Core Insights - Mid-cap stocks offer a balance of risk and reward, often overlooked by investors despite their growth potential and stability [1][2] - The tech sector is dominated by mega-cap companies, which can overshadow mid-cap firms that also contribute to technological advancements [2][3] Company Summaries Nebius Group - Nebius Group N.V. is a Netherlands-based company with a market capitalization of approximately $8.4 billion [4] - The company has experienced significant revenue growth of 466% year-over-year for Q4 and 462% for the full year, despite posting net losses of nearly $137 million for Q4 and almost $397 million for the full year [5] - Nebius aims for annual recurring revenue between $750 million and $1 billion by December 2025, bolstered by an investment from Jeff Bezos in its Tokola unit [5][6] UiPath Inc. - UiPath Inc. is a leader in robotic process automation, with a current stock price forecast of $12.72, indicating a potential downside of 2.69% [9] - The company reported a 14% year-over-year increase in annual recurring revenue, reaching nearly $1.7 billion, with cloud revenue growing over 50% [10] - Despite macro-level uncertainties and competition, analysts project potential gains, with some forecasting a 16% to 38% increase [11] Varonis Systems Inc. - Varonis Systems Inc. has a stock price forecast of $55.06, suggesting a 20.47% upside, driven by better-than-expected revenue results [12] - The company achieved nearly 20% year-over-year revenue growth and raised its annual recurring revenue guidance to $742-$750 million [13] - Strong cash flow management has contributed to its momentum, with operating cash flow reaching $68 million and free cash flow at $65.3 million [13]

Summary of Varonis Systems (VRNS) FY Conference Call Company Overview - Varonis Systems focuses on data security for enterprises, helping organizations protect sensitive data across various environments, including on-premises and cloud applications [3][4] - The company transitioned to a SaaS model in 2023, aiming to complete this transition by the end of 2025 [5][38] Core Business and Technology - Varonis provides a technology platform that automates data protection, enabling organizations to understand their data, monitor access, and respond to threats [4][6] - The company emphasizes the importance of data security, especially in the context of increasing data generation and the rise of generative AI [9][10] Market Opportunity - Data security has become a top priority for organizations, shifting focus from traditional perimeter security to protecting sensitive data [8][9] - Varonis claims to be uniquely positioned in the market, as it protects data from the inside out, unlike competitors who focus on endpoint or network security [10][15] Competitive Landscape - The increase in competitors validates the importance of data security, with many companies entering the space from adjacent product categories [15][16] - Varonis differentiates itself by offering comprehensive monitoring across various data sets, including databases, applications, and cloud environments [18][19] Adoption of Generative AI - Organizations are cautious about adopting generative AI tools without addressing data privacy and security concerns [21][22] - Varonis is seeing increased demand for its services as companies look to secure their data before deploying AI tools [22][23] MDDR Offering - The Managed Detection and Response (MDDR) service has become a significant driver of business, providing customers with continuous monitoring and alerts for potential threats [31][35] - MDDR is only available through the SaaS platform, which has seen rapid adoption since its launch [40][41] Transition to SaaS - Varonis is undergoing a significant transition from on-premises to SaaS, with expectations that 80% of its Annual Recurring Revenue (ARR) will come from SaaS by the end of 2025 [38][39] - The company has reported higher Net Revenue Retention (NRR) for its SaaS offerings compared to overall company metrics, indicating strong customer growth and satisfaction [42][43] Financial Performance - Varonis has raised its ARR guidance despite macroeconomic uncertainties, reflecting confidence in its business model and growth trajectory [55][56] - The company is focused on maintaining profitability during its transition, with better-than-expected margins from its SaaS model [51][52] Conclusion - Varonis Systems is well-positioned to capitalize on the growing demand for data security solutions, particularly as organizations increasingly prioritize data protection in the face of evolving threats and the adoption of AI technologies [9][10][21]

Core Viewpoint - Varonis Systems, Inc. is a leader in data security, focusing on protecting critical data through its cloud-native Data Security Platform, which utilizes AI-powered automation to discover, classify, and secure data across various environments [2][3]. Company Participation in Conferences - Varonis will participate in several upcoming conferences, including: - J.P. Morgan 53rd Annual Global Technology, Media and Communications Conference from May 13 to 15, with a presentation on May 15 at 8:40 a.m. ET [4]. - TD Cowen 53rd Annual Technology, Media & Telecom Conference on May 28 to 29, with a presentation on May 28 at 1:15 p.m. ET [4]. - William Blair 45th Annual Growth Stock Conference from June 3 to 5, with a presentation on June 4 at 12:40 p.m. CT [4]. Company Overview - Varonis is recognized for its unique approach to data security, differentiating itself from traditional cybersecurity firms by focusing on data protection first [2][3]. - The company offers a comprehensive suite of solutions, including data security posture management (DSPM), data classification, data access governance (DAG), data detection and response (DDR), data loss prevention (DLP), AI security, and insider risk management [3].

