PEGA(PEGA) - 2024 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis for the quarter ITEM 1. FINANCIAL STATEMENTS This section presents Pegasystems Inc.'s unaudited condensed consolidated financial statements and related notes for Q1 2024 Unaudited Condensed Consolidated Balance Sheets This section provides a snapshot of the company's financial position at March 31, 2024, and December 31, 2023 Balance Sheet Highlights (in thousands): | Metric | March 31, 2024 | December 31, 2023 | Change | | :------------------------------------ | :------------- | :---------------- | :----- | | Total assets | $1,511,728 | $1,510,736 | +$992 | | Total current assets | $1,059,587 | $1,029,027 | +$30,560 | | Cash and cash equivalents | $291,905 | $229,902 | +$62,003 | | Marketable securities | $327,044 | $193,436 | +$133,608 | | Accounts receivable, net | $191,987 | $300,173 | -$108,186 | | Unbilled receivables, net | $170,458 | $237,379 | -$66,921 | | Total liabilities | $1,121,542 | $1,156,898 | -$35,356 | | Total current liabilities | $1,044,279 | $577,059 | +$467,220 | | Convertible senior notes, net (current) | $499,985 | — | +$499,985 | | Long-term convertible senior notes, net | — | $499,368 | -$499,368 | | Total stockholders' equity | $390,186 | $353,838 | +$36,348 | Unaudited Condensed Consolidated Statements of Operations This section details the company's financial performance, including revenue, expenses, and net loss, for Q1 2024 and Q1 2023 Statements of Operations Highlights (in thousands, except per share): | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Change | % Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :----- | :------- | | Total revenue | $330,147 | $325,472 | +$4,675 | +1% | | Subscription services revenue | $211,903 | $187,509 | +$24,394 | +13% | | Subscription license revenue | $63,338 | $84,527 | -$21,189 | -25% | | Consulting revenue | $54,047 | $53,033 | +$1,014 | +2% | | Gross profit | $235,489 | $227,538 | +$7,951 | +3% | | Total operating expenses | $255,901 | $249,744 | +$6,157 | +2% | | Litigation settlement, net of recoveries | $32,403 | — | +$32,403 | N/A | | (Loss) from operations | $(20,412) | $(22,206) | +$1,794 | +8% | | Net (loss) | $(12,124) | $(20,774) | +$8,650 | +42% | | Basic (Loss) per share | $(0.14) | $(0.25) | +$0.11 | +44% | Unaudited Condensed Consolidated Statements of Comprehensive (Loss) This section presents the company's net loss and other comprehensive income/loss for the three months ended March 31, 2024 and 2023 Comprehensive (Loss) Highlights (in thousands): | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :----- | | Net (loss) | $(12,124) | $(20,774) | +$8,650 | | Total other comprehensive (loss) income, net of tax | $(4,173) | $1,543 | -$5,716 | | Comprehensive (loss) | $(16,297) | $(19,231) | +$2,934 | Unaudited Condensed Consolidated Statements of Stockholders' Equity This section outlines changes in the company's equity accounts, including accumulated deficit and comprehensive loss, for Q1 2024 Stockholders' Equity Highlights (in thousands): | Metric | March 31, 2024 | December 31, 2023 | Change | | :------------------------------------ | :------------- | :---------------- | :----- | | Total stockholders' equity | $390,186 | $353,838 | +$36,348 | | Additional paid-in capital | $432,217 | $379,584 | +$52,633 | | (Accumulated deficit) | $(20,829) | $(8,705) | -$12,124 | | Accumulated other comprehensive (loss) | $(22,052) | $(17,879) | -$4,173 | Unaudited Condensed Consolidated Statements of Cash Flows This section details the company's cash inflows and outflows from operating, investing, and financing activities for Q1 2024 and Q1 2023 Cash Flow Highlights (in thousands): | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :----- | | Cash provided by operating activities | $180,146 | $68,107 | +$112,039 | | Cash (used in) investing activities | $(132,399) | $(14,413) | -$117,986 | | Cash provided by (used in) financing activities | $17,899 | $(29,372) | +$47,271 | | Net increase in cash, cash equivalents, and restricted cash | $62,843 | $25,104 | +$37,739 | | Cash, cash equivalents, and restricted cash, end of period | $295,670 | $170,158 | +$125,512 | Notes to Unaudited Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the unaudited condensed consolidated financial statements - The financial statements are prepared in accordance with SEC rules for interim reporting and U.S. GAAP, and should be read in conjunction with the Annual Report on Form 10-K for the year ended December 31, 2023[20] - All intercompany transactions and balances were eliminated in consolidation, and interim results do not necessarily indicate expected full-year 2024 results[22] NOTE 1. BASIS OF PRESENTATION This note describes the accounting principles and presentation methods used for the interim financial statements - The unaudited condensed consolidated financial statements are prepared pursuant to SEC rules and U.S. GAAP, including only normal recurring adjustments[20][21] - Operating