Appian Corporation

11/06/2025 | Press release | Distributed by Public on 11/06/2025 12:16

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with (1) our consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and (2) the audited consolidated financial statements and the related notes and management's discussion and analysis of financial condition and results of operations for the year ended December 31, 2024 included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission, or SEC, on February 19, 2025.
This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These statements are often identified by the use of words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "project," "will," "would," or the negative or plural of these words or similar expressions or variations, including statements regarding our expectations regarding customer renewals and our future financial and operating performance, expansion of the usage of partners to perform professional services, the increase of our subscriptions revenue as a percentage of total revenue, the fluctuation of gross margin on a quarterly basis, our future capital requirements, and our ability to meet our financial covenants under our Credit Agreement. Such forward-looking statements are subject to a number of risks, uncertainties, assumptions, and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified herein and those discussed in the section titled "Risk Factors," set forth in Part I, Item 1A of our Annual Report on Form 10-K filed with the SEC on February 19, 2025 and in our other filings with the SEC. Forward-looking statements should not be relied on as predictions of future events. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.
Overview
Appian is The Process Company. We deliver a software platform that helps organizations run better processes that reduce costs, improve customer experiences, and gain a strategic edge. Committed to client success, we serve many of the world's largest companies across various industries. We believe processes define each organization. Processes are how they operate, deliver value, and interact with their customers. Nothing is more transformative for an organization than improving their processes. Appian has both the platform and the expertise to enable enterprise transformation.
Appian provides capabilities to tackle any process challenge. Appian tightly integrates data fabric; robotic process automation, or RPA; intelligent document processing, or IDP; generative artificial intelligence, or generative AI; artificial intelligence agents, or AI agents; low-code design; application programming interfaces, or APIs; business rules; and process intelligence capabilities in a single platform. These capabilities are unified and scalable, meeting enterprise demands and easy to change as requirements evolve.
•Process Orchestration: The Appian platform coordinates tasks between AI, automation, and humans to ensure processes run efficiently and intelligently. RPA enables customers to build bots with low-code to automate repetitive manual tasks. Appian AI agents extract data, process documents, and initiate processes at scale. API integration easily connects systems with low-code design tools and hundreds of prebuilt connections.
•Data Fabric: Appian's data fabric is an integrated data layer that unifies data across systems without requiring companies to migrate their data. Appian empowers users to explore data in real-time, build reports, and get AI-powered insights for smarter decision-making. Our patented data fabric technology supports both analytical and transactional workloads, which allows users to build applications that create and update enterprise data. It also includes row-level security rules to enforce access controls at every level. Our data fabric functionality powers and is designed to secure our AI offering.
•Process Intelligence: Process intelligence allows users to gain deep insights into process performance through Appian's Process HQ. It also preps data for process mining with just a few clicks, even across multiple sources. Companies can use AI to monitor processes, identify issues, and get intelligent recommendations for optimization.
•Artificial Intelligence: We believe the key to unlocking AI's full potential is embedding it inside a business process. Process is where business happens. It's where companies make decisions, save and spend money, serve customers, and scale business operations. When AI operates within processes, it gains purpose, governance, and accountability-all essential to delivering value from AI. Appian can embed AI into every process, which gives AI the context and actions it needs to accelerate outcomes for the enterprise.
Appian delivers six key benefits with our "AI in process" approach:
1.Process makes AI easy. Deploying AI in isolated projects is complex and costly. By embedding AI within a process, enterprises can easily access valuable AI capabilities when and where they need them.
2.Process gives AI structure. AI is only as useful as the structure surrounding it. A process gives AI defined goals in a structured flow of work. AI can work alongside humans and automation tools, escalating issues so humans always maintain oversight and control.
3.Process gives AI data. AI is nothing without data. But most enterprises struggle to feed AI complete data from across systems, while still ensuring privacy and maintaining access privileges. By integrating AI into processes, enterprises ensure AI receives quality, real-time data from all systems. Organizations can enforce privacy controls to prevent unauthorized access and optimize data governance to comply with regulations (such as GDPR, HIPAA, etc.).
4.Process makes AI safe. AI is powerful, but no one wants to give AI free reign over their enterprises. Processes provide crucial safety mechanisms, including human approval steps for high-risk actions and escalation paths to ensure AI errors don't cause harm. Additionally, activity logs make auditing and compliance simple for organizations with strict regulatory requirements.
5.Process makes AI measurable. For many enterprises, AI is a black box, which can't be measured for impact. Appian processes track every AI action, allowing organizations to measure performance, identify bottlenecks, and optimize outcomes.
6.Process makes AI enterprise-grade. A process provides the necessary infrastructure to scale AI use. The right tooling puts AI to work with security certifications, enterprise scalability, and other capabilities such as process orchestration, automation, and intelligence. Processes take AI from a collection of disconnected pilots to an enterprise-wide capability.
Appian's unified approach delivers all the capabilities leading organizations need to orchestrate their business processes in one place. It empowers enterprises to transform their processes and improve business outcomes.
We have generated the majority of our revenue from sales of subscriptions, which include (1) cloud subscriptions bundled with maintenance and support and hosting services and (2) term license subscriptions bundled with maintenance and support. Our subscription contracts are priced based primarily on the number of users who access and utilize the applications built on our platform or, alternatively, non-user-based single application licenses. Our subscription contract terms generally vary from one to three years with most providing for payment in advance on an annual, quarterly, or monthly basis. Due to the variability of our billing terms and the episodic nature of our customers purchasing additional subscriptions, we do not believe changes in our deferred revenue in a given period are directly correlated with our revenue growth.
We have invested in our professional services organization to help ensure customers are able to build and deploy applications on our platform. We believe our professional services have driven customer success and facilitated the adoption of our platform by customers. We have a number of strategic partnerships with companies, including Accenture, Capgemini, Deloitte, EY, KPMG, PwC, and TCS, which allow them to refer customers to us in order to purchase subscriptions. Our partners then provide professional services directly to the customers using our
platform. We intend to continue focusing on adding new customers with our strategic partners. We believe our investment in professional services, including strategic partners building their practices around Appian, will drive increased adoption of our platform.
