AGYS 10-K & 10-Q changes, risk factors and insider trading

Our business, markets, growth prospects and business model may be impacted or altered by decreases in travel and leisure activities resulting from weak economic conditions, increases in energy prices and changes in tariffs and currency values, political instability, heightened travel security measures, travel advisories, disruptions in air travel, and concerns over disease,disease and/or pandemics, violence, war, terrorism, and/or terrorism. Our business, markets, growth prospects and business model could be materially impacted or altered as a result of adverse changes in travel and leisure activities due to a pandemic or other wide-ranging and sustained events.

Our business is characterized by rapid and continual changes in technology and evolving industry standards. We believe that in order to remain competitive in the future we need to continue to develop new products, product upgrades and services, requiring the investment of significant financial resources. If we fail to accurately anticipate our customer’scustomers' needs and technological trends, or are otherwise unable to complete the development of a product or product upgrade on a timely basis, we will be unable to introduce new products or product upgrades into the market that are demanded by our customers and prospective customers, and our business and operating results would be materially and adversely affected.

Our product development activities also could be impacted by competition from products with new features or new technologies, such as artificial intelligence (AI), and/or machine learning, that might render our existing products less competitive or obsolete. We may not respond effectively to the technological requirements of the changing market.

We compete for customers based on several factors, including price. The competitive markets in which we operate may require us to reduce our prices in order to contend with the pricing models of our competitors. If our competitors discount certain products or services, we may have to lower prices on certain products or services in order to attract or retain customers. Any such price modifications would likely reduce margins and could have adverse effects on our profitability. In addition, if we fail to reduce our prices in order to contend with the pricing models of our competitors, we may not be able to retain customers or grow our business, which could adversely affect our revenues and liquidity. Additionally, as we incorporate AI into our products, we must appropriately adjust our pricing to accommodate the rapidly rising cost of AI. If we do not increase our product price successfully, we may not be able to recover our costs, which could adversely affect our revenues and profitability.

We rely on a concentrated number of suppliers for the majority of our hardware and for certain software and related service needs. We do not have long term agreements with many of these suppliers. If we can no longer obtain these hardware, software or services from our major suppliers due to mergers, acquisitions or consolidation within the marketplace, material changes in their partner programs, their refusal to continue to supply to us on reasonable terms or at all, and we cannot find suitable replacement suppliers, it may have a material adverse impact on our future operating results and gross margins. Additionally, as we increase our reliance on AI to run our business, we could be vulnerable to price increases from AI providers. If we cannot pass those costs on to our customers, we could face pressure on our gross margins.

We have international offices in Canada, the United Kingdom, Dubai, Australia, China, Hong Kong, Malaysia, the Philippines, Singapore, and India. We have committed resources to maintaining and further expanding, where appropriate, our sales offices and sales and support channels in key international markets. However, our efforts may not be successful. International sales are subject to many risks and difficulties, including but not limited to those arising from the following: building and maintaining a competitive presence in new markets; staffing and managing foreign operations; complying with a variety of foreign laws, rules and regulations; producing localized versions of our products; developing integrations between our products and other locally-used products; import and export restrictions and tariffs; enforcing contracts and collecting accounts receivable; unexpected changes in regulatory requirements; reduced protection for intellectual property rights in some countries; potential adverse tax treatment; language and cultural barriers; foreign currency fluctuations; inflation and any regulatory actions to counter inflation; and political and economic instability abroad.

Despite testing prior to the release and throughout the lifecycle of a product or service, our on-premise and cloud-based solutions sometimes contain coding or configuration errors that can impact their function, performance and security, and result in other negative consequences. The detection and correction of any errors in released on-premise or cloud-based solutions can be time consuming and costly. Errors in our on-premise and cloud-based solutions could affect their ability to properly function, integrate or operate with other software or hardware offerings, could result in service interruptions, delays or outages, could create security vulnerabilities in our products or services, could delay the development or release of new products or services or new versions of products or services, and could adversely affect market acceptance of our products or services. ThisDue includesto third-partythe softwarecentralized productsnature of SaaS delivery models, any service interruption or servicesoutage incorporatedmay intohave ouran own. If we experience any of these errors, or if there are delays in releasing our on-premise or cloud-based solutions or new versions of these offerings, our sales could be affectedimmediate and revenueswidespread couldimpact decline.across Customersmultiple relycustomers on our on-premise and cloud-based solutions and related services to run their businesses, and errors in our solutions and related services could expose us to product liability, performance and warranty claims as well as significant harm to our brand and reputation,simultaneously, which could impactresult ourin futurecustomer sales.dissatisfaction, financial obligations under service level agreements, and reputational harm.

