HubSpot : Quarterly Report for Quarter Ending March 31, 2026 (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 our consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on February 11, 2026. As discussed in the section titled "Special Note Regarding Forward-Looking Statements," the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled "Risk Factors" included under Part II, Item 1A below.

Company Overview

We provide an agentic customer platform that helps marketing, sales, and customer service teams drive business growth. We deliver seamless connection for customer-facing teams with a unified platform that includes three layers: Artificial Intelligence ("AI")-powered agents and engagement Hubs, a Smart customer relationship management product ("CRM"), and a connected ecosystem supporting the customer platform with a marketplace of integrations, templates, expert partners, a community network, and an academy of educational content.

Breeze is our AI that powers the customer platform, including our Smart CRM, engagement Hubs, and the connected ecosystem. Our engagement Hubs that enable companies to attract, engage, and delight customers throughout the customer lifecycle include Marketing, Sales, Service, Operations, Content and Commerce. The Smart CRM is the foundational context layer that combines customer data with AI to power the entire customer platform with unified customer profiles and tools to manage and govern your team and business processes. Our customer platform features a central database of lead and customer interactions and integrated applications designed to help businesses build their presence online, attract prospects across channels, convert prospects into leads, close leads into customers, transact with those customers, and delight them so they become promoters of those businesses.

We designed and built our customer platform to serve a broad range of customers globally. It was built to easily and seamlessly integrate third party applications to further customize to an individual company's industry or needs. Our customer platform starts completely free and grows with our customers to meet their needs at different stages in their life-cycles. It supports multiple languages and currencies and offers an array of sophisticated features, including content partitioning at the enterprise level for companies operating in or serving multiple countries.

We focus on selling to mid-market business-to-business, or B2B, companies, which we define as companies that have between 2 and 2,000 employees. While our customer platform was built to grow with any company, we focus on selling to mid-market businesses because we believe we have significant competitive advantages attracting and serving this market segment. These mid-market businesses seek an integrated, easy-to-implement and easy-to-use solution to reach customers and compete with organizations that have larger marketing, sales, and customer service budgets. We efficiently reach these businesses at scale through our traditional and AI-enhanced engagement strategies, our Solutions Partners, and our "freemium" model. AI-enhanced engagement strategies leverage AI to personalize, automate, and optimize how businesses attract, engage, and retain customers across channels and throughout the customer lifecycle. A Solutions Partner is a service provider that helps businesses with strategy, execution, and implementation of go-to-market activities and technology solutions. Our freemium model attracts customers who begin using our customer platform through our free products and then upgrade to our paid products. As of March 31, 2026, we had 9,021 full-time employees and 299,458 Customers of varying sizes in more than 135 countries, representing many industries.

We primarily sell our customer platform on a subscription basis. Our total revenue increased to $881.0 million for the three months ended March 31, 2026 from $714.1 million for the three months ended March 31, 2025, representing a year-over-year increase of 23% in 2026. We generated net income of $32.6 million for the three months ended March 31, 2026 and net losses of $21.8 million for the three months ended March 31, 2025.

We derive most of our revenue from subscriptions to our cloud-based customer platform and related professional services, which consist of customer on-boarding, training and consulting services. Subscription revenue accounted for 98% of our total revenue for the three months ended March 31, 2026 and 2025. We sell multiple product plans at different base prices on a subscription basis, each of which includes our Smart CRM and integrated applications to meet the needs of the various customers we serve. We also generate revenue through usage and consumption-based models. Customers pay additional fees if the number of contacts stored and tracked in the customer's database exceeds specified thresholds. We also generate revenue based on the purchase of additional subscriptions, products and seats. Most of our Customers' subscriptions are one year or less in duration.

Subscriptions are billed in advance on various schedules. Because the mix of billing terms for orders can vary from period to period, the annualized value of the orders we enter into with our customers will not be completely reflected in deferred revenue at any single point in time. Accordingly, we do not believe that change in deferred revenue is an accurate indicator of future revenue.

Many of our customers purchase on-boarding, training, and consulting services, which are designed to help customers enhance their ability to attract, engage and delight their customers using our customer platform. Professional services and other revenue accounted for 2% of total revenue for the three months ended March 31, 2026 and 2025.