Our customers primarily include financial services, government, life sciences, insurance, manufacturing, energy, healthcare, telecommunications, and transportation organizations. Generally, our sales team targets its efforts at organizations with over 2,000 employees and $2 billion in annual revenue. For the three and nine months ended September 30, 2025, revenue generated from government agencies represented 32.4% and 33.3%, respectively, of total revenue, of which revenue from U.S. federal government agencies was 25.0% and 24.9% of total revenue, respectively. For the three and nine months ended September 30, 2024, revenue generated from government agencies represented 31.0% and 30.6%, respectively, of total revenue, of which revenue from U.S. federal government agencies was 23.2% and 22.5% of total revenue, respectively.
We offer our platform globally. Our platform supports multiple languages to facilitate collaboration and address challenges in multinational organizations. In the three and nine months ended September 30, 2025, 39.7% and 38.2%, respectively, of our total revenue was generated from customers outside of the United States as compared to 36.3% and 37.2% in the three and nine months ended September 30, 2024, respectively. As of September 30, 2025, we operated in 16 countries. We believe we have a significant opportunity to continue to grow our international footprint, and we are investing in new geographies, including through investment in direct and indirect sales channels, professional services, and customer support and implementation partners.
Our business model focuses on maximizing the lifetime value of customer relationships, which is a function of the duration of a customer's deployment of our platform as well as the price and number of subscriptions of our platform that a customer purchases. We incur significant customer acquisition costs, including expenses associated with hiring new sales representatives, who can take anywhere from six months to a year to become productive given the length of our sales cycle, and marketing costs which, with the exception of certain types of sales commissions, are expensed as incurred.
At the same time, we believe the costs we incur to retain customers and drive additional purchases of software are lower than our customer acquisition costs on a relative basis. Over time, we expect a large portion of our customers to renew their subscriptions and purchase additional subscriptions as they continue to build more applications and add more users to our platform. Over the last three years, we had a quarterly average cloud subscriptions gross renewal rate of 98%. We calculate our cloud subscriptions gross renewal rate by dividing (i) the cloud subscriptions revenue from renewing cloud customers in the current 12-month period that were cloud customers during the entirety of the prior 12-month period, by (ii) our cloud subscriptions revenue from all cloud customers in the corresponding prior 12-month period that were cloud customers during the entirety of such prior 12-month period. The calculation includes the impact of customers that churned during the current 12-month period but excludes the impact of price changes, additional users, upsells, and downsells during the same period.
Key Factors Affecting Our Performance
The following are several key factors that affect our performance:
•Market Adoption of Our Platform - Our ability to grow our customer base and drive market adoption of our platform is affected by the pace at which organizations digitally transform. We expect our revenue growth will be primarily driven by the pace of adoption and penetration of our platform. We offer a leading custom software platform and intend to continue to invest to expand our customer base. The degree to which prospective customers recognize the need for our software platform and its ability to enable their organizations to digitally transform, and subsequently allocate budget dollars to purchase our software, will drive our ability to acquire new customers and increase sales to existing customers, which, in turn, will affect our future financial performance.
•Growth of Our Customer Base -We believe we have a substantial opportunity to grow our customer base. We have aggressively invested, and intend to continue to invest, in our sales team in order to drive sales to new customers. We continue to make investments to enhance the expertise of our sales and marketing
organization within our key industry verticals of financial services, government, life sciences, insurance, and manufacturing. In addition, we have established relationships with strategic partners who work with organizations undergoing digital transformations. Our ability to continue to grow our customer base is dependent, in part, upon our ability to differentiate ourselves within the increasingly competitive markets in which we participate.
•Further Penetration of Existing Customers - Our sales team seeks to generate additional revenue from existing customers by adding new users or application licenses to our platform. Many of our customers begin by building a single application and then grow to build dozens of applications on our platform. Generally, the development of new applications on our platform results in the expansion of our user base within an organization and a corresponding increase in revenue. As a result of this "land and expand" strategy, we have generated significant additional revenue from our customer base. Our ability to increase sales to existing customers will depend on a number of factors, including the size of our sales and professional services teams, customers' level of satisfaction with our platform and professional services, pricing, economic conditions, and our customers' overall spending levels.
•Investments in Growth -We have made, and plan to continue to make, investments for long-term growth, including investing in our platform and infrastructure to continuously maximize their power and speed, meet the evolving needs of our customers, and take advantage of our market opportunity. In addition, we may pursue strategic acquisitions that enhance our product offerings. We also intend to continue to invest in sales and marketing as we further expand our sales teams, increase our marketing activities, and grow our international operations.
Key Metrics
We monitor the following metrics to help us measure and evaluate the effectiveness of our operations. All dollar amounts are presented in thousands.
Cloud Subscriptions Revenue
Three Months Ended September 30,
Nine Months Ended September 30,
2025 2024 % Change 2025 2024 % Change
Cloud subscriptions revenue
$ 113,596 $ 94,075 20.8 % $ 320,337 $ 269,106 19.0 %
Cloud subscriptions revenue includes cloud subscriptions bundled with maintenance and support and hosting services. Our cloud subscriptions revenue for any customer is primarily determined by the number of users who access and utilize the applications built on our platform or by the number of application licenses purchased, as well as the price paid. We believe increasing cloud subscriptions revenue is an indicator of the demand for our platform, the pace at which the market for our solutions is growing, the productivity of our sales team and strategic relationships in growing our customer base, and our ability to further penetrate our existing customer base.
Cloud Subscriptions Revenue Retention Rate
As of September 30,
2025 2024
Cloud subscriptions revenue retention rate
111 % 117 %
A key factor to our success is the renewal and expansion of subscription agreements with our existing customers. We calculate this metric over a set of customers who have been with us for at least one full year. To calculate our cloud subscriptions revenue retention rate for a particular trailing 12-month period, we first establish the recurring cloud subscriptions revenue for the previous trailing 12-month period. This effectively represents recurring dollars we should expect in the current trailing 12-month period from the cohort of customers from the previous trailing 12-month period without accounting for any expansion or contraction. We subsequently measure
the recurring cloud subscriptions revenue in the current trailing 12-month period from the cohort of customers from the previous trailing 12-month period. Cloud subscriptions revenue retention rate is then calculated by dividing the aggregate recurring cloud subscriptions revenue in the current trailing 12-month period by the previous trailing 12-month period. This calculation includes the combined impact on our revenue from customer churn, upsells, downsells, pricing changes, and growth in the number of users on our platform. Our cloud subscriptions revenue retention rate can fluctuate from period to period due to large customer contracts in any given period.
