The Company’s quarterly income tax provision is calculated using an estimated annual effective income tax rate (“ETR”) based on historical information and forward-looking estimates. The Company’s estimated annual ETR may fluctuate as a result of changes in items such as forecasted annual pre-tax income, changes to forecasted permanent book-to-tax differences (e.g., non-deductible expenses), and applicable statutory tax rates.
Read in the 10-Qopen_in_new
The Company’s ETR for a particular reporting period may fluctuate from prior periods as a result of changes to the valuation allowance for net deferred tax assets, the impact of anticipated tax settlements with federal, state, or foreign tax authorities, the impact of tax law changes, and the impact of certain discrete events. The Company identifies items that are unusual and non-recurring in nature and treats these as discrete events. The tax effect of these discrete events is booked entirely in the quarter in which they occur.
Read in the 10-Qopen_in_new
During the three and nine months ended September 30, 2026, the Company recorded an income tax provision of $12.0 million and $28.8 million, respectively, resulting in ETRs of 43.0% and 45.0%, which include the effects of various permanent book-to-tax adjustments, foreign tax rate differences, U.S. tax on foreign operations, and U.S. state and local taxes. During the three and nine months ended September 30, 2025, the Company recorded an income tax provision of $10.3 million and $23.9 million, respectively, resulting in ETRs of 50.3% and 52.9%, which include the effects of various permanent book-to-tax adjustments, foreign tax rate differences, U.S. tax on foreign operations, and U.S. state and local taxes.
Read in the 10-Qopen_in_new
A valuation allowance has been established against certain U.S. tax loss carryforwards. All other net deferred tax assets have been determined to be more likely than not realizable. The Company regularly reviews its deferred tax assets for recoverability and would establish a valuation allowance if it believed that such assets may not be recovered, taking into consideration historical operating results, expectations of future earnings, changes in its operations, and the expected timing of the reversals of existing temporary differences.
Read in the 10-Qopen_in_new
The Company accounts for uncertainty in income taxes utilizing ASC 740-10, “Income Taxes.” ASC 740-10 clarifies whether or not to recognize assets or liabilities for tax positions taken that may be challenged by a tax authority. It prescribes a recognition threshold and measurement attribute for financial statement disclosure of tax positions taken or expected to be taken. This interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosures. The application of ASC 740-10 requires judgment related to the uncertainty in income taxes and could impact the Company’s effective tax rate.
Read in the 10-Qopen_in_new
As of September 30, 2026, unrecognized stock-based compensation expense was $159.9 million, which is expected to be recognized over a weighted-average period of 1.3 years.
Read in the 10-Qopen_in_new
In March 2021, the Board approved the Company’s 2021 ESPP. Purchases are accomplished through participation in discrete offering periods. The ESPP is available to most of the Company’s employees. The current offering period began on June 1, 2026 and will end on November 30, 2026.
Read in the 10-Qopen_in_new
Under the ESPP, eligible employees are able to acquire shares of the Company’s common stock by accumulating funds through payroll deductions. The purchase price for shares of common stock purchased under the ESPP is 85% of the lesser of the fair market value of the common stock on (i) the first trading day of the applicable offering period and (ii) the last trading day of the applicable offering period. Employees are required to hold shares purchased for a minimum of six months following the purchase date.
Read in the 10-Qopen_in_new
Stock-based compensation expense for the ESPP is recognized on a straight-line basis over the requisite service period of each award. Stock-based compensation expense related to the ESPP totaled $0.1 million and $0.4 million for the three and nine months ended September 30, 2026, respectively. Stock-based compensation expense related to the ESPP totaled $0.2 million and $0.6 million for the three and nine months ended September 30, 2025, respectively.
