Item 1. FINANCIAL STATEMENTS

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Item 1. FINANCIAL STATEMENTS

DATADOG, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

(unaudited)


	March 31, 2026		December 31, 2025
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	426,360	$	401,305
Marketable securities	4,332,257		4,073,531
Accounts receivable, net of allowance for credit losses of $21,188 and $19,292 as of March 31, 2026 and December 31, 2025, respectively	680,434		741,262
Deferred contract costs, current	81,687		76,022
Prepaid expenses and other current assets	104,468		90,160
Total current assets	5,625,206		5,382,280
Property and equipment, net	378,944		338,093
Operating lease assets	213,260		214,674
Goodwill	540,543		530,568
Intangible assets, net	14,929		14,968
Deferred contract costs, non-current	136,264		126,708

Other assets	42,866		36,553
TOTAL ASSETS	$	6,952,012	$	6,643,844
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	174,801	$	148,791
Accrued expenses and other current liabilities	208,549		209,595
Operating lease liabilities, current	41,401		39,369

Deferred revenue, current	1,231,152		1,193,646
Total current liabilities	1,655,903		1,591,401
Operating lease liabilities, non-current	259,155		256,187
Convertible senior notes, net, non-current	984,496		983,449
Deferred revenue, non-current	50,918		68,711
Other liabilities	13,318		11,890
Total liabilities	2,963,790		2,911,638
COMMITMENTS AND CONTINGENCIES (NOTE 9)
STOCKHOLDERS' EQUITY:
Class A common stock, $0.00001 par value per share; 2,000,000,000 shares authorized as of March 31, 2026 and December 31, 2025; 330,573,793 and 328,117,781 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively	3		3
Class B common stock, $0.00001 par value per share; 310,000,000 shares authorized as of March 31, 2026 and December 31, 2025; 25,271,775 and 24,408,190 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively	—		—
Additional paid-in capital	3,801,272		3,579,010
Accumulated other comprehensive (loss) income	(3,416)		15,404
Retained earnings	190,363		137,789
Total stockholders’ equity	3,988,222		3,732,206
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	6,952,012	$	6,643,844

See accompanying notes to condensed consolidated financial statements.

DATADOG, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)

(unaudited)


	Three Months Ended March 31,
	2026		2025
Revenue	$	1,006,426	$	761,553
Cost of revenue	209,228		157,628
Gross profit	797,198		603,925
Operating expenses:
Research and development	435,298		341,061
Sales and marketing	279,823		214,291
General and administrative	74,750		60,993
Total operating expenses	789,871		616,345
Operating income (loss)	7,327		(12,420)
Other income:
Interest expense	(3,119)		(2,963)
Interest income and other income, net	54,722		47,179
Other income, net	51,603		44,216
Income before provision for income taxes	58,930		31,796
Provision for income taxes	6,356		7,154
Net income	$	52,574	$	24,642
Net income attributable to common stockholders	$	52,574	$	24,642
Basic net income per share	$	0.15	$	0.07

Diluted net income per share	$	0.15	$	0.07
Weighted average shares used in calculating basic net income per share:	353,272		343,097
Weighted average shares used in calculating diluted net income per share:	364,731		363,078

See accompanying notes to condensed consolidated financial statements.

DATADOG, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)


	Three Months Ended March 31,
	2026		2025
Net income	$	52,574	$	24,642
Other comprehensive (loss) income:
Foreign currency translation adjustments	(4,032)		3,106
Unrealized (loss) gain on available-for-sale marketable securities	(11,761)		2,933
Unrealized loss on cash flow hedges	(3,027)		—
Other comprehensive (loss) income	(18,820)		6,039
Comprehensive income	$	33,754	$	30,681

See accompanying notes to condensed consolidated financial statements.

DATADOG, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share data)

(unaudited)


	Class A and Class B Common Stock				Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total Stockholders' Equity
Shares		Amount
BALANCE—December 31, 2025	352,525,971		$	3	$	3,579,010	$	15,404	$	137,789	$	3,732,206
Issuance of common stock upon exercise of stock options	1,293,916		—		9,715		—		—		9,715
Vesting of restricted and performance stock units	1,891,445		—		—		—		—		—
Issuance of restricted shares of common stock from acquisitions	134,236		—		6,517		—		—		6,517

Stock-based compensation	—		—		206,030		—		—		206,030



Change in accumulated other comprehensive loss	—		—		—		(18,820)		—		(18,820)
Net income	—		—		—		—		52,574		52,574
BALANCE—March 31, 2026	355,845,568		$	3	$	3,801,272	$	(3,416)	$	190,363	$	3,988,222


	Class A and Class B Common Stock				Additional Paid-in Capital		Accumulated Other Comprehensive (Loss) Income		Accumulated Deficit		Total Stockholders' Equity
Shares		Amount
BALANCE—December 31, 2024	342,118,782		$	3	$	2,689,013	$	(4,701)	$	30,048	$	2,714,363
Issuance of common stock upon exercise of stock options	1,316,133		—		1,703		—		—		1,703
Vesting of restricted and performance stock units	1,475,894		—		—		—		—		—
Stock-based compensation	—		—		169,927		—		—		169,927
Change in accumulated other comprehensive income	—		—		—		6,039		—		6,039
Net income	—		—		—		—		24,642		24,642
BALANCE—March 31, 2025	344,910,809		$	3	$	2,860,643	$	1,338	$	54,690	$	2,916,674