We have focused on rapidly growing our business and plan to continue to make investments to help us address some of the challenges facing us to support this growth, such as demand for our customer platform by existing and new customers, significant competition from other customer platform providers and related applications and rapid technological changes in our industry.

We believe that the growth of our business is dependent on many factors, including our ability to expand our customer base, increase adoption of our customer platform within existing customers, develop new products and applications to extend the functionality of our customer platform and provide a high level of customer service. We have invested and intend to continue investing for long-term growth. We intend to continue to invest in sales and marketing to support our growth, including investments in AI-enabled tools for guided selling and content generation designed to drive efficiencies and improve conversion rates. We plan to continue to invest in research and development as we continue to introduce new products and applications to extend the functionality of our customer platform, including machine learning capabilities intended to accelerate innovation and increase productivity. We intend to continue maintaining a high level of customer service and support which we consider critical for our continued success, and investing in AI to support automated ticket resolution. We also plan to continue investing in our data center infrastructure and services capabilities in order to support continued future customer growth. We also expect to continue to incur additional general and administrative expenses as a result of our growth and the infrastructure required to operate as a public company, including continued efforts to automate and streamline processes using AI-enabled tools. We expect to use our cash flow from operations to fund these growth strategies and support our business.

Global Economic Conditions

Our results of operations may be significantly influenced by general macroeconomic conditions, including, but not limited to, the impact of pandemics, geo-political conflicts, foreign currency fluctuations, interest rates, inflation, recession risks, tariffs or other trade restrictions, and existing and new domestic and foreign laws and regulations, all of which are beyond our control. Fluctuations in foreign exchange rates and rising inflation have had, and may continue to have an adverse impact on our financial condition and operating results in future periods. As we continue to monitor the direct and indirect impacts of these circumstances, the broader implications of these macroeconomic events on our business, results of operations and overall financial position, particularly in the long term, remain uncertain. See the section titled "Risk Factors'' included under Part II, Item 1A below for further discussion of the possible impact of these factors and other risks on our business.

Key Components of Consolidated Statements of Operations

Revenue

We derive our revenue from two major sources, revenue from subscriptions to our customer platform and professional services and other revenue consisting mainly of on-boarding, training, consulting services fees, and Payments.

Subscription-based revenue is derived from customers using our customer platform for their marketing, sales, service, data, and content management needs. Our customer platform includes a system of record for maintaining a unified view of the customer experience, a system of engagement for efficiently engaging customers through AI agents, SEO, AEO, AI-powered content creation, web content, social, blogging, email, marketing automation, messaging, support ticketing, knowledge base, conversation routing, video hosting, deal progression, prospecting, and data enrichment. Over 2,000 integrations and applications are available for our users, across a wide range of categories, including integrations with leading social media, email, sales, video, analytics, content and webinar tools. All subscription fees that are billed in advance of service are recorded in deferred revenue. Subscription based revenue is recognized net of consideration paid to Solutions Partners when those Solutions Partners purchase the subscription to our customer platform.

Professional services and other revenue are derived primarily from customer on-boarding, training, consulting services, and Payments. Depending on which Hubs and services a customer purchases, they receive on-boarding guidance or training from technical consultants via web meetings.

Cost of Revenue, Operating and Other Expenses

Cost of Revenue

Cost of subscription revenue consists primarily of managed hosting providers and other third-party service providers, employee-related costs including payroll, benefits and stock-based compensation expense for our customer support team, amortization of capitalized software development costs and acquired technology, and allocated overhead costs, which include facilities costs, depreciation of fixed assets, and costs related to information technology.

Cost of professional services and other revenue consists primarily of personnel costs of our professional services organization, including salaries, benefits, bonuses and stock-based compensation, amortization of capitalized software development costs associated with Payments, as well as professional fees and allocated overhead costs, which we define as facilities, depreciation of fixed assets, and costs related to information technology. It also consists of costs associated with Payments and our other service offerings.