Key Components of Results of Operations
Revenue
We generate revenue primarily through sales of subscriptions to our platform as well as professional services. We typically sell our software on a per-user basis or through non-user-based single application licenses. We generally bill customers and collect payment for subscriptions to our platform in advance on an annual, quarterly, or monthly basis. In certain instances, we have had customers pay their entire contract value up front.
Our revenue is comprised of the following:
Subscriptions
Subscriptions revenue is primarily derived from cloud subscriptions bundled with maintenance and support and hosting services and term license subscriptions bundled with maintenance and support. Our maintenance and support agreements provide customers with the right to unspecified software upgrades, maintenance releases and patches released during the term of the maintenance and support agreement on a when-and-if-available basis, and rights to technical support. Term license subscriptions are offered when the customer prefers to self-manage the deployment of our platform within their own infrastructure. When our platform is delivered as a cloud subscription, we manage operational needs in third-party hosted data centers.
Professional Services
Our professional services revenue is comprised of fees for consulting services, including application development, deployment assistance, and training related to our platform.
Cost of Revenue
Subscriptions
Cost of subscriptions revenue consists primarily of fees paid to our third-party managed hosting providers and other third-party service providers, personnel costs, including payroll and benefits for our technology operations and customer support teams, amortization of acquired technology, and allocated overhead costs. We expect cost of revenue to continue to increase in absolute dollars for the foreseeable future as our customer base grows.
Professional Services
Cost of professional services revenue includes all direct and indirect costs to deliver our professional services and training, including employee compensation for our global professional services and training personnel, third-party contractor costs, allocated overhead costs, and the costs of billable expenses such as travel and lodging. The unpredictability of the timing of providing services related to significant professional services agreements sold on a standalone basis may cause significant fluctuations in our cost of professional services which, in turn, may impact our quarterly financial results.
Gross Profit and Gross Margin
Gross profit and gross margin (defined as gross profit as a percentage of total revenue), have been, and will continue to be, affected by various factors, including the mix of cloud subscriptions and term license subscriptions,
the mix of total subscriptions revenue and professional services revenue, subscription pricing, the costs associated with third-party hosting providers, and the extent to which we expand or reduce our professional services to support future changes in our growth. Our gross margin may fluctuate from period to period based on the aforementioned factors.
Subscriptions Gross Margin
Subscriptions gross margin is primarily affected by the growth in our subscriptions revenue as compared to the growth in, and timing of, costs to support such revenue. We expect to continue to invest in customer support and cloud operations to support growth in our business, and the timing of those investments is expected to cause subscriptions gross margin to fluctuate on a quarterly basis.
Professional Services Gross Margin
Professional services gross margin is affected by the growth in our professional services revenue as compared to the growth in, and timing of, the costs of our professional services organization as we continue to invest in the growth of our business, as well as by consultant utilization rates. Professional services gross margin is also impacted by the amount of services performed by subcontractors and partners as opposed to internal resources. The professional services margins for individual quarters remain subject to fluctuation based on the factors discussed above.
Operating Expenses
Operating expenses consist of sales and marketing, research and development, and general and administrative expenses. Personnel-related costs such as salaries, bonuses, commissions, payroll tax payments, and stock-based compensation expense are the most significant components of each of these expense categories. Other components of each category include professional fees for third-party services such as legal, software development resources, contractors, and cloud computing services. In addition, operating expenses include allocated overhead costs, which are primarily comprised of facility costs such as rent, employee medical benefits, employee relations expense, and certain information technology costs.
In general, our operating expenses are expected to continue to increase in absolute dollars as we invest resources in enhancing our product and growing our business, although such growth is expected to be at a more measured rate than prior years.
Sales and Marketing Expense
Sales and marketing expense primarily includes personnel costs, including salaries, bonuses, commissions, stock-based compensation, and other personnel costs related to sales teams. Additional major expenses in this category include travel and entertainment, marketing activities and promotional events, subcontracting fees, and allocated overhead costs. We are focused on increasing the efficiency of our sales force and marketing activities by enhancing account targeting, messaging, field sales operations, and sales training in order to accelerate the adoption of our platform.
We expect sales and marketing headcount to marginally increase from current levels in 2025 due to expected growth in our principal markets and strategic growth areas. Furthermore, we expect sales and marketing expense to increase in absolute dollars as we continue to invest in acquiring new customers, further expand usage of our platform within our existing customer base, and broaden our efforts to build on our brand reputation and increase market awareness of our platform.
Research and Development Expense
Research and development expense consists primarily of personnel costs for our employees who develop and enhance our platform, including salaries, bonuses, stock-based compensation, and other personnel costs. Also included are non-personnel costs such as subcontracting, consulting, professional fees to third party development resources, certain information technology expenses, and allocated overhead costs.
Our research and development efforts are focused on enhancing the capabilities, speed, and power of our software platform. In 2022, we opened a new product development center in India. Although we expect research and development expense to continue to increase in absolute dollars as such costs are critical to maintain and improve the quality of applications and our competitive position, we believe our product development center will result in cost savings over time.
General and Administrative Expense
General and administrative expense consists primarily of personnel costs, including salaries, bonuses, stock-based compensation, and other personnel costs for our administrative, legal, information technology, human resources, finance, and accounting teams as well as our senior executives. Additional expenses included in this category are non-personnel costs such as travel-related expenses, contracting and professional fees for such services as audits, taxation, and legal, insurance and other corporate expenses, including allocated overhead costs, and bad debt expenses. In 2025, we expect general and administrative expense to increase in absolute dollars largely due to investments in our information technology team.
Other Non-Operating Expense (Income)
Other Income, Net
Other income, net consists primarily of gains and losses related to changes in foreign currency exchange rates, interest income on our cash and cash equivalents and investments, and other sources of income or expense not related to our core business operations.
Interest Expense
Interest expense consists primarily of interest on our debt, amortization of deferred financing fees, unused credit facility fees, and commitment fees on our letters of credit.
