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10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED September 30, 2024


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 001-36680

HubSpot, Inc.

(Exact name of registrant as specified in its charter)

    Delaware

    20-2632791

    (State or other jurisdiction of
incorporation or organization)

    (I.R.S. Employer
Identification No.)

    Two Canal Park

   

     Cambridge, Massachusetts 02141

   

     (Address of principal executive offices)

   

(888) 482-7768

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	HUBS	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒

There were 51,623,568 shares of the registrant’s Common Stock issued and outstanding as of November 1, 2024.

HUBSPOT, INC.

Table of Contents


Part I — Financial Information

Item 1.	Unaudited Consolidated Financial Statements:
	Unaudited Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023	6
	Unaudited Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2024 and 2023	7
	Unaudited Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2024 and 2023	8
	Unaudited Consolidated Statement of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2024 and 2023	9
	Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023	10
	Notes to Unaudited Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	35
Item 4.	Controls and Procedures	36

Part II — Other Information

Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	63
Item 3.	Default Upon Senior Securities	63
Item 4.	Mine Safety Disclosures	63
Item 5.	Other Information	63
Item 6.	Exhibits	64
Signatures		65
EX-31.1	CERTIFICATION OF THE CEO PURSUANT TO SECTION 302
EX-31.2	CERTIFICATION OF THE CFO PURSUANT TO SECTION 302
EX-32.1	CERTIFICATION OF THE CEO AND CFO PURSUANT TO SECTION 906

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and these statements involve substantial risks and uncertainties. All statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q are forward-looking statements. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

•

our future financial and operational performance, including our expectations regarding our revenue, cost of revenue, gross margin and operating expenses;

•

maintaining and expanding our customer base and increasing our average subscription revenue per customer;

•

the impact of competition in our industry and innovation by our competitors, including as a result of new or better use of evolving artificial intelligence technologies;

•

our anticipated growth and expectations regarding our ability to manage our future growth;

•

our expectations regarding the potential impact of geo-political conflicts, inflationary pressures, foreign currency movement, macroeconomic stability, and catastrophic events, such as the COVID-19 pandemic, on our business, the broader economy, our workforce and operations, the markets in which we and our partners and customers operate, and our ability to forecast future financial performance;

•

our anticipated areas of investments, including sales and marketing, research and development, including with respect to artificial intelligence and machine learning, customer service and support, data center infrastructure and service capabilities, and expectations relating to such investments;

•

our predictions about industry and market trends;

•

our ability to anticipate and address the evolution of technology and the technological needs of our customers, to roll-out upgrades to our existing software platform and to develop new and enhanced applications to meet the needs of our customers, including with respect to artificial intelligence and machine learning;

•

our ability to maintain our brand and inbound marketing, selling and servicing thought leadership position;

•

the impact of our corporate culture and our ability to attract, hire and retain necessary qualified employees to expand our operations;

•

the anticipated effect on our business of litigation to which we are or may become a party;

•

our ability to successfully acquire and integrate companies and assets;

•

our plans regarding declaring or paying cash dividends in the foreseeable future; and

•

our ability to stay abreast of new or modified laws and regulations that currently apply or become applicable to our business both in the United States and internationally.

We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.

You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have

an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law.

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.

In this Quarterly Report on Form 10-Q, the terms “HubSpot,” “we,” “us,” and “our” refer to HubSpot, Inc. and its subsidiaries, unless the context indicates otherwise.

Risk Factor Summary

The risk factors detailed in Item 1A entitled “Risk Factors” in this Quarterly Report on Form 10-Q are the risks that we believe are material to our investors and a reader should carefully consider them. Those risks are not all of the risks we face and other factors not presently known to us or that we currently believe are immaterial may also affect our business if they occur. The following is a summary of the risk factors detailed in Item 1A:

•

We are dependent upon customer renewals, the addition of new customers, increased revenue from existing customers and the continued growth of the market for a customer platform.

•

We face significant competition from both established and new companies offering marketing, sales, customer service, operations and content management software and other related applications, as well as internally developed software, which may harm our ability to add new customers, retain existing customers and grow our business.

•

Failure to effectively develop and expand our marketing, sales, customer service, operations, and content management capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our platform.

•

If we fail to adapt and respond effectively to rapidly changing technology, evolving industry standards and changing customer needs or requirements, our customer platform may become less competitive.

•

Our ability to introduce new products and features, including new products and features that utilize artificial intelligence, is dependent on adequate research and development resources. If we do not adequately fund our research and development efforts, we may not be able to compete effectively and our business and operating results may be harmed.