results for the interim periods presented do not necessarily indicate the expected results for 2024[22] NOTE 2. MARKETABLE SECURITIES This note details the composition and fair value of the company's marketable securities portfolio Marketable Securities (in thousands): | Category | March 31, 2024 Fair Value | December 31, 2023 Fair Value | | :--------------- | :------------------------ | :------------------------- | | Government debt | $15,852 | $11,503 | | Corporate debt | $311,192 | $181,933 | | Total | $327,044 | $193,436 | - As of March 31, 2024, marketable securities' maturities ranged from April 2024 to January 2026, with a weighted-average remaining maturity of 0.5 years[23] NOTE 3. RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE This note provides information on the company's accounts receivable, unbilled receivables, and deferred revenue balances Receivables (in thousands): | Category | March 31, 2024 | December 31, 2023 | | :-------------------------- | :------------- | :---------------- | | Accounts receivable, net | $191,987 | $300,173 | | Unbilled receivables, net | $170,458 | $237,379 | | Long-term unbilled receivables, net | $72,814 | $85,402 | | Total receivables | $435,259 | $622,954 | - Deferred revenue increased to $382,765 thousand at March 31, 2024, from $377,845 thousand at December 31, 2023, primarily due to new billings in advance of revenue recognized[31][32] - $168.3 million in revenue was recognized from deferred revenue as of December 31, 2023, during the three months ended March 31, 2024[32] NOTE 4. DEFERRED COMMISSIONS This note outlines the balances and amortization of deferred commission expenses Deferred Commissions (in thousands): | Metric | March 31, 2024 | December 31, 2023 | | :----------------------- | :------------- | :---------------- | | Deferred commissions | $102,855 | $114,119 | - Amortization of deferred commissions increased by 21% to $17,282 thousand for the three months ended March 31, 2024, compared to $14,277 thousand for the same period in 2023[33] NOTE 5. GOODWILL AND OTHER INTANGIBLES This note details the carrying amounts and changes in goodwill and other intangible assets - Goodwill decreased slightly to $81,467 thousand at March 31, 2024, from $81,611 thousand at January 1, 2024, due to currency translation adjustments[34] - Net book value of intangible assets was $6,025 thousand at March 31, 2024, down from $7,002 thousand at December 31, 2023[36][37] - Estimated future amortization of intangible assets for the remainder of 2024 is $2,208 thousand[38] NOTE 6. OTHER ASSETS AND LIABILITIES This note provides a breakdown of various other current assets and accrued liabilities Other Current Assets (in thousands): | Category | March 31, 2024 | December 31, 2023 | | :----------------------- | :------------- | :---------------- | | Income tax receivables | $9,058 | $4,804 | | Insurance receivable | $8,305 | $1,954 | | Capped call transactions | $4,192 | — | | Total other current assets | $78,193 | $68,137 | Accrued Expenses (in thousands): | Category | March 31, 2024 | December 31, 2023 | | :-------------------------- | :------------- | :---------------- | | Litigation settlements | $35,000 | — | | Cloud hosting | $12,736 | $1,358 | | Outside professional services | $13,352 | $10,419 | | Total accrued expenses | $80,642 | $39,941 | - Accrued expenses increased by over 100% primarily due to a $35 million litigation settlement[42] NOTE 7. LEASES This note details the company's lease costs, remaining lease terms, and discount rates Lease Costs (in thousands): | Category | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :----------------------- | :-------------------------------- | :-------------------------------- | | Fixed lease costs | $4,262 | $5,766 | | Short-term lease costs | $543 | $781 | | Variable lease costs | $1,609 | $1,975 | | Total lease costs | $6,414 | $8,522 | - Weighted-average remaining lease term was 6.7 years and weighted-average discount rate was 4.0% as of March 31, 2024[47] NOTE 8. DEBT This note describes the company's outstanding convertible senior notes and revolving credit facility - $502.3 million in aggregate principal amount of Convertible Senior Notes are outstanding, due March 1, 2025[58][60] - Interest expense on Convertible Senior Notes was $1,559 thousand for Q1 2024, with an average interest rate of 1.2%[59] - The $100 million senior secured revolving Credit Facility's expiration date was extended to February 4, 2025, with $27.3 million in outstanding letters of credit but no outstanding cash borrowings as of March 31, 2024[65][66] NOTE 9. RESTRUCTURING This note outlines the accrued employee severance and restructuring expenses - Accrued employee severance and related benefits decreased to $5,001 thousand at March 31, 2024, from $8,095 thousand at January 1, 2024, due to cash disbursements[68] - Restructuring expense for the three months ended March 31, 2024, was $163 thousand, an 89% decrease from $1,461 thousand in the prior year