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

•Cost of products and components. Certain areas of our business have and could continue to experience supply chain challenges, including: shortages, shipping delays, and increased costs due to price increases for hardware products and components (including as a result of increased demand from AI data center construction around the world) and in shipping costs; changes in U.S. and foreign trade policies, including new or increased tariffs, potential sanctions and counter-sanctions, particularly with or involving China, South Korea, and TaiwanTaiwan, could result in increased costs;costs. however, weWe have taken steps to minimize the impact of these factors. We have expanded the regions where we sell our hardware products, and we continue to buildadjust our pricing to reflect market conditions, increase our inventory levels of scarce components, and expand our supplier network,network includingby identifying and/or establishing alternative suppliers of our hardware products, increase our inventory levels of scarce components and adjust our pricing to reflect market conditions.products.

We depend on third-party suppliers to deliver hardware products and components in sufficient quantities, at reasonable prices, and timely so that we can timely deliver and install our hardware products and perform our Advanced Exchange, depot repair and field services. We have agreements for the supply of hardware products and components, including long-term or volume-based purchase agreements with some suppliers. We have alternative sources in the event one or more of our component suppliers are not able to perform or fully perform; and we hold safety stocks of single source hardware products in quantities that we believe are sufficient to protect against possible supply chain disruptions; however, we cannot assure that hardware products and components will be available or available in needed quantities and quality or at favorable or competitive prices.prices, including because of increased demand for hardware products and components from AI data center construction around the world. If we experience a problem (availability, quantity, quality, or pricing) with one or more of our suppliers,suppliers andthat we are not able to cover or adequately cover from other sources, it could lead to a shortage of hardware products and components and extended lead times for the delivery and installation of our hardware products or adversely affect our performance of Advanced Exchange, depot repair and field services, which could negatively impact our ability to satisfactorily and timely meet our contractual and customer obligations. This could result in reduced sales, breach or termination of contracts, and damage to our reputation and relationships with our customers, which could have a material adverse effect on our business, financial condition, and results of operations.

Most of our suppliers of hardware products and components are located internationally, including in South Korea, China, and Taiwan, and are susceptible to hostilities in those regions and tariffs and other restrictions on trade between the United States and countries where our hardware products and components are sourced, which could increase the cost or restrict the availability of hardware products and components to us that we may not be able to offset or cover from another source. Furthermore, certain of our suppliers couldhave decideand may continue to discontinue business with us or limit the allocation of hardware products and components to us,us and could decide to discontinue business with us (including as a result of increased demand from AI data center construction around the world), which could result in our inability to fill our supply needs, jeopardizing our ability to fulfill our contractual obligations, which could in turn, result in a decrease in sales and cash flows, contract penalties or terminations, and damage to customer relationships and our reputation.

Inventory management is an area of focus as we balance the need to maintain strategic inventory levels to ensure competitive lead times against the risk of hardware product and component inventory availability and shortages and customer requirements. We hold safety stocks of single source hardware products in quantities that we believe are sufficient to protect against possible supply chain disruptions and, in some instances, increasewe have increased our inventory levels of components to satisfy anticipated customer requirements. Higher inventory levels can lead to increased costs for hardware products and components, higher inventory expenses, and lower gross margins, potentially necessitating the write-down of excess inventory. Effective inventory management is crucial, and failure to maintain optimal inventory levels could negatively impact our financial condition, operational results, and ability to achieve and sustain profitability.

Our ability to successfully execute our operational plans and growth strategies, achieve our business and/or development objectives, or increase the scope or range of our service or product offerings is dependent, in part, on our ability to attract, develop, and retain skilled employees, including data security and product architects, engineers and technical personnelpersonnel, and sales representatives. Competition for top talent in the restaurant/retail and technology industries is intense. If we cannot effectively recruit, develop, and retain qualified employees to drive our operational and strategic goals and develop and convert opportunities our business could suffer. Our ability to recruit, develop, and retain necessary qualified employees depends on a number of factors, including compensation and benefits, flexibility regarding virtual and hybrid work arrangements, work location, work environment, and corporate culture.