We expect that the cost of subscription and professional services and other revenue will increase in absolute dollars as we continue to invest in data center infrastructure and capitalize software development costs for new offerings to grow our business and scale with AI capabilities. As a result of these investments, over time, we expect gross margins to decline slightly, exclusive of stock-based compensation.

Research and Development

Research and development expenses consist primarily of personnel costs of our development team, including payroll, benefits and stock-based compensation expense, professional and contractor fees and allocated overhead costs. We capitalize certain software development costs that are attributable to developing new products and adding incremental functionality to our customer platform and amortize such costs as costs of subscription and cost of professional services and other revenue over the estimated life of the new product or incremental functionality, which is generally two years. We also capitalize certain development costs that are attributable to developing our internally developed software platforms and amortize such costs throughout the consolidated statement of operations over the estimated life of our internally developed software platforms, which is generally five years. We focus our research and development efforts on improving our products and developing new ones, delivering new functionality and enhancing the customer experience. We believe delivering new functionality for our customers is an integral part of our solution and provides our customers with access to a broad array of options and information critical to their marketing, sales, and customer service efforts. We expect to continue to make investments in and expand our offerings to enhance our customers' experience and satisfaction and attract new customers. Over time, we expect research and development expenses to increase in absolute dollars as we continue to increase the functionality of our customer platform and decline as a percentage of total revenue, exclusive of stock-based compensation expense.

Sales and Marketing

Sales and marketing expenses consist primarily of personnel costs of our sales and marketing employees, including sales commissions and incentives, benefits and stock-based compensation expense, marketing programs, including lead generation, costs of our annual UNBOUND (formerly INBOUND) conference, other brand building expenses, amortization of intangible assets,

professional and contractor fees and allocated overhead costs. Sales and marketing expenses also include commissions paid to our Solutions Partners in instances where the end customer purchases and pays for a subscription to our customer platform. We defer certain sales and Solutions Partner commissions related to acquiring new contracts and amortize them ratably over a period of benefit that we have determined to be approximately two to four years.

We plan to continue to invest in sales and marketing to grow our customer base and increase sales to existing customers. This growth will include adding sales personnel and expanding our marketing activities to continue to generate leads and build brand awareness. We expect sales and marketing expenses to increase in absolute dollars as we continue to develop our sales and marketing teams. Over time, we expect sales and marketing expenses will decline as a percentage of total revenue, exclusive of stock-based compensation.

General and Administrative

General and administrative expenses consist of personnel costs and related expenses for executive, finance, legal, human resources, employee-related information technology, administrative personnel, including payroll, benefits and stock-based compensation expense, professional fees for external legal, accounting and other consulting services, and allocated overhead costs. We expect that general and administrative expenses will increase on an absolute dollar basis as we incur the costs of compliance associated with being a publicly traded company, and remain relatively consistent as a percentage of total revenue, exclusive of stock-based compensation expense, as we focus on processes, systems and controls to enable our internal support functions to scale with the growth of our business.

Restructuring

Restructuring expenses primarily consist of variable lease costs related to properties vacated under our restructuring plan. On January 25, 2023, our board of directors authorized a restructuring plan (the "Restructuring Plan") that was designed to reduce operating costs and enable investment in key opportunities for long-term growth while driving continued profitability. The Restructuring Plan included a reduction of our workforce by approximately 7% and a global lease consolidation to create higher density across our workspaces. Future variable facilities related costs for vacated properties will continue to be recorded to restructuring charges.

Other Income (Expense)

Interest income primarily consists of interest earned on invested cash and cash equivalents balances and investments. Interest expense primarily consists of amortization of issuance costs and contractual interest expense related to our 2025 Notes and Revolving Credit Facility. Other expense, net primarily consists of the impact of foreign currency transaction gains and losses associated with monetary assets and liabilities and any gains, losses on, or impairments of our strategic investments.

Income Tax Expense

Income tax expense consists of current and deferred taxes for U.S. and foreign jurisdictions.

Results of Operations for the Three Months Ended March 31, 2026 and 2025

The following tables set forth our results of operations for the periods presented and as a percentage of our total revenue for those periods. The data has been derived from the unaudited consolidated financial statements contained in this Quarterly Report on Form 10-Q which include, in our opinion, all adjustments, consisting only of normal recurring adjustments, that we consider necessary for a fair statement of the financial position and results of operations for the interim periods presented. The period-to-period comparison of financial results is not necessarily indicative of financial results to be achieved in future periods.