period[13][125] NOTE 10. FAIR VALUE MEASUREMENTS This note details the fair value of financial instruments, including capped call transactions and venture investments - Capped Call Transactions, accounted for as derivative instruments, increased to $4,192 thousand at March 31, 2024, from $893 thousand at January 1, 2024, due to a $3,299 thousand fair value adjustment[64][73] - Venture investments increased to $20,946 thousand at March 31, 2024, from $19,450 thousand at January 1, 2024, including a $1,628 thousand gain recognized in other income[73][74] - The fair value of the Convertible Senior Notes was $481.7 million as of March 31, 2024, classified within Level 2 of the fair value hierarchy[75] NOTE 11. REVENUE This note provides a breakdown of revenue by stream and details remaining performance obligations Revenue Streams (in thousands): | Category | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Change | % Change | | :----------------------- | :-------------------------------- | :-------------------------------- | :----- | :------- | | Pega Cloud | $130,902 | $107,879 | +$23,023 | +21% | | Maintenance | $81,001 | $79,630 | +$1,371 | +2% | | Subscription services | $211,903 | $187,509 | +$24,394 | +13% | | Subscription license | $63,338 | $84,527 | -$21,189 | -25% | | Total revenue | $330,147 | $325,472 | +$4,675 | +1% | - Remaining performance obligations (Backlog) increased by 9% to $1,424,742 thousand as of March 31, 2024, from $1,308,084 thousand as of March 31, 2023[78][79] - The decrease in subscription license revenue was primarily due to a large multi-year contract recognized in the three months ended March 31, 2023[122] NOTE 12. STOCK-BASED COMPENSATION This note details the stock-based compensation expense and unrecognized compensation - Stock-based compensation expense decreased by 18.2% to $34,781 thousand for the three months ended March 31, 2024, compared to $42,557 thousand for the same period in 2023[81] - Unrecognized stock-based compensation expense was $184.1 million as of March 31, 2024, with a weighted-average recognition period of 1.8 years[81] NOTE 13. INCOME TAXES This note explains the income tax benefit, effective tax rate, and impact of Pillar Two regulations - The company recorded an income tax benefit of $3,038 thousand for Q1 2024, compared to a provision of $5,249 thousand in Q1 2023, resulting in an effective income tax rate of 20%[84] - The effective income tax rate for Q1 2024 was primarily influenced by a valuation allowance on deferred tax assets in the U.S. and U.K., and an income tax benefit for discrete items[84] - The company anticipates meeting transitional safe harbors for Pillar Two global minimum tax regulations in most jurisdictions for 2024, with any remaining top-up tax being immaterial[130] NOTE 14. (LOSS) PER SHARE This note presents the basic and diluted loss per share calculations and anti-dilutive exclusions - Basic and diluted loss per share improved to $(0.14) for Q1 2024, compared to $(0.25) for Q1 2023[88] - All dilutive securities, including stock options, RSUs, and convertible senior notes, were excluded from the diluted loss per share calculation because their inclusion would be anti-dilutive in periods of loss[88][89][90][91] NOTE 15. COMMITMENTS AND CONTINGENCIES This note details significant legal proceedings, including litigation settlements and ongoing appeals - The company recorded a $32.4 million litigation settlement, net of insurance recoveries, in Q1 2024, related to a proposed settlement of a securities class action lawsuit[95][98] - The Appian Corp. v. Pegasystems Inc. trade secret misappropriation case, with a $2.06 billion judgment, is currently under appeal, and the company is unable to reasonably estimate possible damages[96] - The U.S. SEC has requested information regarding the accounting treatment of the Appian litigation, and the company is cooperating[100] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management discusses the company's financial condition, results of operations, and key performance metrics for Q1 2024 - The company develops, markets, licenses, hosts, and supports enterprise software that helps organizations build agility into their business[107] - Its powerful, low-code platform for workflow automation and AI-powered decisioning enables hyper-personalization, streamlined customer service, and automated mission-critical business processes[107] - Target clients are Global 2000 organizations and government agencies[108] FORWARD-LOOKING STATEMENTS This section cautions investors about inherent risks and uncertainties in forward-looking information - The report contains forward-looking statements based on current expectations and assumptions, which are subject to risks and uncertainties that could cause actual results to differ materially[102][103] - Investors are cautioned not to place undue reliance on such statements, and the company disclaims any obligation to publicly update or revise them[104] NON-GAAP MEASURES This