DATADOG, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Three Months Ended March 31,
	2026		2025
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	52,574	$	24,642
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	17,923		11,255
Accretion of discounts on marketable securities	(11,880)		(10,370)
Amortization of issuance costs	1,047		1,819
Amortization of deferred contract costs	20,325		14,853
Stock-based compensation, net of amounts capitalized	196,841		164,265
Non-cash lease expense	9,073		8,389
Allowance for credit losses on accounts receivable	4,953		4,520
Loss on disposal of property and equipment	1,134		(145)
Changes in operating assets and liabilities:
Accounts receivable, net	55,874		104,227
Deferred contract costs	(35,545)		(21,519)
Prepaid expenses and other current assets	(14,445)		(10,263)
Other assets	(522)		(1,217)
Accounts payable	21,500		(10,712)
Accrued expenses and other liabilities	(3,877)		5,648
Deferred revenue	19,647		(13,851)
Net cash provided by operating activities	334,622		271,541

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities	(1,304,965)		(970,302)
Maturities of marketable securities	1,046,415		555,938
Proceeds from sale of marketable securities	(57)		(76)
Purchases of property and equipment	(11,358)		(8,748)
Capitalized software development costs	(34,173)		(18,402)
Cash paid for acquisition of businesses; net of cash acquired	(10,660)		(1,818)
Net cash used in investing activities	(314,798)		(443,408)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options	9,711		1,673


Repayments of 2025 Convertible Senior Notes	—		(20)
Net cash provided by financing activities	9,711		1,653

Effect of exchange rate changes on cash and cash equivalents	(4,480)		3,085

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	25,055		(167,129)
CASH AND CASH EQUIVALENTS—Beginning of period	401,305		1,246,983
CASH AND CASH EQUIVALENTS—End of period	$	426,360	$	1,079,854

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for income taxes	$	17,172	$	3,658

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Accrued property and equipment purchases	$	8,963	$	4,542
Stock-based compensation included in capitalized software development costs	$	9,189	$	5,662
Issuance of restricted shares of common stock for the acquisition of businesses	$	6,517	$	—
Acquisition holdback	$	1,614	$	50

See accompanying notes to condensed consolidated financial statements.

DATADOG, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Description of Business

Description of Business

Datadog, Inc. (“Datadog” or the “Company”) was incorporated in the State of Delaware on June 4, 2010. On April 21, 2026, the Company completed its conversion from a corporation organized under the laws of the State of Delaware to a corporation organized under the laws of the State of Nevada.

The Company is the AI-powered observability and security platform for cloud applications. The Company’s SaaS platform integrates and automates infrastructure monitoring, application performance monitoring, log management, user experience monitoring, cloud security, service management, and many other capabilities to provide unified, real-time observability and security of its customers’ entire technology stack. The Company is headquartered in New York City and has various other global office locations.

2. Basis of Presentation and Summary of Significant Accounting Policies

Unaudited Interim Condensed Consolidated Financial Information

The unaudited condensed consolidated financial statements include the accounts of Datadog, Inc. and its wholly-owned subsidiaries, and have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and following the requirements of the SEC for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP can be condensed or omitted. These financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for the fair statement of the Company’s financial information. These interim results are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2026 or for any other interim period or for any other future year. The accompanying unaudited condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as filed with the SEC on February 18, 2026 (the “Annual Report”).

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Datadog, Inc. and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Such estimates include the fair value of marketable securities, the allowance for credit losses, the fair value of acquired assets and assumed liabilities from business combinations, useful lives of property, equipment, software and finite lived intangibles, stock-based compensation, valuation of long-lived assets and their recoverability, including goodwill, the incremental borrowing rate for operating leases, estimated expected period of benefit for deferred contract costs, fair value of the liability component of the convertible debt, realization of deferred tax assets and uncertain tax positions, revenue recognition and the allocation of overhead costs between cost of revenue and operating expenses. The Company bases its estimates on historical experience and also on assumptions that management considers reasonable. The Company assesses these estimates on a regular basis; however, actual results could materially differ from these estimates.

Derivative Financial Instruments

The Company utilizes foreign currency forward contracts to reduce the volatility in cash flows associated with forecasted operating expenses denominated in currencies other than the U.S. dollar. These foreign currency forward contracts are designated as cash flow hedges. The Company does not enter into derivative instruments for trading or speculative purposes. Changes in the fair value of these instruments are recorded in accumulated other comprehensive income (loss) and are subsequently reclassified into earnings in the same period in which the underlying hedged transactions affect earnings, generally within operating expenses. In the event the underlying forecasted transactions do not occur, or it becomes probable that they will not occur within the designated hedge period, the related gains or losses are reclassified into earnings. The Company formally designates and documents hedging relationships at inception and assesses hedge effectiveness at inception and on a quarterly basis thereafter. Cash flows at settlement of such foreign currency forward contracts are classified in the same category as the cash flows from the underlying hedged forecasted transactions.

