DigitalOcean(DOCN) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis of DigitalOcean Holdings, Inc Item 1. Financial Statements (unaudited) This section presents the unaudited condensed consolidated financial statements of DigitalOcean Holdings, Inc. for the periods ended June 30, 2025, and December 31, 2024 (balance sheets), and for the three and six months ended June 30, 2025 and 2024 (statements of operations, comprehensive income, stockholders' deficit, and cash flows), along with detailed explanatory notes Condensed Consolidated Balance Sheets The company's financial position shows an increase in total assets and liabilities, with an improved stockholders' deficit | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Total assets | $1,719,808 | $1,639,015 | | Total liabilities | $1,895,025 | $1,841,970 | | Total stockholders' deficit | $(175,217) | $(202,955) | - Total assets increased by $80.8 million from December 31, 2024, to June 30, 2025, while total liabilities increased by $53.0 million[15] - The stockholders' deficit improved from $(202,955) thousand to $(175,217) thousand[15] Condensed Consolidated Statements of Operations The company reported significant revenue growth and a more than doubling of net income for both the three-month and six-month periods year-over-year | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $218,700 | $192,476 | $429,403 | $377,206 | | Gross profit | $130,945 | $114,148 | $260,389 | $223,296 | | Income from operations| $35,619 | $22,328 | $73,261 | $33,866 | | Net income | $37,027 | $19,138 | $75,231 | $33,277 | | Basic EPS | $0.41 | $0.21 | $0.82 | $0.37 | | Diluted EPS | $0.39 | $0.20 | $0.77 | $0.35 | - Revenue increased by 13.6% YoY for the three months ended June 30, 2025, and by 13.8% YoY for the six months ended June 30, 2025[17] - Net income more than doubled for both the three-month and six-month periods year-over-year[17] Condensed Consolidated Statements of Comprehensive Income Comprehensive income saw a substantial increase, primarily driven by higher net income and positive foreign currency translation adjustments in 2025 | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $37,027 | $19,138 | $75,231 | $33,277 | | Other comprehensive income (loss) | $606 | $14 | $906 | $(125) | | Comprehensive income | $37,633 | $19,152 | $76,137 | $33,152 | - Comprehensive income significantly increased, driven by higher net income and positive foreign currency translation adjustments in 2025 compared to 2024[20] Condensed Consolidated Statements of Stockholders' Deficit The total stockholders' deficit decreased, primarily due to net income, partially offset by share repurchases and a decrease in additional paid-in capital | Metric (in thousands) | Balance at Dec 31, 2024 | Balance at June 30, 2025 | | :-------------------- | :---------------------- | :----------------------- | | Common Stock Amount | $2 | $2 | | Additional Paid-In Capital | $57,282 | $8,883 | | Accumulated Other Comprehensive Loss | $(1,497) | $(591) | | Accumulated Deficit | $(258,742) | $(183,511) | | Total Stockholders' Deficit | $(202,955) | $(175,217) | - The total stockholders' deficit decreased from $(202,955) thousand at December 31, 2024, to $(175,217) thousand at June 30, 2025, primarily due to net income attributable to common stockholders of $75,231 thousand, partially offset by share repurchases and a decrease in additional paid-in capital[26] Condensed Consolidated Statements of Cash Flows Operating cash flow increased, but net cash used in investing and financing activities rose significantly due to increased capital expenditures and share repurchases | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $156,537 | $138,033 | | Net cash (used in) provided by investing activities | $(100,407) | $12,095 | | Net cash used in financing activities | $(96,876) | $(24,193) | | (Decrease) increase in cash, cash equivalents and restricted cash | $(40,701) | $125,874 | - Net cash provided by operating activities increased by $18.5 million YoY[28] - Net cash used in investing activities significantly increased to $(100.4) million in 2025 from a positive $12.1 million in 2024[28] - Net cash used in financing activities also increased substantially due to higher share repurchases[28] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations of the company's business, significant accounting policies, and specific financial statement line items Note 1. Nature of the Business and Organization DigitalOcean Holdings, Inc. is a cloud computing platform offering IaaS, PaaS, SaaS, and