We expect to continue to expandexpanding our business through acquisitions of complementary companies, products, and technologies.technologies, including those in new or adjacent verticals. Acquisition transactions are subject to risks including:

•difficulties entering geographic marketsmarkets, new market segments, or new market segmentsverticals in which we have nolimited or limitedno experienceprior experience, which may expose us to unfamiliar market dynamics and heightened execution risk;

•cybersecurity and data security and protection related considerations, controls and exposuresexposures, including risks related to becoming subject to additional rapidly evolving and complex regulatory regimes;

Our international operations subject us to local laws and regulatory regimes, geopolitical or economic changes or events, uncertaintiesuncertainties, and other factors that could harm our business, financial conditioncondition, and results of operations.

•geopolitical events, such the Russia-Ukraine war, tensions with China and between China and Taiwan, hostilities in the Middle East, including the Israel conflict(s), and uncertainty relating to new or increased tariffs or other trade restrictions implemented by the U.S. or retaliatory trade measures or tariffs implemented by other countries, which could result in reduced economic activity, increased costs in operating our business, or other potentially adverse economic outcomes;

•compliance with the laws and regulatory requirements of numerous foreign jurisdictions, including foreign taxing jurisdictions and overlapping of different tax regimes;

The risks described above could increase the cost of doing business internationally, which could have a material adverse effect on our business, financial condition, results of operations, and cash flows. In addition, our international employees, including our employees located in Australia,India, Canada, New Zealand, Canada, India,Australia, and Serbia, and third-party consultants, including consultants located in Germany,the Philippines, Ukraine, Poland, and Ukraine,Nicaragua, provide software development and support services. A sustained loss of the software development services provided by our international employees and third-party consultants could negatively impact our software development efforts, adversely affect our competitive position, harm our reputation, impede our ability to achieve and sustain profitability, and negatively impact our business, financial condition, results of operations, and cash flows.

Our business is susceptible to losses and interruptions caused by flooding, hurricanes, earthquakes, power shortages, telecommunications failures, pandemics and other natural or manmade disasters any one of which could have an adverse impact in countries or regions in which we conduct our business or offer and sell our services and products or our customers conduct their businesses and, in turn, decrease the demand for our services or products. Such events could also: cause delays or disruptions in access to our subscription services or third-party providers’ software and systems; cause supply chain disruptions, resulting in shortages or delays in shipments of hardware products and components; create health and safety risks to our employees and distract employee productivity; and result in changes in consumer spending choices and customer investment decisions, any one of which could harm our business and results of operations. Moreover, we may be subject to climate-related regulations and reporting requirements and changing market dynamics and stakeholder expectations regarding climate change and any impact our operations have or may have on the environment, all of which may impact our business, financial condition and results of operations.

Our cloud applications and information technology systems and those of our third-party service providers/integrators and customers are inherently subject to security defects and vulnerabilities due to the release of new technologies and new techniques developed by malicious actors. If the manner and timing of how we fix identified security defects and vulnerabilities to our cloud applications and information technology systems is wrong or the manner and timing of how our third-party service providers/integrators, or third-party network providers fix defects and vulnerabilities in their cloud applications and information technology systems is wrong, or our customers do not implement or timely implement security updates or version upgrades provided by us or our third-party service providers\integrators, then our and our third-party service providers\integrators cloud applications and information technology systems, and the information technology systems of our customers may be left vulnerable to delays and disruptions to access, which may result in our customer’s being unable to conduct their businesses. Unchecked security defects or vulnerabilities, may result in a material failure of our or our third-party providers\integrators cloud applications and information technology systems, substantial service disruptions, unauthorized access or denial of access, data loss or misappropriation of information, which in turn could result in breach of contract claims, indemnity obligations, governmental investigations and penalties,litigation, indemnity obligations, and reputational damage, which could have a material and adverse effect on our business, financial condition, results of operations and cash flows.