section explains the use and limitations of non-GAAP financial measures for performance evaluation - Non-GAAP financial measures are used to help investors understand core operating results and prospects, consistent with how management measures and forecasts performance[106] - These non-GAAP measures are not a substitute for financial measures prepared under U.S. GAAP[106] BUSINESS OVERVIEW This section describes Pegasystems Inc.'s enterprise software solutions, low-code platform, and target markets - Pegasystems Inc. develops, markets, licenses, hosts, and supports enterprise software with a low-code platform for workflow automation and AI-powered decisioning[107] - Its solutions enable clients to hyper-personalize customer experiences, streamline customer service, and automate mission-critical business processes[107] - The company targets Global 2000 organizations and government agencies[108] Performance metrics This section presents key performance indicators, including Annual Contract Value (ACV) - Annual Contract Value (ACV) is a key performance measure representing the annualized value of active contracts[109] ACV (in millions): | Metric | March 31, 2024 | March 31, 2023 | 1-Year Change | | :----------------------- | :------------- | :------------- | :------------ | | ACV | $1,273 | $1,174 | +9% | | Constant currency ACV | $1,277 | $1,174 | +9% | Cash flow This section analyzes the company's free cash flow and supplemental cash flow information Free Cash Flow (in thousands): | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Cash provided by operating activities | $180,146 | $68,107 | | Investment in property and equipment | $(604) | $(11,487) | | Free cash flow | $179,542 | $56,620 | - Free cash flow is defined as cash provided by operating activities less investment in property and equipment[113] - Supplemental cash flow information for Q1 2024 includes restructuring ($3,347 thousand), legal fees ($2,739 thousand), interest on convertible senior notes ($1,884 thousand), and income taxes ($8,163 thousand)[113] Remaining performance obligations ("Backlog") This section details the company's backlog, representing future revenue from existing contracts Backlog (in millions): | Metric | March 31, 2024 | March 31, 2023 | 1-Year Growth Rate | | :----------------------- | :------------- | :------------- | :----------------- | | Backlog - GAAP | $1,425 | $1,308 | +9% | | Constant currency backlog | $1,429 | $1,308 | +9% | - Backlog represents expected future revenue from existing non-cancellable contracts[78][117] CRITICAL ACCOUNTING POLICIES This section outlines the significant accounting policies and estimates used in financial statement preparation - Financial statements are prepared following U.S. GAAP and SEC rules, requiring estimates and judgments based on historical experience, current conditions, and future expectations[119] - No significant changes to critical accounting policies were reported since the Annual Report on Form 10-K for the year ended December 31, 2023[120] RESULTS OF OPERATIONS This section provides a detailed analysis of the company's revenue, gross profit, and operating expenses Revenue This subsection analyzes revenue performance across different service categories Revenue Performance (in thousands): | Category | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Change | % Change | | :----------------------- | :-------------------------------- | :-------------------------------- | :----- | :------- | | Pega Cloud | $130,902 | $107,879 | +$23,023 | +21% | | Maintenance | $81,001 | $79,630 | +$1,371 | +2% | | Subscription license | $63,338 | $84,527 | -$21,189 | -25% | | Consulting | $54,047 | $53,033 | +$1,014 | +2% | | Total revenue | $330,147 | $325,472 | +$4,675 | +1% | - The increase in Pega Cloud revenue was primarily due to the growth of the hosted client base[121] - The decrease in subscription license revenue was primarily due to a large multi-year contract recognized in the three months ended March 31, 2023[122] Gross profit This subsection examines gross profit and gross profit percentages by revenue stream Gross Profit Performance (in thousands): | Category | 2024 Gross Profit | 2024 Gross Profit % | 2023 Gross Profit | 2023 Gross Profit % | Change | % Change | | :----------------------- | :---------------- | :------------------ | :---------------- | :------------------ | :----- | :------- | | Pega Cloud | $101,305 | 77% | $77,629 | 72% | +$23,676 | +30% | | Consulting | $(4,135) | (8)% | $(7,315) | (14)% | +$3,180 | +43% | | Total gross profit | $235,489 | 71% | $227,538 | 70% | +$7,951 | +3% | - The increase in Pega Cloud gross profit percentage was primarily due to increased cost efficiency for hosting services and employee compensation[124] - The increase in consulting gross profit percentage was primarily due to an increase in consultant realization rates in the Americas[124] Operating expenses This subsection details changes in selling and marketing, R&D, and litigation settlement expenses