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Blackbaud Ticker: BLKB February 10, 2026
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Forward-looking Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements in this presentation consist of, among other things, statements regarding future operating results, all of which are based on current expectations, estimates, and forecasts, and the beliefs and assumptions of the Company’s management. Words such as “believes,” “seeks,” “expects,” “may,” “might,” “should,” “intends,” “could,” “would,” “likely,” “will,” “targets,” “plans,” “anticipates,” “aims,” “projects,” “estimates,” or any variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are subject to risks, uncertainties and assumptions that are difficult to predict. Accordingly, they should not be viewed as assurances of future performance, and actual results may differ materially and adversely from those expressed in any forward-looking statements. Factors that could cause actual results to differ materially from the Company’s expectations expressed in this presentation include: expectations for continuing to successfully execute the Company’s growth and operational improvement strategies; expectations of future growth in the social good software solutions market, segments within that market and the Company’s total addressable market; expectations that achieving the Company’s goals will extend its competitive advantage and provide improved product quality and innovative solutions for its customers; expectations that centers of excellence and use of best-of-breed platforms will drive increasing operating efficiency and contribute to margin improvement; expectations that the Company’s financial position provides flexibility to fuel future growth through acquisitions or other opportunities; expectations that past acquisitions have expanded the Company’s customer and market opportunities; risks associated with unfavorable media coverage; risks associated with acquisitions; risks inherent in the expansion of our international operations; the possibility of reduced growth or amount of charitable giving; uncertainty regarding increased business and renewals from existing customers; risks associated with implementation of software products; the ability to attract and retain key personnel; risks related to the Company’s leverage, credit facility and share repurchase program; lengthy sales and implementation cycles; technological changes that make the Company’s products and services less competitive; risk related to the adequacy of our data security procedures and cybersecurity and data protection risks and related liabilities and potential legal proceedings involving us and uncertainty regarding existing legal proceedings and the other risk factors set forth from time to time in the Company’s SEC filings. Factors that could cause or contribute to such differences include, but are not limited to, those summarized under Risk Factors in the Company’s most recent annual report on Form 10-K, and any quarterly reports on Forms 10-Q thereafter, copies of which are available free of charge at the SEC’s website at www.sec.gov or upon request from the Company’s investor relations department. Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent the Company’s beliefs and assumptions only as of the date of this presentation. Except as required by law, the Company does not intend, and undertakes no obligation, to revise or update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward- looking statements, even if new information becomes available in the future. Trademark Usage All Blackbaud product names appearing herein are trademarks or registered trademarks of Blackbaud, Inc. This presentation contains trade names, trademarks and service marks of other companies. The Company does not intend its use or display of other parties’ trade names, trademarks and service marks to imply a relationship with, or endorsement or sponsorship of, these other parties.
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Historical Financials and Non-GAAP Financial Measures Use of Non-GAAP Financial Measures: The Company has provided in this presentation financial information that has not been prepared in accordance with GAAP. The Company uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating the Company’s ongoing operational performance. The Company believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing its financial results from period to period with other companies in the Company’s industry, many of which present similar non-GAAP financial measures to investors. These non-GAAP financial measures may not be completely comparable to similarly titled measures of other companies due to potential differences in the exact method of calculation between companies. The Company believes that these non-GAAP financial measures reflect the Company’s ongoing business in a manner that allows for meaningful period-to-period comparison and analysis of trends in the Company’s business. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliations of these non-GAAP measures to their most directly comparable GAAP financial measures. Blackbaud discusses non-GAAP organic revenue growth measures, including non-GAAP organic revenue growth, non-GAAP organic revenue growth on a constant currency basis, non-GAAP organic recurring revenue growth, and non-GAAP organic recurring revenue growth on a constant currency basis, which Blackbaud believes provide useful information for evaluating the periodic growth of its business as well as growth on a consistent basis. Each measure of non-GAAP organic revenue growth excludes incremental acquisition-related revenue attributable to companies acquired in the current fiscal year. For companies acquired in the immediately preceding fiscal year, if any, each measure of non-GAAP organic revenue growth reflects presentation of full year incremental non-GAAP revenue derived from such companies as if they were combined throughout the prior period, and it includes the current period non-GAAP revenue attributable to those companies. In addition, each measure of non-GAAP organic revenue growth excludes prior period revenue associated with divested businesses. The exclusion of the prior period revenue is intended to present the results of the divested businesses within the results of the combined company for the same period of time in both the prior and current periods. Blackbaud believes this presentation provides a more comparable representation of our current business’ organic revenue growth and revenue run-rate. In these materials, Blackbaud is presenting the following unaudited information: historical recurring and total revenue for the fiscal years ended December 31, 2025 and 2024 and the interim periods therein; calculations for recurring revenue growth and total revenue growth for the twelve month period ended December 31, 2025 and the interim periods therein; and calculations of non-GAAP organic revenue growth, non-GAAP organic recurring revenue growth, non-GAAP organic revenue growth on a constant currency basis and non-GAAP organic recurring revenue growth on a constant currency basis for the same periods. Rule of 40 is defined as non-GAAP organic revenue growth plus non-GAAP adjusted EBITDA margin. Non-GAAP adjusted EBITDA is defined as GAAP net income plus interest, net; income tax provision (benefit); depreciation; amortization of intangible assets from business combinations; amortization of software development costs; stock-based compensation; acquisition and disposition-related costs; employee severance; restructuring and other real estate activities; costs, net of insurance, related to the previously disclosed security incident discovered in May 2020 (the "Security Incident"); and impairment charges. Non-GAAP free cash flow is defined as operating cash flow less capital expenditures, including costs required to be capitalized for software development, and capital expenditures for property and equipment. In addition, and in order to provide a meaningful basis for comparison, Blackbaud also uses non-GAAP adjusted free cash flow in analyzing its operating performance. Non-GAAP adjusted free cash flow is defined as operating cash flow less capital expenditures, including costs required to be capitalized for software development, capital expenditures for property and equipment, plus cash outflows, net of insurance, related to the Security Incident. Blackbaud believes non-GAAP free cash flow and non-GAAP adjusted free cash flow provide useful measures of the company's operating performance. Non-GAAP adjusted free cash flow is not intended to represent and should not be viewed as the amount of residual cash flow available for discretionary expenditures. Historical Financial Statements Being Presented: In these materials, Blackbaud is presenting the following unaudited historical financial information: historical consolidated balance sheets as of the fiscal years ended December 31, 2025 and 2024 and interim consolidated balance sheets for each of the quarters within fiscal 2025 and 2024; historical consolidated statements of comprehensive income for the fiscal years ended December 31, 2025 and 2024 and interim consolidated statements of comprehensive income for each of the quarters within fiscal 2025 and 2024; historical consolidated statements of cash flows for the fiscal years ended December 31, 2025 and 2024 and interim consolidated statements of cash flows for each of the interim year-to-date periods within fiscal 2025 and 2024; and historical non-GAAP financial information for the fiscal years ended December 31, 2025 and 2024 and for each of the quarters within fiscal 2025 and 2024 as well as reconciliations of the non-GAAP measures to their most directly comparable GAAP measures and related non-GAAP adjustments. Blackbaud is providing this unaudited financial information to allow investors and analysts to more easily access and review the Company’s historical consolidated financial data by including such information in one document. Reconciliation of GAAP to Non-GAAP Financial Measures: Reconciliations of the most directly comparable GAAP measures to non-GAAP financial measures and related adjustments, as well as details of Blackbaud's methodology for calculating non-GAAP organic revenue growth, non-GAAP organic revenue growth on a constant currency basis, non-GAAP organic recurring revenue growth, non-GAAP organic recurring revenue growth on a constant currency basis and Rule of 40 can be found in the Appendix to these materials and on the "Investor Relations" page of the Company's website. Blackbaud has not reconciled forward-looking non-GAAP financial measures contained in this investor material to their most directly comparable GAAP measures. Such reconciliations would require unreasonable efforts at this time to estimate and quantify with a reasonable degree of certainty various necessary GAAP components, including for example those related to compensation, acquisition transactions and integration, tax items or others that may arise. These components and other factors could materially impact the amount of the future directly comparable GAAP measures, which may differ significantly from their non-GAAP counterparts.