We believe that our products and services do not infringe the intellectual property rights of third parties; however, third parties have asserted infringement, misappropriation, and other related claims against us in the past and we cannot guarantee that third parties will not assert infringement or misappropriationsuch claims against us with respect to our current or future products and services, or that any such assertions will not require us to enter into royalty arrangements or settlement agreements, or result in costly litigation or in our being unable to use certain intellectual property. Infringement assertions and related causes of action from third parties have involved, and may involvein the future involve, patent holding companies or non-practicing entities or other patent owners who have no relevant product revenue, and therefore our viable and supportable defenses may provide little or no deterrence to these entities or patent owners in bringing intellectual property rights claims against us. Any of these events could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

We useactively develop AI-native products and sophisticated AI tooling, integrating advanced AI technologies inacross our product development, our internal operations, and customer solutions. We are committed to significantly expanding these capabilities with the productsclear ambition to establish and servicesmaintain wePAR's offer,role andas wean intendAI toinnovation furtherleader expandwithin our AIindustry. However, our expanding use of AI—and capabilitiesthat to remain competitive; however, ineffective or deficient AI practices by us orof third parties—carries couldrisks, leadincluding tothe potential for bias or inaccurate informationoutputs andleading to flawed decision-making, misuse or infringement of intellectual property rights, or operational inefficiencies;inefficiencies, moreover, AI technologies can lead toand unauthorized disclosure of sensitive information. Ensuring the integrity and security of AI tools and usage may require significant investment, potentially impacting our gross margins; however, if we fail to properly address these issues our reputation could be harmed and the demand for our products or services reduced, which could have a material adverse effect on our business, financial condition, and results of operations.

The legal and regulatory landscape surrounding AI technologies is rapidly evolving and uncertain, with jurisdictions around the world applying, or considering applying, laws and regulations related to intellectual property, cybersecurity, export controls, privacy, data security, and data protection to AI, or general legal frameworks on AI, such as the Colorado AI Act, which beginsgoes tointo applyeffect in June 2026, or the EU AI Act, parts of which applywent beginninginto effect in 2025. These laws and regulations are evolving and the application, interpretation, and enforcement of these laws and regulations are uncertain; nevertheless, our failure or perceived failure to comply with applicable laws and regulations, industry standards or ethical requirements and expectations relating to AI could damage our reputation, discourage current or potential customers from using our products and services, and result in costly governmental investigations, enforcement actions or litigation, breach of contract claims, indemnity obligations, additional insurance costs, and/or penalties, which could have a material and adverse effect on our business, financial condition, and results of operations. Moreover, the public may perceive AI negatively, associating it with job displacement and privacy and ethical concerns. This perception could harm our reputation, lead to reduced demand for our products or services or harm our ability to obtain favorable pricing or other terms for our products and services, which could have a material adverse effect on our business, financial condition and results of operations.

•our investments in new products andproducts, new features for ourexisting existingproducts—including the development of AI-native products, advanced AI tooling and capabilities, and related infrastructure—may require moresignificantly investmentgreater capital than plannedanticipated, or ourthese new products or new featuresinitiatives may not achievedeliver the expected commercial successsuccess, andincremental generate additional revenuerevenue, or advance thebusiness growth of our business;

Aggregate sales of hardware, subscription services, and professional services to the one customer and their respective franchisees constitutedaccounted 15%for 21% of our consolidated revenues for the year ended December 31, 2024.2025. Significant reductions, delays or cancellations of hardware sales, subscription services, and professional services to this customer and its franchisees would reduce our revenue and operating income and could materially and adversely affect our business, results of operations, and cash flows.

If a fundamental change occurs, holders of the Senior Notes may require us to repurchase all or a portion of their Senior Notes in cash. Furthermore, upon conversion of any Senior Notes, unless we elect to deliver solely shares of our common stock to settle the conversion (excluding cash in lieu of delivering fractional shares of our common stock), we must make cash payments in respect of the Senior Notes. Even if holders do not elect to convert their Senior Notes, we could be required under applicable accounting rules to reclassify all or a material portion of the outstanding principal of the Senior Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital. Any of the cash payments described above could be significant, and if we fail to repurchase the Senior Notes when required or deliver the consideration due upon conversion, we will be in default under the indentures governing the Senior Notes. In such an event of default, holders of the Senior Notes with the defaulted indebtedness could elect to declare all principal, together with accrued and unpaid interest, due and payable, which would materially and adversely affect our financial condition and results of operations.

In connection with the preparation of our financial statements, we use certain estimates and assumptions based on historical experience and other factors. Our most critical accounting estimates are described in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates”. For example, we make significant estimates and assumptions when accounting for revenue recognition, the recognition and measurement of assets acquired and liabilities assumed in business combinations and asset acquisitions at fair value, stock-based compensation, identifiable intangible assets and goodwill, valuation allowances for receivables, and valuation of excess and obsolete inventories. These estimates and assumptions are subject to significant uncertainties, some of which are beyond our control. Should any of these estimates and assumptions change or prove to have been incorrect, it could adversely affect our results of operations, cash flowsflows, and financial condition.

