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

Our industry is intensely competitive, and many of our competitors have greater financial, technical and sales and marketing resources and largerlarger, installedestablished customer bases, which could enable them to compete more effectively than we do.

The data protection and cyber resiliencyresilience market is intensely competitive, highly fragmented and characterized by rapidly changingevolving technology and evolvingindustry standards, changing customer requirementsrequirements, and frequent new product introductions. CompetitorsOur competitors vary in size and in the scope and breadth of the products and services offered.they Weoffer. mustOur continuallyprimary innovatecompetitors toinclude maintainRubrik, Cohesity, and Veeam, and we also face competition from large technology companies, cloud providers, service providers, and other current or emerging market participants that offer products or services that compete with aspects of our marketportfolio position.or that customers may view as substitutes for our offerings.

We rely on indirect sales channels, such as value-addedincluding resellers, systems integrators, corporate resellers, distributors, OEMs, and marketplaces for the distribution of our solutions,marketplaces, and the failure of these channels to effectively sell our solutions could haveadversely a material adverse effect onaffect our revenues and results of operations.business.

We rely significantly on ourindirect value-addedsales resellers, systems integrators and corporate resellers, which we collectively refer to as resellers,channels for the marketing and distribution of our products and services.services, Resellersincluding arevalue-added resellers, system integrators, corporate resellers, distributors, OEMs, and marketplace partners. Our resellers represent our most significant distribution channel. However, ourOur agreements with resellers are generally not exclusive,non-exclusive, are generallytypically renewablerenewed annually, typically do not contain minimum sales requirementscommitments, andand, in many casescases, may be terminated by either party without cause. ManyIn addition, many of our resellers carrysell data protection and cyber resilience solutions that compete with ours.our Theseofferings. As a result, these resellers may giveallocate agreater higher priority to other softwareresources or SaaSprioritize applications,competing includingproducts thoseor of our competitors,services, or may notdiscontinue continueor toreduce carrypromotion dataof protection and cyber resilienceour solutions. If a significant number of resellers or certain resellers were to discontinue or materially reduce thetheir sales ofefforts on our behalf, prioritize competing products, or werefail to promotecomply with the terms of their agreements, our competitors’business, products in lieuresults of ouroperations, own,financial itcondition, and reputation could havebe aadversely materialaffected. adverseIn effectaddition, onif we fail to effectively manage our futurereseller revenues.relationships, Eventsincluding conflicts among resellers or occurrencesperformance of this nature could seriously harmexpectations, our sales and operating results of operations. If we fail to manage our resellers successfully, there may be conflicts between resellers or they could fail to perform as we anticipate, including required compliance with the terms and conditions of our agreement, either of which could reduce our sales or impact our reputation in the market. In addition, we expect that a portion of our sales growth will depend upon our ability to identify and attract new resellers. Our competitors also use reseller arrangements and may be more successful in attracting resellers and could enter into exclusive relationships with resellers that make it difficult to expand our reseller network. Any failure on our part to maintain and/or expand our network of resellers could impair our ability to grow revenues in the future.suffer.

Further, we have a non-exclusive distribution agreementagreements with Arrowcertain pursuantpartners tothat whichmanage Arrow’sportions primaryof roleour isreseller to enable a more efficientecosystem and effectivefacilitate broader distribution channel forof our solutionssolutions. byOne managingsuch ourpartner resellers("Partner and leveraging their own industry experience. ArrowA") accounted for approximately 35%,32%, 36%35% and 37%36% of our total revenues for the years ended March 31, 2025,2026, 2025 and 2024, respectively. Separately, a second partner ("Partner B") accounted for approximately 11% of our total revenues for the year ended March 31, 2026. Total revenues for the years ended March 31, 2025 and 2024 andfor 2023,Partner respectively.B were less than 10%. If Arrowany of these partners were to discontinue or materially reduce thetheir sales of our solutionssolutions, terminate their agreements with us, or ifexperience ouroperational agreementor withfinancial Arrow was terminated,difficulties, and if we were unable to takeeffectively backreplace thethem or assume management of the affected distribution activities, our resellerbusiness, channelresults orof findoperations, anotherand distributorfinancial to replace Arrow, therecondition could be amaterially materialadversely adverse effect on our future business.affected.