Results of Operations
The following table sets forth our consolidated statements of operations (in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2025 2024 2025 2024
Revenue
Subscriptions $ 147,188 $ 123,121 $ 414,197 $ 353,789
Professional services 39,816 30,931 109,873 96,548
Total revenue 187,004 154,052 524,070 450,337
Cost of revenue
Subscriptions 17,762 14,082 49,810 39,614
Professional services 27,531 23,002 78,322 74,880
Total cost of revenue 45,293 37,084 128,132 114,494
Gross profit 141,711 116,968 395,938 335,843
Operating expenses
Sales and marketing 51,918 50,865 166,929 175,613
Research and development 40,263 38,572 120,127 117,789
General and administrative 36,416 34,688 107,586 108,327
Total operating expenses 128,597 124,125 394,642 401,729
Operating income (loss) 13,114 (7,157) 1,296 (65,886)
Other non-operating expense (income)
Other income, net
(1,398) (12,544) (24,678) (5,882)
Interest expense 5,311 6,168 15,948 17,921
Total other non-operating expense (income) 3,913 (6,376) (8,730) 12,039
Income (loss) before income taxes
9,201 (781) 10,026 (77,925)
Income tax expense 1,376 1,319 3,690 690
Net income (loss) $ 7,825 $ (2,100) $ 6,336 $ (78,615)
The following table sets forth our consolidated statements of operations data expressed as a percentage of total revenue:
Three Months Ended September 30, Nine Months Ended September 30,
2025 2024 2025 2024
Revenue
Subscriptions 78.7 % 79.9 % 79.0 % 78.6 %
Professional services 21.3 20.1 21.0 21.4
Total revenue 100.0 100.0 100.0 100.0
Cost of revenue
Subscriptions 9.5 9.1 9.5 8.8
Professional services 14.7 14.9 14.9 16.6
Total cost of revenue*
24.2 24.1 24.4 25.4
Gross profit 75.8 75.9 75.6 74.6
Operating expenses
Sales and marketing 27.8 33.0 31.9 39.0
Research and development 21.5 25.0 22.9 26.2
General and administrative 19.5 22.5 20.5 24.1
Total operating expenses*
68.8 80.6 75.3 89.2
Operating income (loss)*
7.0 (4.6) 0.2 (14.6)
Other non-operating expense (income)
Other income, net
(0.7) (8.1) (4.7) (1.3)
Interest expense 2.8 4.0 3.0 4.0
Total other non-operating expense (income)
2.1 (4.1) (1.7) 2.7
Income (loss) before income taxes
4.9 (0.5) 1.9 (17.3)
Income tax expense 0.7 0.9 0.7 0.2
Net income (loss)
4.2 % (1.4) % 1.2 % (17.5) %
* Totals may not foot due to rounding.
Comparison of the Three Months Ended September 30, 2025 and 2024
Revenue
Three Months Ended September 30,
2025 2024 $ Change % Change
(dollars in thousands)
Revenue
Subscriptions $ 147,188 $ 123,121 $ 24,067 19.5 %
Professional services 39,816 30,931 8,885 28.7
Total revenue $ 187,004 $ 154,052 $ 32,952 21.4 %
Total revenue increased $33.0 million, or 21%, in the three months ended September 30, 2025 compared to the same period in 2024 due to an increase in our subscriptions revenue of $24.1 million coupled with an increase in our professional services revenue of $8.9 million. The increase in subscriptions revenue was driven by a $19.5 million increase in cloud subscriptions revenue, a $3.5 million increase in term license subscriptions revenue, and a $1.0 million increase in maintenance and support revenue. With respect to new versus existing customers, there was a $6.3 million increase in subscriptions revenue from sales to new customers, while the remaining $17.8 million
of the increase was attributable to expanded deployments, price increases on renewals, and corresponding sales of additional subscriptions to existing customers. The increase in professional services revenue was due primarily to a $6.5 million increase in revenue from sales to new customers along with a $2.4 million increase in sales to existing customers.
Cost of Revenue
Three Months Ended September 30,
2025 2024 $ Change % Change
(dollars in thousands)
Cost of revenue
Subscriptions $ 17,762 $ 14,082 $ 3,680 26.1 %
Professional services 27,531 23,002 4,529 19.7
Total cost of revenue $ 45,293 $ 37,084 $ 8,209 22.1 %
Subscriptions gross margin 87.9 % 88.6 %
Professional services gross margin 30.9 % 25.6 %
Total gross margin 75.8 % 75.9 %
Cost of revenue increased $8.2 million, or 22%, in the three months ended September 30, 2025 compared to the same period in 2024, primarily due to a $3.1 million increase in hosting costs coupled with a $2.5 million increase in contractor costs and a $2.2 million increase in professional services and product support personnel costs. Hosting costs increased due to an increase in sales of our cloud offering during the three months ended September 30, 2025, while contractor costs increased due to an increase in the usage of subcontractors for professional services engagements. Professional services and product support personnel costs increased due to an increase in headcount from September 30, 2024 to September 30, 2025.
Sales and Marketing Expense
Three Months Ended September 30,
2025 2024 $ Change % Change
(dollars in thousands)
Sales and marketing $ 51,918 $ 50,865 $ 1,053 2.1 %
% of revenue 27.8 % 33.0 %
Sales and marketing expense increased $1.1 million, or 2%, in the three months ended September 30, 2025 compared to the same period in 2024, primarily due to a $1.3 million increase in marketing expenses and a $1.2 million increase in sales and marketing personnel costs. These increases were partially offset by a $1.0 million decrease in contractor costs. Although sales and marketing headcount decreased from September 30, 2024 to September 30, 2025, overall sales and marketing personnel costs increased due to higher bonuses and commissions expense.
Research and Development Expense
Three Months Ended September 30,
2025 2024 $ Change % Change
(dollars in thousands)
Research and development $ 40,263 $ 38,572 $ 1,691 4.4 %
% of revenue 21.5 % 25.0 %
Research and development expense increased $1.7 million, or 4%, in the three months ended September 30, 2025 compared to the same period in 2024. This change is primarily attributable to a $1.0 million increase in research and development personnel costs and a $0.5 million increase in information technology costs. Although research and development headcount remained relatively consistent period over period, overall personnel costs increased due to higher bonus expense, while information technology costs increased primarily due to a $0.4 million increase in cloud computing services spend.