•

We are exposed to fluctuations in currency exchange rates that could adversely affect our financial results.

•

The current economic downturn may lead to decreased demand for our products and services and otherwise harm our business and results of operations.

•

Interruptions or delays in service from our third-party data center providers could impair our ability to deliver our platform to our customers, resulting in customer dissatisfaction, damage to our reputation, loss of customers, limited growth, and reduction in revenue.

•

If our customer platform has outages or fails due to defects or similar problems, and if we fail to correct any defect or other software problems, we could lose customers, become subject to service performance or warranty claims or incur significant costs.

•

If our or our customers’ security measures are compromised or unauthorized access to data of our customers or their customers is otherwise obtained, our customer platform may be perceived as not being secure, our customers may be harmed and may curtail or cease their use of our platform, our reputation may be damaged and we may incur significant liabilities.

•

We have a history of losses and may not achieve profitability in the future.

•

We may experience quarterly fluctuations in our operating results due to a number of factors, which makes our future results difficult to predict and could cause our operating results to fall below expectations or our guidance.

•

If we do not accurately predict subscription renewal rates or otherwise fail to forecast our revenue accurately, or if we fail to match our expenditures with corresponding revenue, our operating results could be adversely affected.

•

Our ability to raise capital in the future may be limited, and our failure to raise capital when needed could prevent us from growing.

PART I — Financial Information

Item 1. Financial Statements

HubSpot, Inc.

Unaudited Consolidated Balance Sheets

(in thousands)


	September 30,			December 31,
	2024			2023
Assets
Current assets:
Cash and cash equivalents	$	410,060		$	387,987
Short-term investments		1,527,928			1,000,245
Accounts receivable — net of allowance for doubtful accounts of $5,357 at September 30, 2024 and $5,516 at December 31, 2023		278,893			295,303
Deferred commission expense		135,116			99,326
Prepaid expenses and other current assets		86,704			88,679
Total current assets		2,438,701			1,871,540
Long-term investments		165,623			325,703
Property and equipment, net		110,950			103,331
Capitalized software development costs, net		144,829			106,229
Right-of-use assets		225,922			251,071
Deferred commission expense, net of current portion		149,619			122,194
Other assets		112,045			75,247
Intangible assets, net		35,211			42,316
Goodwill		174,158			173,761
Total assets	$	3,557,058		$	3,071,392
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	5,267		$	9,106
Accrued compensation costs		83,602			53,462
Accrued commissions		88,418			78,169
Accrued expenses and other current liabilities		99,358			94,074
Operating lease liabilities		34,630			35,047
Convertible senior notes		457,674			—
Deferred revenue		719,595			672,150
Total current liabilities		1,488,544			942,008
Operating lease liabilities, net of current portion		265,706			296,561
Deferred revenue, net of current portion		4,232			5,810
Other long-term liabilities		46,694			36,459
Convertible senior notes		—			456,206
Total liabilities		1,805,176			1,737,044
Commitments and contingencies (Note 10)
Stockholders’ equity:
Common stock		51			50
Additional paid-in capital		2,550,974			2,136,908
Accumulated other comprehensive income		5,649			1,827
Accumulated deficit		(804,792	)		(804,437	)
Total stockholders’ equity		1,751,882			1,334,348
Total liabilities and stockholders’ equity	$	3,557,058		$	3,071,392

The accompanying notes are an integral part of the consolidated financial statements.

HubSpot, Inc.