a comprehensive AI/ML platform, continuously investing to penetrate growing markets - DigitalOcean Holdings, Inc. is a cloud computing platform offering IaaS, PaaS, SaaS, and a comprehensive AI/ML platform (DigitalOcean Gradient™ AI Agentic Cloud) including GPU Droplets, Bare Metal GPUs, Gradient AI Platform (LLMs), and Gradient AI Agents[34] - The company continues to invest in its platform to penetrate growing markets[34] Note 2. Summary of Significant Accounting Policies The company reclassified certain personnel costs to cost of revenue for better comparability and is evaluating the impact of new FASB ASUs on financial disclosures - The company reclassified personnel costs related to customer support and certain other costs from sales and marketing and R&D to cost of revenue starting Q4 2024 to better reflect costs and improve comparability with peers[37][38] - This reclassification did not impact income from operations, net income, or EPS[37][38] | Metric (in thousands) | June 30, 2025 | June 30, 2024 | | :-------------------- | :------------ | :------------ | | Cash and cash equivalents | $387,745 | $443,110 | | Restricted cash | $1,747 | $1,747 | | Total cash, cash equivalents and restricted cash | $389,492 | $444,857 | - The allowance for expected credit losses increased from $5,940 thousand at December 31, 2024, to $6,066 thousand at June 30, 2025, with a provision of $8,607 thousand and write-offs of $8,481 thousand[42] - The company is evaluating the impact of new FASB ASUs 2023-09 (Income Tax Disclosures, effective after Dec 15, 2024) and 2024-03/2025-01 (Expense Disaggregation Disclosures, effective after Dec 15, 2026/2027) on its financial disclosures[43][44] Note 3. Revenue Revenue growth was observed across customer categories and geographical regions, with an increase in deferred revenue and remaining performance obligations | Customer Category (3 Months Ended June 30) | 2025 Amount (in thousands) | 2025 % of Revenue | 2024 Amount (in thousands) | 2024 % of Revenue | | :----------------------------------------- | :------------------------- | :---------------- | :------------------------- | :---------------- | | Builders | $62,789 | 29% | $58,466 | 30% | | Scalers | $78,986 | 36% | $69,937 | 36% | | Scalers+ | $53,052 | 24% | $39,257 | 21% | | Learners, Testers and Other | $23,873 | 11% | $24,816 | 13% | | Total | $218,700 | 100% | $192,476 | 100% | | Geographical Revenue (3 Months Ended June 30) | 2025 Amount (in thousands) | 2025 % of Revenue | 2024 Amount (in thousands) | 2024 % of Revenue | | :-------------------------------------------- | :------------------------- | :---------------- | :------------------------- | :---------------- | | North America | $79,560 | 37% | $73,682 | 38% | | Europe | $59,660 | 27% | $54,565 | 28% | | Asia | $50,752 | 23% | $44,345 | 23% | | Rest of the world | $28,728 | 13% | $19,884 | 11% | | Total | $218,700 | 100% | $192,476 | 100% | - Deferred revenue increased from $5,397 thousand at December 31, 2024, to $11,264 thousand at June 30, 2025[50] - The aggregate transaction price for remaining performance obligations was $53,402 thousand as of June 30, 2025, with a weighted-average remaining life of 1.9 years[53] Note 4. Fair Value Measurements The fair value of convertible notes increased, while interest income from investments decreased year-over-year | Financial Instrument (in thousands) | June 30, 2025 Carrying Value | June 30, 2025 Fair Value | Dec 31, 2024 Carrying Value | Dec 31, 2024 Fair Value | | :---------------------------------- | :----------------------------- | :----------------------- | :-------------------------- | :---------------------- | | Convertible Notes | $1,489,164 | $1,400,625 | $1,485,366 | $1,344,375 | - Interest income from investments decreased from $5,128 thousand in Q2 2024 to $3,202 thousand in Q2 2025, and from $10,402 thousand in H1 2024 to $6,859 thousand in H1 2025[56] Note 5. Balance Sheet Details Property and equipment, net, increased due to investments in servers, while depreciation expense decreased year-over-year | Property and Equipment, Net (in thousands) | June 30, 2025 | December 31, 2024 | | :----------------------------------------- | :------------ | :---------------- | | Servers and related equipment | $909,179 | $833,893 | | Internal-use software | $99,259 | $94,981 | | Property and equipment, gross | $1,021,426 | $949,555 | | Less: accumulated depreciation | $(474,163) | $(439,664) | | Less: accumulated amortization | $(81,742) | $(77,347) | | Property and equipment, net | $465,521 | $432,544 | - Property and equipment, net, increased by $32.9 million from December 31, 2024, to June 30, 2025, primarily driven by an increase in servers and related equipment[59] - Depreciation expense for property and equipment decreased YoY for both the three-month and six-month periods[59] | Other Assets (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Prepaid expenses, long term | $7,892 | $5,353 | | Deferred financing fees | $5,109 | $782 | | Other assets | $15,042 | $8,537 | Note 6. Debt The company issued $1.5 billion in convertible notes and established a new $500 million term loan and $300 million revolving credit facility, replacing a previous facility - The company issued $1.5 billion in 0% Convertible Senior Notes due December 1, 2026[62] - Amortization of deferred financing fees was $1,900 thousand for Q2 2025 and $3,798 thousand for H1 2025[62] - On May 5, 2025, DigitalOcean entered into a new $500 million senior secured delayed draw term loan facility and a $300 million senior secured revolving credit facility (2025 Credit Facility), maturing on May 5, 2030[64][67] - The proceeds from the Term Loan Facility are specifically for repurchasing Convertible Notes[64][67] - In connection with the 2025 Credit Facility, the company incurred $4,560 thousand in issuance fees[68][69] - As of June 30, 2025, there were no outstanding borrowings under the 2025 Credit Facility[68][69] - The previous 2022 Credit Facility was terminated on May 5, 2025, upon the entry into the new 2025 Credit Facility[71] Note 7. Commitments and Contingencies The company has estimated undiscounted fixed payment obligations for uncommenced leases and an outstanding letter of credit related to an office space lease - As of June 30, 2025, the company had $3,218 thousand in estimated undiscounted fixed payment obligations for uncommenced leases, primarily for data center co-location space, expected to begin between July and September 2025 with a weighted-average lease term of 3.6 years[73] - A letter of credit for $1,747 thousand related to an office space operating lease was outstanding as of June 30, 2025, with no draws made[74] Note 8. Stockholders' Equity Under the 2024 Share Buyback Program, the company repurchased and retired a significant number of shares during Q2 and H1 2025 - Under the 2024 Share Buyback Program, the company repurchased and retired 691,290 shares for $20,147 thousand in Q2 2025, and 2,255,544 shares for $79,199 thousand in H1 2025[76][77] - The program is authorized for up to $140 million through fiscal year 2025[76][77] Note 9. Stock-Based Compensation Significant shares remain available for grant under equity incentive plans, with substantial unrecognized stock-based compensation for RSUs and PRSUs - As of June 30, 2025, there were 25,512,131 shares available for grant under the 2021 Equity Incentive Plan and 5,202,269 shares available under the ESPP[78][87] - Unrecognized stock-based compensation was $131,757 thousand for RSUs (2.7 years weighted-average period) and $6,474 thousand for PRSUs (2.6 years weighted-average period) as of June 30, 2025[83] | Stock-Based Compensation (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of revenue | $1,422 | $1,611 | $2,817 | $2,987 | | Research and development | $9,456 | $8,480 | $17,725 | $17,468 | | Sales and marketing | $3,089 | $2,610 | $5,635 | $5,935 | | General and administrative | $7,114 | $9,132 | $14,336 | $18,320 | | Total | $21,081 | $21,833 | $40,513 | $44,710 | Note 10. Net Income per Share Attributable to Common Stockholders Diluted EPS increased significantly year-over-year for both the three-month and six-month periods, with convertible notes contributing to potential dilution | EPS Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic EPS | $0.41 | $0.21 | $0.82 | $0.37 | | Diluted EPS| $0.39 | $0.20 | $0.77 | $0.35 | - Diluted EPS increased significantly from $0.20 to $0.39 YoY for the three months ended June 30, 2025, and from $0.35 to $0.77 YoY for the six months ended June 30, 2025[89] | Potentially Dilutive Securities (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Stock Options | 689 | 1,573 | 812 | 1,751 | | RSUs | 392 | 880 | 711 | 1,133 | | PRSUs | 36 | 61 | 57 | 72 | | Convertible Notes | 8,403 | — | 8,403 | — | Note 11. Income Taxes The effective tax rate decreased in 2025 due to a full U.S. valuation allowance and other factors, with a possibility of future deferred tax asset realization | Income Tax Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income tax expense | $(5,421) | $(5,671) | $(8,597) | $(5,787) | | Effective