Accounting Pronouncements Recently Adopted

In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets ("ASU No. 2025-05"), which provides a practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606. The practical expedient permits an entity to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset. This guidance is effective for annual periods, including interim reporting periods, beginning after December 15, 2025, on a prospective basis, with early adoption permitted. The Company adopted this standard on a prospective basis for interim and annual periods beginning January 1, 2026. The adoption of this guidance did not have a material impact on the consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU No. 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40) ("ASU No. 2024-03"), which requires disaggregated disclosure of income statement expenses for public business entities. The ASU does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. For public business entities, it is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The amendments in this ASU should be applied prospectively, however, public business entities are permitted to apply the amendments in the ASU retrospectively. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software ("ASU No. 2025-06"), to modernize the accounting for software costs that are accounted for under Subtopic 350-40. The ASU removes all references to software development stages and allows software development costs to be capitalized once management commits to funding the project and it is probable that the project will be completed and used as intended. The ASU also introduces the concept of "significant development uncertainty," which, if present, prevents capitalization. The guidance is effective for annual reporting periods, including interim reporting periods, beginning after December 15, 2027. The guidance may be applied prospectively, retrospectively, or via a modified prospective transition method. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topics 270): Narrow-Scope Improvements ("ASU No. 2025-11"), which amends guidance related to interim financial reporting. The guidance is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.

3. Marketable Securities

The following is a summary of available-for-sale marketable securities, excluding those securities classified within cash and cash equivalents on the condensed consolidated balance sheets as of March 31, 2026 and December 31, 2025 (in thousands):


	March 31, 2026
	Amortized Cost		Unrealized Gain		Unrealized Losses		Fair Value
Corporate debt securities	$	2,386,236	$	1,630	$	(3,751)	$	2,384,115
Commercial paper	817,510		77		(506)		817,081
U.S. government treasury securities	803,020		560		(1,334)		802,246
Certificates of deposit	327,392		70		(138)		327,324
U.S. government agency securities	1,490		1		—		1,491
Marketable securities	$	4,335,648	$	2,338	$	(5,729)	$	4,332,257


	December 31, 2025
	Amortized Cost		Unrealized Gain		Unrealized Losses		Fair Value
Corporate debt securities	$	2,577,421	$	6,103	$	(131)	$	2,583,393
U.S. government treasury securities	693,907		1,993		(6)		695,894
Commercial paper	599,663		304		—		599,967
Certificates of deposit	192,685		99		—		192,784
U.S. government agency securities	1,490		3		—		1,493
Marketable securities	$	4,065,166	$	8,502	$	(137)	$	4,073,531

As of March 31, 2026, the fair values of available-for-sale marketable securities, by remaining contractual maturity, were as follows (in thousands):


Due within one year	$	2,902,501
Due in one year through five years	1,429,756
Total	$	4,332,257

The Company does not believe that any unrealized losses are attributable to credit-related factors based on its evaluation of available evidence. To determine whether a decline in value is related to credit loss, the Company evaluates, among other factors: the extent to which the fair value is less than the amortized cost basis, changes to the rating of the security by a rating agency and any adverse conditions specifically related to an issuer of a security or its industry. Unrealized gains and losses on marketable securities are presented net of tax.

4. Fair Value Measurements

The following tables present information about the Company’s financial assets and liabilities that have been measured at fair value on a recurring basis as of March 31, 2026 and December 31, 2025, and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands):


	Fair Value Measurement as of March 31, 2026
	Level 1		Level 2		Level 3		Total
Financial Assets:
Cash equivalents:
Money market funds	$	369,785	$	—	$	—	$	369,785
Commercial paper	—		15,058		—		15,058

Corporate debt securities	—		4,442		—		4,442

Marketable securities:
Corporate debt securities	—		2,384,115		—		2,384,115
Commercial paper	—		817,081		—		817,081
U.S. government treasury securities	—		802,246		—		802,246
Certificates of deposit	—		327,324		—		327,324
U.S. government agency securities	—		1,491		—		1,491
Derivative assets—included in prepaid expenses and other current assets:
Cash flow hedges	—		39		—		39
Total financial assets	$	369,785	$	4,351,796	$	—	$	4,721,581

Liabilities:
Derivative liabilities—included in accrued expenses and other current liabilities:
Cash flow hedges	$	—	$	3,067	$	—	$	3,067
Total liabilities	$	—	$	3,067	$	—	$	3,067


	Fair Value Measurement as of December 31, 2025
	Level 1		Level 2		Level 3		Total
Financial Assets:
Cash equivalents:
Money market funds	$	311,106	$	—	$	—	$	311,106
Commercial paper	—		29,879		—		29,879
Corporate debt securities	—		1,524		—		1,524
Marketable securities:
Corporate debt securities	—		2,583,393		—		2,583,393
U.S. government treasury securities	—		695,894		—		695,894
Commercial paper	—		599,967		—		599,967
Certificates of deposit	—		192,784		—		192,784
U.S. government agency securities	—		1,493		—		1,493
Total financial assets	$	311,106	$	4,104,934	$	—	$	4,416,040

The Company considers all highly liquid investments, including money market funds with an original maturity of three months or less at the date of purchase, to be cash equivalents. The Company uses quoted prices in active markets for assets to determine the fair value of its Level 1 investments in money market funds. The Company classifies its commercial paper, corporate debt securities, certificates of deposit, U.S. government treasury securities, Non-U.S. government securities, and cash flow hedges within Level 2 because they are valued using inputs other than quoted prices that are directly or indirectly observable in the market, including readily available pricing sources for the identical underlying security which may not be actively traded.

In addition to its cash equivalents and marketable securities, the Company measures the fair value of its outstanding convertible senior notes on a quarterly basis for disclosure purposes. The Company considers the fair value of the convertible senior notes to be a Level 2 measurement due to limited trading activity of the convertible senior notes. Refer to Note 8, Convertible Senior Notes, to the condensed consolidated financial statements for further details.

5. Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):


	March 31, 2026		December 31, 2025
Computers and equipment	$	67,484	$	63,146
Furniture and fixtures	28,804		28,319
Leasehold improvements	108,381		99,009
Capitalized software development costs	376,290		329,117
Total property and equipment	$	580,959	$	519,591
Less: accumulated depreciation and amortization	(202,015)		(181,498)
Total property and equipment, net	$	378,944	$	338,093

The Company capitalizes costs related to the development of computer software for internal use and is included in capitalized software development costs within property and equipment, net.

Depreciation and amortization expense was approximately $16.3 million and $10.1 million for the three months ended March 31, 2026 and 2025, respectively.

6. Acquisitions, Intangible Assets and Goodwill

2026 Acquisitions

During the quarter ended March 31, 2026, the Company entered into two purchase agreements for acquisitions of businesses, each of which was accounted for as a business combination in accordance with ASC 805, Business Combinations. The Company does not consider the acquisitions to be material, individually or in aggregate. The resulting goodwill from each of the agreements is not deductible for income tax purposes. Pro forma results of operations from these acquisitions have not been presented because they were not material to the consolidated results of operations.

2025 Acquisitions

During the year ended December 31, 2025, the Company entered into three purchase agreements for acquisitions of businesses, each of which was accounted for as a business combination in accordance with ASC 805, Business Combinations. The Company does not consider the acquisitions to be material, individually or in aggregate. The total purchase price in aggregate of $178.4 million consisted of $109.3 million in cash payments, net of cash acquired, $16.1 million of deferred acquisition holdback payments and the issuance of 770,044 restricted shares of Class A common stock. The total purchase price was allocated to intangible assets in the amount of $17.6 million and goodwill in the amount of $163.1 million based on the respective estimated fair values. The purchase price allocations are preliminary. The Company continues to collect information with regard to its estimates and assumptions, including potential liabilities and contingencies. The Company will record adjustments to the fair value of the assets acquired, liabilities assumed and goodwill within the 12 month measurement period, if necessary. The resulting goodwill from the agreements is not deductible for income tax purposes. Pro forma results of operations from the acquisitions have not been presented because they were not material to the consolidated results of operations.

2024 Acquisitions

During the year ended December 31, 2024, the Company entered into one purchase agreement for an acquisition of a business, which was accounted for as a business combination in accordance with ASC 805, Business Combinations. The Company does not consider this acquisition to be material. The total purchase price was allocated to intangible assets in the amount of $0.7 million and goodwill in the amount of $10.2 million based on the respective estimated fair values. The resulting goodwill from the agreements is not deductible for income tax purposes. Pro forma results of operations from the acquisition have not been presented because they were not material to the consolidated results of operations.

Intangible Assets

Intangible assets, net consisted of the following (in thousands):


	March 31, 2026
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Amortization Period
Developed technology	$	16,139	$	(5,701)	$	10,438	3 years
Customer relationships	5,800		(1,309)		4,491		4 years
Total	$	21,939	$	(7,010)	$	14,929


	December 31, 2025
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Amortization Period
Developed technology	$	14,539	$	(4,420)	$	10,119	3 years
Customer relationships	5,800		(951)		4,849		4 years
Total	$	20,339	$	(5,371)	$	14,968

Intangible amortization expense was approximately $1.6 million and $1.1 million for the three months ended March 31, 2026 and 2025, respectively.

As of March 31, 2026, future amortization expense by year is expected to be as follows (in thousands):


	Amount
Remainder of 2026	$	4,976
2027	6,117
2028	3,292
2029	544

Total	$	14,929

Goodwill

The changes in the carrying amount of goodwill were as follows (in thousands):


	Amount
Balance as of December 31, 2025	$	530,568
2026 acquisitions	11,289
Foreign currency translation adjustments	(1,314)
Balance as of March 31, 2026	$	540,543

7. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):


	March 31, 2026		December 31, 2025
Accrued compensation and commissions	$	105,988	$	109,765
Other tax liability and sales tax	51,156		52,934
Other accrued expenses	51,405		46,896

Total accrued expenses and other current liabilities	$	208,549	$	209,595

Due to the timing of when invoices are received, payables for cloud hosting and infrastructure expenses are included within accounts payable on the condensed consolidated balance sheets, amounting to $96.3 million and $122.7 million as of March 31, 2026 and December 31, 2025, respectively.

8. Convertible Senior Notes

2025 Convertible Senior Notes

On June 2, 2020, the Company issued $747.5 million aggregate principal amount of the “2025 Notes.” The 2025 Notes bore interest at a rate of 0.125% per year. The total net proceeds from the sale of the 2025 Notes, after deducting the initial purchasers’ discounts and debt issuance costs, were approximately $730.2 million. The 2025 Notes matured on June 15, 2025. The remaining $634.1 million aggregate principal amount of the 2025 Notes were converted prior to maturity and in connection with such conversions, the Company delivered $634.1 million in cash and issued 1,354,569 shares of the Company's Class A common stock to converting note holders.

2029 Convertible Senior Notes

On December 12, 2024, the Company issued $1.0 billion aggregate principal amount of 0.00% Convertible Senior Notes due 2029 (the “2029 Notes”) in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The total net proceeds from the sale of the 2029 Notes, after deducting the initial purchasers’ discounts and debt issuance costs, were approximately $979.1 million. The 2029 Notes do not bear interest and the principal amount of the 2029 Notes will not accrete. The 2029 Notes will mature on December 1, 2029, unless earlier converted, redeemed or repurchased.