Our OEMsOEM partners sell and integrate our solutions whichas representspart of their offerings and represent a material portionsource of our revenues. WeThese have no control over the shipping dates or volumes of systems these OEMs sell and theypartners have no obligation to sell systems incorporating our solutions.solutions, Theymeet alsominimum havesales no obligation to recommendtargets, or offerrecommend our solutions exclusivelyon oran atexclusive all. They have no minimum sales requirementsbasis, and canmay terminate ourtheir relationshiprelationships with us at any time. TheseWe OEMsdo alsonot couldcontrol the timing, shipping expectations, volume, or pricing of systems sold by OEM partners, and in some cases OEM partners may choose to develop theiror ownpromote data protection and cyber resiliencecompeting solutions. OurIn addition, if one OEM partnerspartner compete with one another. If one ofperceives our OEM partners views our arrangementrelationship with another OEM as competing,competitive, it may decide to stopreduce doingor businesscease its relationship with us. Any material decreasedecline in the volume ofOEM‑related sales generated by OEMs could haveadversely a material adverse effect onaffect our revenuesbusiness, andrevenues, results of operationsoperations, inand thefinancial future.condition.

Volatility in the global economyeconomy, including changes in trade policy or tariffs, could adversely impactaffect our continued growth, results of operationsoperations, financial condition, and our ability to forecast future business.performance.

We encountercan experience long and unpredictable sales and implementation cycles, particularly forwith ourlarge largerenterprise and government customers, which could haveadversely an adverse effect onaffect the size, timing and predictability of our revenues.

We depend on growth in the data protection and cyber resiliency market, and lacka of growthslowdown or contraction in this market could have a material adverse effect on our salesbusiness, results of operations, and financial condition.

Demand for data protection and cyber resilience solutions is linkedinfluenced toby factors such as growth in the amount of data generated and stored,backed up, demand for data retention and management (whether as a result of regulatory requirements or otherwise) demand for and adoption of new backup devices and networking technologies, and ability to respond to and recover from cyber incidents in a secure environment. Because our solutions are concentrated within the data protection and cyber resiliency market, if the demand for backup and data protection solutions devices declines, our sales,business, profitabilityresults of operations, and financial condition wouldcould be materially adversely affected.

Our SaaS offerings require costlysubstantial and continualongoing infrastructure investmentsinvestments, and if these investments do not yield the expected return, our businessbusiness, results of operations, and financial performancecondition mightcould be adversely impacted.affected.

We generate revenues through subscription arrangements, which includes both term-based software licenses and SaaS, perpetual software licenses, customer support contracts and other services. A significant portion of our total revenues comes from subscription arrangements, whichdelivered includeon-premise both sales ofthrough term-based licenseslicensing, andor through cloud-based SaaS offerings. These arrangements are economically and contractually similar, as customers generally receive access to our software for a specified term under binding agreements. We are focused on these types of recurring revenue arrangements.

We expect our subscription arrangements will continue to generate revenues from the renewals of term-based licenses and SaaS offerings sold in prior years. Any of our pricing models (capacity, instanceinstance-based, based,consumption, etc.) can be sold via a subscription arrangement, either through term-based licensing or hostedvia services.cloud-based SaaS offerings. In term-based license arrangements, the customer has the right to use the software over a designated period of time. The capacity of the license is fixed and the customer has made an unconditional commitment to pay. Software revenue in these arrangements is generally recognized when the software is delivered.delivered Inor SaaSmade offerings,available customersfor use hosted software over the contract period without taking possession of the software.download. Revenue related to our SaaS offerings is generally recognized ratably over the contract period.period or, in consumption arrangements, as the solutions are consumed.

Our customer support revenue includes support services for term‑based subscription customers and support contracts tiedfor toperpetual ourlicense software products.customers. Customer support includes software updates on a when-and-if-available basis, telephone support, integrated web-based support, and other premium support offerings, for both term-based software license and perpetual software license arrangements.offerings. We sell our customer support contracts as a percentage of net software.software purchases. Customer support revenue is recognized ratably over the term of the customer support agreement, which is typically one year on our perpetual licenses.licenses Theand over the term ofon our subscriptionterm-based arrangementslicenses, iswhich typically range from one to three years but can range between one and five years.