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Blackbaud Investment Pillars Innovation Driving Product Value • AI empowering customers • Embedded cyber security protects customer data • Product first approach driving 90%+ retention rates • Market leading portfolio depth and breadth • Continued migration to 3rd party cloud enables leverage & efficiencies Rich Market Opportunity • Global market leadership • Significant available TAM • Stable end markets • Fragmented competitive landscape Attractive Financial Model • Enviable recurring revenue stream • Large and diverse customer base • Sustained double digit earnings growth • Strong cash flows Purposeful Capital Allocation • Multi-year, programmatic share repurchase • Focus on debt level to maintain optimal capital structure • Targeted M&A to bolster innovation
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Business Overview
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Cloud Software We build, integrate and implement vertical- specific solutions purpose-built for the unique needs of our customers. Data Intelligence Using exclusive data, analytics and expertise, we deliver unparalleled insight and intelligence to the customers we serve. Services We drive impact through dedicated customer support and training, along with strategic and managed services tailored to our customers. Expertise With over four decades of experience, we are undisputed industry experts on technology for social good. Blackbaud is the world’s leading provider of AI-powered solutions for social impact Blackbaud propels impact at scale with the sector’s most intelligent solutions
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AI-powered solutions serving the specific needs of the diverse social impact market Arts & Cultural Organizations Foundations Individual Change Agents Companies Healthcare Organizations K-12 Schools Faith Communities Higher Education Institutions Nonprofits
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Our core competencies expand what is possible for purpose-driven organizations Fundraising & Engagement • Fundraising • Peer-to-Peer Fundraising • Marketing AI & Data Intelligence • Agents for Good • Insights • Data Health Financial Management • Fund Accounting • Financial Aid Management • Tuition Management Services • Consulting Services • Implementation and Optimization Services Social Responsibility • Employee Giving and Volunteering • Grantmaking Organizational & Program Management • Education Management • Ticketing Payment Services • Merchant Services • Payables Grant & Award Management • Grantmaking • Award Management
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• Blackbaud is the leading provider of AI-powered solutions wholly dedicated to powering social impact • Only Blackbaud offers a full portfolio of purpose-built, integrated solutions • Highly fragmented competition offers single-point solutions • Large customer base with strong retention Most comprehensive solution set that accelerates impact OUR COMPETITORS1 Fundraising, Relationship Management & Engagement (and partners) Payment Services Financial Management, Grant & Award Management Organizational & Program Management Corporate Social Responsibility 1Informed by internal competitive intelligence and analysis.
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Fueling accelerated impact for our customers year-over-year increase in giving and volunteering by using YourCause® CSRconnect® and Impact EdgeTM rolling fundraising average achieved by leveraging Blackbaud Enterprise Fundraising CRMTM increase in annual fundraising since the inception of its Challenge Against Cancer program by using Blackbaud TeamRaiser® reduction in workload by leveraging Payment Assistant in Blackbaud Financial Edge NXT® of lapsed donors recaptured by using Prospect Insights in Blackbaud Raiser's Edge NXT® year-over-year increase in fundraising with their use of Blackbaud Raiser’s Edge NXT® and Blackbaud Donation Forms
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Large and underpenetrated total addressable market $10B+ Blackbaud TAM $3.5B $3.0B $1.0B $1.5B $1.5B Sources: FY 2025 Blackbaud Revenue. Global Blackbaud TAM based on IRS data, Canadian Revenue Agency, Private School Universe, IPEDS, Dun & Bradstreet, HIMSS, Guidestar, S&P Global database, Small Business & Entrepreneurship Council, Blackbaud internal data Fundraising, Relationship Management and Engagement Revenue Penetration: <20% Payment Services Revenue Penetration: <20% Corporate Social Responsibility Revenue Penetration: <5% Financial Management, Grant and Award Management Revenue Penetration: <10% Organizational and Program Management Revenue Penetration: <10%
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Q4 2025 Performance & FY26 Financial Guidance
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Q4 2025 Performance 33.8% 35.4% Q4 2024 Q4 2025 • Keen focus on margin expansion opportunities, while at the same time making investments in the business in key areas like innovation, AI, and cybersecurity. • 160bps improvement to non-GAAP adjusted EBITDA margin in Q4. • Non-GAAP Diluted EPS growth of 11% YoY in Q4. EBITDA and EPS Highlights: Non-GAAP performance through 12/31/25. Non-GAAP adjusted EBITDA is defined as GAAP net income plus interest, net; income tax provision (benefit); depreciation; amortization of intangible assets from business combinations; amortization of software development costs; stock-based compensation; acquisition and disposition-related costs; employee severance; restructuring and other real estate activities; costs, net of insurance, related to the previously disclosed security incident discovered in May 2020; and impairment of capitalized software development costs. Please refer to the appendix of this presentation. $302.1M ($19.1M) $12.2M $295.3M Non-GAAP Organic Revenue Year over Year Profitability Year over Year $1.07 $1.19 Q4 2024 Q4 2025 Non-GAAP Diluted EPSNon-GAAP Adj. EBITDA Margin +160bps Q4 2024 Less: Non-GAAP revenue from divested businesses Plus: organic revenue increase Q4 2025 • Contractual recurring growth supported by sales bookings and modernized approach to renewal pricing launched in March ’23. • Strong transactional recurring growth in the quarter primarily driven by volume growth and improved rates. • Note: Blackbaud divested EverFi business as of 12/31/24. Revenue Highlights: 4.3% Organic Revenue Growth 11% growth
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2026 total company guidance ($ in millions, except per share amounts) Low Midpoint High Implied Growth at Midpoint Total Revenue $1,173 $1,176 $1,179 4.25% Non-GAAP Adjusted EBITDA $430 $434 $438 7% Non-GAAP EPS $5.15 $5.20 $5.25 17% Non-GAAP Free Cash Flow $280 $285 $290 37% Assumptions included in full year 2026 financial guidance: Non -GAAP annualized effective tax rate of 24.5%; Interest expense for the year of $62M - $66M; Fully diluted shares for the year in the range of 45M – 46M; Capital expenditures for the year in the range of $60M to $70M, including approximately $52M to $62M of capitalized software development costs.
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Anticipated impact of larger up for renewal cohort on FY26 revenue growth outlook 2025 2026 Estimate Renewal Cohort Sizes ~40% Increase YoY • Dollar value of renewal cohorts fluctuate from year to year based on mix of contracts up for renewal. • Blackbaud’s 2026 contractual recurring renewal cohort is approximately 40% larger than last year. • We anticipate renewal rates on these up for renewal contracts to remain in line with prior years, however the larger volume of contracts up for renewal may result in higher churn dollars. • This is forecasted to have a negative impact of 0.5 to 0.75 percentage points on total revenue growth for 2026, which is reflected in our financial guidance ranges.