Unaudited Consolidated Statements of Operations

(in thousands, except per share data)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2024			2023			2024			2023
Revenues:
Subscription	$	654,738		$	545,832		$	1,882,241		$	1,553,253
Professional services and other		14,983			11,725			42,124			35,062
Total revenue		669,721			557,557			1,924,365			1,588,315
Cost of revenues:
Subscription		85,066			71,895			247,408			210,011
Professional services and other		14,258			13,745			42,520			40,910
Total cost of revenues		99,324			85,640			289,928			250,921
Gross profit		570,397			471,917			1,634,437			1,337,394
Operating expenses:
Research and development		191,185			156,871			565,001			454,511
Sales and marketing		309,928			271,448			904,010			787,423
General and administrative		77,928			61,308			219,380			179,939
Restructuring		987			846			2,847			93,296
Total operating expenses		580,028			490,473			1,691,238			1,515,169
Loss from operations		(9,631	)		(18,556	)		(56,801	)		(177,775	)
Other income (expense):
Interest income		21,780			16,181			60,877			40,195
Interest expense		(936	)		(950	)		(2,772	)		(2,817	)
Other (expense) income		(565	)		(1,664	)		14,381			(2,128	)
Total other income		20,279			13,567			72,486			35,250
Income (loss) before income tax expense		10,648			(4,989	)		15,685			(142,525	)
Income tax (expense) benefit		(2,502	)		1,412			(16,040	)		(9,575	)
Net income (loss)	$	8,146		$	(3,577	)	$	(355	)	$	(152,100	)
Net income (loss) per share, basic	$	0.16		$	(0.07	)	$	(0.01	)	$	(3.06	)
Net income (loss) per share, diluted	$	0.16		$	(0.07	)	$	(0.01	)	$	(3.06	)
Weighted average common shares used in computing basic net income (loss) per share:		51,354			50,051			51,017			49,719
Weighted average common shares used in computing diluted net income (loss) per share:		51,778			50,051			51,017			49,719

The accompanying notes are an integral part of the consolidated financial statements.

HubSpot, Inc.

Unaudited Consolidated Statements of Comprehensive Income (Loss)

(in thousands)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2024			2023			2024			2023
Net income (loss)	$	8,146		$	(3,577	)	$	(355	)	$	(152,100	)
Other comprehensive loss:
Foreign currency translation adjustment		5,349			(2,832	)		2,548			(1,805	)
Changes in unrealized loss on investments, net of income taxes of $0 for the three and nine months ended September 30, 2024 and 2023		5,612			1,839			2,209			5,317
Changes in unrealized loss on cash flow hedges, net of income taxes of $52 and $115 for the three months and nine months ended September 30, 2024, and $0 for the three and nine months ended September 30, 2023		(490	)		—			(935	)		—
Comprehensive income (loss)	$	18,617		$	(4,570	)	$	3,467		$	(148,588	)

The accompanying notes are an integral part of the consolidated financial statements.

HubSpot, Inc.

Unaudited Consolidated Statements of Stockholders' Equity

(in thousands, except per share amounts)


	Common Stock, $0.001 Par Value					Treasury Stock, $0.001 Par Value					Additional Paid-In			Accumulated Other Comprehensive			Accumulated
	Shares			$		Shares			$		Capital			Income (Loss)			Deficit			Total
Balances at December 31, 2023		50,448		$	50		910		$	—	$	2,136,908		$	1,827		$	(804,437	)	$	1,334,348
Issuance of common stock under stock plans		716			1		(5	)		—		44,587			—			—			44,588
Restricted stock units taxes paid in cash		(22	)		—		—			—		(13,491	)		—			—			(13,491	)
Stock-based compensation		—			—		—			—		250,604			—			—			250,604
Other comprehensive loss, net of tax		—			—		—			—		—			(6,649	)		—			(6,649	)
Net loss		—			—		—			—		—			—			(8,501	)		(8,501	)
Balances at June 30, 2024		51,142		$	51		905		$	—	$	2,418,608		$	(4,822	)	$	(812,938	)	$	1,600,899
Issuance of common stock under stock plans		272			—		(2	)		—		1,287			—			—			1,287
Restricted stock units taxes paid in cash		(7	)		—		—			—		(4,238	)		—			—			(4,238	)
Stock-based compensation		—			—		—			—		135,317			—			—			135,317
Other comprehensive loss, net of tax		—			—		—			—		—			10,471			—			10,471
Net income		—			—		—			—		—			—			8,146			8,146
Balances at September 30, 2024		51,407		$	51		903		$	—	$	2,550,974		$	5,649		$	(804,792	)	$	1,751,882


	Common Stock, $0.001 Par Value					Treasury Stock, $0.001 Par Value				Additional Paid-In			Accumulated Other Comprehensive			Accumulated
	Shares			$		Shares		$		Capital			(Loss)			Deficit			Total
Balances at December 31, 2022		49,217		$	49		910	$	—	$	1,647,446		$	(12,890	)	$	(639,927	)	$	994,678
Issuance of common stock under stock plans		635			1		—		—		23,978			—			—			23,979
Restricted stock units taxes paid in cash		(11	)		—		—				(4,102	)		—			—			(4,102	)
Stock-based compensation		—			—		—		—		223,087			—			—			223,087
Other comprehensive income, net of tax		—			—		—		—		—			4,505			—			4,505
Net loss		—			—		—		—		—			—			(148,523	)		(148,523	)
Balances at June 30, 2023		49,841		$	50		910	$	—	$	1,890,409		$	(8,385	)	$	(788,450	)	$	1,093,624
Issuance of common stock under stock plans		280			—		—		—		1,316			—			—			1,316
Restricted stock units taxes paid in cash		(7	)		—		—		—		(3,468	)		—			—			(3,468	)
Stock-based compensation		—			—		—		—		112,482			—			—			112,482
Other comprehensive loss, net of tax		—			—		—		—		—			(993	)		—			(993	)
Net loss		—			—		—		—		—			—			(3,577	)		(3,577	)
Balances at September 30, 2023		50,114		$	50		910	$	—	$	2,000,739		$	(9,378	)	$	(792,027	)	$	1,199,384