Holders may convert their 2029 Notes at their option at any time prior to the close of business on the business day immediately preceding September 1, 2029 only under the following circumstances:

(1)during any calendar quarter commencing after the calendar quarter ending on March 31, 2025 (and only during such calendar quarter), if the last reported sale price of the Company’s Class A common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price for the 2029 Notes on each applicable trading day;

(2)during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of 2029 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s Class A common stock and the conversion rate on each such trading day;

(3)if the Company calls such 2029 Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or

(4)upon the occurrence of specified corporate events, as set forth in the indenture governing the 2029 Notes (the “2029 Indenture”).

On or after September 1, 2029 until the close of business on the second scheduled trading day immediately preceding the maturity date for the 2029 Notes, holders may convert all or any portion of their 2029 Notes, in integral multiples of $1,000 principal amount, at the option of the holder regardless of the foregoing circumstances. The conversion rate for the 2029 Notes is initially 4.5955 shares of Class A common stock per $1,000 principal amount of 2029 Notes (equivalent to an initial conversion price for the 2029 Notes of approximately $217.60 per share of Class A common stock), subject to adjustment as set forth in the 2029 Indenture. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of Class A

common stock or a combination of cash and shares of Class A common stock, at the Company’s election. If the Company satisfies its conversion obligation solely in cash or through payment and delivery, as the case may be, of a combination of cash and shares of Class A common stock, the amount of cash and shares of Class A common stock, if any, due upon conversion will be based on a daily conversion value calculated on a proportionate basis for each trading day in a 20 trading day observation period as described in the 2029 Indenture. In addition, if specific corporate events occur prior to the applicable maturity date for the 2029 Notes, or if the Company elects to redeem the 2029 Notes, the Company will increase the conversion rate for the 2029 Notes for a holder who elects to convert their 2029 Notes in connection with such a corporate event or redemption in certain circumstances.

During the three months ended March 31, 2026, the conditional conversion features of the 2029 Notes were not triggered. Therefore the 2029 Notes are not convertible, in whole or in part, at the option of the holders between April 1, 2026 through June 30, 2026. As of March 31, 2026, the 2029 Notes were classified as non-current liabilities on the Company's condensed consolidated balance sheet.

The Company may not redeem the 2029 Notes prior to December 6, 2027. The Company may redeem for cash all or any portion of the 2029 Notes, at its option, on or after December 6, 2027 if the last reported sale price of its Class A common stock was at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides a notice of redemption at a redemption price equal to 100% of the principal amount of the 2029 Notes to be redeemed, plus accrued and unpaid special interest, if any, to, but excluding, the redemption date.

The net carrying amount of the 2029 Notes was as follows (in thousands):


	March 31, 2026		December 31, 2025
Convertible senior notes, net:
Principal	$	1,000,000	$	1,000,000
Unamortized debt issuance costs	(15,504)		(16,551)
Net carrying amount	$	984,496	$	983,449

As of March 31, 2026, the total estimated fair value of the 2029 Notes was approximately $969.5 million. The fair value was determined based on the closing trading price or quoted market price per $100 of the 2029 Notes as of the last day of trading for the period. The fair value of the 2029 Notes is primarily affected by the trading price of the Company’s Class A common stock and market interest rates and has been classified as level 2 in the fair value hierarchy.

Issuance costs were being amortized to interest expense over the contractual terms of the 2025 Notes at an effective interest rate of 0.59%. Issuance costs are being amortized to interest expense over the contractual terms of the 2029 Notes at an effective interest rate of 0.43%.

The following table sets forth the interest expense related to the 2025 and 2029 Notes for the three months ended March 31, 2026 and 2025 (in thousands):


	Three Months Ended March 31,
	2026		2025
Contractual interest expense	$	—	$	199
Amortization of issuance costs	1,047		1,819
Total	$	1,047	$	2,018

Capped Calls

In connection with the pricing of the 2029 Notes, the Company entered into privately negotiated capped call transactions with certain option counterparties (the “Capped Calls”). The initial strike price of each of the Capped Calls corresponds to the initial conversion price of the 2029 Notes. The Capped Calls are expected to partially offset the potential dilution to the Company’s Class A common stock upon any conversion of the 2029 Notes, with such offset subject to a cap based on the cap price. For accounting purposes, the Capped Calls are separate transactions, and not part of the 2029 Notes. As these transactions

meet certain accounting criteria, the Capped Calls are recorded in stockholders’ equity and are not accounted for as derivatives. The cost incurred to purchase the Capped Calls was recorded as a reduction to additional paid-in capital and will not be remeasured.

The following table sets forth key terms and costs incurred for the Capped Calls related to the 2029 Notes (in millions, except per share amounts):


	2029 Notes
Initial strike price per share, subject to certain adjustments	$	217.60
Initial cap price per share, subject to certain adjustments	$	322.38
Net cost incurred	$	100.9
Common stock covered, subject to anti-dilution adjustments	4.6

In connection with the maturity of the 2025 Notes, the Company issued 1,354,569 shares to holders of the 2025 Notes that converted prior to maturity and received 1,360,738 shares from the relevant option counterparties upon settlement of the Capped Calls relating to the 2025 Notes.

9. Commitments and Contingencies

**Non-cancelable Material Commitments—**During the three months ended March 31, 2026, other than certain non-cancelable operating leases described in Note 10, Leases, there have been no other material changes outside the ordinary course of business to the Company’s contractual obligations and commitments from those disclosed in the Annual Report.