General and Administrative Expense
Three Months Ended September 30,
2025 2024 $ Change % Change
(dollars in thousands)
General and administrative
$ 36,416 $ 34,688 $ 1,728 5.0 %
% of revenue 19.5 % 22.5 %
General and administrative expense increased $1.7 million, or 5%, in the three months ended September 30, 2025 compared to the same period in 2024 primarily due to a $1.3 million increase in general and administrative personnel costs and a $1.0 million increase in rent expense. These increases were partially offset by a $0.8 million decrease in insurance expense. Personnel costs increased due to an increase in headcount from September 30, 2024 to September 30, 2025 coupled with higher bonus expense and a $0.6 million increase in stock compensation expense. Rent expense increased due to $0.8 million of lease impairment charges. Insurance expense decreased due to a $0.5 million decrease in amortization of the judgment preservation insurance policy.
Other Income, Net
Three Months Ended September 30,
2025 2024 $ Change % Change
(dollars in thousands)
Other income, net
$ (1,398) $ (12,544) $ 11,146 (88.9) %
% of revenue (0.7) % (8.1) %
Other income, net was $1.4 million in the three months ended September 30, 2025 compared to other income, net of $12.5 million in the three months ended September 30, 2024. This change was primarily due to $0.3 million in foreign exchange losses in the three months ended September 30, 2025 as compared to $9.2 million in foreign exchange gains in the three months ended September 30, 2024, in addition to a $1.8 million decrease in other income attributable to short-swing profit disgorgement payments to us from a public stockholder of our Class A common stock during the three months ended September 30, 2024.
Interest Expense
Three Months Ended September 30,
2025 2024 $ Change % Change
(dollars in thousands)
Interest expense $ 5,311 $ 6,168 $ (857) (13.9) %
% of revenue 2.8 % 4.0 %
Interest expense decreased by $0.9 million in the three months ended September 30, 2025 as compared to the corresponding period in 2024 primarily due to a lower effective interest rate and lower outstanding principal compared to the prior year period.
Income Tax Expense
Three Months Ended September 30,
2025 2024 $ Change % Change
(dollars in thousands)
Income tax expense $ 1,376 $ 1,319 $ 57 4.3 %
% of revenue
0.7 % 0.9 %
Income tax expense increased by $0.1 million in the three months ended September 30, 2025 as compared to the corresponding period in 2024. This change was primarily driven by increased pre-tax book income in certain international subsidiaries for the three months ended September 30, 2025.
Comparison of the Nine Months Ended September 30, 2025 and 2024
Revenue
Nine Months Ended September 30,
2025 2024 $ Change % Change
(dollars in thousands)
Revenue
Subscriptions $ 414,197 $ 353,789 $ 60,408 17.1 %
Professional services 109,873 96,548 13,325 13.8
Total revenue $ 524,070 $ 450,337 $ 73,733 16.4 %
Total revenue increased $73.7 million, or 16%, in the nine months ended September 30, 2025 compared to the same period in 2024 due to an increase in our subscriptions revenue of $60.4 million as well as an increase in our professional services revenue of $13.3 million. The increase in subscriptions revenue was driven by a $51.2 million increase in cloud subscriptions revenue, a $7.2 million increase in term license subscriptions revenue, and a $2.0 million increase in maintenance and support revenue. With respect to new versus existing customers, there was a $15.1 million increase in subscriptions revenue from sales to new customers, while the remaining $45.3 million of the increase was attributable to expanded deployments, price increases on renewals, and corresponding sales of additional subscriptions to existing customers. The increase in professional services revenue was due primarily to a $15.3 million increase in revenue from sales to new customers, which was partially offset by a $2.0 million decrease in sales to existing customers.
Cost of Revenue
Nine Months Ended September 30,
2025 2024 $ Change % Change
(dollars in thousands)
Cost of revenue
Subscriptions $ 49,810 $ 39,614 $ 10,196 25.7 %
Professional services 78,322 74,880 3,442 4.6
Total cost of revenue $ 128,132 $ 114,494 $ 13,638 11.9 %
Subscriptions gross margin 88.0 % 88.8 %
Professional services gross margin 28.7 % 22.4 %
Total gross margin 75.6 % 74.6 %
Cost of revenue increased $13.6 million, or 12%, in the nine months ended September 30, 2025 compared to the same period in 2024, primarily due to a $8.8 million increase in hosting costs coupled with a $4.9 million increase in contractor costs. These increases were partially offset by a $0.3 million decrease in professional services and product support personnel costs. Hosting costs increased due to an increase in sales of our cloud offering during the nine months ended September 30, 2025, while contractor costs increased due to an increase in the usage of subcontractors for professional services engagements. Although professional services and product support headcount increased from September 30, 2024 to September 30, 2025, overall personnel costs decreased due to a $1.4 million decrease in severance expense as compared to the prior year.
Sales and Marketing Expense
Nine Months Ended September 30,
2025 2024 $ Change % Change
(dollars in thousands)
Sales and marketing $ 166,929 $ 175,613 $ (8,684) (4.9) %
% of revenue 31.9 % 39.0 %
Sales and marketing expense decreased $8.7 million, or 5%, in the nine months ended September 30, 2025 compared to the same period in 2024, primarily due to a $6.1 million decrease in sales and marketing personnel costs, and a $1.5 million decrease in information technology spend. These decreases were partially offset by a $1.3 million increase in travel and entertainment costs. Sales and marketing personnel costs decreased due to a decrease in sales and marketing headcount from September 30, 2024 to September 30, 2025. Information technology costs declined largely due to lower cloud computing expense. Travel and entertainment expense increased due to a higher number of in-person events and engagements relative to the prior year.
Research and Development Expense
Nine Months Ended September 30,
2025 2024 $ Change % Change
(dollars in thousands)
Research and development $ 120,127 $ 117,789 $ 2,338 2.0 %
% of revenue 22.9 % 26.2 %
Research and development expense increased $2.3 million, or 2%, in the nine months ended September 30, 2025 compared to the same period in 2024. This change is primarily attributable to a $1.6 million increase in
research and development personnel costs and a $1.5 million increase in information technology costs. Although research and development headcount remained consistent period over period, overall personnel costs increased due to higher bonus expense and stock compensation, partially offset by a reduction in salaries expense. Information technology costs increased primarily due to higher spend on cloud computing services and computer software.