Our business and operations are subject to a variety of regulatory requirements in the countries in which we operate or in which we offer our solutions, including, among other things, with respect to data privacy, artificial intelligence (“AI”),AI, information security, trade compliance, tax, and labor matters.

We may become subject to regulation and disclosure requirements related to environmental, social and governance (“ESG”) matters. In addition, stakeholders, including investors, customers, suppliers and employees, may pressure us to make commitments on these matters that may be difficult to manage or achieve. If we fail to make or meet such commitments, we may be subject to criticism, reputational harm or legal liability.

The number and scale of cyberattacks have continued to increase and the methods and techniques used by threat actors, including sophisticated “supply-chain” attacks, continue to evolve at a rapid pace. As a result, we may be unable to identify current attacks, anticipate future attacks or implement adequate security measures. We have experienced attacks in the past, which did not have any material adverse effects on our business, financial condition or results of operations. However, we may also experience security breaches that maycould remain undetected for an extended period and, therefore, have a greater impact on our systems, our products, the proprietary data contained therein, our customers, and ultimately, our business.

We maintain relationships with third parties to provide certain services to us or to our customers, including cloud hosting and other cloud-based services. We makehave contractual obligations to customers based on these relationships and, in some cases, also entrust these providers with both our own sensitive data as well as the sensitive data of our customers (that may include sensitive guest data). If these third-party providers do not perform as expected or encounter service disruptions, cyber-attacks, data breaches, or other difficulties, we or our customers may be materially and adversely affected, including, among other things, by facing increased costs, potential liability to customers, guests, or other third parties, regulatory issues, and reputational harm. If it is necessary to migrate these services to other providers because of poor performance, security considerations, or other financial or operational factors, it could result in service disruptions to our customers and significant time, expense, or exposure to us, any of which could materially adversely impact our business.

In addition, many of our projects are critical to the operations of our customers’ businesses. While our contracts typically include provisions designed to limit our exposure to legal claims relating to our products and services, these provisions may not adequately protect us or may not be enforceable in all cases. The general liability insurance coverage that we maintain, including coverage for errors and omissions, is subject to important exclusions and limitations. We cannot be certain that this coverage will continue to be available on reasonable terms or will be available in sufficient amounts to cover one or more large claims, or that the insurer will not disclaimdeny coverage as to any future claim. A successful assertion of one or more large claims against us that exceeds our available insurance coverage or changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could adversely affect our profitability.

During the year ended March 31, 2025,2026, the trading price of our common stock ranged from a low close of $71.45$65.76 to a high close of $141.74.$141.12. The market price for our common stock couldhas experienced and may continue to be subject to wide fluctuations in response to many risk factors listed in this section, and others beyond our control. Factors affectingthat have affected and may continue to affect the trading price of our common stock may include, but are not limited to:

our operating results failing to meet the expectationexpectations of securities analysts or investors in a particular period or failure of securities analysts to publish reports about us or our business;

any major change in our board or management; and general economic and political conditions such as recessions, interest rates, tariffs, fuel prices, international currency fluctuations, supply chain interruptions, global or regional pandemics, and acts of war or terrorism.

We have significant deferred tax assets which can provide us with significant future cash tax savings if we are able to use them, including significant net operating losses. However, the extent to which we will be able to use these net operating losses may be impacted, restricted, or eliminated by a number of factors, including changes in tax rates, laws or regulations, and whether we generate sufficient future taxable income. To the extent that we are unable to utilize our net operating losses or other losses, our results of operations, liquidity, and financial condition could be materially adversely impacted. When we cease to have net operating losses available to us in a particular tax jurisdiction, either through their expiration, disallowance, or utilization, our cash tax liability will increase in that jurisdiction.