401(k) Plan—The Company sponsors a 401(k) defined contribution plan covering all eligible U.S. employees. The Company is responsible for administrative costs of the 401(k) plan and makes matching contributions to the 401(k) plan. For the three months ended March 31, 2026 and 2025, the Company incurred expense of $2.5 million and $2.1 million, respectively, for matching contributions.

Legal Matters—The Company is involved from time to time in various claims and legal actions arising in the ordinary course of business. While it is not feasible to predict or determine the ultimate outcome of these matters, the Company believes that none of its current legal proceedings will have a material adverse effect on its financial position or results of operations.

Indemnification—The Company enters into indemnification provisions under some agreements with other parties in the ordinary course of business, including business partners, investors, contractors, customers and the Company’s officers, directors and certain employees. The Company has agreed to indemnify and defend the indemnified party claims and related losses suffered or incurred by the indemnified party from actual or threatened third-party claim because of the Company’s activities or non-compliance with certain representations and warranties made by the Company. It is not possible to determine the maximum potential loss under these indemnification provisions due to the Company’s limited history of prior indemnification claims and the unique facts and circumstances involved in each particular provision. To date, losses recorded in the Company’s condensed consolidated statements of operations in connection with the indemnification provisions have not been material.

10. Leases

The Company has entered into various non-cancelable operating leases for its facilities expiring between 2026 and 2036. Certain lease agreements contain an option for the Company to renew a lease for a term of up to three years or an option to terminate a lease early within one year. The Company considers these options, which may be elected at the Company’s sole discretion, in determining the lease term on a lease-by-lease basis.

Lease expense for these leases is recognized on a straight-line basis over the lease term, with variable lease payments recognized in the period those payments are incurred.

The components of lease cost recognized within the Company’s condensed consolidated statements of operations were as follows (in thousands):


	Three Months Ended March 31,
	2026		2025
Operating lease cost (1)	$	14,175	$	13,055

Short-term lease cost	4,589		2,757

1)Includes non-cash lease expense of $9.1 million and $8.4 million for the three months ended March 31, 2026 and 2025, respectively.

Supplemental cash flow information and non-cash activity related to the Company’s operating leases are as follows (in thousands):


	Three Months Ended March 31,
	2026		2025
Cash paid for amounts included in measurement of lease liabilities	$	12,937	$	10,611
Operating lease assets obtained in exchange for new lease liabilities	8,914		37,769

Maturities of lease liabilities by fiscal year for the Company’s operating leases are as follows (in thousands):


	Amount
Remainder of 2026	$	44,313
2027	59,568
2028	51,685
2029	48,792
2030	49,097
Thereafter	128,348
Total lease payments	$	381,803
Less: imputed interest	(81,247)
Present value of lease liabilities	$	300,556

As of March 31, 2026, the Company had various operating leases that had not yet commenced, which are excluded from the table above. The operating leases will commence between fiscal years 2026 and 2027 with total undiscounted future payments of $221.6 million and a weighted-average lease term of 9.1 years.

Weighted average remaining lease term and discount rate for the Company’s operating leases are as follows:


	March 31, 2026
Weighted-average remaining lease term (years)	6.9
Weighted-average discount rate	6.67	%

11. Revenue

Geographical Information

Revenue by location is determined by the billing address of the customer. The following table sets forth revenue by geographic area (in thousands):


	Three Months Ended March 31,
	2026		2025
North America (1)	$	723,933	$	533,815
International	282,493		227,738
Total	$	1,006,426	$	761,553

1)Includes revenue from the United States of $692.7 million and $508.5 million for the three months ended March 31, 2026 and 2025, respectively.

Deferred Revenue and Remaining Performance Obligations

Certain of the Company’s customers pay in advance of satisfaction of performance obligations and other customers with monthly contract terms are billed in arrears on a monthly basis. The Company records contract liabilities to deferred revenue when customers are billed or when the Company receives customer payments in advance of the performance obligations being satisfied on the Company’s contracts.

Revenue recognized during the three months ended March 31, 2026 and 2025, which was included in the deferred revenue balances at the beginning of each such period, was $560.3 million and $425.3 million, respectively.

Remaining performance obligations represent the aggregate amount of the transaction price in contracts allocated to performance obligations not delivered, or partially undelivered, as of the end of the reporting period. Remaining performance obligations include unearned revenue, multi-year contracts with future installment payments and certain unfulfilled orders against accepted customer contracts at the end of any given period. As of March 31, 2026 and December 31, 2025, the aggregate transaction price allocated to remaining performance obligations was $3,484.4 million and $3,461.2 million, respectively. There is uncertainty in the timing of revenues associated with the Company’s drawdown contracts, as future revenue can often vary significantly from past revenue. However, the Company expects to recognize substantially all of the remaining performance obligations over the next 24 months.

Accounts Receivable

Accounts receivable deemed uncollectible are charged against the allowance for credit losses when identified. During the three months ended March 31, 2026 and 2025, the Company charged $3.3 million and $3.1 million, respectively, of accounts receivable deemed uncollectible against the allowance for credit losses.

Unbilled accounts receivable represents revenue recognized on contracts for which billings have not yet been presented to customers because the amounts were earned but not contractually billable as of the balance sheet date. The unbilled accounts receivable balance is due within one year. As of March 31, 2026 and December 31, 2025, unbilled accounts receivable of approximately $134.1 million and $127.0 million, respectively, was included in accounts receivable on the Company’s condensed consolidated balance sheets.