General and Administrative Expense
Nine Months Ended September 30,
2025 2024 $ Change % Change
(dollars in thousands)
General and administrative
$ 107,586 $ 108,327 $ (741) (0.7) %
% of revenue 20.5 % 24.1 %
General and administrative expense decreased $0.7 million, or 1%, in the nine months ended September 30, 2025 compared to the same period in 2024 primarily due to a $3.5 million decrease in rent expense and a $3.5 million decrease in insurance expense driven by lower amortization expense associated with our judgment preservation insurance policy. Rent expense decreased due to $0.8 million of lease impairment charges in the nine months ended September 30, 2025 as compared to $5.5 million of lease impairment charges recorded in the prior year period. These decreases were partially offset by increases of $2.0 million in general and administrative personnel costs, $1.8 million in professional fees, and $1.7 million in information technology spending. Personnel costs increased due to an increase in headcount from September 30, 2024 to September 30, 2025 coupled with higher bonus expense and a $1.1 million increase in stock compensation expense. Professional fees increased primarily due to a $2.9 million increase in expenses related to litigation with Pegasystems, while information technology spending increased due to higher spend on computer software and cloud computing.
Other Income, Net
Nine Months Ended September 30,
2025 2024 $ Change % Change
(dollars in thousands)
Other income, net $ (24,678) $ (5,882) $ (18,796) ***
% of revenue (4.7) % (1.3) %
***Indicates a percentage that is not meaningful.
Other income, net was $24.7 million in the nine months ended September 30, 2025 compared to other income, net of $5.9 million in the nine months ended September 30, 2024. This change was primarily due to $19.4 million in foreign exchange gains in the nine months ended September 30, 2025 as compared to $2.5 million in foreign exchange losses in the nine months ended September 30, 2024. In addition, there was a $3.2 million decrease in other income related to a non-recurring local government incentive payment and short-swing profit disgorgement payments to us from a public stockholder of our Class A common stock that were both received in the prior year.
Interest Expense
Nine Months Ended September 30,
2025 2024 $ Change % Change
(dollars in thousands)
Interest expense $ 15,948 $ 17,921 $ (1,973) (11.0) %
% of revenue 3.0 % 4.0 %
Interest expense decreased by $2.0 million in the nine months ended September 30, 2025 as compared to the corresponding period in 2024 primarily due to a lower effective interest rate and lower outstanding principal across the comparable periods.
Income Tax Expense
Nine Months Ended September 30,
2025 2024 $ Change % Change
(dollars in thousands)
Income tax expense $ 3,690 $ 690 $ 3,000 ***
% of revenue
0.7 % 0.2 %
***Indicates a percentage that is not meaningful.
Income tax expense increased by $3.0 million in the nine months ended September 30, 2025 as compared to the corresponding period in 2024. This change was primarily driven by increased pre-tax book income in certain international subsidiaries for the nine months ended September 30, 2025. The change in pre-tax book income was primarily attributable to increases in unrealized foreign exchange gains.
Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we provide investors with certain non-GAAP financial performance measures. We use these non-GAAP financial performance measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Management believes these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenses that may not be indicative of our recurring core business operating results. We believe both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management's internal comparisons to historical performance as well as comparisons to competitors' operating results. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to measures used by management in its financial and operational decision-making and (2) they are used by institutional investors and the analyst community to help them analyze the health of our business.
Our non-GAAP financial performance measures include the following: non-GAAP subscriptions cost of revenue, non-GAAP professional services cost of revenue, non-GAAP total cost of revenue, non-GAAP total operating expense, non-GAAP operating income (loss), non-GAAP income tax expense (benefit), non-GAAP net income (loss), and non-GAAP net income (loss) per share, basic and diluted. These non-GAAP financial performance measures exclude the effect of stock-based compensation expense, unrealized foreign exchange rate gains and losses, certain non-ordinary litigation-related expenses consisting of legal and other professional fees associated with the Pegasystems cases (net of insurance reimbursements), or Litigation Expense, amortization of the judgment preservation insurance policy, or JPI Amortization, severance costs related to an involuntary reduction in our workforce, or Severance Costs, lease impairment and lease-related charges associated with actions taken to reduce the footprint of our leased office spaces, or Lease Impairment and Lease-Related Charges, and a short-swing profit disgorgement paid to us by an investor, or Short-Swing Profit Payment. While some of these items may be recurring in nature and should not be disregarded in the evaluation of our earnings performance, it is useful to exclude such items when analyzing current results and trends compared to other periods as these items can vary significantly from period to period depending on specific underlying transactions or events that may occur. Therefore, while we may incur or recognize these types of expenses in the future, we believe removing these items for purposes of calculating our non-GAAP financial measures provides investors with a more focused presentation of our ongoing operating performance.
We also discuss adjusted EBITDA, a non-GAAP financial performance measure we believe offers a useful view of the overall operation of our business. We define adjusted EBITDA as net income (loss) before (1) other income,
net, (2) interest expense, (3) income tax expense, (4) depreciation expense and amortization of intangible assets, (5) stock-based compensation expense, (6) Litigation Expense, (7) JPI Amortization, (8) Severance Costs, and (9) Lease Impairment and Lease-Related Charges. The most directly comparable GAAP financial measure to adjusted EBITDA is net income (loss). Users should consider the limitations of using adjusted EBITDA, including the fact this measure does not provide a complete depiction of our operating performance. Adjusted EBITDA is not intended to purport to be an alternative to net income (loss) as a measure of operating performance or to cash flows from operating activities as a measure of liquidity.
The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, as a substitute for, or superior to the financial information prepared and presented in accordance with GAAP, and our non-GAAP measures may be different from non-GAAP measures used by other companies.