Our certificate of incorporation and bylaws and the Delaware General Corporation Law (the “DGCL”), contain provisions that could make it more difficult for a third party to acquire us, even if doing so might be beneficial to our stockholders. These provisions include:

We prepare our Consolidated Financial Statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”). Our application of new accounting principles can have a significant impact on our operating results including previously reported results subject to any retroactive treatment. In addition, new accounting principles may require significant changes to certain aspects of our business including how we operate and contract with our customers and suppliers. In order to manage such changes, we may incur significant costs to implement and maintain potentially extensive updates to our accounting systems and internal control over financial reporting that could negatively impact our financial condition and the results of our operations. Furthermore, difficulties or delays in applying new accounting principles could result in a failure to meet our financial reporting obligations.

In “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”), management explains the general financial condition and results of operations for Agilysys and subsidiaries including:

On August 20, 2024, we acquired Book4Time Parent, Inc. (“Book4Time”), a global leader in spa management SaaS software, as further described in Note 16, Business Combinations,Combination, to our condensed consolidated financial statements included under Part II, Item 8 of this annual report. The cash consideration for the acquisition totaled $145.8 million of net cash, partially funded by a credit agreement (the “Credit Agreement”) we entered into on August 16, 2024 (the “Credit Agreement Closing Date”), with the lenders party thereto and Bank of America, N.A., as lender and administrative agent, as further described in Note 15, Debt, to our condensed consolidated financial statements included under Part II, Item 8 of this annual report.

Agilysys has been a leader in hospitality software for more than 45 years, delivering innovative state-of-the-art cloud-native SaaS and on-premise guest-centricsolutions technologyfor solutions.hotels, Customersmulti-amenity aroundresorts, thecruise worldlines, include:casinos, brandedcorporate foodservice management, restaurants, universities, stadiums, and independenthealthcare hotels;facilities. multi-amenityThe resort properties; casinos; property, hotel and resort management companies; cruise lines; corporate dining providers; higher education campus dining providers; food service management companies; hospitals; lifestyle communities; senior living facilities; stadiums; and theme parks. Agilysys offers the most comprehensiveCompany’s software solutions in the industry, includinginclude point-of-sale (POS), property management (PMS), inventory and procurement, payments, and related applications,applications tothat manage and enhance the entire guest journey. Agilysys is also known for its world classworld-class customer-centric service. SomeMany of the largesttop hospitality companies around the world use Agilysys solutions to help improve guest loyalty, drive revenue growthgrowth, and increase operational efficiencies. The Company has one reportable segment serving the global hospitality industry. Agilysys operates across the Americas, Europe, the Middle East, Africa, Asia-Pacific, and India with headquarters located in Alpharetta, GA.

The following table presents the percentage relationship of our Consolidated StatementStatements of Operations line items to our consolidated net revenues for the periods presented:

Legal settlements.settlements, net. Legal settlementssettlements, net increased $0.8 million during fiscal 2025 compared to fiscal 2024 due to an increase in certain customer settlements.

The Credit Agreement provides for a revolving credit facility in the initial maximum aggregate principal amount of $75.0 million (the “Revolving Facility”). The Revolving Facility includes the ability for the Company to request an increase toin the commitments under the Revolving Facility by an additional aggregate principal amount of up to $25.0 million. On the Credit Agreement Closing Date, we drew $50.0 million on the Revolving Facility, the proceeds of which we used to fund the Business Combination described below. We disclose our Revolving Facility in Note 15, Debt, to our Consolidated Financial Statements included under Item 8 of this Annual Report.

Cash FlowFlows

Cash flowflows provided by operating activities. Cash flows provided by operating activities were $55.1$70.0 million in fiscal 2025.2026 Thedue provisionto cash-based earnings of cash$77.8 wasmillion dueand primarilya to our net incomedecrease of $23.2 million adjusted for $26.2 million in non-cash expense including depreciation, amortization, share-based compensation, deferred income taxes and an increase of $5.7$7.8 million from the changes in operating assets and liabilities.liabilities during fiscal 2026. Cash-based earnings is net income of $38.8 million and $39.0 million in non-cash adjustments including depreciation, amortization, share-based compensation, and deferred income taxes.