tax rate | 12.8% | 22.9% | 10.3% | 14.8% | - The effective tax rate decreased in 2025 compared to 2024, primarily due to a full valuation allowance in the U.S., mix of foreign income, excess tax benefits from stock-based compensation, and R&D credits[93][95] - The company is not currently subject to OECD Pillar Two global minimum tax[93][95] - The company believes there is a reasonable possibility that within the next 12 months, sufficient positive evidence may become available to support the realization of deferred tax assets, potentially leading to a release of the valuation allowance and a decrease in income tax expense[96] Note 12. Segment and Geographical Information DigitalOcean operates as a single segment, with long-lived assets primarily located in the United States - DigitalOcean operates as a single operating and reporting segment, with the CEO assessing performance based on consolidated results against the annual operating plan[98] | Long-Lived Assets, Net (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | United States | $498,444 | $381,708 | | Netherlands | $76,240 | $76,707 | | Germany | $45,797 | $44,489 | | Canada | $35,690 | $32,688 | | Other | $78,483 | $84,829 | | Total | $734,654 | $620,421 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on DigitalOcean's financial condition and results of operations, highlighting key business metrics, factors affecting performance, and a detailed comparison of financial results for the three and six months ended June 30, 2025, and 2024, along with discussions on liquidity, capital resources, and non-GAAP financial measures Overview DigitalOcean is a leading cloud computing platform offering IaaS, PaaS, SaaS, and AI/ML services, with a focus on simplicity, scalability, and approachability, and a growing customer base entering committed contracts - DigitalOcean is a leading cloud computing platform offering IaaS, PaaS, SaaS, and AI/ML services, including DigitalOcean Gradient™ AI Agentic Cloud[103][104][105] - The company focuses on simplicity, scalability, and approachability as key differentiators[103][104][105] - Revenue is primarily generated from consumption-based cloud computing platform usage[106] - A growing number of customers are entering into committed contracts for larger workloads[106] - Higher Spend Customers (Builders, Scalers, Scalers+) represented 89% of total revenue in Q2 2025, up from 87% in Q2 2024[108] - The number of Higher Spend Customers increased to approximately 174,000 as of June 30, 2025, from 160,000 as of June 30, 2024[108] - ARPU increased from $99.45 in Q2 2024 to $111.70 in Q2 2025[109][110] - ARR as of June 30, 2025, was $875 million, up from $770 million as of June 30, 2024[109][110] Key Factors Affecting Our Performance The company focuses on increasing usage by existing customers, growing Higher Spend Customers through strategic initiatives, investing in platform offerings, and pursuing partnerships and acquisitions - The company aims to increase usage by existing customers through understanding their needs, increasing feature velocity, shaping product roadmap for Higher Spend Customers, and introducing account management[114] - Net Dollar Retention (NDR) increased from 97% in Q2 2024 to 99% in Q2 2025[114] - Strategies to grow Higher Spend Customers include new marketing initiatives, enhanced R&D, a new migration services team, and a dedicated AI sales team[115] - DigitalOcean continues to invest in its platform and product offerings, particularly in IaaS, PaaS/SaaS, and AI/ML, to meet the evolving needs of digital native enterprises[116][117] - Strategic partnerships and acquisitions, such as with Hugging Face, are pursued to accelerate platform, product, and marketing initiatives and expand product offerings[119] Key Business Metrics Higher Spend Customers are a critical focus, representing a significant majority of revenue and growth, with ARPU and ARR showing positive trends | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | | Builders | 154,186 | 142,546 | | Scalers | 19,680 | 16,990 | | Scalers+ | 585 | 474 | | ARPU | $111.70 | $99.45 | | ARR (in millions) | $875 | $770 | | Net dollar retention rate | 99% | 97% | - Higher Spend Customers (Builders, Scalers, Scalers+) are a critical focus, representing a significant majority of revenue and growth[125][124] - The company changed its methodology for calculating customer count and ARR in Q4 2024, with prior periods recast[125][124] - ARPU is calculated monthly as total revenue from Learners, Builders, Scalers, and Scalers+ divided