Our other services revenue consists primarily of professional service offerings, including consultation, assessment and design, installation services, and customer education. RevenuesRevenue from other services can vary period over period based on the timing services are delivered and are typically recognized as the services are performed.

Our cost of revenues isconsist asof followsthe following:

•Cost of Subscription Revenue, consists primarily of thethird-party costhosting offees related to our SaaS offerings, third-party royaltiesroyalty costs on certain offerings, and other costs such as media, manuals, translation and distribution costs, and third-party hosting fees related to our SaaS offeringscosts;

•Cost of Perpetual License Revenue, consists primarily of the cost of third-party royaltiesroyalty costs on certain offerings;

•Cost of Customer Support Revenue, consists primarily of salary and other employee benefitcompensation costs in providing customer support services; and

•Cost of Other Services Revenue, consists primarily of salary and other employee benefitcompensation costs in providing professional services.

Our operating expenses areconsist asof followsthe following:

•Sales and Marketing, consists primarily of salaries, commissions,commissions and bonuses, employee benefits, stock-based compensation and other direct and indirect business expenses, including travel and related expenses, sales promotion expenses, public relations expenses and costs for marketing materials and other marketing events (such as trade shows and advertising);

•Research and Development, consists primarily of salaries, bonuses, stock-based compensation, benefits and related expenses for research and development personnel associated with the development of new, or the modification of existing, offerings and applications; further, costs related to certain contract labor and consulting fees and expenses associated with the design, certification and testing of our offerings are included; as well as legal costs associated with the patent registration of such offerings and applications;

•General and Administrative, consists primarily of salaries, bonuses, stock-based compensation and benefits for our executive,executives, accounting,finance, human resources, legal,legal informationand compliance, business technology and other administrative personnel. Also included in this category are other general corporate expenses, such as outside legallegal, consulting and accounting services, compliance costs and insurance; and

•Depreciation and Amortization, consists of depreciation expense for fixed assets, computer equipment we use for information services and in our development and test labs, and amortization of intangible assets. In fiscal year 2023, depreciation for our owned corporate headquarters was also included.

Sales outside the United States were 46%47% of our total revenues for fiscal 2025,2026, 46% for fiscal 2025 and 48% for fiscal 2024 and 47% for fiscal 2023.2024. The income statements of our non-U.S. operations are translated into U.S. dollars at the average exchange rates for each applicable month in a period. To the extent the U.S. dollar weakens against foreign currencies, the translation of these foreign currency denominatedcurrency-denominated transactions generally results in increased revenue,revenues, operating expenses and income from operations for our non-U.S. operations. Similarly, our revenue,revenues, operating expenses and netincome incomefrom operations will generally decrease for our non-U.S. operations if the U.S. dollar strengthens against foreign currencies.

Using the average foreign currency exchange rates from fiscal 2024,2025, our fiscal 20252026 total revenues would have been higherlower by $4.2$29.5 million andmillion, our cost of revenues would have been higherlower by $1.0$1.2 million, respectively.and Ourour operating expenses would not have been materiallylower impactedby for$7.7 fiscal 2025.million.

In presenting our consolidated financial statements in conformity with U.S. generally accepted accounting principles ("GAAP"),GAAP, we are required to make estimates and judgments that affect the amounts reported therein. Some of the estimates and assumptions we are required to make relate to matters that are inherently uncertain as they pertain to future events. We base these estimates on historical experience and on various other assumptions that we believe to be reasonable and appropriate. Actual results may differ significantly from these estimates. To the extent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows may be affected.