Cash flows provided by operating activities were $48.2$55.1 million in fiscal 2024.2025. The provision of cash was due primarily to ourcash-based net incomeearnings of $86.2$49.4 million adjusted for $48.0 million in non-cash expense including depreciation, amortization, share-based compensation, deferred income taxes, gains on asset disposals and an increase of $10.0$5.7 million from the changes in operating assets and liabilities. Cash-based earnings is net income of $23.2 million and $26.2 million in non-cash adjustments including depreciation, amortization, share-based compensation, and deferred income taxes.

Cash flows provided by operating activities were $34.5$48.2 million in fiscal 2023.2024. The provision of cash was due primarily to ourcash-based net incomeearnings of $14.6$38.2 million adjusted for $16.5 million in non-cash expense including depreciation, amortization, and share-based compensation and an increase of $3.4$10.0 million from the changes in operating assets and liabilities. Cash-based earnings is net income of $86.2 million and $48.0 million in non-cash adjustments including depreciation, amortization, share-based compensation, and deferred income taxes.

Cash flow used in investing activities. Cash flows used in investing activities in fiscal 2025 were $148.6 million consisting primarily of $145.8 million in cash paid for business combinations, net of cash acquired, and property and equipment purchases, which decreased during the year ended March 31, 2025 compared to the year ended March 31, 2024 due primarily to leasehold improvements and equipment purchases for our new office lease in Chennai, India during the year ended March 31,fiscal 2024.

Cash flowflows provided by (used in) financing activities. Cash flows providedused byin financing activities in fiscal 20252026 were $21.9$24.5 million due primarily to $49.6 million in debt proceeds, net of issuance costs, debt repayments of $26.0$24.0 million, proceeds from Employee Stock Purchase Plan purchases of $1.0$1.5 million, and share repurchases of $2.7$2.0 million to satisfy employee tax withholding on share-based compensation.

Agilysys invests in corporate-owned life insurance policies for certain former executives, for which some are endorsement split-dollar life insurance arrangements. We entered into agreements with each of the former executives, whereby we must maintain the life insurance policy for a specified amount and split a portion of the policy benefits with their designated beneficiary. Our investment in these corporate-owned life insurance policies were recorded at their cash surrender value, which approximates fair value at the balance sheet date. InOn the Consolidated Balance Sheets at the balance sheet date, the cash surrender value of $1.1 million for the remaining policies were held in “Other non-current assets,” and the present value of future proceeds owed to those executives’ designated beneficiary of $0.1 million, which approximates fair value, were recorded within “Other non-current liabilities” in the Consolidated Balance Sheets at the balance sheet date.

Revenue recognition. Our customary business practice is to enter into legally enforceable written contracts with our customers. The majority of our contracts are governed by a master service or universal agreement between us and the customer, which sets forth the general terms and conditions of any individual contract between the parties, which is then supplemented by a customer order to specify the different goods and services, the associated prices, and any additional terms for an individual contract. Performance obligations specific to each individual contract are defined within the terms of each order. Each performance obligation is identified based on the goods and services that will be transferred to our customer that are both capable of being distinct and are distinct within the context of the contract. The transaction price is determined based on the consideration to which we will be entitled and expect to receive in exchange for transferring goods or services to the customer. Typically, our contracts do not provide our customer with any right of return or refund; we do not constrain the contract price as it is probable that there will not be a significant revenue reversal due to a return or refund.

We recognize revenue for hardware sales when the product is shipped to the customer and when obligations that affect the customer’s final acceptance of the arrangement have been fulfilled. Hardware is purchased from suppliers and provided to the end-user customers via drop-ship or from inventory. We are responsible for negotiating the price both with the supplier and the customer, payment to the supplier, establishing payment terms and product returns with the customer, and bearingwe bear the credit risk if the customer does not pay for the goods. As the principal contact with the customer, we recognize revenue and cost of goods sold when we ship or are notified by the supplier that the product has been shipped. In certain limited instances, as shipping terms dictate, revenue is recognized upon receipt at the point of destination or upon installation at the customer site.