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Long-term Aspirational Goals
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Blackbaud is an ideal platform for compounding profitable growth Clear market leader with the most comprehensive set of purpose-built and mission critical solutions powering social impact Durable and proven operating model with resilient end markets and strong recurring revenue Sustained competitive advantage via commitment to AI and product innovation with a platform to deliver these solutions at scale Track record of delivering improved financial performance with a pathway to consistent revenue growth, expanding margins and double-digit EPS growth over the long-term
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Significant financial progress since 2020 $2.94 $5.20 FY20 FY26 Guidance Midpoint Non-GAAP Diluted EPS 10% CAGR $242M $434M FY20 FY26 Guidance Midpoint Non-GAAP Adjusted EBITDA 10% CAGR $913M $1,176M FY20 FY26 Guidance Midpoint Total Revenue 4% CAGR $76M $285M FY20 FY26 Guidance Midpoint Non-GAAP Free Cash Flow 25% CAGR
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• Goal of achieving Rule of 45 by 2030. • New product offerings such as Agents for Good represent potential upside to current long-term revenue growth targets. • Expect EBITDA growth to outpace revenue growth via operating leverage and ongoing cost and efficiency initiatives, with focus on improving EBITDA to FCF conversion. • Targeting consistent double digit non- GAAP EPS growth supported by continued stock repurchase and debt reduction. 1) FY25 growth rates after normalizing for estimated impact of 12/31/24 divestiture of EverFi. Executing on defined initiatives to drive strong financial results ($ in millions, except per share amounts) FY25 Actuals FY26 Guidance Midpoint CAGR Targets: ‘26 – ’30 Total Revenue $1,128 (5.5% growth1) $1,176 (4.3% growth) 4% to 6% Non-GAAP Adjusted EBITDA $405 (~8% growth1) $434 (7% growth) 6% to 8% Non-GAAP EPS $4.45 (~12% growth1) $5.20 (17% growth) 13%+ FCF Margin 18% 24% Expand FCF margin to 28%+
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Blackbaud’s revenue growth model Contractual Recurring (Software) Transactional Recurring (Payments) One-time Services and Other Total Revenue Revenue Mix (% of FY25 Total) 64% 34% 2% 100% Historical Growth CAGR (FY20-FY25) 4% 8% (19%) 4% Growth Drivers • Bookings (new logo) • Bookings (cross-sell & upsell) • Sales productivity • Customer retention (3+ year contracts) • Price uplift at renewal & annual escalators • New unit (new logo) • New unit (cross-sell & upsell) • Same store volume growth • Digital giving mix shift • Pricing models • Small component of overall revenue • Actively shrunk this portion of portfolio (transition to third party partners) to focus on high value software and payments Expected Growth Contribution (FY26-FY30) Mid single-digit Mid to high single-digit Near-term drag becoming neutral contributor Mid single-digit plus
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Revenue driver: proven “land and expand” model underpinned by product development and innovation New Logo Approximately half of direct sales force focused on new customer acquisition to refill top of funnel in “land and expand” sales model New Product Blackbaud’s Agents for Good strategy brings net new products into sales team’s bag for 2026+ Cross-sell / Upsell Approximately half of direct sales force focused on selling to existing customers. Meaningful opportunity for continued product expansion
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Revenue driver: mission critical products drive strong retention rates 90% 90% 91% 92% 92% 92% 2020 2021 2022 2023 2024 2025 Gross Dollar Retention Rate Historical gross dollar retention metrics exclude EverFi that was divested as of 12/31/2024. 3+ years (~20% on 4+ years) Typical contract term length Mid to high single-digit Contract price increase at renewal Mid to high single-digit Embedded annual price escalators
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Revenue driver: diverse transactional revenue streams deliver high single-digit growth 55% 20% 20% 5% Tuition Management Products: Blackbaud Tuition Management Growth Drivers: New customers, private school enrollment growth, pricing optimization Consumer Giving Products: JustGiving Growth Drivers: New customers, same store volume growth, pricing optimization, geographic expansion, viral events Donation Processing Products: Blackbaud Integrated Payments Growth Drivers: New customers, same store volume growth, pricing optimization, viral events $384M FY25 Revenue 8% CAGR FY20-FY25 Event-Based Usage
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Profit driver: multiple initiatives underway to deliver high-single digit EBITDA growth and margin expansion 26.5% 35.9% FY20 Adjusted EBITDA Margin FY25 Adjusted EBITDA Margin FY30 Adjusted EBITDA Margin 940 bps 40%+ Delivered significant margin improvement via initiatives including headcount efficiencies, data center consolidation and reduction in real estate footprint. Global workforce strategy to broaden access to talent and improve operating efficiency. Continued platform modernization on core products will improve unit economics and gross margins. Finalize third party cloud transition and shut down two remaining colocation data centers (including the largest). Reduce overall vendor footprint and consolidate tools to command better contract pricing. Currently piloting AI tools in all aspects of internal operations. Meaningful opportunity for efficiency gains in R&D, sales and marketing and G&A over the mid to long term. Workforce Strategy Platform Modernization Data Center Closures Vendor Optimization AI & Other Efficiency Gains
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Capital allocation: strong free cash flow generation to fund investments and fuel disciplined capital allocation strategy $76M $168M $154M $214M $245M $208M $285M $0 $50 $100 $150 $200 $250 $300 2020 2021 2022 2023 2024 2025 2026 Guidance Midpoint Non-GAAP free cash flow1 25% CAGR 1. Non-GAAP adjusted free cash flow is defined as operating cash flow less capital expenditures, including costs required to be capitalized for software development, and capital expenditures for prope rty and equipment. FY21-FY25 represent adjusted FCF which adds back cash outflows, net of insurance, related to the previously disclosed Security Incident discovered in May 2020 . 2. FY 2025 figure includes approximately $12 million of cash tax benefit related to the One Big Beautiful Bill Act and approxima tely $60 million of one-time items and working capital fluctuations that negatively impacted our 2025 free cash flow. 2026 Free Cash Flow guidance assumes $10m to $15m of non- recurring net benefit. • Positive cash tax impact primarily related to the One Big Beautiful Bill Act. • Partially offset by transition costs associated with global workforce strategy. 2
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Capital allocation: executing on stock repurchase program to meaningfully reduce common stock outstanding 53.6M 51.6M 51.6M 50.9M 49.2M 48.5M 48.5M 48.1M 46.7M 0.2M 3.0M 0.8M 1.6M 1.5M 0.5M 1.4M -2. 0M 0. 0M 2. 0M 4. 0M 6. 0M 8. 0M 1 0. 0M 4 0. 0M 4 2. 0M 4 4. 0M 4 6. 0M 4 8. 0M 5 0. 0M 5 2. 0M 5 4. 0M Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 Common Stock Outstanding Shares Repurchased 13% net reduction since Q4 2023 Percentage of cumulative FCF allocated to stock repurchase between 2023 and 2025 Expected percentage of cumulative FCF between 2026 and 2030 that will be allocated to future stock repurchases to continue reducing common stock outstanding over time Board authorization for stock repurchases. $961 million remaining as of 12/31/2025
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Capital allocation: long-term capital allocation strategy focused on maximizing shareholder value Stock Repurchases • Blackbaud has reduced common stock outstanding by 13% since Q4 2023 • Expect to allocate 50%+ of FY26-FY30 free cash flow to stock repurchases and continue to reduce common stock outstanding over time Debt Repayment • Manage debt balance and related interest expense to optimize for non-GAAP EPS and FCF growth over the long-term • Targeting Debt to EBITDA ratio below 2.0x over the mid and long-term Accretive M&A Target acquisition opportunities with high synergy value and a focus on vertical end markets already served by other Blackbaud products The timing and amount of repurchases depends on several factors, including market and business conditions, the trading price of our common stock and the nature of other investment opportunities. The repurchase program may be limited, suspended or discontin ued at any time without prior notice.