		Three Months Ended March 31,
(dollars in thousands)		2026				2025
Revenues:
Subscription		$	862,264			$	698,728
Professional services and other			18,731				15,409
Total revenue			880,995				714,137
Cost of revenues:
Subscription			128,724				100,230
Professional services and other			16,970				14,877
Total cost of revenues			145,694				115,107
Gross profit			735,301				599,030
Operating expenses:
Research and development			234,193				220,100
Sales and marketing			386,431				326,697
General and administrative			85,640				78,633
Restructuring			1,094				1,080
Total operating expenses			707,358				626,510
Income (loss) from operations			27,943				(27,480	)
Other income (expense)
Interest income			12,884				20,564
Interest expense			(245	)			(644	)
Other expense, net			(1,288	)			(2,309	)
Total other income			11,351				17,611
Income (loss) before income tax expense			39,294				(9,869	)
Income tax expense			(6,740	)			(11,924	)
Net income (loss)		$	32,554			$	(21,793	)

		Three Months Ended March 31,
		2026				2025
Revenue:
Subscription			98	%			98	%
Professional services and other			2				2
Total revenue			100				100
Cost of revenue:
Subscription			15				14
Professional services and other			2				2
Total cost of revenue			17				16
Gross profit			83				84
Operating expenses:
Research and development			27				31
Sales and marketing			44				46
General and administrative			10				11
Restructuring			0				0
Total operating expenses			80				88
Income (loss) from operations			3				(4	)
Total other income			1				2
Income (loss) before income tax expense			4				(1	)
Income tax expense			(1	)			(2	)
Net income (loss)			4	%			(3	)%

Percentages are based on actual values. Totals may not sum due to rounding.

Three Months Ended March 31, 2026 Compared to the Three Months Ended March 31, 2025

Revenue

	Three Months Ended March 31,
(dollars in thousands)	2026			2025			$ Change			% Change
Revenues:
Subscription	$	862,264		$	698,728		$	163,536			23	%
Professional services and other		18,731			15,409			3,322			22	%
Total revenue	$	880,995		$	714,137		$	166,858			23	%

Subscription revenue increased during the three months ended March 31, 2026 compared to the same period in 2025 primarily due to the increase in Customers, which grew from 258,258 as of March 31, 2025 to 299,458 as of March 31, 2026. In addition, Average Subscription Revenue per Customer increased from $11,038 for the three months ended March 31, 2025 to $11,722 for the three months ended March 31, 2026. The growth in Customers was primarily driven by increased demand for our lower-priced Starter products. The increase in Average Subscription Revenue per Customer was primarily driven by increased demand for our Professional and Enterprise products and the impact of foreign currency translation primarily attributable to the decrease in the value of the U.S. Dollar relative to the Euro and British Pound Sterling, partially offset by continued purchases of our lower-priced Starter products.

Professional services and other revenue increased during the three months ended March 31, 2026 compared to the same period in 2025 primarily driven by Payments.

Cost of Revenue, Gross Profit and Gross Margin Percentage

	Three Months Ended March 31,
(dollars in thousands)	2026			2025			$ Change			% Change
Total cost of revenue	$	145,694		$	115,107		$	30,587			27	%
Gross profit	$	735,301		$	599,030		$	136,271			23	%
Gross margin percentage		83	%		84	%

Total cost of revenue for the three months ended March 31, 2026 increased compared to the same period in 2025 primarily due to an increase in subscription and hosting costs, amortization of capitalized software development costs, amortization of acquired technology, employee-related costs and allocated overhead expenses. Gross margins remained relatively consistent year-over-year.