Our subscription service revenue is comprised of fees for contracts that provide customers a right to access our software for a subscribed period. We do not provide the customer the contractual right to license the software at any time outside of the subscription period under these contracts. Our subscription service revenue is primarily based on rates per location, including rates per points of sale and per room. We recognize certain subscription service revenue on a per-transaction basis. The customer can only benefit from the software and software maintenance when provided the right to access the software. Accordingly, each of the rights to access the software, the maintenance services, any hosting services, and any transaction-based services are not considered a distinct performance obligation in the context of the contract and should be combined into a single performance obligation to be recognized over the contract period. The Company recognizes subscription revenue over amonthly one-month periodperiods based on the typical monthlyservice, invoicing and renewal cycle in accordance with our customer agreement terms.

Professional services revenuesrevenue primarily consistconsists of fees for consulting, implementation, installation, integration and training and are generally recognized over time as the customer simultaneously receives and consumes the benefits of the professional services as the services are being performed. Certain professional development services are recognized upon delivery of the developed solutions to the customer. At the end of each reporting period, we recognize the most likely amount of variable consideration on any contract holdbacks we expect to bill for development services delivered. Professional services can be provided by internal or external providers, do not significantly affect the customer’s ability to access or use other provided goods or services, and provide a measure of benefit beyond that of other promised goods or services in the contract. As a result, professional services are considered distinct in the context of the contract and represent a separate performance obligation. Professional services that are billed on a time and materials basis are recognized over time as the services are performed. For contracts billed on a fixed price basis, revenue is recognized over time using an input method based on labor hours expended to date relative to the total labor hours expected to be required to satisfy the related performance obligation.

During the three and nine months ended DecemberJune 31,30, 2025,2026, global macroeconomic and geopolitical conditions were, and continue to be, shaped by a number of factors, including, but not limited to, changes in global tariff and other trade policies, new and existing domestic and foreign laws and regulations, armed conflicts, foreign currency fluctuations, labor shortages and natural disasters. We believe such factors are negatively influencing customer spending and provider pricing decisions resulting in decreased demand, increased costs, and reduced margins with varying impact across our markets.

Agilysys has been a leader in hospitality software for more than 45 years, delivering innovative cloud-native SaaS and on-premise solutions for hotels, multi-amenity resorts, cruise lines, casinos, corporate foodservice management, restaurants, universities, stadiums, and healthcare facilities. The Company’s software solutions include point-of-sale (POS), property management (PMS), inventory and procurement, payments, and related applications that manage and enhance the entire guest journey. Agilysys is also is known for its world-class customer-centric service. Many of the top hospitality companies around the world use Agilysys solutions to improve guest loyalty, drive revenue growth, and increase operational efficiencies.

As required by the SEC, we separately present revenue earned as products revenue, subscription and maintenance revenue, professional services revenue or professional servicesproducts revenue in our condensed consolidated statements of operations. In addition to the SEC requirements, we may, at times, also refer to revenue as defined below. The terminology, definitions, and applications of terms we use to describe our revenue may be different from those used by other companies and caution should be used when comparing these financial measures to those of other companies. We use the following terms to describe revenue:

ThirdFirst Fiscal Quarter 2026 Compared to ThirdFirst Fiscal Quarter 2025

The following table presents our consolidated revenue and operating results for the three months ended DecemberJune 31,30, 20252026 and 20242025:

Net revenue. Total net revenue increased $10.8$11.0 million, or 15.6%,14.3%, during the thirdfirst quarter of fiscal 20262027 compared to the thirdfirst quarter of fiscal 2025. Products revenue remained flat. The recent trend of declining products revenue due to increasing customer preference for subscription-based versus perpetual software licenses, was offset during the quarter by higher fulfillment of perpetual software licenses compared to the previous three quarters.2026. Subscription and maintenance revenue increased $7.6$9.1 million, or 17.2%,18.8%, compared to the thirdfirst quarter of fiscal 20252026 driven by continued growth in subscription-based service revenue. Total subscription revenue increased 23.1%26.1% during the thirdfirst quarter of fiscal 20262027 compared to the thirdfirst quarter of fiscal 2025.2026. Professional services revenue increased $3.2$1.5 million, or 22.0%,8.3%, due to higher service activity as our new and existing customers continue implementing technology to improve their operations. Products revenue increased $0.4 million, or 3.9%, due to the fulfillment of perpetual software licenses compared to the prior year quarter.