In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application, while in other cases, significant judgment is required in selecting among available alternative accounting standards that allow different accounting treatment for similar transactions. We consider these policies requiring significant management judgment to be critical accounting policies. The following is a description of these critical accounting policies.policies:

We account for revenue in accordance with Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers. Our revenue recognition policies require us to make significant judgments and estimates. In applying ourthese revenue recognition policy,policies, we must determine which portions of our revenue are recognized currently (generally software-related revenue) and which portions must be deferred and recognized in future periods (generally SaaS, customer support, and other services revenuerevenues). We analyze various factors including, but not limited to, the standalone selling priceprices of undeliveredperformance services when sold on a stand-alone basis,obligations, our pricing policies, the creditworthiness of our customers, and contractual terms and conditionsconditions, including whether extended payment terms give rise to a significant financing component, in helping us to makemaking such judgments about revenue recognition. As most of our transactions go through indirect distribution channels, we are also required to make judgments around principal versus agent considerations and judgments arounddetermining which party is our customer in multi-party arrangements. Changes in judgment on any of these factors could materially impact the timing and amount of revenue recognized in a given period. We recognize revenue net of sales tax.

Most of our contracts with customers contain multiple performance obligations. For these contracts, we evaluate and account for individual performance obligations separately if they are determined to be distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. Standalone selling prices offor software licenses (both perpetualterm-based and term-basedperpetual) are typically estimated using the residual approach. Standalone selling prices for SaaS, customer support contracts, and other services are typically estimated based on observable transactions when these services are sold on a standalone basis. We recognize revenue net of sales taxes. For additional information on how we recognize revenue, see Note 3 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Under ASC 740, Income Taxes, deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts. Valuation allowances are established when, in our judgment, it is more likely than not that deferred tax assets will not be realized. In assessing the need for a valuation allowance, we consider all available objective and verifiable evidence both positive and negative, including historical levels of pre-tax income or loss, both on a consolidated basis and tax reporting entity basis, legislative developments, expectations and risks associated with estimates of future pre-tax income, and prudent and feasible tax planning strategies. At March 31, 20252026 and 2024,2025, we recorded a valuation allowance, which reflects uncertainties around our ability to generate sufficient income in certain jurisdictions to utilize our net deferred tax assets. At March 31, 2023, we had recorded a full valuation allowance as the realizability of the Company's gross deferred tax assets was not more likely than not. We believe, in the current period, it is more likely than not that we will have sufficient taxable income to realize our remaining deferred tax assets.

Goodwill representsis recorded when the residual purchase priceconsideration paid infor aan businessacquisition combination afterexceeds the fair value of allnet identifiedtangible and intangible assets andacquired. liabilitiesThe havecarrying beenvalue recorded. We testof goodwill is tested for impairment aton leastan annually,annual basis on January 1, or more frequentlyoften if eventsan event occurs or changes in circumstances indicatechange that would more likely than not reduce the carryingfair value of goodwillits maycarrying notamount. beFor recoverable.the Wepurpose of impairment testing, we have onea single reporting unit. Goodwill is tested at this reporting unit level. We have elected to first assess the qualitative factors to determine whether it is more likely than not that the fair value of our single reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative goodwill impairment test. This may involve making judgments about a variety of factors that impact fair value, including business plans, anticipated future cash flows, economic projections, and other market data. If the qualitative assessment indicates that it is more likely than not that the fair value is less than the carrying amount, a quantitative goodwill impairment test is performed. If the fair value exceeds the carrying amount, no further analysis is required; otherwise, an impairment loss is recognized for the amount by which the carrying value of goodwill exceeds its fair value. Because there are inherent uncertainties involved in these factors, significant differences between these estimates and actual results could result in future impairment charges and could materially impact our future financial results. No impairment of goodwill has been identified during the years presented.

–Perpetual license revenue decreased $2.0$12.4 million, or 3%22% year over year.year, Ourconsistent preferredwith routeour tocontinued marketshift istoward ledsubscription-based by the sale of term-based licenses.offerings. Perpetual licenses are generally only sold in certainlimited verticals and geographies.geographies, Perpetualand we expect perpetual license revenue accountedto for 6% of total revenues in fiscal 2025 comparedcontinue to 7%decline inover fiscal 2024.time.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “"Item 1A. Risk Factors”" of our Annual Report on Form 10-K for the fiscal year ended March 31, 2025,2026, which are incorporated herein by reference, and could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. If any of the risks actually occur, our business, financial conditionscondition, or results of operations could be negatively affected. In that case, the trading price of our stock could decline, and our stockholders may lose part or all of their investment. There have been no material changes from the risk factors set forth in Part I, "Item 1A. Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended March 31, 2026.

