Accounting Changes and Error Corrections

9 Months Ended

Sep. 30, 2025

Accounting Changes and Error Corrections [Abstract]


13. 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. This error 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 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.

In evaluating whether our previously issued consolidated financial statements were materially misstated, we considered the guidance in Accounting Standard Codification (ASC) Topic 250, Accounting Changes and Error Corrections, including ASC Topic 250-10-S99-1 (SAB Topic 1.M), Assessing Materiality, and ASC Topic 250-10-S99-2 (SAB Topic 1.N), Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements. We concluded that the valuation allowance error was not material to any of the prior reporting periods impacted and, therefore, amendments of previously filed reports were not required. However, the effect of correcting the valuation allowance error in the current period would have been material to the consolidated financial statements for the three and nine months ended September 30, 2025, and would be material to the forecasted consolidated results of operations for the year ending December 31, 2025. Accordingly, the correction of the valuation allowance error, along with other unrelated 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.

In accordance with Rule 10D-1(b) under the Securities Exchange Act of 1934, we performed a recovery analysis of incentive-based compensation received by our executive officers during the applicable recovery period. Based on this analysis, no clawback of compensation was required by applicable SEC rules.

We have revised certain prior period financial statements to correct for an accounting error related to the valuation allowance as well as other unrelated immaterial errors. See Note 2, Basis of Presentation, for further information. A summary of revisions to our previously reported financial statements is presented below.

Revised consolidated balance sheets


(dollars in millions)	As of December 31, 2023
	As reported		Adjustment		As revised
Prepaid expenses and other current assets	$	99.3	$	0.1	$	99.4
Total current assets	929.8		0.1		929.9
Total assets	2,912.3		0.1		2,912.4
Accrued expenses and other current liabilities	64.3		0.6		64.9
Deferred revenue, current portion	392.5		(1.7)		390.9
Total current liabilities	1,197.1		(1.1)		1,196.1
Total liabilities	2,103.6		(1.1)		2,102.5
Retained earnings	198.9		1.2		200.1
Total stockholders' equity	808.7		1.2		809.9
Total liabilities and stockholders’ equity	2,912.3		0.1		2,912.4

Revised consolidated balance sheets (continued)


(dollars in millions)	As of March 31, 2024						As of June 30, 2024						As of September 30, 2024						As of December 31, 2024
	As reported		Adjustment		As revised		As reported		Adjustment		As revised		As reported		Adjustment		As revised		As reported		Adjustment		As revised
Prepaid expenses and other current assets	$	94.6	$	0.1	$	94.7	$	92.3	$	0.1	$	92.4	$	87.5	$	0.2	$	87.7	$	81.3	$	0.3	$	81.6
Total current assets	577.1		0.1		577.2		1,079.2		0.1		1,079.3		655.6		0.2		655.8		976.3		0.3		976.6
Total assets	2,549.1		0.1		2,549.3		3,042.7		0.1		3,042.9		2,601.0		0.2		2,601.2		2,495.7		0.3		2,496.0
Accrued expenses and other current liabilities	75.3		0.8		76.1		51.7		0.8		52.5		48.7		0.9		49.6		75.5		0.9		76.5
Deferred revenue, current portion	360.4		(1.2)		359.2		427.1		(1.3)		425.8		411.6		(1.1)		410.4		359.5		(1.0)		358.5
Total current liabilities	862.6		(0.4)		862.2		1,349.0		(0.5)		1,348.5		962.2		(0.2)		962.0		1,252.1		—		1,252.1
Deferred tax liability	82.4		0.6		83.0		75.4		0.4		75.8		68.2		—		68.2		9.5		15.5		25.0
Total noncurrent liabilities	1,152.5		0.6		1,153.0		1,116.4		0.4		1,116.9		1,094.4		—		1,094.4		1,101.6		15.5		1,117.1
Total liabilities	2,015.1		0.1		2,015.2		2,465.4		—		2,465.4		2,056.6		(0.2)		2,056.4		2,353.7		15.4		2,369.2
Additional paid-in capital	1,184.3		(3.3)		1,181.1		1,208.6		(2.6)		1,206.1		1,227.2		—		1,227.2		1,291.4		—		1,291.4
Retained earnings (accumulated deficit)	204.1		3.3		207.4		225.9		2.7		228.6		246.5		0.4		246.9		(84.3)		(15.2)		(99.5)
Total stockholders' equity	534.1		—		534.0		577.3		0.1		577.5		544.3		0.4		544.8		142.0		(15.2)		126.8
Total liabilities and stockholders’ equity	2,549.1		0.1		2,549.3		3,042.7		0.1		3,042.9		2,601.0		0.2		2,601.2		2,495.7		0.3		2,496.0