The following tables reconcile our non-GAAP measures to their nearest comparable GAAP measures (in thousands, except per share data):
GAAP Measure Stock-Based Compensation Litigation Expense JPI Amortization Lease Impairment and Lease-Related Charges Short-Swing Profit Payment Unrealized Foreign Exchange Rate Gains and Losses Non-GAAP Measure
Three Months Ended September 30, 2025
Subscriptions cost of revenue $ 17,762 $ (224) $ - $ - $ - $ - $ - $ 17,538
Professional services cost of revenue 27,531 (1,399) - - - - - 26,132
Total cost of revenue 45,293 (1,623) - - - - - 43,670
Total operating expense 128,597 (8,637) (2,130) (3,153) (1,105) - - 113,572
Operating income 13,114 10,260 2,130 3,153 1,105 - - 29,762
Non-operating (income) expense (1,398) - - - - - 110 (1,288)
Income tax impact of above items 1,376 375 - - - - (406) 1,345
Net income (loss) 7,825 9,885 2,130 3,153 1,105 - 296 24,394
Net income per share, basic
$ 0.11 $ 0.13 $ 0.03 $ 0.04 $ 0.01 $ - $ - $ 0.32
Net income per share, diluted(a, c)
$ 0.10 $ 0.13 $ 0.03 $ 0.04 $ 0.01 $ - $ - $ 0.32
Three Months Ended September 30, 2024
Subscriptions cost of revenue $ 14,082 $ (211) $ - $ - $ - $ - $ - $ 13,871
Professional services cost of revenue 23,002 (1,325) - - - - - 21,677
Total cost of revenue 37,084 (1,536) - - - - - 35,548
Total operating expense 124,125 (7,969) (1,979) (3,635) (324) - - 110,218
Operating (loss) income (7,157) 9,505 1,979 3,635 324 - - 8,286
Non-operating (income) expense (12,544) - - - - 1,799 9,950 (795)
Income tax impact of above items 1,319 117 - - - - (327) 1,109
Net (loss) income (2,100) 9,388 1,979 3,635 324 (1,799) (9,623) 1,804
Net (loss) income per share, basic(c)
$ (0.03) $ 0.13 $ 0.03 $ 0.05 $ - $ (0.02) $ (0.13) $ 0.02
Net (loss) income per share, diluted(b, c)
$ (0.03) $ 0.13 $ 0.03 $ 0.05 $ - $ (0.02) $ (0.13) $ 0.02
(a) Accounts for the impact of 0.6 million shares of dilutive securities.
(b) Accounts for the impact of 1.8 million shares of dilutive securities.
(c) Per share amounts do not foot due to rounding.
GAAP Measure Stock-Based Compensation Litigation Expense JPI Amortization Severance Costs Lease Impairment and Lease-Related Charges Short-Swing Profit Payment Unrealized Foreign Exchange Rate Gains and Losses Non-GAAP Measure
Nine Months Ended September 30, 2025
Subscriptions cost of revenue $ 49,810 $ (672) $ - $ - $ - $ - $ - $ - $ 49,138
Professional services cost of revenue 78,322 (4,161) - - - - - - 74,161
Total cost of revenue 128,132 (4,833) - - - - - - 123,299
Total operating expense 394,642 (26,159) (6,324) (9,355) - (1,714) - - 351,090
Operating income 1,296 30,992 6,324 9,355 - 1,714 - - 49,681
Non-operating (income) expense (24,678) - - - - - - 20,879 (3,799)
Income tax impact of above items 3,690 1,125 - - - - - (1,732) 3,083
Net income (loss) 6,336 29,867 6,324 9,355 - 1,714 - (19,147) 34,449
Net income (loss) per share, basic
$ 0.09 $ 0.40 $ 0.09 $ 0.13 $ - $ 0.02 $ - $ (0.26) $ 0.47
Net income (loss) per share, diluted(a)
$ 0.08 $ 0.40 $ 0.08 $ 0.13 $ - $ 0.02 $ - $ (0.26) $ 0.46
Nine Months Ended September 30, 2024
Subscriptions cost of revenue $ 39,614 $ (641) $ - $ - $ - $ - $ - $ - $ 38,973
Professional services cost of revenue 74,880 (4,364) - - (1,398) - - - 69,118
Total cost of revenue 114,494 (5,005) - - (1,398) - - - 108,091
Total operating expense 401,729 (25,006) (3,442) (12,643) (4,136) (5,786) - - 350,716
Operating (loss) income (65,886) 30,011 3,442 12,643 5,534 5,786 - - (8,470)
Non-operating (income) expense
(5,882) - - - - - 1,799 (2,856) (6,939)
Income tax impact of above items 690 1,258 - - 1,096 - - 81 3,125
Net (loss) income (78,615) 28,753 3,442 12,643 4,438 5,786 (1,799) 2,775 (22,577)
Net (loss) income per share, basic and diluted(b)
$ (1.08) $ 0.40 $ 0.05 $ 0.17 $ 0.06 $ 0.08 $ (0.02) $ 0.04 $ (0.31)
(a) Accounts for the impact of 0.5 million shares of dilutive securities.
(b) Per share amounts do not foot due to rounding.
The following table reconciles GAAP net income (loss) to adjusted EBITDA for the three and nine months ended September 30, 2025 and 2024 (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,
2025 2024 2025 2024
GAAP net income (loss) $ 7,825 $ (2,100) $ 6,336 $ (78,615)
Other income, net (1,398) (12,544) (24,678) (5,882)
Interest expense 5,311 6,168 15,948 17,921
Income tax expense 1,376 1,319 3,690 690
Depreciation expense and amortization of intangible assets
2,459 2,562 7,429 7,503
Stock-based compensation expense 10,260 9,505 30,992 30,011
Litigation Expense
2,130 1,979 6,324 3,442
JPI Amortization
3,153 3,635 9,355 12,643
Severance Costs
- - - 5,534
Lease Impairment and Lease-Related Charges
1,105 324 1,714 5,786
Adjusted EBITDA $ 32,221 $ 10,848 $ 57,110 $ (967)
Liquidity and Capital Resources
The following table presents selected financial information and statistics pertaining to liquidity and capital resources as of September 30, 2025 and December 31, 2024:
As of
September 30, 2025 December 31, 2024
Cash and cash equivalents $ 125,249 $ 118,552
Short-term investments and marketable securities 66,312 41,308
Property and equipment, net 33,168 37,109
Working capital* 69,285 80,787
* Defined as current assets net of current liabilities.
We believe our existing cash and cash equivalents and short-term investments and marketable securities, together with any positive cash flows from operations and available borrowings under our line of credit, will be sufficient to support working capital and capital expenditure requirements for at least the next twelve months.