Our goodwill was approximately $887.5$898.0 million at December 31, 20242025 and our intangibles were $237.3$203.4 million at December 31, 2024.2025. Identifiable intangible assets are primarily a result of business acquisitions and internally developed capitalized software. We test our goodwill and identifiable intangible assets for impairment annually, or more frequently if an event occurs or circumstances change that would indicate possible impairment. We describe the impairment testing process and results of this testing more thoroughly in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates.” Our estimates are subject to uncertainties. If we determine an impairment has occurred at any point in time, we will be required to reduce goodwill or identifiable intangible assets on our balance sheet, which could materially and adversely impact our financial condition and results of operations. Additional information about our impairment testing is contained in "Note 1 – Summary of Business and Significant Accounting Policies" of the notes to consolidated financial statements in "Part II, Item 8. Financial Statements and Supplementary Data" of this Annual Report.

We have and likely will in the future issue and sell shares of common stock or other securities to raise capital or issue securities for a variety of purposes, including in connection with acquisitions of other businesses or other strategic transactions. TransactionsThe involvingissuance of newly issued shares of our common stock or other securities convertible into our common stock, if converted,stock could resultdilute existing shareholders by reducing each share’s percentage ownership of the company, thereby decreasing current shareholders’ proportionate interest in dilution,future possiblyearnings, substantial,assets, toand voting power, and potentially lowering the market price of our shareholders.common Dilutionstock. Additionally, dilution may have a negative impact on the price of our common stock if investors react unfavorably to a transaction or ifinvolving the dilutionissuance causesof a significant decrease in our earnings per share.shares.

Our board of directors and management periodically evaluate strategic transactions to maximize value for our shareholders, including strategic acquisitions, sales of non-strategic assets or businesses, capital markets and other transactions. We cannot provide assurance that any transaction will be completed; whether we decide to pursue a transaction will depend on numerous factors, some of which are beyond our control. Such factors include the interest of potential acquisition targets or acquirers, sources of financing and terms, market conditions, and industry trends. Even if a transaction is completed, there can be no assurance that the transaction will be successful or have a positive effect on shareholder value. In addition, our financial results and operations could be adversely affected, including the diversion of management’s attention from our operations and the execution of other strategies. We have and will continue to incur substantial expenses associated with identifying, evaluating, and negotiating potential strategic transactions, including legal, accounting, and financial advisor fees. Furthermore, the public announcement of a strategic transaction may negatively impact our operating results if investors react unfavorably to the announcement or if we are not able to realize the anticipated benefits of the transaction. We do not intend to disclose developments or provide updates with respect to potential strategic transactions unless and until disclosure is appropriate or required. Accordingly, speculation regarding potential strategic transactions could cause our stock price to significantly fluctuate.

The trading price and volume of our common stock mayhas experience priceexperienced, and volumemay continue to experience, volatility, which could impair our ability to finance strategic transactions using our common stock and could result in losses for our shareholders.

•the actual or perceived impact of uncertainties, volatility, and economic disruption created by macroeconomic conditions and geopolitical events, including, inflation, recession, interest rate fluctuations, actual and potential shifts in and uncertainties with respect to U.S. and foreign trade policies,policies (including new or increased tariffs or other trade restrictions implemented by the U.S. or retaliatory trade measures or tariffs implemented by other countries,countries), actual or anticipated military or political conflicts (including the Russian-Ukraine war, tensions with China and between China and Taiwan, the Israel-Hamas conflict and other hostilities in the Middle East) and global pandemics (like COVID-19) or other public health crises, on our business, our customers, and the industries in which we operate;

•the contents of published research reports about us or the industries in which we operate or the failure of securities analysts to cover our common stock;

In addition, the market for technology stocks or the stock market in general has experienced and may continue to experience uneven investor confidence, which may cause the trading price for our common stock to decline for reasons unrelated to our operating performance.