We generate revenues through subscription arrangements, which includes bothinclude term-based softwarelicenses, licensesterm-based support, and SaaS, as well as perpetual software licenses, customerperpetual support contractssupport, and other services. A significant portion of our total revenues comes from subscription arrangements, whether deployed on-premise (term-based license) or delivered via hosted cloud SaaS solutions.arrangements. These arrangements are economically and contractually similar, as customers generally receive access to our software for a specified term under binding agreements. We are focused on these types of recurring revenue arrangements.

We expect our subscription arrangements will continue to generate revenues from the renewals of term-based licenseslicenses, term-based support, and SaaS offerings sold in prior years. Any of our pricing models (capacity, instanceinstance-based, based,consumption, etc.) can be sold either through term-based licensing or via hosted cloudcloud-based SaaS solutions.offerings. In term-based license arrangements, software revenue is generally recognized when the software is delivered.delivered Revenueor made available for download. Term-based support revenue and revenue related to our SaaS isofferings are generally recognized ratably over the contract period.period or, in consumption arrangements, as the solutions are consumed.

Our customerterm-based support revenueand includesperpetual support revenues include support services for term‑based license customers and support contracts tiedfor toperpetual ourlicense softwarecustomers, products.respectively. CustomerThese support includesofferings include software updates on a when-and-if-available basis, telephone support, integrated web-based support, and other premium support offerings, for both term-based software license and perpetual software license arrangements.offerings. We sell our customer support contracts as a percentage of net software purchases. Customer supportSupport revenue is recognized ratably over the term of the customer support agreement, which is typically one year on our perpetual licenses and over the term on our term-based licenses, which typically range from one to three years.years for term-based support and one year for perpetual support.

Our other services revenue consists primarily of professional service offerings, including consultation, assessment and design, installation services, and customer education. Revenues fromrelated to other services can vary period over period based on the timing services are delivered and are typically recognized as the services are performed.

We sell to end-user customers both directly through our sales force and indirectly through our global network of value-added reseller partners, systems integrators, corporate resellers, original equipment manufacturers, and marketplaces. RevenueRevenues generated through indirect distribution channels accounted for approximately 90% of our total revenues in both the ninethree months ended DecemberJune 31,30, 20252026 and 2024.2025. Revenue generated through direct distribution channels accounted for approximately 10% of our total revenues in both the ninethree months ended DecemberJune 31,30, 20252026 and 2024.2025. Deals initiated by our direct sales force are sometimes transacted through indirect channels based on end-user customer requirements, which are not always in our control and can cause this overall percentage split to vary from period-to-period.period to period. As such, there may be fluctuations in the dollars and percentage of revenuerevenues generated through our distribution channels from time-to-time.time to time. We believe that the growth of our revenue,revenues, derived from both our indirect channel partners and direct sales force, are key attributes to our long-term growth strategy. We intend to continue to invest in both our channel relationships and direct sales force in the future, but we continue to expect more revenuerevenues to be generated through indirect distribution channels over the long term. The failure of our indirect distribution channels or our direct sales force to effectively sell our products and services could have a material adverse effect on our revenues and results of operations.

We have non-exclusive distribution agreements with certain partners who enable a more efficient and effective distribution channel for our solutions by managing our resellers and leveraging their own industry experience. For the ninethree months ended DecemberJune 31,30, 20252026 and 2024,2025, Partner A accounted for approximately 32% and 35%33% of our total revenues, respectively. Separately, Partner B accounted for approximately 11% of our total revenues for both the ninethree months ended DecemberJune 31,30, 2026 and 2025. TotalIf revenuesany for the nine months ended December 31, 2024 for Partner B were less than 10%. Ifof these partners were to discontinue or materially reduce thetheir sales of our solutionssolutions, orterminate if ourtheir agreements with themus, wereor terminated,experience operational or financial difficulties, and if we were unable to takeeffectively backreplace thethem or assume management of the affected distribution activities, our resellerbusiness, channelrevenues, orand findresults anotherof distributor to replace them, thereoperations could be amaterially materialadversely adverse effect on our future business.affected.