	Three Months Ended March 31,
(dollars in thousands)	2026			2025			$ Change			% Change
Subscription cost of revenue	$	128,724		$	100,230		$	28,494			28	%
Percentage of subscription revenue		15	%		14	%

The increase in subscription cost of revenue for the three months ended March 31, 2026 compared to the same period in 2025 was primarily due to the following:

	Change
	Three Months
	(in thousands)
Subscription and hosting costs	$	14,996
Amortization of capitalized software development costs		12,293
Amortization of acquired technology		204
Employee-related costs		721
Allocated overhead expenses		280
	$	28,494

Subscription and hosting costs increased primarily due to growth in our Customer base from 258,258 as of March 31, 2025 to 299,458 as of March 31, 2026. We also incurred higher subscription and hosting costs as we continued to support increased usage of our customer platform and continued investments to expand AI functionality. Amortization of capitalized software development costs increased due to the increased number of developers working on our software platform as we continued to develop new products and increased functionality. Employee-related costs increased as a result of increased headcount as we grew our support organization to support our customer growth and improve service levels and offerings. Allocated overhead expenses increased due to an increase in

shared company expenses associated with our systems and infrastructure as we continued to grow our business and slight increase in the proportional allocation of shared company expenses associated with headcount in subscriptions cost of revenue.

	Three Months Ended March 31,
(dollars in thousands)	2026			2025			$ Change			% Change
Professional services and other cost of revenue	$	16,970		$	14,877		$	2,093			14	%
Percentage of professional services and other revenue		91	%		97	%

The increase in professional services and other cost of revenue for three months ended March 31, 2026 compared to the same period in 2025 was primarily due to the following:

	Change
	Three Months
	(in thousands)
Commerce payment processing fees	$	2,020
Professional fees		1,118
Employee-related costs		(1,020	)
Allocated overhead expenses		(25	)
	$	2,093

Commerce payment processing fees increased due to higher payment volume and merchant activity. Professional fees increased and employee-related costs decreased as we continue to leverage our Solutions Partners to deliver on-boarding and other professional services. Allocated overhead expenses decreased primarily due to the decreased proportional allocation of shared company expenses associated with headcount in services cost of revenue.

Research and Development

	Three Months Ended March 31,
(dollars in thousands)	2026			2025			$ Change			% Change
Research and development	$	234,193		$	220,100		$	14,093			6	%
Percentage of total revenue		27	%		31	%

The increase in research and development expense for the three months ended March 31, 2026 compared to the same period in 2025 was primarily due to the following:

	Change
	Three Months
	(in thousands)
Software and services	$	6,153
Employee-related costs		5,892
Allocated overhead expenses		1,150
Professional fees		898
	$	14,093

Software and services expense increased due to an increase in use of AI tools. Employee-related costs increased as a result of increased headcount as we continued to grow our engineering organization to develop new products, increase functionality and to maintain our existing customer platform. Allocated overhead expenses increased due to an increase in shared company expenses associated with our systems and infrastructure as we continued to grow our business and increased proportional allocation of shared company expenses associated with headcount in research and development. Professional fees increased due to an increase in the use of third party services and contractors as we continued to grow our engineering organization.

Sales and Marketing

	Three Months Ended March 31,
(dollars in thousands)	2026			2025			$ Change			% Change
Sales and marketing	$	386,431		$	326,697		$	59,734			18	%
Percentage of total revenue		44	%		46	%

The increase in sales and marketing expense for the three months ended March 31, 2026 compared to the same period in 2025 was primarily due to the following:

	Change
	Three Months
	(in thousands)
Employee-related costs	$	50,818
Marketing programs		4,568
Professional fees		3,411
Allocated overhead expenses		2,823
Software and services		2,265
Solutions Partner commissions		(4,151	)
	$	59,734

Employee-related costs increased as a result of increased headcount as we expanded our selling and marketing organizations to grow our customer base. Marketing programs increased due to the timing and size of certain marketing efforts as we made investments in attracting new customers. Professional fees increased due to an increase in the use of third party services and contractors for our marketing efforts. Allocated overhead expenses increased due to an increase in shared company expenses associated with our systems and infrastructure to support our business growth. Software and services cost increased due to an increase in the use of third party software and AI-enabled tools to improve productivity. Solutions Partner commissions decreased as we changed the duration and eligibility of commissions for certain Solutions Partners to better align with the value delivered to customers. The decrease from the change in duration and eligibility of commissions was partially offset by increased revenue generated through our Solutions Partners.

