ​ (9,041) ​ Amortization of acquired intangible assets – selling and marketing expense ​ (522) ​ (571) ​ (1,047) ​ (1,102) ​ Non-GAAP selling and marketing expense ​ $ 47,080 ​ $ 44,648 ​ $ 93,847 ​ $ 86,466 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-GAAP General and Administrative Expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ General and administrative expense ​ $ 51,142 ​ $ 43,392 ​ $ 105,481 ​ $ 88,420 ​ Stock-based compensation expense ​ (5,008) ​ (3,986) ​ (10,891) ​ (10,949) ​ Severance expense (1) ​ ​ (2,689) ​ ​ (317) ​ ​ (10,097) ​ ​ (774) ​ Acquisition-related retained employee compensation (2) ​ ​ (1,250) ​ ​ — ​ ​ (1,667) ​ ​ — ​ Transaction costs (3) ​ ​ (6,250) ​ ​ — ​ ​ (8,800) ​ ​ — ​ Amortization of cloud computing implementation costs – general and administrative expense ​ ​ (1,358) ​ ​ (1,018) ​ ​ (2,395) ​ ​ (2,024) ​ Non-GAAP general and administrative expense ​ $ 34,587 ​ $ 38,071 ​ $ 71,631 ​ $ 74,673 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-GAAP Operating Income: ​ ​ ​ ​ ​ ​ ​ ​ ​ Income (loss) from operations ​ $ (4,443) ​ $ (3,864) ​ $ (15,049) ​ $ 622 ​ Stock-based compensation expense ​ 13,762 ​ 11,990 ​ 32,270 ​ 33,034 ​ Depreciation and amortization of capitalized software and acquired intangible assets – cost of subscription revenues ​ 21,882 ​ 16,670 ​ 41,968 ​ 32,525 ​ Amortization of acquired intangible assets – selling and marketing expense ​ ​ 522 ​ 571 ​ ​ 1,047 ​ 1,102 ​ Amortization of cloud computing implementation costs – general and administrative expense ​ ​ 1,358 ​ ​ 1,018 ​ ​ 2,395 ​ ​ 2,024 ​ Severance expense (1) ​ ​ 2,689 ​ ​ 317 ​ ​ 10,097 ​ ​ 774 ​ Acquisition contingent consideration ​ ​ — ​ ​ 200 ​ ​ — ​ ​ 200 ​ Change in fair value of acquisition contingent earn-outs ​ ​ (100) ​ ​ 2,300 ​ ​ (5,838) ​ ​ (12,400) ​ Acquisition-related retained employee compensation (2) ​ ​ 1,250 ​ ​ — ​ ​ 1,667 ​ ​ — ​ Transaction costs (3) ​ ​ 7,375 ​ 2,980 ​ 13,359 ​ ​ 5,640 ​ Non-GAAP operating income ​ $ 44,295 ​ $ 32,182 ​ $ 81,916 ​ $ 63,521 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-GAAP Net Income: ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) ​ $ 9,043 ​ $ (961) ​ $ 6,533 ​ $ 10,169 ​ Income tax benefit ​ ​ (13,142) ​ ​ (1,675) ​ ​ (20,281) ​ ​ (6,780) ​ Stock-based compensation expense ​ 13,762 ​ 11,990 ​ 32,270 ​ 33,034 ​ Depreciation and amortization of capitalized software and acquired intangible assets – cost of subscription revenues ​ ​ 21,882 ​ ​ 16,670 ​ ​ 41,968 ​ ​ 32,525 ​ Amortization of acquired intangible assets – selling and marketing expense ​ ​ 522 ​ ​ 571 ​ ​ 1,047 ​ ​ 1,102 ​ Amortization of cloud computing implementation costs – general and administrative expense ​ ​ 1,358 ​ ​ 1,018 ​ ​ 2,395 ​ ​ 2,024 ​ Severance expense (1) ​ 2,689 ​ 317 ​ 10,097 ​ 774 ​ Acquisition contingent consideration ​ ​ — ​ ​ 200 ​ ​ — ​ ​ 200 ​ Change in fair value of acquisition contingent earn-outs ​ ​ (100) ​ ​ 2,300 ​ ​ (5,838) ​ ​ (12,400) ​ Acquisition-related retained employee compensation (2) ​ ​ 1,250 ​ ​ — ​ ​ 1,667 ​ ​ — ​ Transaction costs (3) ​ ​ 7,375 ​ ​ 2,980 ​ ​ 13,359 ​ ​ 5,640 ​ Non-GAAP income before income taxes ​ ​ 44,639 ​ 33,410 ​ ​ 83,217 ​ 66,288 ​ Income tax adjustment at statutory rate (4) ​ (11,383) ​ (8,519) ​ (21,220) ​ (16,903) ​ Non-GAAP net income ​ $ 33,256 ​ $ 24,891 ​ $ 61,997 ​ $ 49,385 ​ (1) The three and six months ended June 30, 2026 periods include $1,713 and $7,883, respectively, in severance costs related to the Value Creation Plan. For further information, refer to Note 15, “Restructuring” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. ​ 60 Table of Contents ​ (2) The acquisition-related compensation expenses recorded for the three and six months ended June 30, 2026 are related to the Additional Cash Consideration obligation associated with the acquisition of Brinta. For further information, refer to Note 3, “Acquisitions” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. ​ (3) The three and six months ended June 30, 2026 periods include $6,250 and $8,800, respectively, in costs incurred to support the execution of our Value Creation Plan, recorded in general and administrative expense. For further information, refer to Note 15, “ Restructuring” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. Amounts also include legal expenses associated with pending litigation related to claims the Company has made against a competitor. For further information, refer to Note 12, “Commitments and Contingencies” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. ​ (4) Non-GAAP income before income taxes is adjusted for income taxes using the respective statutory tax rates for applicable jurisdictions, which for purposes of this determination were assumed to be 25.5%. ​ ​ Critical Accounting Estimates The critical accounting policies that reflect our more significant judgments and estimates used in the preparation of our condensed consolidated financial statements include revenue recognition and income taxes, which are described in our 2025 Annual Report. There have been no material updates or changes to our critical accounting estimates compared to the critical accounting estimates described in our 2025 Annual Report. Recent Accounting Pronouncements For further information on recent accounting pronouncements, refer to Note 1, “Summary of Significant Accounting Policies” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.