Operating Expenses (in thousands): | Category | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Change | % Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :----- | :------- | | Selling and marketing | $127,695 | $149,797 | -$22,102 | -15% | | Research and development | $72,113 | $75,376 | -$3,263 | -4% | | Litigation settlement, net of recoveries | $32,403 | — | +$32,403 | 100% | | Restructuring | $163 | $1,461 | -$1,298 | -89% | - The decrease in selling and marketing was primarily due to a $17.5 million decrease in compensation and benefits from reduced headcount as the company optimized its go-to-market strategy[125] - The increase in litigation settlement, net of recoveries, was due to the estimated cost to settle ongoing litigation arising from proceedings outside the ordinary course of business[125] Other income and expenses This subsection reviews foreign currency impacts, interest income, and other net income/expenses Other Income and Expenses (in thousands): | Category | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Change | % Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :----- | :------- | | Foreign currency transaction (loss) | $(3,262) | $(2,675) | $(587) | -22% | | Interest income | $5,281 | $1,485 | +$3,796 | +256% | | Other income, net | $1,684 | $6,583 | $(4,899) | -74% | | Total | $5,250 | $6,681 | $(1,431) | -21% | - The increase in interest income was primarily due to higher investment balances and market interest rates[129] - The decrease in other income, net, was due to a $3.8 million gain on venture investments and a $2.8 million gain from repurchases of convertible senior notes in Q1 2023[129] (Benefit from) provision for income taxes This subsection discusses the income tax benefit and effective tax rate for the period - The company recorded an income tax benefit of $3,038 thousand for Q1 2024, compared to a provision of $5,249 thousand in Q1 2023, with an effective income tax rate of 20%[128] - The effective income tax rate was primarily driven by the valuation allowance on deferred tax assets in the U.S. and U.K., and forecasted taxable income, offset by an income tax benefit for discrete items[128] LIQUIDITY AND CAPITAL RESOURCES This section analyzes the company's cash flows, financial position, and ability to meet obligations Cash, Cash Equivalents, and Marketable Securities (in thousands): | Category | March 31, 2024 | December 31, 2023 | | :------------------------------------ | :------------- | :---------------- | | Held in U.S. entities | $491,808 | $263,453 | | Held in foreign entities | $127,141 | $159,885 | | Total cash, cash equivalents, and marketable securities | $618,949 | $423,338 | - The company believes its current cash, marketable securities, cash flow from operations, borrowing capacity, and ability to engage in capital market transactions will be sufficient to fund operations and obligations for at least the next 12 months[131] Operating activities This subsection details cash generated from the company's primary business operations - Cash provided by operating activities increased to $180,146 thousand in Q1 2024, up from $68,107 thousand in Q1 2023[131] - The change was primarily due to growth in client collections and the impact of cost-efficiency initiatives[133] Investing activities This subsection outlines cash flows related to the purchase and sale of investments and assets - Cash used in investing activities increased to $132,399 thousand in Q1 2024, from $14,413 thousand in Q1 2023[131] - This change was primarily due to increased purchases of financial instruments and reduced investment in property and equipment[134] Financing activities This subsection describes cash flows from debt, equity, and other financing transactions - Cash provided by financing activities was $17,899 thousand in Q1 2024, compared to cash used of $29,372 thousand in Q1 2023[131] - The company has $502.3 million in aggregate principal amount of convertible senior notes outstanding, due March 1, 2025[135] - The $100 million senior secured revolving credit agreement's expiration date was extended to February 4, 2025[136] Stock repurchase program This subsection details the company's share repurchase activities and remaining authorization - The Board of Directors extended the expiration date of the current share repurchase program from June 30, 2024, to June 30, 2025[137][157] - As of March 31, 2024, $60 million remained in the stock repurchase authority[137] Dividends This subsection outlines the company's dividend policy and payments made - The company intends to pay a quarterly cash dividend of $0.03 per share[138] - Dividend payments to stockholders totaled $2,515 thousand for the three months ended March 31, 2024[139] Contractual obligations This subsection summarizes the company's future payment commitments under various contracts Contractual Obligations as of March 31, 2024 (in thousands): | Category | Total | | :------------------------------------ | :---- | | Convertible