General and Administrative

	Three Months Ended March 31,
(dollars in thousands)	2026			2025			$ Change			% Change
General and administrative	$	85,640		$	78,633		$	7,007			9	%
Percentage of total revenue		10	%		11	%

The increase in general and administrative expense for the three months ended March 31, 2026 compared to the same period in 2025 was primarily due to the following:

	Change
	Three Months
	(in thousands)
Employee-related costs	$	2,758
Customer credit card fees		1,661
Professional fees		1,803
Allocated overhead expenses		785
	$	7,007

Employee-related costs increased as a result of increased headcount as we grew our business and required additional personnel to support our expanded operations. Customer credit card fees increased due to increased customer transactions as we continued to grow our business. Professional fees increased primarily due to increase in the use of third-party services and contractors. Allocated overhead expenses increased due to an increase in shared company expenses associated with our systems and infrastructure as we continued to grow our business.

Restructuring

	Three Months Ended March 31,
(dollars in thousands)	2026			2025			$ Change			% Change
Restructuring	$	1,094		$	1,080		$	14			1	%
Percentage of total revenue	*			*

* not meaningful

Restructuring charges in the three months ended March 31, 2026 and 2025 consisted of variable facilities-related costs on unused space.

Interest income

	Three Months Ended March 31,
(dollars in thousands)	2026			2025			$ Change			% Change
Interest income	$	12,884		$	20,564		$	(7,680	)		(37	)%
Percentage of total revenue		1	%		3	%

The decrease during the three months ended March 31, 2026 is primarily due to lower average investment balances driven by cash outlays from our 2025 Notes settlement in the first half of 2025, Share Repurchase Programs and lower yields.

Interest expense

	Three Months Ended March 31,
(dollars in thousands)	2026			2025			$ Change			% Change
Interest expense	$	(245	)	$	(644	)	$	399			62	%
Percentage of total revenue	*			*

* not meaningful

Interest expense decreased primarily due to conversions of our 2025 Notes in the first quarter of 2025.

Other expense, net

	Three Months Ended March 31,
(dollars in thousands)	2026			2025			$ Change			% Change
Other expense, net	$	(1,288	)	$	(2,309	)	$	1,021			(44	)%
Percentage of total revenue	*			*

* not meaningful

The change in other income (expense) during the three months ended March 31, 2026 is primarily due to the following:

	Change
	Three Months
	(in thousands)
Impairment of strategic investments	$	687
Gain on strategic investments		632
Foreign currency gains and losses		(298	)
	$	1,021

The decrease in the impairment of strategic investments is due to an impairment of $1.6 million in the first quarter of 2025 compared to $0.9 million in the same period in 2026. The increase in gain on strategic investments is due to gains of $0.7 million from observable price changes in the value of certain strategic investments in the first quarter of 2026 compared to $0.1 million in the same period in 2025. The change in foreign currency gains and losses is primarily attributable to the value of the U.S. Dollar relative to the Euro and British Pound Sterling.

Income tax expense

	Three Months Ended March 31,
(dollars in thousands)	2026			2025			$ Change			% Change
Income tax expense	$	(6,740	)	$	(11,924	)	$	5,184			(43	)%
Effective tax rate		(17	)%		121	%

The decrease in the income tax expense is primarily from a reduction in U.S. tax expense as a result of the pattern in which pre-tax income is realized throughout 2026 as compared to 2025.

We will continue to maintain a full valuation allowance on our deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of this allowance. However, given our anticipated future earnings, management believes that there is a reasonable possibility that within the next 12 months, sufficient positive evidence may become available to reach a conclusion that all or a portion of the valuation allowance may no longer be needed. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded. The exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that we are able to actually achieve.

Liquidity and Capital Resources

Our principal sources of liquidity to date have been cash and cash equivalents, net accounts receivable, our common stock offerings, our convertible notes offerings, and our available revolving credit facility.

The following table shows cash and cash equivalents, working capital, net cash and cash equivalents provided by operating activities, net cash and cash equivalents provided by investing activities, and net cash and cash equivalents used in financing activities for the three months ended March 31, 2026 and 2025.

