Risk Factors Update Summary

• Provision for income taxes increased by $13 million to $26 million in fiscal 2024 compared to fiscal 2023.
• Cybersecurity Risk Management: Enhanced cybersecurity measures, risk assessments, and oversight mechanisms implemented to safeguard information systems.
• The Company acquired BluBracket, Inc. for $25.1 million, with $4.2 million held back for indemnification.
• Revenue growth rates fluctuated, with total revenues increasing from $320.8 million in fiscal 2022 to $583.1 million in fiscal 2024.
• Net loss per share decreased from $(1.47) to $(3.48) due to changes in the numerator and denominator.
• Total cash proceeds from ESPP shares decreased from $8 million to $7.4 million.
• The threshold for fully vesting in outstanding equity awards increased from $750,000 to $1,000,000.
• Customer Growth: Customer base increased from over 3,800 in 2023 to over 4,400 in 2024, with revenue growth.
• ESPP rollover triggered a new offering period through December 15, 2025, with incremental compensation cost of $10.9 million.
• Net deferred tax liability released $0.4 million in U.S. valuation allowance due to BluBracket acquisition.
• Short-term investments totaled $515.1 million, with unrealized losses of $234,000 as of January 31, 2024.
• Unrecognized stock-based compensation expense related to the ESPP decreased from $23 million to $18.9 million.
• Transition to Business Source License for future versions may not prevent competition using pre-license change versions.
• Cost of cloud-hosted services increased from $2.2 million to $2.8 million.
• The company implemented a Compensation Recovery Policy for prompt recovery of executive compensation.
• Employees purchased 426 and 378 shares under the ESPP, an increase from 351 and 284 shares.
• Operating losses decreased from $274 million in fiscal 2023 to $190 million in fiscal 2024.
• Goodwill as of January 31, 2024, was $12.2 million, compared to $0 as of January 31, 2023.
• Revenue Growth: Subscription revenue increased significantly from $46.9 million in 2023 to $76.1 million in 2024.
• Sales to large enterprises and regulated industries require increased features and compliance capabilities for revenue growth.
• Failure to meet large enterprise customer requirements may hinder revenue growth from cloud offerings.
• Gross Margin Improvement: Gross margin increased from 80% in 2023 to 82% in 2024.
• Expected volatility for stock valuation increased from 69% to 83%.
• The Policy applies to Incentive-Based Compensation received after October 2, 2023, during the Covered Period.
• The Company recognized compensation expense of $1.7 million related to Retention Payments agreements in fiscal year 2024.
• Net operating loss carryforwards were $690.9 million federal and $602.3 million state as of January 31, 2024.
• The Company's total revenue increased to $583.1 million in 2024 from $475.9 million in 2023.
• The Policy covers the recovery of Excess Compensation exceeding what would have been received based on restated amounts.
• Operating Expenses: Sales and marketing expenses increased by $86.3 million, or 32%, from 2023 to 2024.
• The Policy outlines events requiring its application, such as accounting restatements due to noncompliance.
• Changes in tax laws, such as the Tax Act, may impact the tax treatment of earnings.
• Research and Development: Research and development expenses increased by $30.3 million, or 18%, from 2023 to 2024.
• The Company's total deferred contract acquisition costs increased to $130.3 million as of January 31, 2024, from $124.1 million in 2023.
• Increased cybersecurity risks due to AI integration and potential security incidents.
• General and Administrative Expenses: General and administrative expenses increased by $22.9 million, or 20%, from 2023 to 2024.
• The Policy defines Covered Period as the three completed fiscal years preceding the Accounting Restatement Determination Date.
• The Company's total accrued compensation and benefits increased to $56.0 million as of January 31, 2024, from $58.6 million in 2023.
• The Policy allows for limited exceptions to recovery, such as impracticality or potential failure of a tax-qualified retirement plan.