We have in the past entered into, and may in the future enter into, investments in or acquisitions of complementary businesses, products, or technologies, which could also require us to seek additional equity financing, incur indebtedness, or use cash resources. We have no present binding agreements or commitments to enter into any such acquisitions. If we are unable to raise additional capital when desired, our business, operating results, and financial condition could be adversely affected.
Sources of Funds
We have historically financed our operations in large part with equity financing arrangements. Our last public offering was completed in June 2020. Through these public offerings, we received net proceeds of $344.8 million.
To further help strengthen our financial position and support our growth initiatives, in November 2022 we entered into a Senior Secured Credit Facilities Credit Agreement, or the Credit Agreement, which provides for a five-year term loan facility in an aggregate principal amount of $200.0 million and, in addition, up to $100.0 million for a revolving credit facility, including a letter of credit sub-facility in the aggregate availability amount of $20.0 million and a swingline sub-facility in the aggregate availability amount of $10.0 million (as a sublimit of the revolving loan facility).
The Credit Agreement matures on November 3, 2027. We have been using the proceeds to fund the growth of our business and support our working capital requirements. We are currently in compliance with all covenants, had used borrowing capacity of $62.0 million under our $100.0 million revolving credit facility, and had outstanding letters of credit totaling $14.7 million in connection with securing our leased office space.
We expect future sources of funds to consist primarily of cash generated from sales of subscriptions and the related professional services. We may also elect to raise additional sources of funding through entering into new debt financing arrangements or conducting additional public offerings. Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of spending to support research and development efforts, the expansion of sales and marketing activities, particularly internationally, the introduction of new and enhanced products and functions as well as platform enhancements and professional services offerings, and the level of market acceptance of our product.
Uses of Funds
Our current principal uses of cash are funding operations and other working capital requirements. Historically, we have also utilized cash to pay for the acquisition of businesses that were complementary to ours, and we may pursue similar opportunities in the future. Over the past several years, revenue has increased significantly from year to year and, as a result, cash flows from customer collections have also grown. However, as we continue to invest in growing our business, operating expenses have also increased.
In 2023, we entered into a Judgment Preservation Insurance policy in connection with our $2.036 billion judgment against Pegasystems. See Note 12 to the consolidated financial statements for additional details. The total cost of the policy was $57.3 million, which we paid with operating cash on hand.
Over the past two years, we have also initiated several share repurchase programs as follows:
•In February 2024, our Board of Directors authorized a share repurchase program, under which we repurchased approximately 1.3 million shares of our common stock for approximately $50.0 million during the first quarter of 2024.
•In May 2025, our Board of Directors authorized a second program to repurchase up to $10.0 million of our common stock from May 2025 to December 2025. In the second quarter of 2025, we repurchased 0.3 million shares under this program at an average share price of $31.91 and totaling $10.0 million.
•In August 2025, our Board of Directors authorized a third program to repurchase up to $10.0 million of our common stock from August 2025 to August 2027. In the third quarter of 2025, we repurchased 0.3 million shares under this program at an average share price of $30.60 and totaling $10.0 million.
Outside of the above items and cash used by operations, other uses of cash in 2025 to date have included capital expenditures related to the expansion of new leased facilities and principal repayments of our term loan debt.
Furthermore, we have a non-cancellable cloud hosting arrangement with AWS that contains provisions for minimum purchase commitments. Specifically, purchase commitments under the agreement total $220.0 million over five years. The agreement, which was originated in July 2021 and amended in October 2024, currently contains minimum annual spending requirements of $44.0 million from November 2024 to October 2029. Spending under this agreement for the three and nine months ended September 30, 2025 totaled $14.3 million and
$37.6 million, respectively. Spending under this agreement for the three and nine months ended September 30, 2024 totaled $10.8 million and $31.8 million, respectively. We expect to meet our minimum annual spending requirement during the term of the arrangement.
Historical Cash Flows
Nine Months Ended September 30,
2025 2024 $ Change % Change
(dollars in thousands)
Beginning cash, cash equivalents, and restricted cash $ 118,552 $ 149,351 $ (30,799) (20.6) %
Operating activities:
Net income (loss) 6,336 (78,615) 84,951 ***
Stock-based compensation and other non-cash adjustments 18,830 45,648 (26,818) (58.7)
Changes in working capital 36,571 25,974 10,597 40.8
Net cash provided by (used by) operating activities 61,737 (6,993) 68,730 ***
Investing activities:
Net cash used by investing activities
(27,454) (34,294) 6,840 (19.9)
Financing activities:
Net cash used by financing activities (30,138) (8,496) (21,642) ***
Effect of exchange rates 2,552 (375) 2,927 ***
Net change 6,697 (50,158) 56,855 ***
Ending cash and cash equivalents
$ 125,249 $ 99,193 $ 26,056 26.3 %
*** Indicates a percentage that is not meaningful.
Operating Activities
Net cash provided by operating activities was $61.7 million for the nine months ended September 30, 2025 as compared to $7.0 million of net cash used by operating activities for the nine months ended September 30, 2024. The increase in net cash provided by operating activities was primarily driven by increased cash collections stemming from strong contract bookings in the fourth quarter of 2024 and the first nine months of 2025, as well as our continuing cost management activities.
Investing Activities
Net cash used by investing activities was $27.5 million for the nine months ended September 30, 2025 as compared to $34.3 million in net cash used by investing activities for the nine months ended September 30, 2024. This change was primarily driven by a $22.6 million increase in proceeds from the maturity of investments. This increase was partially offset by a $16.6 million increase in purchases of short-term investments.
Financing Activities
Net cash used by financing activities was $30.1 million for the nine months ended September 30, 2025 as compared to $8.5 million of net cash used by financing activities for the nine months ended September 30, 2024. The increase in net cash used by financing activities was primarily due to a $50.0 million decrease in proceeds from borrowings, which was partially offset by a $30.0 million decrease in repurchases of common stock, a $1.3 million
increase in debt repayments, and a $1.0 million increase in payments for employee taxes related to the net share settlement of equity awards during the nine months ended September 30, 2025.
Critical Accounting Estimates
There have been no material changes in our critical accounting estimates from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 19, 2025. We are not aware of any specific events or circumstances that would require us to update our estimates, assumptions, and judgments.
Recent Accounting Pronouncements
See Note 2 to the unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements.
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