The following section generally discusses year-over-year comparisons between 20242025 and 2023.2024. Discussions related to year-over-year comparisons between 20232024 and 20222023 are included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Recast Sections of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023,2024, filed with the SEC on JanuaryMarch 6,3, 2025.

Consists of revenue from hardware support, installationinstallations and implementation,implementations, and on-site and technical support.

Consists of employee-related costs incurred for management and administrative functions, including finance, legal, human resources, and information technology. General and administrative expenses also include costs related to fees paid for certain professional services and software, insuranceinsurance, and occupancy costs, as well as bad debt expense and depreciation expense.

Represents the loss on inducement of our 20262024 Notes and 2024partial Notes.inducement of our 2026 Notes, and the loss related to the early repayment of the Credit Facility.

Other income (expense), income, net

Consists of foreign currency transaction gains and losses and other miscellaneous non-operating income (expense).and expenses.

Benefit from (Provision for) Benefit from Income Taxes

Consists of U.S. federal and state income tax as well astax, international income taxes in various foreign jurisdictions.jurisdictions, and interest and penalties related to income taxes. Our effective tax rate fluctuates from period to period due to changes in the mix of income and losses in jurisdictions with a wide range of tax rates, the effect of acquisitions, changes resulting from the amount of recorded valuation allowance, and permanent differences between GAAP and local tax laws. Refer to "Note 13 -– Income Taxes" of the notes to consolidated financial statements in "Part II, Item 8. Financial Statements and Supplementary Data" of this Annual Report for additional information about our income taxes and effective tax rate.

Professional serviceTotal revenues were $55.5$455.5 million for the year ended December 31, 2024,2025, an increase of $4.8$105.6 million or 9.5%30.2% compared to $50.7$350.0 million for the year ended December 31, 2023. The increase was substantially driven by a $4.6 million increase in hardware repair services and a $2.4 million increase in field operations, partially offset by a $2.2 million decrease in installation services.2024.

Total gross margin as a percentage of total revenue for the year ended December 31, 2024,2025, increased to 41.8%43.5% as compared to 32.3%41.8% for the year ended December 31, 2023.2024.

Subscription service gross margin as a percentage of subscription service revenue for the year ended December 31, 2024,2025, increased to 53.5%54.7% as compared to 48.0%53.5% for the year ended December 31, 2023.2024. The increase was substantially driven by aoperating continuedefficiencies focus on efficiency improvements with ourin hosting and customer support costs relative to the growth in subscription service revenues for both Engagement Cloud and Operator Cloud, as well as improved grossmargin marginscontributions stemming from post-acquisition operations of the Delaget product line and the inclusion of approximately two additional months of PAR Retail.Retail product line results in the current period. These improvements were partially offset by an impairment loss recorded in the current period related to the write-off of capitalized software development costs for the PAR Clear product.

Professional service gross margin as a percentage of professional service revenue for the year ended December 31, 2024,2025, increasedwas torelatively 25.4%unchanged at 25.0% as compared to 14.8%25.4% for the year ended December 31, 2023. The increase primarily consists of increased gross margins for hardware service repair and field operations substantially driven by improved cost management.2024.

Amortization of identifiable intangible assets was $13.4 million for the year ended December 31, 2025, an increase of $5.0 million as compared to $8.5 million for the year ended December 31, 2024, an increase of $6.6 million as compared to $1.9 million for the year ended December 31, 2023.2024. The increase primarilywas consistsdriven ofby an increase in amortizable intangible assets stemming from the Stuzo AcquisitionAcquisition, andthe TASK Group Acquisition, the Delaget Acquisition, and the GoSkip Asset Acquisition.

Included in operating expenses for the year ended December 31, 2024 was a $0.6 million reduction to the fair value of the contingent consideration liability for certain post-closing revenue focused milestones from the MENU AcquisitionAcquisition. comparedThere was no comparable adjustment to acontingent $9.2consideration million reductionliability for the year ended December 31, 2023.2025.

Included in operating expenses for the year ended December 31, 2024 was $0.5 million in insurance proceeds from the settlement of legacy insurance claims compared to $0.5 million in insurance proceedsreceived from the settlement of a legacy insurance claimclaim. There was no comparable gain for the year ended December 31, 2023.2025.