(dollars in millions)	As of March 31, 2025						As of June 30, 2025
	As reported		Adjustment		As revised		As reported		Adjustment		As revised
Accounts receivable, net of allowance	$	78.1	$	—	$	78.1	$	145.2	$	0.8	$	146.0
Prepaid expenses and other current assets	88.2		0.1		88.3		91.2		0.3		91.6
Total current assets	627.5		0.1		627.6		1,154.0		1.1		1,155.1
Total assets	2,102.2		0.1		2,102.4		2,629.4		1.1		2,630.5
Accrued expenses and other current liabilities	45.1		1.0		46.1		40.9		1.2		42.1
Deferred revenue, current portion	326.2		(0.7)		325.6		399.2		(0.4)		398.8
Total current liabilities	863.9		0.4		864.3		1,380.1		0.9		1,380.9
Deferred tax liability	9.6		15.5		25.1		9.8		15.5		25.3
Total noncurrent liabilities	1,205.1		15.5		1,220.6		1,161.4		15.5		1,176.9
Total liabilities	2,069.0		15.8		2,084.9		2,541.4		16.3		2,557.8
Accumulated deficit	(79.4)		(15.7)		(95.1)		(53.5)		(15.2)		(68.7)
Total stockholders' equity	33.2		(15.7)		17.5		88.0		(15.2)		72.7
Total liabilities and stockholders’ equity	2,102.2		0.1		2,102.4		2,629.4		1.1		2,630.5

Revised consolidated statements of comprehensive (loss) income


(dollars in millions, except per share amounts)	Twelve months ended December 31, 2023
	As reported		Adjustment		As revised
Revenue	$	1,105.4	$	1.6	$	1,107.1
Cost of revenue	502.2		5.8		508.0
Gross profit	603.2		(4.2)		599.1
Research and development	153.3		(5.8)		147.5
Total operating expenses	558.5		(5.8)		552.7
Income from operations	44.7		1.6		46.4
Income before provision for income taxes	17.6		1.6		19.3
Income tax provision	15.8		0.5		16.3
Net income	1.8		1.2		3.0
Earnings per share
Basic	0.03		0.03		0.06
Diluted	0.03		0.03		0.06
Comprehensive (loss)	(8.8)		1.2		(7.6)


(dollars in millions, except per share amounts)	Three months ended March 31, 2024						Three months ended June 30, 2024						Three months ended September 30, 2024
	As reported		Adjustment		As revised		As reported		Adjustment		As revised		As reported		Adjustment		As revised
Revenue	$	279.3	$	(0.7)	$	278.6	$	287.3	$	0.1	$	287.3	$	286.7	$	(0.1)	$	286.6
Cost of revenue	126.2		1.7		127.9		124.7		1.7		126.4		127.5		1.8		129.3
Gross profit	153.0		(2.3)		150.7		162.6		(1.7)		160.9		159.2		(1.9)		157.3
Sales, marketing and customer success	50.9		(0.5)		50.4		47.1		0.1		47.2		49.5		0.4		49.8
Research and development	42.8		(2.1)		40.7		39.1		(1.7)		37.4		39.4		(1.5)		37.9
General and administrative	47.8		(2.4)		45.4		33.4		0.5		34.0		25.6		1.9		27.5
Total operating expenses	142.3		(5.0)		137.4		120.5		(1.0)		119.5		115.4		0.8		116.2
Income (loss) from operations	10.7		2.6		13.3		42.1		(0.7)		41.4		43.8		(2.7)		41.1
Income (loss) before (benefit) provision for income taxes	3.8		2.6		6.4		29.7		(0.7)		29.0		32.7		(2.7)		30.0
Income tax (benefit) provision	(1.5)		0.6		(0.9)		7.9		(0.1)		7.8		12.1		(0.4)		11.7
Net income (loss)	5.2		2.1		7.3		21.8		(0.6)		21.2		20.5		(2.3)		18.3
Earnings (loss) per share
Basic	0.10		0.04		0.14		0.43		(0.01)		0.42		0.41		(0.05)		0.36
Diluted	0.10		0.04		0.14		0.42		(0.01)		0.41		0.40		(0.05)		0.35
Comprehensive income (loss)	8.2		2.1		10.2		20.8		(0.6)		20.2		13.5		(2.3)		11.2

Revised consolidated statements of comprehensive (loss) income (continued)