by their total count[128][129] - ARR is calculated by multiplying the most recent quarter's revenue by four[128][129] Components of Results of Operations Revenue is derived from various cloud offerings, with cost of revenue including data center and personnel costs, while operating expenses are expected to increase due to growth investments - Revenue is generated from IaaS, PaaS, SaaS, and AI/ML offerings, with sales incentives and credits recorded as contract liabilities[131][132] - Cost of revenue includes data center fees, personnel costs for customer support/operations, and partnership expenses[133][134] - The company plans continued investment in infrastructure[133][134] - Operating expenses (R&D, Sales & Marketing, G&A) are expected to increase in absolute dollars due to investments in platform, product offerings, and business growth[135][136][137] - Other income, net, primarily consists of interest income, amortization of deferred financing fees, and foreign currency exchange gains/losses[138][139] - Income tax expense is influenced by the mix of income in various jurisdictions and a full valuation allowance on U.S. deferred tax assets[138][139] Results of Operations This section provides a detailed comparison of the company's financial performance for the three and six months ended June 30, 2025, and 2024 Comparison of the Three Months Ended June 30, 2025 and 2024 Revenue growth was driven by increased ARPU and Higher Spend Customers, while general and administrative expenses decreased due to lower personnel costs | Metric (in thousands) | 2025 | 2024 | $ Change | % Change | | :-------------------- | :--- | :--- | :------- | :------- | | Revenue | $218,700 | $192,476 | $26,224 | 14% | | Cost of revenue | $87,755 | $78,328 | $9,427 | 12% | | Research and development | $39,644 | $32,984 | $6,660 | 20% | | Sales and marketing | $19,288 | $17,997 | $1,291 | 7% | | General and administrative | $36,394 | $40,839 | $(4,445) | (11%) | | Other income, net | $6,829 | $2,481 | $4,348 | 175% | | Income tax expense | $(5,421) | $(5,671) | $250 | (4%) | - Revenue growth was primarily driven by a 12% increase in ARPU and a 16% increase in revenue from Higher Spend Customers[147][148] - Gross profit increased to 60% from 59% YoY[147][148] - General and administrative expenses decreased due to lower personnel and recruiting costs, including reversals of stock-based compensation from forfeited RSUs, partially offset by increases in professional services, digital services tax, and payment processing fees[152] Comparison of the Six Months Ended June 30, 2025 and 2024 Revenue increased by 14% driven by ARPU and Higher Spend Customers, while general and administrative expenses significantly decreased due to lower personnel costs | Metric (in thousands) | 2025 | 2024 | $ Change | % Change | | :-------------------- | :--- | :--- | :------- | :------- | | Revenue | $429,403 | $377,206 | $52,197 | 14% | | Cost of revenue | $169,014 | $153,910 | $15,104 | 10% | | Research and development | $79,238 | $65,911 | $13,327 | 20% | | Sales and marketing | $38,689 | $36,907 | $1,782 | 5% | | General and administrative | $69,201 | $86,612 | $(17,411)| (20%) | | Other income, net | $10,567 | $5,198 | $5,369 | 103% | | Income tax expense | $(8,597) | $(5,787) | $(2,810) | 49% | - Revenue increased by 14% driven by a 13% increase in ARPU and a 16% increase in revenue from Higher Spend Customers[156][157] - Gross profit increased to 61% from 59% YoY[156][157] - General and administrative expenses decreased significantly due to lower personnel costs related to acquisition-related deferred compensation and executive reorganization in H1 2024[160] Liquidity and Capital Resources The company expects sufficient liquidity from existing cash, operations, and credit facilities for both short-term and long-term needs, despite increased cash usage in investing and financing activities - The company believes existing cash, cash equivalents, cash flow from operations, and the 2025 Credit Facility will be sufficient for working capital, capital expenditures, and contractual commitments for at least the next 12 months and long term[164] - For the six months ended June 30, 2025, the company repurchased and retired 2,255,544 shares of common stock for $79 million under the 2024 Share Buyback Program[165] | Cash Flow Summary (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $156,537 | $138,033 | | Net cash (used in) provided by investing activities | $(100,407) | $12,095 | | Net cash used in financing activities | $(96,876) | $(24,193) | | (Decrease) increase