Deferred Contract Costs

Sales commissions earned by the Company’s sales force are considered incremental and recoverable costs of obtaining a contract with a customer. These costs are deferred and then amortized over a period of benefit, which is determined to be four years. Amounts expected to be recognized within one year of the balance sheet date are recorded as deferred contract costs, current; the remaining portion is recorded as deferred contract costs, non-current, in the condensed consolidated balance sheets.

Deferred contract costs on the Company’s condensed consolidated balance sheets were $218.0 million and $202.7 million as of March 31, 2026 and December 31, 2025, respectively. Amortization expense was $20.3 million and $14.9 million for the three months ended March 31, 2026 and 2025, respectively.

12. Stockholders’ Equity

Class A and Class B Common Stock

The Company has two classes of common stock, Class A and Class B. The rights of the holders of Class A and Class B common stock are identical, except with respect to voting and conversion. Each share of Class A common stock is entitled to one vote per share and each share of Class B common stock is entitled to ten votes per share. Shares of Class B common stock may be converted into Class A common stock at any time at the option of the stockholder and are automatically converted to Class A common stock upon sale or transfer, subject to certain limited exceptions.

During the three months ended March 31, 2026, 304,491 shares of Class B common stock were converted into Class A common stock.

As of March 31, 2026, the Company had authorized 2,000,000,000 shares of Class A common stock and 310,000,000 shares of Class B common stock, each with a par value of $0.00001 per share, of which 330,573,793 shares of Class A common stock and 25,271,775 shares of Class B common stock were issued and outstanding.

Equity Incentive Plans

The Company has two equity incentive plans, the 2012 Equity Incentive Plan (the “2012 Plan”) and the 2019 Equity Incentive Plan (the “2019 Plan”). In connection with the Company’s initial public offering of Class A common stock (the “IPO”), the Company ceased granting awards under the 2012 Plan, and all shares that remained available for issuance under the 2012 Plan at that time were transferred to the 2019 Plan. Additionally, as of March 31, 2026, there were 2,166,251 shares of Class A common stock issuable upon conversion of Class B common stock underlying options outstanding under the 2012 Plan. Under the 2019 Plan, the Board and any committee or subcommittee of the Board may grant stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”) and performance stock units (“PSUs”) and other awards, each equity award valued or based on the Company’s Class A common stock, to employees, directors, consultants and advisors of the Company. As of March 31, 2026, there were 108,289,634 shares available for grant under the 2019 Plan.

Stock Options

The following table summarizes the Company’s stock option activity and weighted-average exercise prices:


	Number of Options Outstanding	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (in Years)	Aggregate Intrinsic Value (in thousands)
Balance—December 31, 2025	3,474,619	$	7.26	3.0	$	447,294
Options granted	—	—
Options exercised	(1,293,916)	7.34
Options forfeited or expired	—	—
Balance—March 31, 2026	2,180,703	$	7.21	2.8	$	241,704
Exercisable—March 31, 2026	2,180,703	$	7.21	2.8	$	241,704

As of March 31, 2026, there were 14,452 shares of Class A common stock and 2,166,251 shares of Class B common stock issuable upon the exercise of options outstanding. As of December 31, 2025, there were 14,452 shares of Class A common stock and 3,460,167 shares of Class B common stock issuable upon the exercise of options outstanding.

There were no options granted during the three months ended March 31, 2026 and 2025. The Company received approximately $9.7 million and $1.7 million in cash proceeds from options exercised during the three months ended March 31, 2026 and 2025, respectively. The intrinsic value of options exercised during the three months ended March 31, 2026 and 2025 was approximately $127.5 million and $168.4 million, respectively.

Restricted Stock Units, Restricted Stock and Performance Stock Units

The following table summarizes the activity for the Company’s unvested RSUs and PSUs:


	Shares	Weighted- Average Grant Date Fair Value
Unvested and outstanding balance as of December 31, 2025	16,700,043	$	124.10
Awarded	2,602,673	121.33
Vested	(1,891,445)	108.10
Forfeited/canceled	(376,799)	127.67
Unvested and outstanding balance as of March 31, 2026	17,034,472	125.38

The Company granted 134,236 restricted shares of Class A common stock in connection with acquisitions during the three months ended March 31, 2026.

Total compensation cost related to unvested RSUs and restricted shares of common stock not yet recognized was approximately $1,817.0 million and $1,717.2 million as of March 31, 2026 and December 31, 2025, respectively. The weighted-average period over which this compensation cost related to unvested RSUs and restricted shares of common stock will be recognized is 2.9 years and 2.8 years as of March 31, 2026 and December 31, 2025, respectively.

Total compensation cost related to unvested PSUs not yet recognized was approximately $63.2 million and $82.8 million as of March 31, 2026 and December 31, 2025, respectively. The weighted-average period over which this compensation cost related to unvested PSUs will be recognized is 1.4 years and 1.3 years as of March 31, 2026 and December 31, 2025, respectively.

Employee Stock Purchase Plan

In September 2019, the Board adopted and approved the 2019 Employee Stock Purchase Plan (the “ESPP”).

The ESPP is implemented through a series of offerings under which eligible employees are granted purchase rights to purchase shares of the Company’s Class A common stock on specified dates during such offerings. Under the ESPP, the Company may specify offerings with durations of not more than 27 months and may specify shorter purchase periods within each offering. Historically offering periods have been approximately 6 months. On each purchase date, eligible employees will purchase the shares at a price per share equal to 85% of the lesser of (1) the fair market value of the Company’s Class A common stock on the first trading day of the offering period, or (2) the fair market value of the Company’s Class A common stock on the purchase date, as defined in the ESPP.