senior notes | $506,037 | | Purchase obligations | $529,220 | | Operating lease obligations | $89,517 | | Venture investment commitments | $1,000 | | Liability for uncertain tax positions | $2,175 | | Total | $1,127,949 | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK This section discusses the company's exposure to market risk, primarily focusing on foreign currency fluctuations, which impact both revenue (translation risk) and monetary assets/liabilities (remeasurement risk) - The company is exposed to market risk from adverse changes in financial market prices and rates[142] Foreign currency exposure This section analyzes the company's exposure to foreign currency fluctuations and their potential impact Translation risk This subsection assesses the impact of currency fluctuations on the translation of foreign subsidiary financial statements - A hypothetical 10% strengthening in the U.S. dollar against other currencies would have resulted in a 4% decrease in revenue and a 4% decrease in net income for the three months ended March 31, 2024[145] Remeasurement risk This subsection evaluates the impact of currency fluctuations on monetary assets and liabilities denominated in foreign currencies - The company is primarily exposed to changes in foreign currency exchange rates associated with the Australian dollar, Euro, and U.S. dollar-denominated cash, cash equivalents, receivables, and intercompany balances held by its U.K. subsidiary[146] - A hypothetical 10% strengthening in the British pound exchange rate would have resulted in a foreign currency loss of $14,618 thousand for the three months ended March 31, 2024[147] ITEM 4. CONTROLS AND PROCEDURES Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2024. There were no material changes in internal control over financial reporting during the quarter - The CEO and CFO evaluated and concluded that the company's disclosure controls and procedures were effective as of March 31, 2024[148] - There have been no changes in internal control over financial reporting during the quarter ended March 31, 2024, that have materially affected or are reasonably likely to materially affect internal control over financial reporting[149] PART II - OTHER INFORMATION This section provides additional information on legal proceedings, risk factors, equity sales, and other disclosures ITEM 1. LEGAL PROCEEDINGS This section incorporates by reference the detailed legal proceedings information from Note 15, including the Appian Corp. litigation, the securities class action lawsuit (settled in principle for $35 million), and derivative litigation - Information regarding legal proceedings is incorporated by reference from "Note 15. Commitments and Contingencies" in Part I, Item 1 of this Quarterly Report[151] ITEM 1A. RISK FACTORS The company encourages readers to review the risk factors identified in its Annual Report on Form 10-K for the year ended December 31, 2023, as these could materially affect its business, financial condition, and future results - Readers are encouraged to carefully consider the risk factors identified in Item 1A. "Risk Factors" of the Annual Report on Form 10-K for the year ended December 31, 2023[152] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS The company repurchased 78 thousand shares of common stock for $61.06 per share in Q1 2024, primarily for tax withholdings related to equity awards. No shares were purchased under the publicly announced share repurchase program during this period - 78 thousand shares of common stock were repurchased at an average price of $61.06 per share in Q1 2024, primarily for tax withholdings for net settlement of equity awards[137][153][154] - No shares were purchased as part of the publicly announced share repurchase program during the three months ended March 31, 2024[153] ITEM 5. OTHER INFORMATION No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers in Q1 2024. The Credit Facility expiration date was extended to February 4, 2025, and the share repurchase program was extended to June 30, 2025 - No director or officer adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the three months ended March 31, 2024[155] - The expiration date of the $100 million senior secured revolving credit agreement (Credit Facility) was extended to February 4, 2025[156] - The Board of Directors extended the expiration date of the current share repurchase program from June 30, 2024, to June 30, 2025[157] ITEM 6. EXHIBITS This section lists the exhibits filed with the Form 10-Q, including organizational documents, certifications, and XBRL-related documents - The exhibits include organizational documents, the Seventh Amendment to Loan Documents, CEO and CFO certifications, and various Inline XBRL documents[159] SIGNATURE The report was signed by Kenneth Stillwell, Chief Operating Officer and Chief Financial Officer, on April 24, 2024 - The report was signed by Kenneth Stillwell, Chief Operating Officer and Chief Financial Officer, on April 24, 2024[163]