Other Income (Expense), Income, Net

Other income (expense),expense, net was $1.1 million for the year ended December 31, 2024,2025, ana increasechange of $1.6$2.3 million as compared to ($0.5)other income, net of $1.1 million for the year ended December 31, 2023. Other income (expense), net substantially includes foreign currency transactions gains and losses and other miscellaneous non-operating income (expense).2024. The change was substantially driven by increases in foreign currency transaction fluctuations, with net foreign currency losses recognized in the current period compared to net gains andin otherthe miscellaneousprior expenses.period.

The benefit from (provision for) income taxes was $2.9 million for the year ended December 31, 2025, a change of $7.7 million as compared to a benefit from income taxes of $4.8 million for the year ended December 31, 2024, an increase of $6.6 million as compared to $(1.8) million for the year ended December 31, 2023.2024. The change was substantiallyprimarily drivendue byto the absence of the benefit recorded in the prior year, resulting from a reduction inof the Company's valuation allowance which resulted fromfollowing the establishment of deferred tax liabilities relatedin toconnection with the Stuzo Acquisition and Delaget Acquisition. The provision recorded during the year ended December 31, 2025 primarily related to foreign income tax expense.

Net income from discontinued operations was $0.2 million for the year ended December 31, 2025, a decrease of $84.7 million as compared to $84.9 million for the year ended December 31, 2024,2024. an increase of $73.1 million as compared to $11.9 million forDuring the year ended December 31, 2023.2025, Thea increase$0.2 million gain from the divestiture of RRC was substantiallyrecognized drivenas bya result of a favorable net working capital settlement. During the year ended December 31, 2024, an $81.2 million gain on sale of PGSC and RRC.RRC was recognized. The residual amount represents PGSC and RRC operating income, offset by a provision for income taxes relating to the gain on sale of PGSC and RRC.

ARR is the annualized revenue from our subscription services, which includes subscription fees for our SaaS solutions and related support, managed platform development services, and transaction-based fees for payment processing services. We generally calculate ARR by annualizing the monthly recurring revenue for all active sites as of the last day of each month for the respective reporting period. ARR is an operating measure, it does not reflect our revenue determined in accordance with GAAP, and ARR should be viewed independently of, and not combined with or substituted for, our revenue and other financial information determined in accordance with GAAP. Further, ARR is not a forecast of future revenue and investors should not place undue reliance on ARR as an indicator of our future or expected results. Our reported ARR is based on a constant currency, using the exchange rates established at the beginning of the year and consistently applied throughout the period and to comparative periods presented. The table below presents our ARR on a constant currency basis, calculated using the exchange rates fromset 2024.at Forthe acquisitionsbeginning madeof 2025. Using the exchange rates established during eachthe prior period, Engagement Cloud ARR and Operator Cloud ARR as of December 31, 2024 were $2.9 million and $0.6 million higher, respectively, than the constant currency rateARR appliedreported is the exchange rate at the date of each acquisition's closure.below. There was no impact on our prior periodto ARR as a result of applyingDecember a31, constant currency2023 as the exchange rate effects only began with the TASK Group Acquisition in 2024.

•Engagement Cloud consisting of Punchh,PAR Engagement (Punchh and PAR Retail,Ordering), PAR Ordering,Retail (including GoSkip), and Plexure product offerings.

*Inorganic Engagement Cloud ARR represents PAR Retail and PlexureGoSkip ARR only as of December 31, 2024.2025.

Revaluing our ending ARR as of December 31, 20242025 using currencyexchange rates determined at the beginning of 2025,2026, our Inorganic Engagement Cloud ARR would be $85.1$186.7 million and Inorganic Operator Cloud ARR would be $24.1$130.5 million.

*Inorganic Engagement Cloud active sites includes PAR Retail and PlexureGoSkip active sites only as of December 31, 2024.2025.

The tables below provide reconciliations between net loss and adjusted EBITDA, diluted net loss per share and non-GAAP diluted net income (loss) per share, and subscription service gross margin percentage and non-GAAP subscription service gross margin percentage. Amounts presented in the reconciliations and other tables presented herein may not sum due to rounding.

The risks described in the Part I, Item 1A. "Risk Factors” section of our 2025 Annual Report could materially and adversely affect our business, financial condition, and results of operations, and the trading price of our common stock could decline. Except as modified, updated, or supplemented below, there have been no material changes to the Risk Factors described in our 2025 Annual Report. The risk factor below was previously provided in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026.