The accompanying notes are an integral part of the consolidated financial statements.

HubSpot, Inc.

Unaudited Consolidated Statements of Cash Flows

(in thousands)


	For the Nine Months Ended September 30,
	2024			2023
Operating Activities:
Net loss		(355	)	$	(152,100	)
Adjustments to reconcile net loss to net cash and cash equivalents provided by operating activities, net of acquisitions
Depreciation and amortization		68,447			53,508
Stock-based compensation		370,382			318,545
Restructuring charges		—			64,938
Gain on strategic investments		(18,555	)		—
Impairment of strategic investments		4,094			—
(Benefit from) provision for deferred income taxes		(611	)		4,943
Amortization of debt discount and issuance costs		1,501			1,477
Accretion of bond discount		(36,694	)		(30,213	)
Unrealized currency translation		(3,377	)		(1,380	)
Changes in assets and liabilities
Accounts receivable		13,861			13,178
Prepaid expenses and other assets		(8,606	)		(36,023	)
Deferred commission expense		(61,425	)		(54,335	)
Right-of-use assets		26,461			23,244
Accounts payable		1,449			(5,165	)
Accrued expenses and other liabilities		39,322			34,276
Operating lease liabilities		(32,555	)		(28,933	)
Deferred revenue		41,119			40,699
Net cash and cash equivalents provided by operating activities		404,458			246,659
Investing Activities:
Purchases of investments		(1,486,338	)		(1,137,283	)
Maturities of investments		1,155,555			1,154,784
Sale of investments		1,997			—
Equity method investment		(3,943	)		(2,250	)
Purchases of property and equipment		(25,213	)		(25,031	)
Purchases of strategic investments		(7,623	)		(9,250	)
Capitalization of software development costs		(66,721	)		(49,288	)
Proceeds from net working capital settlement		1,933			—
Net cash and cash equivalents used in investing activities		(430,353	)		(68,318	)
Financing Activities:
Employee taxes paid related to the net share settlement of stock-based awards		(17,777	)		(7,571	)
Proceeds related to the issuance of common stock under stock plans		61,211			37,934
Net cash and cash equivalents provided by financing activities		43,434			30,363
Effect of exchange rate changes on cash, cash equivalents and restricted cash		4,534			(4,181	)
Net increase in cash, cash equivalents and restricted cash		22,073			204,523
Cash, cash equivalents and restricted cash, beginning of period		392,040			334,175
Cash, cash equivalents and restricted cash, end of period	$	414,113		$	538,698
Supplemental cash flow disclosure:
Cash paid for income taxes	$	11,037		$	11,465
Cash paid for interest	$	861		$	861
Right-of-use assets obtained in exchange for operating lease liabilities	$	503		$	4,668
Right-of-use asset reductions related to operating lease terminations	$	—		$	(1,210	)
Non-cash investing and financing activities:
Capital expenditures incurred but not yet paid	$	793		$	7,257
Asset retirement obligations	$	—		$	(201	)

The accompanying notes are an integral part of the consolidated financial statements.

HubSpot, Inc.

Notes to Unaudited Consolidated Financial Statements

1. Organization and Operations

HubSpot, Inc. (the “Company”) provides a customer platform that helps businesses connect and grow better. The Company delivers seamless connection for customer-facing teams with a unified platform that includes three layers: AI-powered engagement hubs, a Smart customer relationship management product (“CRM”), and a connected ecosystem supporting the customer platform with a marketplace of integrations, templates, and expert partners, a community network, and an academy of educational content.

The engagement hubs include Marketing Hub, Sales Hub, Service Hub, Operations Hub, Content Hub and Commerce Hub, as well as other tools and integrations that enable companies to attract, engage, and delight customers throughout the customer experience.