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Blackbaud Investment Pillars Innovation Driving Product Value • AI empowering customers • Embedded cyber security protects customer data • Product first approach driving 90%+ retention rates • Market leading portfolio depth and breadth • Continued migration to 3rd party cloud enables leverage & efficiencies Rich Market Opportunity • Global market leadership • Significant available TAM • Stable end markets • Fragmented competitive landscape Attractive Financial Model • Enviable recurring revenue stream • Large and diverse customer base • Sustained double digit earnings growth • Strong cash flows Purposeful Capital Allocation • Multi-year, programmatic share repurchase • Focus on debt level to maintain optimal capital structure • Targeted M&A to bolster innovation
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Thank you.
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Appendix
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Unaudited Historical Financial Information and Non-GAAP Financial Measures Being Presented Reclassifications to the unaudited historical financial information In order to provide comparability between periods presented, our “recurring“ and “one-time services and other" revenue lines have been combined within “revenue" in the previously reported consolidated statements of comprehensive income to conform to the presentation of the current period. Similarly, "cost of recurring" and "cost of one-time services and other" have been combined within "cost of revenue" in the previously reported consolidated statements of comprehensive income to conform to the presentation of the current period. Revision of Prior Period Financial Statements During the three months ended September 30, 2025, we identified a prior period error related to the previously recorded valuation allowance in accounting for income taxes, which resulted in an understatement of the deferred tax liability by $15.5 million as of December 31, 2024, March 31, 2025 and June 30, 2025, and a corresponding overstatement of the income tax benefit and an understatement of the GAAP net loss for the year ended December 31, 2024. There was no impact to our income tax provision for the first and second quarters of 2025. We evaluated the materiality of the error and determined that the impact was not material to our previously issued consolidated financial statements for the prior periods impacted but that correcting the error in the current period would have been material to our consolidated results of operations for the three and nine months ended September 30, 2025, and would be material to our forecasted consolidated results of operations for the year ended December 31, 2025. Accordingly, the correction of the valuation allowance error, along with other immaterial prior period errors, has been reflected as a revision to the applicable prior periods in the financial information presented herein and will be reflected in future filings that include such periods. As part of the our Quarterly Report on Form 10-Q for the third quarter of 2025, we included comparative financial statement tables showing “as reported” versus “as revised” amounts.
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(in thousands) Q1 2024 Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 Assets Current assets: Cash and cash equivalents $ 26,376 $ 30,438 $ 34,633 $ 67,628 $ 37,243 $ 41,566 $ 38,255 $ 38,914 Restricted cash 356,493 800,670 428,095 741,884 419,400 870,248 419,185 720,061 Accounts receivable, net of allowance 96,097 152,832 97,988 83,539 78,105 146,044 82,561 80,517 Customer funds receivable 3,529 2,943 7,343 1,970 4,522 5,696 3,996 1,308 Prepaid expenses and other current assets 94,711 92,410 87,699 81,572 88,329 91,551 94,838 89,290 Total current assets 577,206 1,079,293 655,758 976,593 627,599 1,155,105 638,835 930,090 Property and equipment, net 96,074 98,066 95,053 91,926 85,031 83,052 85,332 85,076 Operating lease right-of-use assets 35,464 28,489 27,522 26,554 1,725 5,266 4,931 4,630 Software development costs, net 162,491 165,465 169,507 148,319 150,113 153,604 154,074 155,842 Goodwill 1,053,130 1,053,249 1,056,882 1,052,506 1,054,290 1,057,927 1,056,656 1,056,815 Intangible assets, net 565,008 549,521 536,008 132,881 126,338 120,791 112,697 106,654 Other assets 59,883 68,785 60,444 67,221 57,270 54,784 51,916 51,575 Total assets $ 2,549,256 $ 3,042,868 $ 2,601,174 $ 2,496,000 $ 2,102,366 $ 2,630,529 $ 2,104,441 $ 2,390,682 Liabilities and stockholders’ equity Current liabilities: Trade accounts payable $ 48,863 $ 44,038 $ 43,983 $ 50,810 $ 46,435 $ 42,664 $ 48,761 $ 27,344 Accrued expenses and other current liabilities 76,050 52,513 49,631 76,484 46,138 42,101 53,050 43,272 Due to customers 358,836 802,372 434,093 742,340 422,780 874,757 421,820 719,833 Debt, current portion 19,302 23,786 23,830 23,875 23,350 22,566 22,613 22,660 Deferred revenue, current portion 359,174 425,813 410,422 358,546 325,559 398,836 383,138 368,986 Total current liabilities 862,225 1,348,522 961,959 1,252,055 864,262 1,380,924 929,382 1,182,095 Debt, net of current portion 1,020,520 998,071 977,019 1,051,110 1,182,343 1,136,112 1,042,005 1,087,037 Deferred tax liability 82,996 75,824 68,196 24,999 25,085 25,254 9,246 21,981 Deferred revenue, net of current portion 6,832 2,315 1,705 2,015 6,033 2,179 1,773 2,778 Operating lease liabilities, net of current portion 38,492 36,290 35,218 34,186 2,395 5,526 5,030 4,605 Other liabilities 4,163 4,362 12,304 4,796 4,771 7,796 8,816 7,132 Total liabilities 2,015,228 2,465,384 2,056,401 2,369,161 2,084,889 2,557,791 1,996,252 2,305,628 Commitments and contingencies Stockholders’ equity: Preferred stock — — — — — — — — Common stock, $0.001 par value 71 71 71 71 72 72 72 72 Additional paid-in capital 1,181,054 1,206,073 1,227,198 1,291,442 1,319,562 1,347,234 1,369,807 1,391,641 Treasury stock, at cost (855,692) (857,452) (922,516) (1,060,348) (1,198,721) (1,199,608) (1,231,316) (1,316,224) Accumulated other comprehensive loss 1,222 175 (6,887) (4,869) (8,302) (6,292) (9,198) (5,948) Retained earnings (accumulated deficit) 207,373 228,617 246,907 (99,457) (95,134) (68,668) (21,176) 15,513 Total stockholders’ equity 534,028 577,484 544,773 126,839 17,477 72,738 108,189 85,054 Total liabilities and stockholders’ equity $ 2,549,256 $ 3,042,868 $ 2,601,174 $ 2,496,000 $ 2,102,366 $ 2,630,529 $ 2,104,441 $ 2,390,682 Historical Consolidated Balance Sheets (Unaudited)