We monitor the following key performance indicators to help evaluate the state of our business. We believe the below metrics are material to investors to understand the growth and performance of our business, as they help normalize certain variable factors. Metrics such as Subscription Annualized Recurring Revenue ("Subscription ARR"), SubscriptionSaaS ARR, SaaS ARR and SaaSSubscription Net Dollar Retention Rate ("SaaSSubscription NRR") provide a consistent view of our recurring revenue profile. ARR, Subscription ARR,ARR and SaaS ARR exclude non-recurring elements and reflect the annualized value of active contracts, while SaaSSubscription NRR measures net expansion within our existing Subscription customer base. Together, we believe these metrics offer meaningful insight into the health and trajectory of our recurring revenue streams. Total ARR, which also included the annualized maintenance contract on perpetual licenses, is no longer disclosed.

Subscription ARR includesrepresents onlythe annualized value of all active contracts as of the end of a reporting period attributable to term‑based licenses, maintenance and support services associated with term licenses,license SaaS,arrangements, SaaS subscriptions, and utilityconsumption‑based arrangements, calculated usingby dividing the sametotal methodologyactive contract value by the number of days in the contract term and multiplying the result by 365. For consumption-based arrangements on a pay as ARR.you go model without a fixed commitment, the applicable ARR is calculated by annualizing the revenue contractually expected to be received in a given month based on actual monthly usage from a prior month. We believe Subscription ARR provides meaningfuluseful insight into the growth of our subscription-based offerings and reflects both new customer acquisition and expansion within our existing customer base. As our most strategically significant and rapidly expanding revenue streams, our subscription arrangements are central to our long-term growth strategy and operational focus.

SaaS ARR includes only the cloud-hosted portion of Subscription ARR and is calculated using the same methodology. SaaS ARR reflects the annualized value of active SaaS contracts and weWe believe this metric provides insight into customer adoption trends and expansion within our cloud-based offerings. As SaaS continues to represent a growing share of our total revenue, we view this metric as a key indicator of our ability to meet the evolving needs of our customer base. Continued adoption and conversion to SaaS arrangements are critical to sustaining our long-term growth and aligning with customer preferences for cloud-delivered solutions.

Subscription NRR includes all contracts attributable to term-based licenses, maintenance and support services associated with term license arrangements, SaaS subscriptions, and consumption-based arrangements. Subscription NRR is calculated as the percentage of SaaSSubscription ARR retained from existing customers at the start of an annual period after accounting for expansion revenue, churn, and downgrades.downgrades, It is presentedmeasured on aan constant currencyannualized basis using exchangethe ratestrailing asfour ofquarter March 31, 2025.average. Acquired SaaSSubscription ARR is excluded until the acquisition is fully integrated, which we generally expect to occur twelve months from the closingclose date. We believe our SaaSSubscription Net Dollar Retention RateNRR offers valuable insight into the year-over-year expansion of our existing customer base, reflecting both increased utilization of current products and services as well as the adoption of additional offerings.

These metrics are non-GAAP measures and do not have standardized definitions under GAAP. As such, they may not be comparable to similarly titled measures used by other companies and should be considered as a supplement to, and not as a substitute for, financial information prepared in accordance with GAAP. Management uses these metrics to assess the health of our recurring revenue base and to inform strategic decision-making. These metrics should be viewed independently of GAAP revenue, deferred revenuerevenue, and unbilled revenue and are not intended to be combined with or to replace those items. ARR is not a forecast of future revenue.

Sales outside the United States were 47%45% and 44% of our total revenues for both the ninethree months ended DecemberJune 31,30, 20252026 and 2024.2025, respectively. The income statements of our non-U.S. operations are translated into U.S. dollars at the average exchange rates for each applicable month in a period. To the extent the U.S. dollar weakens against foreign currencies, the translation of these foreign currency denominatedcurrency-denominated transactions generally results in increased revenues, operating expensesexpenses, and income from operations for our non-U.S. operations. Similarly, our revenues, operating expensesexpenses, and income from operations will generally decrease for our non-U.S. operations if the U.S. dollar strengthens against foreign currencies.