Read in the 10-Qopen_in_new
In accordance with the Merger Agreement, no new offering period will commence under the ESPP, no individual who was not participating in the ESPP as of the date of the Merger Agreement may commence participation in the ESPP and no current participant may increase his or her rate of payroll contributions under the ESPP. The ESPP will terminate no later than immediately prior to the Effective Time and any ongoing offering period will be shortened so that a purchase date will occur on or prior to the date that is five business days prior to the anticipated closing date of the Merger (or such other date as may be mutually agreed by the Company and Parent). See Note 17 for additional information regarding the ESPP. 13. Stockholders’ Equity
Read in the 10-Qopen_in_new
In connection with the Board’s approval of the February 2026 Repurchase Program, the Board determined to discontinue the previously authorized repurchase plan that was announced on November 6, 2024 (the “November 2024 Repurchase Program”). Accordingly, going forward, any and all repurchases will be made pursuant to the February 2026 Repurchase Program, subject to the restrictions described below. Under the terms of the Merger Agreement, the Company has agreed that, until the earlier of the Effective Time and the termination of the Merger Agreement, it will not repurchase any shares of its capital stock without the prior written consent of Parent (which consent may not be unreasonably withheld, conditioned or delayed), subject to certain limited exceptions, including repurchases or withholding of shares in connection with the exercise, vesting or settlement of outstanding equity awards.
Read in the 10-Qopen_in_new
The components of Accrued expenses recorded on the Condensed Consolidated Balance Sheets were as follows:
Read in the 10-Qopen_in_new
As of (in thousands) September 30, 2026 December 31, 2025 Vendor payments $ 11,589 $ 12,127 Employee commissions and bonuses 30,136 40,898 Payroll and other employee related expense 15,107 14,030 401k and pension expense 750 779 Other taxes 4,988 5,718 Total accrued expenses $ 62,570 $ 73,552
Read in the 10-Qopen_in_new
As of the date hereof, two complaints have been filed by purported Company stockholders related to the Merger (the “Complaints”). As of the date hereof, none of the defendants named in the Complaints has been served. The Complaints assert claims for, among other things, purported disclosure deficiencies in the Definitive Proxy Statement on Schedule 14A (as further described herein). The Complaints seek, among other relief, (i) injunctive relief preventing the closing of the Merger until defendants issue purportedly complete disclosures regarding the Merger, (ii) rescission of the Merger and/or actual and punitive damages in the event the Merger is consummated, (iii) attorneys’ and experts’ fees and expenses, and (iv) such other and further relief that the court may find just and proper. If any additional complaints are filed, the Company and/or Parent will not necessarily disclose such complaints. The Company does not believe it is necessary to record a litigation accrual at this time, as a loss is not determined to be probable.
Read in the 10-Qopen_in_new
The Merger Agreement contains certain customary termination rights for the Company, on the one hand, and Parent, on the other hand, including that, subject to certain limitations, the Company or Parent may terminate the Merger Agreement if (i) the Merger is not consummated by 11:59 p.m. (New York City Time), on May 6, 2027 (the “Initial Termination Date”), which Initial Termination (x) will be automatically extended until 11:59 p.m. (New York City Time) on August 6, 2027 if certain of the conditions to the Merger have been satisfied as of the Initial Termination Date and (y) may be extended by Parent on one occasion if the marketing period has commenced but has not been completed on the third Business day immediately prior to the then-scheduled termination date; and (ii) any order prohibiting the Merger has become final and non-appealable; or (iii) the approval by the Company’s stockholders is not obtained at the special meeting of the Company’s stockholders. Subject to certain specified limitations and requirements set forth in the Merger Agreement, Parent may terminate the Merger Agreement if the Board issues an Adverse Recommendation Change, and the Company may terminate the Merger Agreement if, prior to the receipt of the approval of the Company’s stockholders, the Board authorizes the Company to enter into a definitive agreement providing for a Superior Proposal (as defined in the Merger Agreement) and the Company enters into such definitive agreement, or if Parent fails to consummate the Merger when required to do so under the Merger Agreement. The Company and Parent may also terminate the Merger Agreement by mutual written consent or for any material, uncured breach by the other party. Upon termination of the Merger Agreement under certain specified circumstances, the Company will be required to pay to Parent a termination fee of $60.0 million and under certain other circumstances, Parent will be required to pay the Company a termination fee of $144.0 million.
Read in the 10-Qopen_in_new
The Company held a special meeting of its stockholders (the “Special Meeting”) on October 29, 2026, to vote on, among other things, the adoption of the Merger Agreement. The Company’s stockholders adopted the Merger Agreement at the Special Meeting.