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Historical Consolidated Statements of Comprehensive Income (Unaudited) (in thousands, except share and per share amounts) Q1 2024 Q2 2024 Q3 2024 Q4 2024 FY 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 FY 2025 Revenue $ 278,576 $ 287,337 $ 286,598 $ 302,113 $ 1,154,624 $ 269,936 $ 282,030 $ 281,143 $ 295,256 $ 1,128,365 Cost of revenue 127,876 126,449 129,290 139,583 523,198 114,815 113,633 113,653 122,972 465,073 Gross profit 150,700 160,888 157,308 162,530 631,426 155,121 168,397 167,490 172,284 663,292 Operating expenses Sales, marketing and customer success 50,392 47,200 49,808 50,099 197,499 44,644 44,046 44,105 44,769 177,564 Research and development 40,714 37,415 37,916 37,635 153,680 33,559 33,595 37,198 33,778 138,130 General and administrative 45,361 33,962 27,519 35,881 142,723 56,679 32,856 31,044 34,031 154,610 Amortization of intangible assets 904 902 918 817 3,541 534 566 570 564 2,234 EVERFI disposition — — — 405,360 405,360 — — — — — Total operating expenses 137,371 119,479 116,161 529,792 902,803 135,416 111,063 112,917 113,142 472,538 Income (loss) from operations 13,329 41,409 41,147 (367,262) (271,377) 19,705 57,334 54,573 59,142 190,754 Interest expense (10,276) (15,715) (14,140) (15,503) (55,634) (16,945) (18,411) (16,774) (15,840) (67,970) Other income, net 3,347 3,310 2,997 4,895 14,549 2,105 1,118 3,245 2,531 8,999 Income (loss) before (benefit) provision for income taxes 6,400 29,004 30,004 (377,870) (312,462) 4,865 40,041 41,044 45,833 131,783 Income tax (benefit) provision (906) 7,760 11,714 (31,506) (12,938) 542 13,575 (6,448) 9,144 16,813 Net income (loss) $ 7,306 $ 21,244 $ 18,290 $ (346,364) $ (299,524) $ 4,323 $ 26,466 $ 47,492 $ 36,689 $ 114,970 Earnings (loss) per share Basic $ 0.14 $ 0.42 $ 0.36 $ (7.06) $ (5.92) $ 0.09 $ 0.55 $ 1.00 $ 0.78 $ 2.41 Diluted $ 0.14 $ 0.41 $ 0.35 $ (7.06) $ (5.92) $ 0.09 $ 0.55 $ 0.98 $ 0.76 $ 2.37 Common shares and equivalents outstanding Basic weighted average shares 52,052,370 50,747,337 50,409,292 49,051,396 50,560,538 48,429,061 47,784,062 47,680,002 46,845,015 47,680,184 Diluted weighted average shares 53,414,495 51,677,418 51,632,569 49,051,396 50,560,538 49,445,079 48,248,057 48,498,285 47,960,158 48,469,961 Other comprehensive income (loss) Foreign currency translation adjustment (1,185) 339 6,463 (8,439) (2,822) 3,259 7,324 (2,284) 568 8,867 Unrealized gain (loss) on derivative instruments, net of tax 4,095 (1,386) (13,525) 10,457 (359) (6,692) (5,314) (622) 2,682 (9,946) Total other comprehensive income (loss) 2,910 (1,047) (7,062) 2,018 (3,181) (3,433) 2,010 (2,906) 3,250 (1,079) Comprehensive income (loss) $ 10,216 $ 20,197 $ 11,228 $ (344,346) $ (302,705) $ 890 $ 28,476 $ 44,586 $ 39,939 $ 113,891
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Historical Consolidated Statements of Cash Flows (Unaudited) 3 months ended 6 months ended 9 months ended 12 months ended 3 months ended 6 months ended 9 months ended 12 months ended (in thousands) 3/31/2024 6/30/2024 9/30/2024 12/31/2024 3/31/2025 6/30/2025 9/30/2025 12/31/2025 Cash flows from operating activities Net income (loss) $ 7,306 $ 28,550 $ 46,840 $ (299,524) $ 4,323 $ 30,789 $ 78,281 $ 114,970 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 30,095 60,553 91,618 121,665 21,647 43,346 64,652 86,215 Provision for credit losses and sales returns 305 519 1,721 4,932 788 2,973 3,788 4,382 Stock-based compensation expense 30,286 55,305 76,430 104,968 22,170 49,422 71,079 92,910 Deferred taxes (11,688) (18,383) (21,776) (69,530) (221) (653) (16,682) (181) Amortization of deferred financing costs and discount 349 984 1,786 2,538 699 1,346 1,940 2,480 Loss on disposition of businesses 1,561 1,561 1,561 16,847 — — — — EVERFI impairment charges — — — 390,204 — — — — Other non-cash adjustments — 2,462 2,462 2,462 (5,384) (5,407) (5,180) (5,177) Changes in operating assets and liabilities, net of acquisition and disposal of businesses: Accounts receivable 3,844 (53,062) 918 4,729 4,770 (64,984) (2,422) (938) Prepaid expenses and other assets (3,249) (2,455) (934) 3,193 (5,192) (8,955) (9,707) (4,487) Trade accounts payable 23,778 19,146 18,322 28,336 (4,651) (8,408) (3,233) (23,535) Accrued expenses and other liabilities 8,087 (13,351) (16,089) (12,990) (8,134) (9,910) 2,033 (10,826) Deferred revenue (25,363) 36,606 19,527 (1,861) (29,427) 38,770 22,991 9,737 Net cash provided by operating activities 65,311 118,435 222,386 295,969 1,388 68,329 207,540 265,550 Cash flows from investing activities Purchase of property and equipment (953) (6,118) (7,235) (7,443) (688) (1,311) (4,805) (7,767) Capitalized software development costs (13,070) (28,392) (42,882) (59,757) (12,970) (27,787) (40,268) (54,236) Cash used in disposition of business (1,179) (1,179) (1,179) (1,179) (12,235) (12,235) (12,235) (12,235) Other investing activities — (5,029) (5,029) (5,029) — — — — Net cash used in investing activities (15,202) (40,718) (56,325) (73,408) (25,893) (41,333) (57,308) (74,938) Cash flows from financing activities Proceeds from issuance of debt 339,800 1,211,600 1,303,400 1,441,400 216,200 272,300 307,000 404,500 Payments on debt (79,343) (966,680) (1,080,192) (1,144,709) (85,523) (187,666) (316,922) (369,784) Debt issuance costs — (6,458) (6,458) (6,458) — — — — Employee taxes paid for withheld shares upon equity award settlement (52,723) (54,483) (55,950) (56,828) (37,948) (38,655) (39,669) (40,403) Change in due to customers (336,578) 106,851 (263,732) 46,957 (320,248) 128,582 (323,467) (25,557) Change in customer funds receivable (3,197) (2,577) (6,777) (1,679) (2,483) (3,262) (1,676) 997 Purchase of treasury stock, including excise tax payments (262,596) (262,596) (325,408) (418,034) (100,030) (103,205) (133,338) (217,152) Net cash (used in) provided by financing activities (394,637) 25,657 (435,117) (139,351) (330,032) 68,094 (508,072) (247,399) Effect of exchange rate on cash, cash equivalents, and restricted cash (860) (523) 3,527 (1,955) 1,668 7,212 5,768 6,250 Net (decrease) increase in cash, cash equivalents, and restricted cash (345,388) 102,851 (265,529) 81,255 (352,869) 102,302 (352,072) (50,537) Cash, cash equivalents, and restricted cash, beginning of period 728,257 728,257 728,257 728,257 809,512 809,512 809,512 809,512 Cash, cash equivalents, and restricted cash, end of period $ 382,869 $ 831,108 $ 462,728 $ 809,512 $ 456,643 $ 911,814 $ 457,440 $ 758,975