Revenue Growth - For the three months ended March 31, 2025, total revenues were $136.4 million, a 20% increase compared to $114.0 million for the same period in 2024[116] - SaaS revenues for the three months ended March 31, 2025, were $88.6 million, up from $34.0 million in the same period in 2024, indicating significant growth in SaaS deployments[116] - Total revenues for the three months ended March 31, 2025, increased by 19.6% to $136.4 million compared to $114.0 million in the same period of 2024[146] - SaaS revenues surged by 160.6% from $34.0 million in Q1 2024 to $88.6 million in Q1 2025, driven by new customer acquisitions and existing customer conversions[146] - Annual Recurring Revenue (ARR) rose by 19% to $664.3 million as of March 31, 2025, compared to $560.3 million in 2024[146] Customer Metrics - As of March 31, 2025, Annual Recurring Revenues (ARR) reached $664.3 million, representing a 19% increase from $560.3 million as of March 31, 2024[120] - SaaS as a percentage of total ARR was approximately 61% as of March 31, 2025, and is expected to continue increasing throughout the transition to a SaaS delivery model[122] - The renewal rate for the three months ended March 31, 2025, remained over 90%, indicating strong customer retention[128] - Approximately 70% of revenues for the three months ended March 31, 2025, were derived from the United States, with 21% from EMEA and 9% from the rest of the world[114] Financial Performance - Operating losses for the three months ended March 31, 2025, were $43.8 million, compared to $47.6 million for the same period in 2024[116] - Research and development expenses increased by 13.3% to $54.2 million in Q1 2025 from $47.8 million in Q1 2024[149] - Sales and marketing expenses grew by 2.2% to $72.8 million in Q1 2025, remaining the largest component of operating expenses[149] - General and administrative expenses rose by 13.9% to $24.2 million in Q1 2025 from $21.3 million in Q1 2024[151] - Financial income, net increased by 39.9% to $11.9 million in Q1 2025, primarily due to higher interest income and foreign currency gains[152] - Income taxes for Q1 2025 were $3.97 million, a 183% increase from $1.4 million in Q1 2024[153] Cash Flow and Liquidity - Net cash provided by operating activities was $68.0 million in Q1 2025, up from $56.7 million in Q1 2024[154] - As of March 31, 2025, the company held $609.2 million in cash and cash equivalents, sufficient to fund operations for at least the next 12 months[154] - For the three months ended March 31, 2025, cash inflows from operating activities were $68.0 million, compared to $56.7 million for the same period in 2024, reflecting a year-over-year increase of 24%[156][157] - The company experienced a $65.1 million decrease in accounts receivable for the three months ended March 31, 2025, contributing to cash inflows[156] - Net cash used in investing activities for the three months ended March 31, 2025, was $25.0 million, primarily due to $18.6 million paid for an acquisition[159] - Net cash used in financing activities for the three months ended March 31, 2025, was $75.5 million, mainly due to $61.3 million in stock repurchases[161] - The company authorized a share repurchase program of up to $100.0 million in February 2025, with $38.7 million remaining under the program as of March 31, 2025[166] Acquisitions and Obligations - The company completed the acquisition of Cyral, Inc. on March 17, 2025, enhancing its capabilities in database activity monitoring[124] - Remaining Performance Obligations (RPO) stood at $788.7 million as of March 31, 2025, with expectations for this figure to increase as the transition to a SaaS delivery model progresses[123] - The company has contractual minimum purchase commitments totaling $5.4 million due in the next 12 months and $21.0 million due thereafter[167] Currency and Sales Metrics - Approximately 25% of revenues for the three months ended March 31, 2025, were earned in non-U.S. dollar denominated currencies, primarily in Euro and Pound Sterling[175] - Days sales outstanding (DSO) for the three months ended March 31, 2025, was 79, slightly higher than 78 for the same period in 2024[156][157] Revenue Recognition - The transition to a SaaS delivery model may cause significant variations in reported revenues due to differences in revenue recognition accounting treatment[121]