Gross profit and gross profit margin. Our total gross profit increased $6.4$8.4 million, or 14.6%,17.7%, during the thirdfirst quarter of fiscal 20262027 and total gross profit margin decreasedincreased from 63.0%61.7% to 62.5%63.5% compared to the thirdfirst quarter of fiscal 20252026 driven by changes in the composition of revenue by category. Subscription and maintenance gross profit increased $6.4 million, or 16.5%, and gross profit margin decreased from 79.5% to 78.0% as certain variable costs increased ahead of related subscription revenue. Professional services gross profit increased $2.0 million, or 41.5%, and gross profit margin increased from 27.1% to 35.4% reflecting improved utilization rates from efficiency gains on multi-solution implementations. Products gross profit decreased $0.4 million, or 7.6%,1.2%, and products gross profit margin decreased from 48.0%37.7% to 44.3%35.9% due to the composition of hardware and proprietary software products delivered. Subscription and maintenance gross profit increased $6.3 million, or 17.9%, and gross profit margin increased from 78.5% to 79.0% as subscription revenue increases outpaced associated variable costs as a result of certain cost control measures. Professional services gross profit increased $0.5 million, or 13.6%, and gross profit margin decreased from 26.7% to 24.9% reflecting lower utilization rates due to continued hiring and training of new staff.

Operating expenses, excluding other (gains) charges, net, and legal settlements, net, increased $5.2$3.4 million, or 14.3%,8.0%, during the thirdfirst quarter of fiscal 20262027 compared with the thirdfirst quarter of fiscal 2025.2026.

Product development. Product development increased $4.0$2.8 million, or 26.4%,16.0%, in the thirdfirst quarter of fiscal 2027 compared with the first quarter of fiscal 2026 compared with the third quarter of fiscal 2025 due to hiring and increased salary, incentive and employee benefits rates across our development teams.

Sales and marketing. Sales and marketing increased $0.1$0.4 million, or 1.0%,3.4%, in the thirdfirst quarter of fiscal 2027 compared with the first quarter of fiscal 2026 compared with the third quarter of fiscal 2025 due to hiring and increased compensation rates across our sales teams offset by timing of marketing event and trade show activity.

General and administrative. General and administrative increased $1.3$0.4 million, or 13.6%,3.3%, in the thirdfirst quarter of fiscal 2027 compared with the first quarter of fiscal 2026 compared with the third quarter of fiscal 2025 due to increased compensation rates across our administrative teams.

Depreciation of fixed assets. Depreciation of fixed assets remained consistent with the thirdfirst quarter of fiscal 2025.2026.

Amortization of internal-use software and intangibles. Amortization of internal-use software and intangibles decreasedremained $0.2consistent million inwith the thirdfirst quarter of fiscal 2026 compared with the third quarter of fiscal 2025 as a result of changes to the purchase price allocation during the measurement period impacting certain intangible assets resulting from the Book4Time acquisition.2026.

Other income (expense), net

Other income,income (expense), net. Other income,income (expense), net, mainly consists of movement of foreign currencies against the U.S. dollar.

For the three months ended DecemberJune 31,30, 2025 and 2024,2026, income tax provision and the effective tax rate were primarily driven by the tax effects of share-based compensation, GILTINet Controlled Foreign Corporation Tested Income (NCTI) and the mix of earnings in the U.S. and India.

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) is a stimulus bill which was in response to economic consequences of the COVID-19 pandemic. The CARES Act provided an employee retention credit, which is a refundable tax credit against certain employment taxes. During the three months ended DecemberJune 31,30, 2025 and 2024,2025, we recorded $3.0$0.2 million and $0.5 million, respectively, of employee retention credits under the CARES Act including associated interest received or expected to be received in cash as other (gains) charges, net, in the condensed consolidated statements of operations. As of DecemberJune 31,30, 2025,2026, we have recorded $3.0 million of employee retention credits receivable as other current assets on the condensed consolidated balance sheet.