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Historical Reconciliations of GAAP to Non-GAAP Financial Measures (Unaudited) (in thousands, except share and per share amounts) Q1 2024 Q2 2024 Q3 2024 Q4 2024 FY 2024(1) Q1 2025 Q2 2025 Q3 2025 Q4 2025 FY 2025(1) GAAP Revenue $ 278,576 $ 287,337 $ 286,598 $ 302,113 $ 1,154,624 $ 269,936 $ 282,030 $ 281,143 $ 295,256 $ 1,128,365 GAAP gross profit $ 150,700 $ 160,888 $ 157,308 $ 162,530 $ 631,426 $ 155,121 $ 168,397 $ 167,490 $ 172,284 $ 663,292 GAAP gross margin 54.1 % 56.0 % 54.9 % 53.8 % 54.7 % 57.5 % 59.7 % 59.6 % 58.4 % 58.8 % Non-GAAP adjustments: Add: Stock-based compensation expense 3,728 3,390 2,948 4,026 14,092 2,698 3,250 2,850 2,719 11,517 Add: Amortization of intangibles from business combinations 14,663 14,639 14,667 12,988 56,957 7,052 7,020 6,811 6,761 27,644 Add: Employee severance — — — — — — 302 (18) — 284 Subtotal 18,391 18,029 17,615 17,014 71,049 9,750 10,572 9,643 9,480 39,445 Non-GAAP gross profit $ 169,091 $ 178,917 $ 174,923 $ 179,544 $ 702,475 $ 164,871 $ 178,969 $ 177,133 $ 181,764 $ 702,737 Non-GAAP gross margin 60.7 % 62.3 % 61.0 % 59.4 % 60.8 % 61.1 % 63.5 % 63.0 % 61.6 % 62.3 % GAAP income (loss) from operations $ 13,329 $ 41,409 $ 41,147 $ (367,262) $ (271,377) $ 19,705 $ 57,334 $ 54,573 $ 59,142 $ 190,754 GAAP operating margin 4.8 % 14.4 % 14.4 % (121.6)% (23.5)% 7.3 % 20.3 % 19.4 % 20.0 % 16.9 % Non-GAAP adjustments: Add: Stock-based compensation expense 30,286 25,019 21,125 28,538 104,968 22,170 27,252 21,657 21,831 92,910 Add: Amortization of intangibles from business combinations 15,567 15,541 15,585 13,805 60,498 7,586 7,586 7,381 7,325 29,878 Add: Employee severance — — — — — — 2,147 (242) — 1,905 Add: Acquisition and disposition-related costs 2,255 2,398 246 1,201 6,100 25,132 264 383 112 25,891 Add: Security Incident-related costs(2) 10,323 1,822 637 918 13,700 2,180 395 247 282 3,104 Add: EVERFI impairment and disposition charges — — — 405,360 405,360 — — — — — Subtotal 58,431 44,780 37,593 449,822 590,626 57,068 37,644 29,426 29,550 153,688 Non-GAAP income from operations $ 71,760 $ 86,189 $ 78,740 $ 82,560 $ 319,249 $ 76,773 $ 94,978 $ 83,999 $ 88,692 $ 344,442 Non-GAAP operating margin 25.8 % 30.0 % 27.5 % 27.3 % 27.6 % 28.4 % 33.7 % 29.9 % 30.0 % 30.5 % GAAP income (loss) before (benefit) provision for income taxes $ 6,400 $ 29,004 $ 30,004 $ (377,870) $ (312,462) $ 4,865 $ 40,041 $ 41,044 $ 45,833 $ 131,783 GAAP net income (loss) $ 7,306 $ 21,244 $ 18,290 $ (346,364) $ (299,524) $ 4,323 $ 26,466 $ 47,492 $ 36,689 $ 114,970 Shares used in computing GAAP diluted earnings (loss) per share 53,414,495 51,677,418 51,632,569 49,051,396 50,560,538 49,445,079 48,248,057 48,498,285 47,960,158 48,469,961 GAAP diluted earnings (loss) per share $ 0.14 $ 0.41 $ 0.35 $ (7.06) $ (5.92) $ 0.09 $ 0.55 $ 0.98 $ 0.76 $ 2.37 Non-GAAP adjustments: Add: GAAP income tax (benefit) provision (906) 7,760 11,714 (31,506) (12,938) 542 13,575 (6,448) 9,144 16,813 Add: Total Non-GAAP adjustments affecting income from operations 58,431 44,780 37,593 449,822 590,626 57,068 37,644 29,426 29,550 153,688 Non-GAAP income before provision for income taxes 64,831 73,784 67,597 71,952 278,164 61,933 77,685 70,470 75,383 285,471 Assumed non-GAAP income tax provision(3) 15,884 18,077 16,561 17,628 68,150 15,174 19,033 17,265 18,469 69,941 Non-GAAP net income $ 48,947 $ 55,707 $ 51,036 $ 54,324 $ 210,014 $ 46,759 $ 58,652 $ 53,205 $ 56,914 $ 215,530 Shares used in computing Non-GAAP diluted earnings per share 53,414,495 51,677,418 51,632,569 50,591,254 51,750,308 49,445,079 48,248,057 48,498,285 47,960,158 48,469,961 Non-GAAP diluted earnings per share $ 0.92 $ 1.08 $ 0.99 $ 1.07 $ 4.06 $ 0.95 $ 1.22 $ 1.10 $ 1.19 $ 4.45 (1) The individual amounts for each quarter may not sum to full year totals due to rounding. (2) Includes Security Incident-related costs incurred. Recorded expenses consisted primarily of payments to third- party service providers and consultants, including legal fees, as well as settlements of customer claims, negotiated settlements and accrua ls for certain loss contingencies. Not included in this adjustment were costs associated with enhancements to our cybersecurity program. (3) We use a non-GAAP effective tax rate of 24.5% when calculating non -GAAP net income and non-GAAP diluted earnings per share. We base this rate on our estimated annual GAAP income tax rate, adjusted for items excluded from GAAP income when calculating non-GAAP income and for significant nonrecurring tax adjustments. We review this non-GAAP tax rate annually to determine whether it remains appropriate for evaluating our financial performance. In conducting t his review, we consider our GAAP annual effective tax rate, changes in tax legislation, non- GAAP adjustments, and shifts in the geographic mix of revenues and expenses. We also evaluate other factors that we deem significant. Because the tax treatment of non-GAAP adjustments differs from GAAP and because of our methodology for estimating t he annual tax rate, the non-GAAP tax rate may differ from the GAAP tax rate and from our actual tax liabilities.