Company Overview - Varonis' Annual Recurring Revenue (ARR) reached $664.3 million, representing a 19% year-over-year growth[8,44] - SaaS ARR constitutes approximately 61% of the total ARR[8,44] - The company's Year-To-Date (YTD) Operating Cash Flow is $68.0 million, and YTD Free Cash Flow is $65.3 million[8,44] Market Trends - The amount of data created globally is projected to grow at a compound annual growth rate of 24% by 2028, with unstructured data accounting for over 90% of the total data generated[18] - It is expected that 90% of organizations will adopt a hybrid cloud approach by 2027, and over 80% of enterprises are expected to use Generative AI by 2026[18] - The global average cost of a data breach in 2024 was $4.9 million, with 40% of breaches involving data stores across multiple environments[18] Financial Performance & Guidance - The company anticipates Annual Recurring Revenues (ARR) between $742.0 million and $750.0 million for the full year 2025, indicating a year-over-year growth of 16% to 17%[53] - The company projects total revenues between $610.0 million and $625.0 million for the full year 2025, representing a year-over-year growth of 11% to 13%[53] - The company expects Free Cash Flow between $120.0 million and $125.0 million for the full year 2025[53]

Financial Performance - Varonis Systems reported $136.42 million in revenue for the quarter ended March 2025, representing a year-over-year increase of 19.7% [1] - The EPS for the same period was $0.00, compared to -$0.03 a year ago, indicating a significant improvement [1] - The reported revenue exceeded the Zacks Consensus Estimate of $133.22 million by +2.41% [1] - The EPS surprise was +100.00%, as the consensus EPS estimate was -$0.05 [1] Key Metrics - Annual Recurring Revenues reached $664.30 million, surpassing the $657.21 million average estimate based on six analysts [4] - Maintenance and Services revenues were $16.38 million, which is -31.9% year-over-year and below the $20.06 million average estimate [4] - Term license subscriptions generated $31.49 million, compared to the $35.14 million estimated by three analysts [4] - SaaS revenues were $88.56 million, exceeding the three-analyst average estimate of $78.28 million [4] Stock Performance - Varonis shares have returned +15.3% over the past month, outperforming the Zacks S&P 500 composite's +11.5% change [3] - The stock currently holds a Zacks Rank 4 (Sell), suggesting potential underperformance relative to the broader market in the near term [3]

Financial Performance - Varonis Systems reported break-even quarterly earnings per share, compared to a Zacks Consensus Estimate of a loss of $0.05, marking an earnings surprise of 100% [1] - The company posted revenues of $136.42 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 2.41%, and showing an increase from year-ago revenues of $114.02 million [2] Earnings Outlook - The current consensus EPS estimate for the coming quarter is $0.03 on revenues of $147.87 million, and for the current fiscal year, it is $0.16 on revenues of $619.45 million [7] - The estimate revisions trend for Varonis is currently unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Industry Context - The Security industry, to which Varonis belongs, is currently in the bottom 31% of over 250 Zacks industries, suggesting that the outlook for the industry can significantly impact stock performance [8] - Another company in the same industry, Fortinet, is expected to report quarterly earnings of $0.53 per share, reflecting a year-over-year change of +23.3%, with revenues anticipated to be $1.54 billion, up 13.5% from the previous year [9][10]

Financial Data and Key Metrics Changes - In Q1, Annual Recurring Revenue (ARR) grew 19% year-over-year to $664.3 million, with free cash flow increasing to $65.3 million from $56.4 million in the same period last year [9][22][24] - Total revenues for Q1 were $136.4 million, reflecting a 20% year-over-year increase, despite a 1% headwind due to the increased SaaS sales mix [23][24] - Gross profit was $109.4 million, resulting in a gross margin of 80.2%, down from 83.3% in Q1 2024 [24][25] - The company reported a net income of $700,000, compared to a net loss of $3.7 million in Q1 2024 [25] Business Line Data and Key Metrics Changes - SaaS revenues reached $88.6 million, while term license subscription revenues were $31.5 million, and maintenance and services revenues were $16.4 million, with renewal rates exceeding 90% [23][24] - Maintenance and services revenues declined by 32% year-over-year, primarily due to perpetual maintenance customers converting to the SaaS platform [24] Market Data and Key Metrics Changes - SaaS ARR now represents approximately 61% of total ARR, an increase from 53% in Q4 [21][22] - The company is experiencing strong demand for its SaaS solutions, particularly in securing data across cloud platforms [12][13] Company Strategy and Development Direction - The company is accelerating its SaaS transition, aiming to complete it by the end of the year, driven by strong demand for its SaaS solutions [9][10] - The acquisition of Firal enhances the company's data security platform, allowing for next-generation database activity monitoring and expanding its total addressable market [16][17] - The company is focusing on automating data security and integrating AI tools to enhance customer protection and satisfaction [10][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving over 20% ARR growth, citing strong customer demand and healthy new customer momentum [21][32] - The macroeconomic environment remains uncertain, but the company is focused on factors within its control and is optimistic about long-term opportunities [50][51] Other Important Information - The company repurchased 1,476,456 shares at an average price of $41.49, totaling $61.3 million [26] - The acquisition of Cyril is expected to add approximately $4 million in operating expenses in 2025, with no immediate impact on ARR or revenue [27][81] Q&A Session Summary Question: Confidence in ARR growth exceeding 20% - Management highlighted strong SaaS NRR trends and customer demand as key factors supporting confidence in achieving over 20% ARR growth [31][32] Question: MDDR adoption and competitive environment - Management noted that MDDR has been the fastest adopted platform, with strong customer interest in data-centric security solutions [36][40] Question: Operating margins and transition dynamics - Management indicated that the trough in operating margins is expected this year, with improvements anticipated as the transition progresses [43][44] Question: Macro impacts on performance - Despite macro uncertainty, management reported strong demand from both new and existing customers, contributing to ARR acceleration [48][51] Question: New logo momentum and customer adoption - Management observed that the MDDR offering and AI tools have simplified the value proposition for new customers, leading to increased adoption [84][85] Question: Gross margin outlook and operating income range - Management explained that gross margin volatility is expected during the transition, with a long-term target of around 80% by 2027 [90][91]

Financial Data and Key Metrics Changes - In Q1 2025, Annual Recurring Revenue (ARR) grew 19% year-over-year to $664.3 million, with SaaS ARR now representing approximately 61% of total ARR, an increase from 53% in Q4 2024 [7][19][20] - Free cash flow for the quarter was $65.3 million, up from $56.4 million in the same period last year [7][20] - Total revenues for Q1 were $136.4 million, reflecting a 20% year-over-year increase [20] - Gross profit was $109.4 million, resulting in a gross margin of 80.2%, down from 83.3% in Q1 2024 [21] - The company reported a net income of $700,000, compared to a net loss of $3.7 million in Q1 2024 [22] Business Line Data and Key Metrics Changes - SaaS revenues reached $88.6 million, while term license subscription revenues were $31.5 million, and maintenance and services revenues were $16.4 million, with renewal rates exceeding 90% [20] - Maintenance and services revenues declined by 32% year-over-year, primarily due to perpetual maintenance customers converting to the SaaS platform [21] Market Data and Key Metrics Changes - The company noted strong customer interest in deploying generative AI tools, which has driven new customer engagement and existing customer conversions to the SaaS platform [8][10] - The acquisition of Firal is expected to enhance the company's data security platform and expand its total addressable market [13][14] Company Strategy and Development Direction - The company is accelerating its SaaS transition, aiming to complete it by the end of 2025, driven by strong demand for its SaaS solutions [6][7] - Varonis is focusing on providing automated data security across various platforms, including cloud data stores, which is seen as a competitive advantage [10][11] - The acquisition of Firal is part of a strategy to unify structured and unstructured data security monitoring, addressing more auditing and compliance use cases [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to achieve over 20% ARR growth, citing strong SaaS net revenue retention and new customer momentum [19][29] - The management acknowledged macroeconomic uncertainties but emphasized strong demand from both new and existing customers, which contributed to ARR acceleration [48] Other Important Information - The company repurchased 1,476,456 shares at an