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law. The legislation includes several changes to federal tax law that generally allow for more favorable deductibility of certain business expenses beginning in the Company’s fiscal 2026, including the restoration of immediate expensing of domestic research and development expenditures, reinstatement of accelerated fixed asset depreciation and modifications to the international tax framework. We applied the relevant changes to the Company’s income tax provision for the period ended DecemberJune 31,30, 2025,2026, which did not materially impact the Company’s consolidated tax position. We expect future cash tax savings resulting from the full expensing of U.S. research and development expenses under the OBBBA. OBBBA also amended and extended to calendar year 2030 the statute of limitations for employee retention credits under the CARES Act for certain employment taxes incurred during the three months ended September 30, 2021.

Our cash requirements consist primarily of working capital needs, capital expenditures, and payments of contractual obligations. Our contractual obligations consist primarily of operating leases for office space and a credit agreement (the “Credit Agreement”) we entered into on August 16, 2024, with the lenders party thereto and Bank of America, N.A., as lender and administrative agent, as further described in Note 11, Debt, to our Creditcondensed Agreement.consolidated financial statements included under Part I, Item 1 of this quarterly report.

The Credit Agreement provides for a revolving credit facility in the initial maximum aggregate principal amount of $75 million (the “Revolving Facility”). The Revolving Facility includes the ability for the Company to request an increase to the commitments under the Revolving Facility by an additional aggregate principal amount of up to $25 million. OnThere theis Credit Agreement Closing Date, we drew $50 million on the Revolving Facility, the proceeds of which we used to fund the Business Combination described below. We have repaid the entireno principal balance outstanding as of JulyJune 2025.30, 2026.

We have expanded our business in part by investing in strategic growth through business acquisitions. We have used cash as consideration in our business acquisitions, including $145.8 million of net cash,acquisitions partially funded by our Revolving Facility, during the nine months ended December 31, 2024, to complete the acquisition of Book4Time.Facility. We completed no business combinations during the ninethree months ended DecemberJune 31,30, 2025.2026 and 2025, respectively.

At DecemberJune 31,30, 2025,2026, 100% of our cash and cash equivalents, of which 92%90% were located in the United States, were deposited in bank accounts or invested in highly liquid investments including commercial paper and treasury bills with original maturity from the date of acquisition of three months or less and money market funds. We determine the fair value of commercial paper using significant other observable inputs based on pricing from independent sources that use quoted prices in active markets for identical assets or other observable inputs including benchmark yields and interest rates. We believe credit risk is limited with respect to our cash and cash equivalents.

We believe that cash flow from operating activities, cash on hand of $81.5$123.7 million as of DecemberJune 31,30, 2025,2026, and access to capital markets will provide adequate funds to meet our short- and long-term liquidity requirements.

Cash flow provided by (used in) operating activities. Due to cash-based earnings of $55.9$18.7 million and a decrease of $21.7$10.9 million due to changes in net operating assets and liabilities. Cash-based earnings is net income of $26.5$9.0 million and $29.4$9.7 million of non-cash adjustments.

Cash flow (used in) provided by financing activities. Consists of $24.0 million in debt repayments during the nine months ended December 31, 2025, proceeds from Employee Stock Purchase Plan purchases, and the repurchase of shares to satisfy employee tax withholding on share-based compensation.compensation and, for the three months ended June 30, 2025, $12.0 million in debt repayments.

As of DecemberJune 31,30, 2025,2026, there were no significant changes to our contractual obligations as presented in our Annual Report for the year ended March 31, 2025.2026.

This Quarterly Report and other publicly available documents, including the documents incorporated herein and therein by reference, contain, and our officers and representatives may from time to time make, "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: "anticipate," "intend," "plan," "goal," "seek," "believe," "project," “outlook,” “forecast,” “preliminary,” "estimate," "expect," "strategy," "future," "likely," "may," “would,” “could,” "should," "will" and similar references to future periods. These statements are not guarantees of future performance and involve risks, uncertainties, and assumptions that are difficult to predict. These statements are based on management’s current expectations, intentions, or beliefs and are subject to a number of factors, assumptions, and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Factors that could cause or contribute to such differences or that might otherwise impact the business include the risk factors set forth in Item 1A in Part II of this Quarterly Report and Item IA1A of our Annual Report for the fiscal year ended March 31, 2025.2026. We undertake no obligation to update any such factor or to publicly announce the results of any revisions to any forward-looking statements contained herein whether as a result of new information, future events, or otherwise.