(dollars in millions, except per share amounts)	Six months ended June 30, 2024						Nine months ended September 30, 2024						Twelve months ended December 31, 2024
	As reported		Adjustment		As revised		As reported		Adjustment		As revised		As reported		Adjustment		As revised
Revenue	$	566.5	$	(0.6)	$	565.9	$	853.3	$	(0.8)	$	852.5	$	1,155.5	$	(0.9)	$	1,154.6
Cost of revenue	250.9		3.4		254.3		378.4		5.2		383.6		516.3		6.9		523.2
Gross profit	315.6		(4.0)		311.6		474.8		(5.9)		468.9		639.2		(7.8)		631.4
Sales, marketing and customer success	97.9		(0.4)		97.6		147.4		—		147.4		197.5		—		197.5
Research and development	81.9		(3.7)		78.1		121.2		(5.2)		116.0		160.6		(6.9)		153.7
General and administrative	81.2		(1.9)		79.3		106.8		—		106.8		142.7		—		142.7
Total operating expenses	262.8		(6.0)		256.9		378.2		(5.2)		373.0		909.7		(6.9)		902.8
Income (loss) from operations	52.8		1.9		54.7		96.6		(0.8)		95.9		(270.5)		(0.9)		(271.4)
Income (loss) before provision (benefit) for income taxes	33.5		1.9		35.4		66.2		(0.8)		65.4		(311.6)		(0.9)		(312.5)
Income tax provision (benefit)	6.4		0.4		6.9		18.6		—		18.6		(28.4)		15.5		(12.9)
Net income (loss)	27.1		1.5		28.6		47.6		(0.8)		46.8		(283.2)		(16.4)		(299.5)
Earnings (loss) per share
Basic	0.53		0.03		0.56		0.93		(0.01)		0.92		(5.60)		(0.32)		(5.92)
Diluted	0.52		0.03		0.55		0.91		(0.01)		0.90		(5.60)		(0.32)		(5.92)
Comprehensive income (loss)	28.9		1.5		30.4		42.4		(0.8)		41.6		(286.4)		(16.4)		(302.7)


(dollars in millions, except per share amounts)	Three months ended March 31, 2025						Three months ended June 30, 2025						Six months ended June 30, 2025
	As reported		Adjustment		As revised		As reported		Adjustment		As revised		As reported		Adjustment		As revised
Revenue	$	270.7	$	(0.7)	$	269.9	$	281.4	$	0.6	$	282.0	$	552.0	$	(0.1)	$	552.0

Gross profit	155.8		(0.7)		155.1		167.7		0.6		168.4		323.6		(0.1)		323.5




Income from operations	20.4		(0.7)		19.7		56.7		0.6		57.3		77.1		(0.1)		77.0
Income before provision for income taxes	5.6		(0.7)		4.9		39.4		0.6		40.0		45.0		(0.1)		44.9
Income tax provision	0.7		(0.2)		0.5		13.4		0.2		13.6		14.1		—		14.1
Net income	4.9		(0.5)		4.3		26.0		0.5		26.5		30.8		(0.1)		30.8
Earnings per share
Basic	0.10		(0.01)		0.09		0.54		0.01		0.55		0.64		—		0.64
Diluted	0.10		(0.01)		0.09		0.54		0.01		0.55		0.63		—		0.63
Comprehensive income	1.4		(0.5)		0.9		28.0		0.5		28.5		29.4		(0.1)		29.4

Revised consolidated statements of cash flows


(dollars in millions)	Twelve months ended December 31, 2023
	As reported		Adjustment		As revised
Cash flows from operating activities
Net income	$	1.8	$	1.2	$	3.0
Changes in operating assets and liabilities, net of acquisition and disposal of businesses:
Prepaid expenses and other assets	16.9		(0.1)		16.7
Accrued expenses and other liabilities	(30.3)		0.6		(29.7)
Deferred revenue	8.9		(1.7)		7.2
Net cash provided by operating activities	199.6		—		199.6


(dollars in millions)	Three months ended March 31, 2024						Six months ended June 30, 2024						Nine months ended September 30, 2024						Twelve months ended December 31, 2024
	As reported		Adjustment		As revised		As reported		Adjustment		As revised		As reported		Adjustment		As revised		As reported		Adjustment		As revised
Cash flows from operating activities
Net income (loss)	$	5.2	$	2.1	$	7.3	$	27.1	$	1.5	$	28.6	$	47.6	$	(0.8)	$	46.8	$	(283.2)	$	(16.4)	$	(299.5)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Stock-based compensation expense	33.6		(3.3)		30.3		57.9		(2.6)		55.3		76.4		—		76.4		105.0		—		105.0
Deferred taxes	(12.2)		0.6		(11.7)		(18.8)		0.4		(18.4)		(21.8)		—		(21.8)		(85.0)		15.5		(69.5)
Changes in operating assets and liabilities, net of acquisition and disposal of businesses:
Prepaid expenses and other assets	(3.3)		—		(3.2)		(2.5)		—		(2.5)		(0.9)		(0.1)		(0.9)		3.3		(0.1)		3.2
Trade accounts payable	23.1		0.7		23.8		19.1		—		19.1		18.3		—		18.3		28.3		—		28.3
Accrued expenses and other liabilities	7.9		0.2		8.1		(13.6)		0.2		(13.4)		(16.4)		0.3		(16.1)		(13.3)		0.3		(13.0)
Deferred revenue	(25.8)		0.5		(25.4)		36.2		0.4		36.6		19.0		0.5		19.5		(2.5)		0.7		(1.9)
Net cash provided by operating activities	64.6		0.7		65.3		118.4		—		118.4		222.4		—		222.4		296.0		—		296.0
Cash flows from investing activities
Purchase of property and equipment	(0.3)		(0.7)		(1.0)		(6.1)		—		(6.1)		(7.2)		—		(7.2)		(7.4)		—		(7.4)
Net cash used in investing activities	(14.5)		(0.7)		(15.2)		(40.7)		—		(40.7)		(56.3)		—		(56.3)		(73.4)		—		(73.4)