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) applicable to interim periods, under the rules and regulations of the United States Securities and Exchange Commission (“SEC”). In the opinion of management, the Company has prepared the accompanying unaudited consolidated financial statements on a basis substantially consistent with the audited consolidated financial statements of the Company as of and for the year ended December 31, 2023, and these consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results of the interim periods presented. All intercompany balances and transactions have been eliminated in consolidation.

The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any subsequent quarter or for the entire year ending December 31, 2024. The year-end balance sheet data was derived from audited financial statements, but this Form 10-Q does not include all disclosures required under GAAP. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted under the rules and regulations of the SEC.

These interim financial statements should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K filed with the SEC on February 14, 2024. Other than the addition of the accounting policy related to derivatives as described in Note 6, there have been no changes in the Company’s significant accounting policies from those that were disclosed in the Company’s Annual Report on Form 10-K that have had a material impact on our consolidated financial statements and related notes.

Recent Accounting Pronouncements

Recent accounting standards not included below are not expected to have a material impact on our consolidated financial position and results of operations.

In November 2023, the Financial Accounting Standards Board ("FASB") issued guidance enhancing the disclosures of reportable segment information, primarily about significant segment expenses. The new standard will be effective for the Company for the annual periods beginning January 1, 2024, and for interim periods beginning January 1, 2025, with early adoption permitted. Upon adoption, the guidance should be applied retrospectively to all prior periods presented in the financial statements. The adoption of this standard only impacts disclosures and is not expected to have a material impact on the Company's consolidated financial statements.

In December 2023, the FASB issued guidance enhancing income tax disclosure requirements by requiring specified categories and greater disaggregation within the rate reconciliation table, disclosure of income taxes paid by jurisdiction, and providing clarification on uncertain tax positions and related financial statement impacts. The new standard will be effective for the Company on January 1, 2025, with early adoption permitted. The adoption of this standard only impacts disclosures and is not expected to have a material impact on the Company's consolidated financial statements.

In November 2024, the FASB issued guidance that requires the disclosure about specific types of expenses included in the expense captions presented on the face of the income statement. The new standard will be effective for the Company for the annual periods beginning January 1, 2027, and for interim periods beginning January 1, 2028, with early adoption permitted. The Company is currently evaluating the impact of adoption of the standard on its consolidated financial statements.

Revision of Previously Issued Financial Statements

During the financial close process for the first quarter of 2024, the Company identified an error related to the calculation of contractual credits in one of its third-party vendor agreements which impacted the Company's previously issued financial statements

beginning with the quarter ended December 31, 2021. The error impacted subsequent annual and quarterly reporting periods through December 31, 2023. The Company assessed the materiality of the error, in consideration of both quantitative and qualitative factors, and concluded that it is not material to any previously presented interim or annual financial statements. The Company revised its financial statements for the periods impacted. In connection with the revisions, the Company also corrected a previously identified immaterial error related to the recording of certain deferred tax balances.

Changes to the interim consolidated statements of operations for the three and nine months ended September 30, 2023, as a result of the error, were as follows (in thousands, except per share data):


Consolidated Statements of Operations and Comprehensive Loss	For the Three Months Ended September 30, 2023
	As Previously Reported			Adjustments			As Revised
	(in thousands)
Cost of revenues - Subscription	$	73,781		$	(1,886	)	$	71,895
Total cost of revenues		87,526			(1,886	)		85,640
Gross profit		470,031			1,886			471,917
Loss from operations		(20,442	)		1,886			(18,556	)
Loss before income tax expense		(6,875	)		1,886			(4,989	)
Net loss		(5,463	)		1,886			(3,577	)
Comprehensive loss		(6,456	)		1,886			(4,570	)
Net loss per common share, basic and diluted	$	(0.11	)	$	0.04		$	(0.07	)


	For the Nine Months Ended September 30, 2023
	As Previously Reported			Adjustments			As Revised
	(in thousands)
Cost of revenues - Subscription	$	215,944		$	(5,933	)	$	210,011
Total cost of revenues		256,854			(5,933	)		250,921
Gross profit		1,331,461			5,933			1,337,394
Loss from operations		(183,708	)		5,933			(177,775	)
Loss before income tax expense		(148,458	)		5,933			(142,525	)
Income tax expense		(14,233	)		4,658			(9,575	)
Net loss		(162,691	)		10,591			(152,100	)
Comprehensive loss		(159,179	)		10,591			(148,588	)
Net loss per common share, basic and diluted	$	(3.27	)	$	0.22		$	(3.06	)

2. Revenues