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Historical Reconciliations of GAAP to Non-GAAP Financial Measures (Unaudited) 3 months ended 6 months ended 9 months ended 12 months ended 3 months ended 6 months ended 9 months ended 12 months ended (in thousands) 3/31/2024 6/30/2024 9/30/2024 12/31/2024 3/31/2025 06/30/2025 09/30/2025 12/31/2025 GAAP net cash provided by operating activities 65,311 118,435 222,386 295,969 1,388 68,329 207,540 265,550 GAAP operating cash flow margin 23.4 % 20.9 % 26.1 % 25.6 % 0.5 % 12.4 % 24.9 % 23.5 % Non-GAAP adjustments: Less: purchase of property and equipment (953) (6,118) (7,235) (7,443) (688) (1,311) (4,805) (7,767) Less: capitalized software development costs (13,070) (28,392) (42,882) (59,757) (12,970) (27,787) (40,268) (54,236) Non-GAAP free cash flow $ 51,288 $ 83,925 $ 172,269 $ 228,769 $ (12,270) $ 39,231 $ 162,467 $ 203,547 Non-GAAP free cash flow margin 18.4 % 14.8 % 20.2 % 19.8 % (4.5) % 7.1 % 19.5 % 18.0 % Non-GAAP adjustments: Add: Security Incident-related cash flows 2,028 5,822 15,081 15,925 852 2,473 4,300 4,640 Non-GAAP adjusted free cash flow $ 53,316 $ 89,747 $ 187,350 $ 244,694 $ (11,418) $ 41,704 $ 166,767 $ 208,187 Non-GAAP adjusted free cash flow margin 19.1 % 15.9 % 22.0 % 21.2 % (4.2) % 7.6 % 20.0 % 18.5 %
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Historical Revenue by Type (Unaudited) (in thousands, except share and per share amounts) Q1 2024 Q2 2024 Q3 2024 Q4 2024 FY 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 FY 2025 Revenue Contractual recurring $ 190,357 $ 193,645 $ 194,724 $ 195,814 $ 774,540 $ 175,465 $ 180,128 $ 182,984 $ 183,243 $ 721,820 Transactional recurring 80,488 87,781 85,165 100,269 353,703 87,860 96,151 92,818 107,512 384,341 Total recurring revenue $ 270,845 $ 281,426 $ 279,889 $ 296,083 $ 1,128,243 $ 263,325 $ 276,279 $ 275,802 $ 290,755 $ 1,106,161 One-time services and other 7,732 5,910 6,709 6,030 26,381 6,611 5,751 5,341 4,501 22,204 Total revenue $ 278,576 $ 287,337 $ 286,598 $ 302,113 $ 1,154,624 $ 269,936 $ 282,030 $ 281,143 $ 295,256 $ 1,128,365
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Historical Reconciliations of GAAP and Non-GAAP Organic Revenue Growth (Unaudited) (dollars in thousands) Years ended Three months ended Year ended Three months ended 12/31/2025 12/31/2024 12/31/2025 09/30/2025 06/30/2025 03/31/2025 12/31/2024 12/31/2024 09/30/2024 06/30/2024 03/31/2024 GAAP revenue $ 1,128,365 $ 1,154,624 $ 295,256 $ 281,143 $ 282,030 $ 269,936 $ 1,154,624 $ 302,113 $ 286,598 $ 287,337 $ 278,576 GAAP revenue growth (2.3)% (2.3)% (1.9)% (1.8)% (3.1)% Less: Non-GAAP revenue from divested businesses(1) — (85,565) — — — — (85,565) (19,096) (19,304) (23,756) (23,409) Non-GAAP organic revenue(2) $ 1,128,365 $ 1,069,059 $ 295,256 $ 281,143 $ 282,030 $ 269,936 $ 1,069,059 $ 283,017 $ 267,294 $ 263,581 $ 255,167 Non-GAAP organic revenue growth 5.5 % 4.3 % 5.2 % 7.0 % 5.8 % Non-GAAP organic revenue(2) $ 1,128,365 $ 1,069,059 $ 295,256 $ 281,143 $ 282,030 $ 269,936 1,069,059 $ 283,017 $ 267,294 $ 263,581 $ 255,167 Foreign currency impact on Non-GAAP organic revenue(3) (3,516) — (940) (964) (1,910) 298 — — — — — Non-GAAP organic revenue on constant currency basis(3) $ 1,124,849 $ 1,069,059 $ 294,316 $ 280,179 $ 280,120 $ 270,234 $ 1,069,059 $ 283,017 $ 267,294 $ 263,581 $ 255,167 Non-GAAP organic revenue growth on constant currency basis 5.2 % 4.0 % 4.8 % 6.3 % 5.9 % GAAP recurring revenue 1,106,161 1,128,243 290,755 275,802 276,279 263,325 1,128,243 296,083 279,889 281,426 270,845 GAAP recurring revenue growth (2.0)% (1.8)% (1.5)% (1.8)% (2.8)% Less: Non-GAAP recurring revenue from divested businesses(1) — (82,550) — — — — (82,550) (18,643) (18,435) (23,418) (22,054) Non-GAAP organic recurring revenue(2) $ 1,106,161 $ 1,045,693 $ 290,755 $ 275,802 $ 276,279 $ 263,325 $ 1,045,693 $ 277,440 $ 261,454 $ 258,008 $ 248,791 Non-GAAP organic recurring revenue growth 5.8 % 4.8 % 5.5 % 7.1 % 5.8 % Non-GAAP organic recurring revenue(2) $ 1,106,161 $ 1,045,693 $ 290,755 $ 275,802 $ 276,279 $ 263,325 1,045,693 $ 277,440 $ 261,454 $ 258,008 $ 248,791 Foreign currency impact on non-GAAP organic recurring revenue(3) (3,501) — (929) (955) (1,894) 277 — — — — — Non-GAAP organic recurring revenue on constant currency basis(3) $ 1,102,660 $ 1,045,693 $ 289,826 $ 274,847 $ 274,385 $ 263,602 $ 1,045,693 $ 277,440 $ 261,454 $ 258,008 $ 248,791 Non-GAAP organic recurring revenue growth on constant currency basis 5.4 % 4.5 % 5.1 % 6.3 % 6.0 % (1) Non-GAAP revenue from divested businesses excludes revenue associated with divested businesses in the prior period. The exclusion of the prior period revenue is to present the results of the divested business with the results of the combined companyfor the same period of time in both the prior and current periods. (2) Non-GAAP organic revenue and non-GAAP organic recurring revenue for the prior year periods presented herein may not agree tonon-GAAP organic revenue presented in the respective prior period quarterly financial information solely due to the manner in which non-GAAP organic revenue growth is calculated. (3) To determine non-GAAP organic revenue growth and non-GAAP organic recurring revenue growth on a constant currency basis, revenues from entities reporting in foreign currencies were translated to U.S. Dollars using the comparable period's quarterly weighted average foreign currency exchange rates. The primary foreign currencies creating the impact are the Australian Dollar, British Pound,Canadian Dollar and Euro.
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Reconciliations of Non-GAAP Organic Revenue Growth and Rule of 40 (Unaudited) (dollars in thousands) Three months ended Years ended 12/31/2025 12/31/2024 12/31/2025 12/31/2024 GAAP net income $ 36,689 $ (346,364) $ 114,970 $ (299,524) Non-GAAP adjustments: Add: Interest, net 13,942 13,638 60,078 45,788 Add: GAAP income tax provision (benefit) 9,144 (31,506) 16,813 (12,938) Add: Depreciation 2,230 3,207 10,053 12,828 Add: Amortization of intangibles from business combinations 7,325 13,805 29,878 60,498 Add: Amortization of software development costs(1) 12,911 13,325 49,692 51,240 Subtotal 45,552 12,469 166,514 157,416 Non-GAAP EBITDA $ 82,241 $ (333,895) $ 281,484 $ (142,108) Non-GAAP EBITDA margin(2) 27.9 % 24.9 % Non-GAAP adjustments: Add: Stock-based compensation expense 21,831 28,538 92,910 104,968 Add: Employee severance — — 1,905 — Add: Acquisition and disposition-related costs 112 1,201 25,891 6,100 Add: Security Incident-related costs(3) 282 918 3,104 13,700 Add: EVERFI impairment and disposition charges — 405,360 — 405,360 Subtotal 22,225 436,017 123,810 530,128 Non-GAAP adjusted EBITDA $ 104,466 $ 102,122 $ 405,294 $ 388,020 Non-GAAP adjusted EBITDA margin(4) 35.4 % 35.9 % Rule of 40(5) 39.7 % 41.4 % Non-GAAP adjusted EBITDA 104,466 102,122 405,294 388,020 Foreign currency impact on Non-GAAP adjusted EBITDA(6) (382) (559) (1,785) (1,618) Non-GAAP adjusted EBITDA on constant currency basis(6) $ 104,084 $ 101,563 $ 403,509 $ 386,402 Non-GAAP adjusted EBITDA margin on constant currency basis 35.4 % 35.9 % Rule of 40 on constant currency basis(7) 39.4 % 41.1 % (1) Includes amortization expense related to software development costs and amortization expense from capitalized cloud computin g implementation costs. (2) Measured by GAAP revenue divided by non-GAAP EBITDA. (3) Includes Security Incident-related costs incurred, net of probable insurance recoveries. Recorded expenses consisted primari ly of payments to third- party service providers and consultants, including legal fees, as well as settlements of customer claims, negotiated settlements and accruals for certain loss contingencies. Not included in this adjustm ent were costs associated with enhancements to our cybersecurity program. (4) Measured by non-GAAP organic revenue divided by non-GAAP adjusted EBITDA. (5) Measured by non-GAAP organic revenue growth plus non-GAAP adjusted EBITDA margin. See Non-GAAP organic revenue growth table on prior slide. (6) To determine non-GAAP adjusted EBITDA on a constant currency basis, non- GAAP adjusted EBITDA from entities reporting in fore ign currencies were translated to U.S. Dollars using the comparable prior period's quarterly weighted average foreign currency exchange rates. The primary foreign currencies creating the impact are the Austra lian Dollar, British Pound, Canadian Dollar and Euro. (7) Measured by non-GAAP organic revenue growth on constant currency basis plus non- GAAP adjusted EBITDA margin on constant currency basis. See Non-GAAP organic revenue growth table on prior slide.