Revised consolidated statements of cash flows (continued)


(dollars in millions)	Three months ended March 31, 2025						Six months ended June 30, 2025
	As reported		Adjustment		As revised		As reported		Adjustment		As revised
Cash flows from operating activities
Net income	$	4.9	$	(0.5)	$	4.3	$	30.8	$	(0.1)	$	30.8
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses and sales returns	0.8		—		0.8		3.8		(0.8)		3.0
Changes in operating assets and liabilities, net of acquisition and disposal of businesses:
Prepaid expenses and other assets	(5.3)		0.1		(5.2)		(8.9)		—		(9.0)
Accrued expenses and other liabilities	(8.2)		0.1		(8.1)		(10.2)		0.3		(9.9)
Deferred revenue	(29.8)		0.3		(29.4)		38.2		0.6		38.8
Net cash provided by operating activities	1.4		—		1.4		68.3		—		68.3

Revised consolidated statements of stockholders' equity


	Retained earnings (accumulated deficit)						Total stockholders' equity
(dollars in millions)	As reported		Adjustment		As revised		As reported		Adjustment		As revised
Balance at December 31, 2022	$	197.0	$	—	$	197.0	$	744.0	$	—	$	744.0
Net income	1.8		1.2		3.0		1.8		1.2		3.0
Balance at December 31, 2023	198.9		1.2		200.1		808.7		1.2		809.9
Net (loss)	(283.2)		(16.4)		(299.5)		(283.2)		(16.4)		(299.5)
Balance at December 31, 2024	(84.3)		(15.2)		(99.5)		142.0		(15.2)		126.8

Revised consolidated statements of stockholders' equity (continued)


	Additional paid-in capital						Retained earnings (accumulated deficit)						Total stockholders' equity
(dollars in millions)	As reported		Adjustment		As revised		As reported		Adjustment		As revised		As reported		Adjustment		As revised
Balance at December 31, 2023	$	1,203.0	$	—	$	1,203.0	$	198.9	$	1.2	$	200.1	$	808.7	$	1.2	$	809.9
Net income	—		—		—		5.2		2.1		7.3		5.2		2.1		7.3
Stock-based compensation	33.6		(3.3)		30.3		—		—		—		33.6		(3.3)		30.3
Balance at March 31, 2024	1,184.3		(3.3)		1,181.1		204.1		3.3		207.4		534.1		—		534.0
Net income	—		—		—		21.8		(0.6)		21.2		21.8		(0.6)		21.2
Stock-based compensation	24.3		0.7		25.0		—		—		—		24.3		0.7		25.0
Balance at June 30, 2024	1,208.6		(2.6)		1,206.1		225.9		2.7		228.6		577.3		0.1		577.5
Net income	—		—		—		20.5		(2.3)		18.3		20.5		(2.3)		18.3
Stock-based compensation	18.6		2.6		21.1		—		—		—		18.6		2.6		21.1
Balance at September 30, 2024	1,227.2		—		1,227.2		246.5		0.4		246.9		544.3		0.4		544.8


Balance at December 31, 2024	1,291.4		—		1,291.4		(84.3)		(15.2)		(99.5)		142.0		(15.2)		126.8
Net income	—		—		—		4.9		(0.5)		4.3		4.9		(0.5)		4.3
Balance at March 31, 2025	1,319.6		—		1,319.6		(79.4)		(15.7)		(95.1)		33.2		(15.7)		17.5
Net income	—		—		—		26.0		0.5		26.5		26.0		0.5		26.5
Balance at June 30, 2025	1,347.2		—		1,347.2		(53.5)		(15.2)		(68.7)		88.0		(15.2)		72.7