		Three Months ended March 31,
		2026				2025
		(in thousands)
Cash and cash equivalents		$	943,937			$	625,029
Working capital			923,881				1,036,775
Net cash and cash equivalents provided by operating activities			198,825				161,570
Net cash and cash equivalents provided by investing activities			64,578				22,562
Net cash and cash equivalents used in financing activities			(196,182	)			(80,330	)

Our cash and cash equivalents at March 31, 2026 were held for working capital purposes. At March 31, 2026, $329.5 million of our cash and cash equivalents was held in accounts outside the United States. We do not assert indefinite reinvestment of our foreign earnings because these earnings have been subject to United States Federal tax. While we have concluded that any incremental tax incurred upon ultimate distribution of these earnings to be immaterial, our current plans do not demonstrate a need to repatriate undistributed earnings to fund our U.S. operations.

Cash from operations could be affected by various risks and uncertainties detailed in the section titled "Risk Factors" included under Part II, Item 1A. However, based on our current business plan and revenue prospects, we believe that our existing cash, cash equivalents and investment balances, and our anticipated cash flows from operations will be sufficient to meet our working capital and operating resource expenditure requirements for the next twelve months.

Net Cash and Cash Equivalents Provided by Operating Activities

Net cash and cash equivalents provided by operating activities consist primarily of net income (loss) adjusted for certain non-cash items, including stock-based compensation, depreciation and amortization and other non-cash charges, net.

Net cash and cash equivalents provided by operating activities during the three months ended March 31, 2026 primarily reflected our net income of $32.6 million, $40.2 million of depreciation and amortization, $115.7 million in stock-based compensation, $2.5 million of unrealized currency translation, impairments of strategic investments of $0.9 million, and $0.1 million of amortization of debt discount and issuance costs, offset by non-cash expenses that included $6.8 million accretion of bond discounts, gains on strategic investments of $0.7 million, and $0.1 million of benefit from deferred income taxes. Working capital sources of cash and cash equivalents primarily included a $58.4 million decrease in accounts receivable related to increased collection, $38.4 million increase in deferred revenue primarily resulting from the growth in the number of customers invoiced during the period,

$31.3 million increase in accounts payable related to timing of bill payments, and $7.4 million decrease in right-of-use asset. These sources of cash and cash equivalents were offset by $60.5 million increase in prepaid expenses and other assets, $24.7 million decrease in accrued expenses and other liabilities, $22.1 million increase in deferred commissions, and $13.9 million decrease in operating lease liabilities.

Net cash and cash equivalents provided by operating activities during the three months ended March 31, 2025, primarily reflected our net loss of $21.8 million, $28.8 million of depreciation and amortization, $116.7 million in stock-based compensation and an impairment of strategic investments of $1.6 million, $0.5 million of amortization of debt discount and issuance costs, offset by non-cash expenses that included $14.0 million accretion of bond discounts, and $2.7 million of unrealized currency translation. Working capital sources of cash and cash equivalents primarily included a $39.4 million increase in deferred revenue primarily resulting from the growth in the number of customers invoiced during the period, a $45.7 million decrease in accounts receivable related to increased collection, a $18.0 million increase in accounts payable related to timing of bill payments, and a $6.4 million decrease in right-of-use asset. These sources of cash and cash equivalents were offset by a $26.4 million increase in prepaid expenses and other assets, a $7.5 million decrease in operating lease liabilities, a $27.2 million increase in deferred commissions, and $1.2 million decrease in accrued expenses and other liabilities.

Net Cash and Cash Equivalents Provided by Investing Activities

Our investing activities have consisted primarily of purchases and maturities of investments, property and equipment purchases, purchases of intangible assets, purchases of strategic investments, capitalization of software development costs, and business acquisitions. Capitalized software development costs are related to new products or improvements to our existing software platform that expand the functionality for our customers.

Net cash and cash equivalents provided by investing activities during the three months ended March 31, 2026 consisted primarily of $487.7 million received related to the maturity of investments, offset by $358.7 million purchases of investments, $15.4 million of purchased property and equipment, $5.8 million purchases of strategic investments, $34.3 million of capitalized software development costs, $8.3 million related to business acquisitions, and $0.5 million purchases of intangible assets.