Read in the 10-Qopen_in_new
On October 29, 2026, the Board approved the cessation of payroll contributions under the ESPP effective as of October 30, 2026, and the shortening of the current offering period such that the final purchase date under the ESPP will occur as soon as reasonably practicable following October 30, 2026, and in any event on or prior to the date that is five business days prior to the anticipated closing date of the Merger. On the final purchase date, participants’ accumulated payroll contributions will be used to purchase shares of the Company’s common stock in accordance with the terms of the ESPP, with any remaining amounts refunded to participants. The ESPP will terminate immediately prior to the Effective Time.
Read in the 10-Qopen_in_new
The Merger Agreement contains certain customary termination rights for the Company, on the one hand, and Parent, on the other hand, including that, subject to certain limitations, the Company or Parent may terminate the Merger Agreement if (i) the Merger is not consummated by 11:59 p.m. (New York City Time), on May 6, 2027 (the “Initial Termination Date”), which Initial Termination (x) will be automatically extended until 11:59 p.m. (New York City Time) on August 6, 2027 if certain of the conditions to the Merger have been satisfied as of the Initial Termination Date and (y) may be extended by Parent on one occasion if the marketing period has commenced but has not been completed on the third Business day immediately prior to the then-scheduled termination date; and (ii) any order prohibiting the Merger has become final and non-appealable; or (iii) the approval by the Company’s stockholders is not obtained at the special meeting of the Company’s stockholders. Subject to certain specified limitations and requirements set forth in the Merger Agreement, Parent may terminate the Merger Agreement if the Board issues an Adverse Recommendation Change, and the Company may terminate the Merger Agreement if, prior to the receipt of the approval of the Company’s stockholders, the Board authorizes the Company to enter into a definitive agreement providing for a Superior Proposal (as defined in the Merger Agreement) and the Company enters into such definitive agreement, or if Parent fails to consummate the Merger when required to do so under the Merger Agreement. The Company and Parent may also terminate the Merger Agreement by mutual written consent or for any material, uncured breach by the other party. Upon termination of the Merger Agreement under certain specified circumstances, the Company will be required to pay to Parent a termination fee of $60.0 million and under certain other circumstances, Parent will be required to pay the Company a termination fee of $144.0 million.
Read in the 10-Qopen_in_new
We prepared and filed with the SEC on September 29, 2026, a Definitive Proxy Statement on Schedule 14A, which contains additional information about the Merger Agreement and the Merger.
Read in the 10-Qopen_in_new
Comparison of the Three and Nine Months Ended September 30, 2026 and September 30, 2025
Read in the 10-Qopen_in_new
Legal proceedings
Legal Proceedings Related to the Merger: As of the date hereof, two complaints have been filed by purported Company stockholders related to the Merger (the “Complaints”). As of the date hereof, none of the defendants named in the Complaints has been served. The Complaints assert claims for, among other things, purported disclosure deficiencies in the Definitive Proxy Statement on Schedule 14A (as further described herein). The Complaints seek, among other relief, (i) injunctive relief preventing the closing of the Merger until defendants issue purportedly complete disclosures regarding the Merger, (ii) rescission of the Merger and/or actual and punitive damages in the event the Merger is consummated, (iii) attorneys’ and experts’ fees and expenses, and (iv) such other and further relief that the court may find just and proper. If any additional complaints are filed, the Company and/or Parent will not necessarily disclose such complaints.
Read in the 10-Qopen_in_new
Share sales and buybacks
We did not repurchase any shares of our common stock during the three months ended September 30, 2026. Refer to Note 13 of our Condensed Consolidated Financial Statements for information regarding our authorized repurchase programs.
Read in the 10-Qopen_in_new
Item 6
Schedules or exhibits omitted pursuant to item 601(a)(5) of Regulation S-K, as may be applicable. The Company agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request; provided, however, that the Company may request confidential treatment pursuant to Rule 24b-2 under the Exchange Act, as amended, for any schedule or exhibit so furnished.
Read in the 10-Qopen_in_new