in cash, cash equivalents and restricted cash | $(40,701) | $125,874 | - The change in investing activities was primarily due to a $91.7 million reallocation of marketable securities to cash equivalents and increased capital expenditures[172] Non‑GAAP Financial Measures DigitalOcean utilizes non-GAAP financial measures, including Adjusted EBITDA and Non-GAAP Net Income, to provide additional insights into its operating performance - DigitalOcean uses non-GAAP financial measures, including Adjusted EBITDA, Adjusted EBITDA Margin, Non-GAAP Net Income, and Non-GAAP Diluted Net Income Per Share, to supplement GAAP results and provide insights into operating performance[178][179] | Adjusted EBITDA (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | GAAP Net income | $37,027 | $19,138 | $75,231 | $33,277 | | Adjusted EBITDA | $89,465 | $81,586 | $175,749 | $155,910 | | Adjusted EBITDA margin | 41% | 42% | 41% | 41% | | Non-GAAP Net Income (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | GAAP Net income | $37,027 | $19,138 | $75,231 | $33,277 | | Non-GAAP Net income | $57,815 | $47,605 | $113,264 | $90,352 | | Non-GAAP Net income per share, diluted | $0.59 | $0.48 | $1.15 | $0.91 | Item 3. Quantitative and Qualitative Disclosures about Market Risk No material changes in market risk were reported compared to the information provided in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - No material changes in market risk were reported compared to the previous Annual Report on Form 10-K[190] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting identified during the quarter - Disclosure controls and procedures were evaluated as effective at the reasonable assurance level as of June 30, 2025[191] - No material changes in internal control over financial reporting were identified during the quarter ended June 30, 2025[192] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity security sales, defaults, mine safety, other information, exhibits, and signatures Item 1. Legal Proceedings The company is not currently involved in any litigation expected to have a material adverse effect on its financial position, results of operations, or liquidity - No current legal proceedings are expected to have a material adverse effect on the company's financial position, results of operations, or liquidity[194] Item 1A. Risk Factors No material changes to the risk factors discussed in the Annual Report on Form 10-K for the year ended December 31, 2024, were reported - No material changes to the risk factors discussed in the Annual Report on Form 10-K for the year ended December 31, 2024[195] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased a significant number of common shares under its 2024 Share Buyback Program during the three months ended June 30, 2025 | Period | Total Number of Shares Purchased | Average Price Paid per Share | Approximate Dollar Value of Shares that May Yet Be Purchased (in thousands) | | :--------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------------ | | April 1-30, 2025 | 234,503 | $29.11 | $16,744 | | May 1-31, 2025 | 227,620 | $29.97 | $9,923 | | June 1-30, 2025 | 229,167 | $28.36 | $3,425 | | Total | 691,290 | $29.14 | | - The 2024 Share Buyback Program, approved for up to $140 million through fiscal year 2025, resulted in the repurchase of 691,290 shares for an average price of $29.14 per share during Q2 2025[196] Item 3. Defaults Upon Senior Securities This item is marked as 'Not applicable,' indicating no defaults upon senior securities Item 4. Mine Safety Disclosures This item is marked as 'Not applicable,' indicating no mine safety disclosures Item 5. Other Information The Chief Product and Technology Officer adopted a Rule 10b5-1(c) trading plan for the sale of common stock between September 2025 and June 2026 - Bratin Saha, Chief Product and Technology Officer, adopted a 10b5-1 trading plan to sell up to 130,557 shares of common stock between September 3, 2025, and June 1, 2026[199] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including the Credit Agreement, CEO and CFO certifications, and Inline XBRL documents - Key exhibits include the Credit Agreement dated May 5, 2025, CEO and CFO certifications (Rule 13a-14(a)/15d-14(a) and 18 U.S.C. Section 1350), and Inline XBRL documents[202] Signatures The report was duly signed on August 5, 2025, by the Chief Executive Officer and Chief Financial Officer, certifying its submission - The report was signed by CEO Padmanabhan Srinivasan and CFO W. Matthew Steinfort on August 5, 2025[206]