Using the average foreign currency exchange rates from the three months ended DecemberJune 31,30, 2024,2025, our total revenues would have been lower by $9.5$2.4 million, our cost of revenues would have been lower by $0.3$0.1 millionmillion, and our operating expenses would have been lowerhigher by $2.3$0.9 million from non-U.S. operations for the three months ended DecemberJune 31,30, 2025. Using the average foreign currency exchange rates from the nine months ended December 31, 2024, our total revenues would have been lower by $18.7 million, our cost of revenues would have been lower by $0.7 million and our operating expenses would have been lower by $4.6 million from non-U.S. operations for the nine months ended December 31, 2025.2026.

In addition, we are exposed to risks of foreign currency fluctuation primarily from cash balances, accounts receivablesreceivables, and intercompany accounts denominated in foreign currencies and are subject to the resulting transaction gains and losses, which are recorded as a component of general and administrative expenses. We recognized net foreign currency transaction gains of approximately $0.2$0.1 million and losses of approximately $1.8$1.2 million for the three and nine months ended DecemberJune 31,30, 2026 and 2025, respectively. We recognized net foreign currency transaction gains of approximately $0.3 million and insignificant losses for the three and nine months ended December 31, 2024, respectively.

In presenting our consolidated financial statements in conformity with GAAP,U.S. generally accepted accounting principles ("GAAP"), we are required to make estimates and judgments that affect the amounts reported therein. Some of the estimates and assumptions we are required to make relate to matters that are inherently uncertain as they pertain to future events. We base these estimates on historical experience and on various other assumptions that we believe to be reasonable and appropriate. Actual results may differ significantly from these estimates. To the extent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of operationsoperations, and cash flows may be affected.

There have been no significant changes in our critical accounting policies during the ninethree months ended DecemberJune 31,30, 20252026 as compared to the critical accounting policies and estimates disclosed in “"Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies”" included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2025.2026.

Three months ended DecemberJune 31,30, 20252026 compared to three months ended DecemberJune 31,30, 20242025

We track total revenues on a geographic basis. Our Americas region includes the United States, Canada, and Latin America. Our International region primarily includes Europe, the Middle East, Africa, Australia, India, and Southeast Asia and China.Asia. Americas and International represented 57%59% and 43%41% of our total revenues, respectively, for the three months ended DecemberJune 31,30, 2025.2026. Total revenues increased 15%9% and 26%15% year over year in the Americas and International,International regions, respectively.

▪The increase in InternationalAmericas total revenues was dueprimarily todriven increasesby of39% 42%,growth 45%,in 10%SaaS revenue and 40%14% growth in term-based license, SaaS, customer support andrevenue, otherreflecting servicescontinued revenues,growth respectively,in subscription-based offerings. These increases were partially offset by a 10% decreasedeclines in perpetual support revenue and term-based license revenue, as compared to the same period of the prior year.revenue.

Our totalInternational revenues in International isare subject to changes in foreign exchange rates as further discussed above in the “"Foreign Currency Exchange Rates’Rates' Impact on Results of Operations” section.Operations."

–DepreciationOperating andExpenses amortization($ expensein decreased $0.1 million.millions)

–Restructuring expenses were $11.9$2.4 million for the three months ended DecemberJune 31,30, 2025.2026. These charges relate to twoour restructuring plansplan initiated duringin the third quarter of fiscal 2026 and consist primarily of severance and associated costs from headcount reductions. These charges also include $1.3$0.6 million of stock-based compensation resulting from modifications to existing awards granted to certain employees. WeAs anticipateof bothJune plans30, will2026, the majority of costs associated with this plan have been incurred and the remaining activities are anticipated to be completed in fiscal 2027, with approximately $20 million of additional costs expected to be incurred.2027. Restructuring expenses were $4.0$0.2 million for the three months ended DecemberJune 31,30, 2024 and2025 related to a prior restructuring plan that was completed in fiscal 2025.plan.

Interest income was $8.4$7.7 million in the three months ended DecemberJune 31,30, 20252026 compared to $1.6$2.0 million in the three months ended DecemberJune 31,30, 2024.2025. The increase in interest income compared to the same period in the prior year iswas primarily duedriven toby investment of cash balancesinvestments in money market funds.funds beginning in the third quarter of fiscal 2026.