The tariff and supply chain environment remains complex and evolving. Beginning in the second quarter of 2025, the U.S. government implemented a series of significant new tariffs, including under the International Emergency Economic Powers Act ("IEEPA"), affecting imports from several countries where we source certain components and hardware products. Other countries responded with retaliatory actions or plans for retaliatory actions. On February 20, 2026, the U.S. Supreme Court held that IEEPA does not authorize the President to impose tariffs,tariffs thoughand, the administrative process for seeking refunds remains under development and subject to considerable uncertainty. Followingfollowing the ruling, the administration announced a replacement, time-limited 10% global ad valorem tariff effective February 24, 2026, which hasexpired subsequentlyJuly been24, 2026. In its place, the administration immediately imposed new Section 301 duties of 10 to 12.5 percent on products from 80 countries. Litigation continues over refunds tied to the invalidated IEEPA duties and the tariff environment remains subject to legalconsiderable challenge. In March 2026, the U.S. Trade Representative was directed to initiate new investigations for the purpose of building the legal foundation for a second round of durable, country-specific tariffs. The resulting situation remains uncertain and fluid.uncertainty.

Total revenues were $124.0$133.4 million for the three months ended MarchJune 31,30, 2026, an increase of $20.1$21.0 million or 19.4%18.7% compared to $103.9$112.4 million for the three months ended MarchJune 31,30, 2025.

ProfessionalSubscription service revenues were $16.2$83.4 million for the three months ended MarchJune 31,30, 2026, an increase of $2.6$11.5 million or 19.0%16.0% compared to $13.6$71.9 million for the three months ended MarchJune 31,30, 2025. TheOf increasethis increase, $4.2 million was primarily driven by ainorganic $2.3revenue growth contributed by the Bridg product line. The remaining $7.3 million increasewas driven by growth in installationaverage revenuesrevenue associatedper withsite thethrough onboardingcross-selling, ofupselling, Tierand 1price Operatorincrease Cloud customers.initiatives.

Total gross margin as a percentage of total revenue for the three months ended MarchJune 31,30, 2026, decreased to 44.0%42.4% fromas 46.5%compared to 45.4% for the three months ended MarchJune 31,30, 2025.

SubscriptionHardware servicegross margin as a percentage of subscription servicehardware revenue for the three months ended MarchJune 31,30, 2026, decreased to 55.6%20.3% fromas 57.8%compared to 27.3% for the three months ended MarchJune 31,30, 2025. The decrease was primarily reflectsdriven by an increase in excess and obsolete inventory expense, including a change$1.5 inmillion subscriptioncharge service revenue mix, as product and service offerings with comparatively lower gross margins represented a greater proportion of revenue, consistent with the mix shift that beganrecorded in the second quarter of 2025.2026 related to a discontinued product, and a shift in hardware product mix.

Professional service gross margin as a percentage of professional service revenue for the three months ended MarchJune 31,30, 2026, increaseddecreased to 27.8%22.7% fromas 25.4%compared to 28.7% for the three months ended MarchJune 31,30, 2025. The increasedecrease was primarily driven by improveda marginsshift in our hardwareprofessional service repairrevenue operationsmix andtoward fieldlower-margin operationsinstallation asservices aassociated resultwith the onboarding of reducedtier-one third-party spending and improved cost management.customers.

S&M expenses were $12.3$23.8 million for the threesix months ended MarchJune 31,30, 2026, ana increasedecrease of $0.5$0.2 million or 4.3%0.9% compared to $11.8$24.1 million for the threesix months ended MarchJune 31,30, 2025. The increasedecrease was primarily driven by a $0.8$0.7 million increasedecrease in marketingorganic expensesS&M andexpense, primarily due to a $0.3$0.9 million decrease in recurring compensation costs, partially offset by a $0.2 million increase in severance costs related to non-recurring restructuring events,activities. This decrease was partially offset by a $0.4$0.5 million decreaseincrease in recurringinorganic compensationS&M costsexpense andstemming afrom $0.2post-acquisition millionoperations decreaseof inthe contractedBridg services.product line.