average price of $41.49, totaling $61.3 million [23] - The updated guidance for 2025 includes an ARR expectation of $742 million to $750 million, representing growth of 16% to 17% [24] Q&A Session Summary Question: What gives confidence that ARR can grow north of 20%? - Management highlighted strong SaaS net revenue retention and customer demand as key factors supporting this confidence [28][29] Question: Can you provide more color around MDDR adoption and the competitive environment? - Management noted that MDDR has been the fastest adopted platform and emphasized the need for a data-centric approach to prevent data breaches [34][37] Question: How far are we from the trough in operating margins? - Management indicated that the trough is expected to occur this year, with improvements anticipated as the transition progresses [41][42] Question: What impacts did the macro environment have in the quarter? - Despite macro uncertainties, management reported strong demand and confidence in the long-term opportunity, leading to raised ARR guidance [48] Question: Can you discuss the recent acquisition in the database activity monitoring space? - Management described the acquisition as a natural extension of their offerings, addressing customer dissatisfaction with incumbents and enhancing their data security capabilities [56][58] Question: How is the company addressing new customer adoption behavior? - Management noted that the simplicity and automation of their offerings have improved their ability to attract new customers [81]

Varonis First Quarter 2025 Financial Results [Financial and Business Highlights](index=1&type=section&id=Financial%20and%20Business%20Highlights) Varonis reported strong Q1 2025 results, driven by SaaS platform transition, with ARR growing 19% to $664.3 million and SaaS ARR reaching 61% of total - The company's Q1 results reflect the momentum of its SaaS platform, with SaaS ARR reaching **61% of total company ARR**. Management attributes growth to tailwinds including MDDR and Generative AI[2](index=2&type=chunk) Q1 2025 Financial Performance vs. Q1 2024 | Metric | Q1 2025 ($) | Q1 2024 ($) | | :--- | :--- | :--- | | Total Revenues | $136.4 million | $114.0 million | | SaaS Revenues | $88.6 million | $34.0 million | | GAAP Operating Loss | ($43.8) million | ($47.6) million | | Non-GAAP Operating Loss | ($6.5) million | ($10.6) million | Q1 2025 Key Performance Indicators | Metric | Value ($) | Change (YoY) | | :--- | :--- | :--- | | Annual Recurring Revenues (ARR) | $664.3 million | +19% | | Cash from Operations (YTD) | $68.0 million | vs. $56.7 million | | Free Cash Flow (YTD) | $65.3 million | vs. $56.4 million | - Key business developments in the quarter include: Acquired Cyral to expand the Varonis Data Security Platform with next-gen Database Activity Monitoring; Launched Varonis for Agentforce to secure the AI layer of the Salesforce platform; Repurchased **1.5 million shares** for a total of **$61.3 million**; Opened new data centers in India to support customer expansion[6](index=6&type=chunk)[7](index=7&type=chunk) [Financial Outlook](index=2&type=section&id=Financial%20Outlook) Varonis provided Q2 and raised full-year 2025 guidance, projecting Q2 revenues of $145.0-$150.0 million and full-year ARR of $742.0-$750.0 million - Despite an uncertain macro environment, the company raised its full-year ARR guidance based on strong Q1 performance and business drivers[2](index=2&type=chunk) Q2 2025 Financial Outlook | Metric | Expected Range ($) | | :--- | :--- | | Revenues | $145.0M - $150.0M (11%-15% YoY Growth) | | Non-GAAP Operating Loss | ($5.0)M - ($2.0)M | | Non-GAAP Net Income per Diluted Share | $0.00 - $0.01 | Full Year 2025 Financial Outlook (Updated) | Metric | Expected Range ($) | | :--- | :--- | | Revenues | $610.0M - $625.0M (11%-13% YoY Growth) | | ARR | $742.0M - $750.0M (16%-17% YoY Growth) | | Non-GAAP Operating Income | $0.5M - $10.5M | | Non-GAAP Net Income per Diluted Share | $0.14 - $0.17 | | Free Cash Flow | $120.0M - $125.0M | [Non-GAAP Financial Measures and Key Performance Indicators](index=2&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Key%20Performance%20Indicators) This section details the company's non-GAAP financial measures and defines key performance indicators like ARR and Free Cash Flow for clearer operational insights - Non-GAAP operating income (loss) is calculated by excluding stock-based compensation expense, related payroll tax expense, and amortization of acquired intangible assets and acquisition-related expenses[11](index=11&type=chunk) - Non-GAAP net income (loss) excludes the same items