Net cash and cash equivalents provided by investing activities during the three months ended March 31, 2025, consisted primarily of $674.4 million purchases of investments, $13.3 million of purchased property and equipment, $11.0 million purchases of strategic investments, $51.4 million related to business acquisitions, and $30.4 million of capitalized software development costs. These uses of cash were offset by $803.1 million received related to the maturity of investments.

Net Cash and Cash Equivalents Used in Financing Activities

Our financing activities have consisted primarily of the repayment of our 2025 Notes, repurchases of our common stock, payment of debt issuance costs, the issuance of common stock under our stock plans, and payments of employee taxes related to the net share settlement of stock-based awards.

For the three months ended March 31, 2026 cash used in financing activities consisted of $206.7 million used for repurchases of our common stock, $3.2 million used for payment of employee taxes related to the net share settlement of stock-based awards, and $2.6 for payment of debt issuance costs, offset by $16.3 million of proceeds related to issuance of common stock under stock plans.

For the three months ended March 31, 2025, cash provided in financing activities consisted of $19.3 million of proceeds related to issuance of common stock under stock plans, offset by $9.1 million used for payment of employee taxes related to the net share settlement of stock-based awards and $90.6 million for repayments of the 2025 Notes attributable to the principal.

Liquidity and Capital Resources Considerations

Contractual Obligations and Commitments

Contractual obligations are cash that we are obligated to pay as part of certain contracts that we have entered during our course of business. Our contractual obligations consist of operating lease liabilities that are included in our consolidated balance sheet and vendor commitments associated with agreements that are legally binding. As of March 31, 2026, the total obligation for operating leases was $296.6 million, of which $54.4 million is expected in the next twelve months. As of March 31, 2026, our vendor commitment was $415.1 million, of which $248.1 million is expected in the next twelve months. See Note 12 for all obligations the Company is committed to in the notes to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Share Repurchase Program

In February 2026, our Board of Directors authorized the 2026 Share Repurchase Program for the repurchase of shares of the Company's common stock, in an aggregate amount of up to $1 billion, over a period of 24 months. Repurchases under the Share Repurchase Programs may be made under a variety of methods, including privately negotiated or open market trades, pursuant to 10b5-1 plans. The share repurchase program does not obligate us to acquire a specified number of shares, and may be suspended, modified, or terminated at any time and will be funded using our cash and cash equivalents. Consideration paid for the shares repurchased is recorded as a reduction to stockholders' equity on the consolidated balance sheets.

During the three months ended March 31, 2026, we repurchased 0.8 million shares of our common stock at an average price of $249.74 per share, for an aggregate repurchase amount of $211.0 million. See Note 14 of the notes to consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Letters of Credit

As of March 31, 2026, we had a total of $2.7 million in letters of credit outstanding for office space. These irrevocable letters of credit are expected to remain in effect, in some cases, until 2029.

Revolving Credit Facility

In February 2026, we entered into the Revolving Credit Agreement. As of March 31, 2026, there were no outstanding borrowings under the revolving credit facility. The Company's obligations under the Revolving Credit Agreement are secured by substantially all of the Company's assets. The Revolving Credit Agreement contains customary representations and warranties, customary affirmative and negative covenants, and, during periods when the Company does not maintain investment-grade credit ratings, a financial covenant that is tested quarterly and requires the Company to maintain a certain consolidated leverage ratio, and customary events of default. As of March 31, 2026, we were in compliance with all financial covenants under the Revolving Credit Agreement.

Off-Balance Sheet Arrangements

We have no material off-balance sheet arrangements as of March 31, 2026 exclusive of items described above and indemnifications of officers, directors and employees for certain events or occurrences while the officer, director or employee is, or was, serving at our request in such capacity.

Critical Accounting Policies and Estimates

There have been no significant changes in our critical accounting policies and estimates during the three months ended March 31, 2026 as compared to the critical accounting policies and estimates disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.

Recent Accounting Pronouncements

For information on recent accounting pronouncements, see Recent Accounting Pronouncements in the notes to the consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.