RG&DA expenses were $22.0$26.3 million for the three months ended MarchJune 31,30, 2026, ana increasedecrease of $2.2$5.4 million or 11.2%17.1% compared to $19.8$31.7 million for the three months ended MarchJune 31,30, 2025. The increasedecrease was primarily driven by a $0.8$1.1 million increasedecrease in outsourcedbad developmentdebt costs andexpense, a $0.6$0.7 million increasedecrease in recurring compensation costs, reflectinga continued$0.5 investmentmillion decrease in productpurchased development, including AI-enabled functionalityservices, and other enhancements to our product and service offerings. The residual increase was primarily driven by a $0.6$0.5 million increasedecrease in severancetravel costs related to non-recurring restructuring events.expense.

AmortizationIntangible ofasset identifiableimpairment intangible assetsloss was $3.4$5.4 million for the three months ended MarchJune 31,30, 2026, relativelyrelated unchangedto fromthe $3.3write-off millionof an indefinite-lived trademark acquired in the Stuzo Acquisition. There was no intangible asset impairment loss for the three months ended MarchJune 31,30, 2025.

Other income, net was $0.8 million for the three months ended MarchJune 31,30, 2026, a change of $0.9$2.2 million compared to other expense, net of $0.1$1.4 million for the three months ended MarchJune 31,30, 2025. The change was primarilysubstantially driven by foreign currency transaction fluctuations, with net foreign currency gains recognized in the current period compared to net losses in the prior period.

Gain on extinguishment of debt, net was $0.4 million for the threesix months ended MarchJune 31,30, 2026, related to the $3.9 million gain recognized on the repurchase of a portion of the 2027 Notes, partially offset by the $3.5 million loss recognized on the induced conversion of a portion of the 2026 Notes. For the threesix months ended MarchJune 31,30, 2025, loss on extinguishment of debt, net was $5.8 million, related to the early repayment of the former credit facility with Blue Owl Capital Corporation as administrative agent and collateral agent and Blue Owl Credit Facility.Advisors, LLC as lead arranger and bookrunner (the "Credit Facility").

Provision for income taxes was $1.6$1.4 million for the three months ended MarchJune 31,30, 2026, relativelyan unchangedincrease fromof $1.3$0.4 million compared to $0.9 million for the three months ended MarchJune 31,30, 2025. The increase was primarily driven by additional foreign income tax expense.

There was no income from discontinued operations for the three months ended MarchJune 31,30, 2026,2026 compared to $0.2 million foror the three months ended MarchJune 31,30, 2025, stemming from a $0.2 million gain recognized from the divestiture of RRC as a result of a favorable net working capital settlement.2025.

ARR is the annualized revenue from our subscription services, which includes subscription fees for our SaaS solutions and related support, managed platform development services, and transaction-based fees for payment processing services. We generally calculate ARR by annualizing the monthly recurring revenue for all active sites as of the last day of each month for the respective reporting period. ARR is an operating measure, it does not reflect our revenue determined in accordance with GAAP, and ARR should be viewed independently of, and not combined with or substituted for, our revenue and other financial information determined in accordance with GAAP. Further, ARR is not a forecast of future revenue and investors should not place undue reliance on ARR as an indicator of our future or expected results. Our reported ARR is based on a constant currency, using the exchange rates established at the beginning of the year and consistently applied throughout the period and to comparative periods presented. The table below presents our ARR on a constant currency basis, calculated using the exchange rates set at the beginning of 2026. Using the exchange rates established during the prior period, ARR as of June 30, 2025 was $1.5 million lower than the constant currency ARR reported below.

Active sites represent locations active on our subscription services as of the last day of the respective reporting period. Our key performance indicators ARR and active sites are presented as two subscription service product lines:

*Inorganic Engagement Cloud ARR represents Bridg ARR only as of March 24, 2026.

*Inorganic Engagement Cloud active sites represent Bridg unique active sites only as of March 24, 2026.

In addition to disclosing financial results in accordance with GAAP, this Quarterly Report contains references to the non-GAAP financial measures below. We believe these non-GAAP financial measures provide investors with useful supplemental information about our operating performance, enable comparison of financial trends and results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business and measuring our performance. Our non-GAAP financial measures reflect adjustments based on one or more of the following items below. The income tax effect of the below adjustments were not tax-effected due to the valuation allowance on all of our net deferred tax assets.