as non-GAAP operating income, plus foreign exchange gains/losses, amortization of debt issuance costs, and acquisition-related taxes[12](index=12&type=chunk) - Annual Recurring Revenue (ARR) is a key performance indicator defined as the annualized value of active SaaS, term-based subscription license, and maintenance contracts at the end of a period. It is not a forecast of future revenues[19](index=19&type=chunk) - Free cash flow is defined as net cash from operating activities less purchases of property and equipment and capitalized internal-use software. It is considered a useful indicator of liquidity[15](index=15&type=chunk) [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) This section presents the unaudited Condensed Consolidated Statements of Operations, Balance Sheets, and Cash Flows for Q1 2025, offering a GAAP-based financial overview [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Total revenues for Q1 2025 increased to **$136.4 million**, driven by SaaS revenue growth, while GAAP operating loss narrowed to **($43.8) million** Condensed Consolidated Statements of Operations (in thousands) | Line Item | Q1 2025 ($) | Q1 2024 ($) | | :--- | :--- | :--- | | **Total revenues** | **$136,423** | **$114,022** | | SaaS | $88,560 | $33,985 | | Term license subscriptions | $31,488 | $55,980 | | Maintenance and services | $16,375 | $24,057 | | Gross profit | $107,405 | $92,673 | | **Operating loss** | **($43,766)** | **($47,633)** | | **Net loss** | **($35,783)** | **($40,490)** | | Net loss per share, basic and diluted | ($0.32) | ($0.37) | - The decline in term license subscription and maintenance revenues was primarily driven by customers converting to the company's SaaS platform[5](index=5&type=chunk) [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets were **$1.58 billion** and total liabilities **$1.21 billion**, with **$1.2 billion** in cash and marketable securities Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | Cash and cash equivalents | $153,107 | $185,585 | | Total marketable securities | $1,006,226 | $1,002,279 | | **Total assets** | **$1,577,094** | **$1,664,275** | | Total current liabilities | $710,108 | $709,885 | | Total long-term liabilities | $499,243 | $498,734 | | **Total liabilities** | **$1,209,351** | **$1,208,619** | | **Total stockholders' equity** | **$367,743** | **$455,656** | - As of March 31, 2025, the company had **$1.2 billion** in cash and cash equivalents, short-term deposits, and marketable securities[6](index=6&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For Q1 2025, cash from operations increased to **$68.0 million**, resulting in **$65.3 million** free cash flow, with **$75.5 million** used in financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Q1 2025 ($) | Q1 2024 ($) | | :--- | :--- | :--- | | Net cash provided by operating activities | $68,000 | $56,723 | | Net cash used in investing activities | ($25,017) | ($111,966) | | Net cash used in financing activities | ($75,461) | ($28,446) | | **Decrease in cash and cash equivalents** | **($32,478)** | **($83,689)** | - Cash used in financing activities included **$61.3 million** for the repurchase of common stock and **$21.4 million** for taxes paid related to net share settlement of equity awards[33](index=33&type=chunk) [Reconciliation of GAAP to Non-GAAP Measures](index=9&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) This section provides detailed reconciliations of GAAP to non-GAAP financial measures for Q1 2025 and Q1 2024, including operating loss, net income, and free cash flow Reconciliation of GAAP to Non-GAAP Operating Loss (in thousands) | Line Item | Q1 2025 ($) | Q1 2024 ($) | | :--- | :--- | :--- | | **GAAP operating loss** | **($43,766)** | **($47,633)** | | Stock-based compensation | $32,255 | $32,093 | | Payroll tax related to stock comp. | $3,067 | $4,587 | | Amortization & acquisition expenses | $1,986 | $381 | | **Non-GAAP operating loss** | **($6,458)** | **($10,572)** | Reconciliation of GAAP Net Loss to Non-GAAP Net Income (Loss) (in thousands) | Line Item | Q1 2025 ($) | Q1 2024 ($) | | :--- | :--- | :--- | | **GAAP net loss** | **($35,783)** | **($40,490)** | | Total add-backs | $36,451 | $36,763 | | **Non-GAAP net income (loss)** | **$668** | **($3,727)** | Reconciliation to Free Cash Flow (in thousands) | Line Item | Q1 2025 ($) | Q1 2024 ($) | | :--- | :--- | :--- | | Net cash provided by operating activities | $68,000 | $56,723 | | Purchases of property and equipment | ($2,339) | ($297) | | Capitalized internal-use software | ($325) | — | | **Free cash flow** | **$65,336** | **$56,426** |