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Reconciliation of GAAP to Non-GAAP Consolidated Statements of Operations (Unaudited) Three Months Ended December 31, 2025 (in thousands, except per share amounts) GAAP Stock-based compensation expense Amortization of intangibles from business combinations Acquisition and disposition-related costs Security Incident- related costs(1) Non-GAAP adjustments subtotal Non-GAAP Revenue 295,256 — — — — — 295,256 Cost of revenue 122,972 (2,719) (6,761) — — (9,480) 113,492 Gross profit 172,284 2,719 6,761 — — 9,480 181,764 Total gross margin 58.4 % 3.2 % 61.6 % Operating expenses Sales, marketing and customer success 44,769 (3,823) — — — (3,823) 40,946 Research and development 33,778 (6,082) — — — (6,082) 27,696 General and administrative 34,031 (9,207) — (112) (282) (9,601) 24,430 Amortization 564 — (564) — — (564) — Total operating expenses 113,142 (19,112) (564) (112) (282) (20,070) 93,072 Income from operations 59,142 21,831 7,325 112 282 29,550 88,692 Total operating margin 20.0 % 10.0 % 30.0 % Net Income $ 36,689 $ 56,914 Shares used in computing diluted earnings per share 47,960 47,960 Diluted earnings per share $ 0.76 $ 1.19 (1) Includes Security Incident-related costs incurred, net of insurance recoveries. Recorded expenses consisted primarily of pay ments to third-party service providers and consultants, including legal fees, as well as settlements of customer claims, negotiated settlements and accruals for certain loss contingencies. Not included in this adjustment were cos ts associated with enhancements to our cybersecurity program.
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Year Ended December 31, 2025 (in thousands, except per share amounts) GAAP Stock-based compensation expense Amortization of intangibles from business combinations Employee severance Acquisition and disposition-related costs Security Incident- related costs(1) Non-GAAP adjustments subtotal Non-GAAP Revenue 1,128,365 — — — — — — 1,128,365 Cost of revenue 465,073 (11,517) (27,644) (284) — — (39,445) 425,628 Gross profit 663,292 11,517 27,644 284 — — 39,445 702,737 Total Gross Margin 58.8 % 3.5 % 62.3 % Operating expenses Sales, marketing and customer success 177,564 (16,072) — (271) — — (16,343) 161,221 Research and development 138,130 (24,252) — (827) — — (25,079) 113,051 General and administrative 154,610 (41,069) — (523) (25,891) (3,104) (70,587) 84,023 Amortization 2,234 — (2,234) — — — (2,234) — Total operating expenses 472,538 (81,393) (2,234) (1,621) (25,891) (3,104) (114,243) 358,295 Income from operations 190,754 92,910 29,878 1,905 25,891 3,104 153,688 344,442 Total Operating Margin 16.9 % 13.6 % 30.5 % Net Income $ 114,970 $ 215,530 Shares used in computing diluted earnings per share 48,470 48,470 Diluted earnings per share $ 2.37 $ 4.45 (1) Includes Security Incident-related costs incurred, net of probable insurance recoveries. Recorded expenses consisted primari ly of payments to third- party service providers and consultants, including legal fees, as well as settlements of customer claims , negotiated settlements and accruals for certain loss contingencies. Not included in this adjustment were costs associated wit h enhancements to our cybersecurity program. Reconciliation of GAAP to Non-GAAP Consolidated Statements of Operations (Unaudited)
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Three Months Ended December 31, 2024 (in thousands, except per share amounts) GAAP Stock-based compensation expense Amortization of intangibles from business combinations Employee severance Acquisition and disposition-related costs Security Incident- related costs(1) EVERFI impairment and disposition charges Non-GAAP adjustments subtotal Non-GAAP Revenue 302,113 — — — — — — — 302,113 Cost of revenue 139,583 (4,026) (12,988) — — — — (17,014) 122,569 Gross profit 162,530 4,026 12,988 — — — — 17,014 179,544 Total gross margin 53.8 % 5.6 % 59.4 % Operating expenses Sales, marketing and customer success 50,099 (5,158) — — — — — (5,158) 44,941 Research and development 37,635 (7,099) — — — — — (7,099) 30,536 General and administrative 35,881 (12,255) — — (1,201) (918) — (14,374) 21,507 Amortization 817 — (817) — — — — (817) — EVERFI disposition 405,360 — — — — — (405,360) (405,360) — Total operating expenses 529,792 (24,512) (817) — (1,201) (918) (405,360) (432,808) 96,984 Income from operations (367,262) 28,538 13,805 — 1,201 918 405,360 449,822 82,560 Total operating margin (121.6)% 148.9 % 27.3 % Net (loss) income $ (346,364) $ 54,324 Shares used in computing diluted (loss) earnings per share 49,051 50,591 Diluted (loss) earnings per share $ (7.06) $ 1.07 (1) Includes Security Incident-related costs incurred, net of probable insurance recoveries. Recorded expenses consisted primari ly of payments to third- party service providers and consultants, including legal fees, as well as settlements of customer claims , negotiated settlements and accruals for certain loss contingencies. Not included in this adjustment were costs associated with enhancements to our c ybersecurity program. Reconciliation of GAAP to Non-GAAP Consolidated Statements of Operations (Unaudited)
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Year Ended December 31, 2024 (in thousands, except per share amounts) GAAP Stock-based compensation expense Amortization of intangibles from business combinations Employee severance Acquisition and disposition-related costs Security Incident- related costs(1) EVERFI impairment and disposition charges Non-GAAP adjustments subtotal Non-GAAP Revenue 1,154,624 — — — — — — — 1,154,624 Cost of revenue 523,198 (14,092) (56,957) — — — — (71,049) 452,149 Gross profit 631,426 14,092 56,957 — — — — 71,049 702,475 Total Gross Margin 54.7 % 6.1 % 60.8 % Operating expenses Sales, marketing and customer success 197,499 (17,946) — — — — — (17,946) 179,553 Research and development 153,680 (26,488) — — — — — (26,488) 127,192 General and administrative 142,723 (46,442) — — (6,100) (13,700) — (66,242) 76,481 Amortization 3,541 — (3,541) — — — — (3,541) — EVERFI disposition 405,360 — — — — — (405,360) (405,360) — Total operating expenses 902,803 (90,876) (3,541) — (6,100) (13,700) (405,360) (519,577) 383,226 Income from operations (271,377) 104,968 60,498 — 6,100 13,700 405,360 590,626 319,249 Total Operating Margin (23.5)% 51.1 % 27.6 % Net (loss) income $ (299,524) $ 210,014 Shares used in computing diluted (loss) earnings per share 50,561 51,750 Diluted (loss) earnings per share $ (5.92) $ 4.06 (1) Includes Security Incident-related costs incurred, net of probable insurance recoveries. Recorded expenses consisted primari ly of payments to third- party service providers and consultants, including legal fees, as well as settlements of customer claims , negotiated settlements and accruals for certain loss contingencies. Not included in this adjustment were costs associated with enhancements to our c ybersecurity program. Reconciliation of GAAP to Non-GAAP Consolidated Statements of Operations (Unaudited)