The Company recognized $7.2 million of stock-based compensation expense related to the ESPP during the three months ended March 31, 2026. As of March 31, 2026, $31.6 million has been withheld on behalf of employees for a future purchase under the ESPP due to the timing of payroll deductions. There were no purchases related to ESPP in the three months ended March 31, 2026. As of March 31, 2026, 26,719,708 shares of Class A common stock remain available for grant under the ESPP.

Stock-Based Compensation

The Company recognizes and measures compensation expense for all stock-based payment awards granted to employees, directors and nonemployees, including stock options, restricted stock units (“RSUs”), performance-based awards (“PSUs”), and the employee stock purchase plan (the “ESPP”) based on the fair value of the awards on the date of grant. The determination of the grant date fair value using an option-pricing model is affected by the estimated fair value of the Company’s common stock as well as assumptions regarding a number of other complex and subjective variables. These variables include expected stock price volatility over the expected term of the award, actual and projected employee stock option exercise behaviors, the risk-free interest rate for the expected term of the award and expected dividends. The fair value of RSUs and PSUs is determined by the closing price on the date of grant of the Company’s Class A common stock, as reported on the Nasdaq Global Select Market. The Company estimates the fair value of the rights to acquire stock under the ESPP using the Black-Scholes option-pricing model. Stock-based compensation for stock options and RSUs is recognized on a straight-line basis over the requisite service period and account for forfeitures as they occur. Stock-based compensation for PSUs is amortized under the accelerated attribution method and may be adjusted over the vesting period based on interim estimates of performance against pre-set objectives. PSUs will vest upon achievement of specified performance targets and subject to continuous service through the applicable vesting dates. The compensation cost is recognized over the requisite service period when it is probable that the performance condition will be satisfied and the Company accounts for forfeitures as they occur.

The Company also has certain options that have performance-based vesting conditions; stock-based compensation expense for such awards is recognized on a straight-line basis from the time the vesting condition is likely to be met through the time the vesting condition has been achieved.

Stock-based compensation expense was included in the condensed consolidated statement of operations as follows (in thousands):


	Three Months Ended March 31,
	2026		2025
Cost of revenue	$	8,558	$	6,651
Research and development	123,671		105,735
Sales and marketing	42,298		34,125
General and administrative	22,314		17,754
Stock-based compensation, net of amounts capitalized	196,841		164,265
Capitalized stock-based compensation expense	9,189		5,662
Total stock-based compensation expense	$	206,030	$	169,927

13. Interest Income and Other Income, Net

Interest income and other income, net consist of the following (in thousands):


	Three Months Ended March 31,
	2026		2025
Interest income	$	49,229	$	50,727
Other income (loss), net	5,493		(3,548)
Interest income and other income, net	$	54,722	$	47,179

14. Income Ta****xes

The Company recorded a provision for income taxes of $6.4 million and $7.2 million for the three months ended March 31, 2026 and 2025, respectively. The Company has generated U.S. operating income and has minimal profits in its foreign jurisdictions during the quarter.

The Company’s effective tax rate was 10.79% and 22.50% for the three months ended March 31, 2026 and March 31, 2025, respectively. The effective tax rate differs from the U.S. federal statutory rate primarily due to the impact of a full valuation allowance on U.S. deferred tax assets, the favorable effects of the One Big Beautiful Bill Act (“OBBBA”), and withholding taxes in certain foreign jurisdictions.

The Company has applied ASC 740, Income Taxes, and has determined that it has uncertain positions that would result in a tax reserve for each of the three months ended March 31, 2026 and 2025. There were no material changes to the Company's unrecognized tax benefits during the three months ended March 31, 2026. The Company’s policy is to recognize interest and penalties related to uncertain income tax positions in income tax expense. The Company is subject to U.S. federal tax authority, U.S. state tax authority and foreign tax authority examinations.

The Company has evaluated the available evidence supporting the realization of its deferred tax assets, including the amount and timing of future taxable income, and has determined that it is more likely than not that its net deferred tax assets will not be realized in the United States. Due to uncertainties surrounding the realization of the deferred tax assets, the Company recorded a full valuation allowance against substantially all of its net deferred tax assets. When the Company determines that it will be able to realize some portion or all of its deferred tax assets, an adjustment to its valuation allowance on its deferred tax assets would have the effect of increasing net income in the period such determination is made.

The Company is subject to tax laws in the United States and numerous foreign jurisdictions. The United States and many international legislative and regulatory bodies continually propose and enact legislation that could significantly impact how U.S. multinational corporations are taxed. The Company is closely monitoring proposed legislation and its potential impact.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States. The OBBBA permanently extends certain provisions of the Tax Cuts and Jobs Act, including 100% bonus depreciation for certain qualified property, and reverses the requirement to capitalize and amortize domestic research and experimentation (“R&E”) expenses. As a result, for tax years beginning after December 31, 2024, taxpayers may deduct such expenses in the year incurred. The legislation also

introduced an election to accelerate any unamortized domestic R&E expenditures over a one- or two-year period beginning with the 2025 tax year and includes modifications to the international tax framework. The OBBBA also includes modifications to the international tax framework. Future guidance from the Internal Revenue Service and other tax authorities with respect to such legislation may affect us, and certain aspects thereof could be repealed or modified in future legislation. In accordance with ASC 740, Accounting for Income Taxes, the Company has reflected the effects of the OBBBA in its financial statements for the quarter ended March 31, 2026. The enactment of the OBBBA reduced the Company’s forecasted U.S. income tax expense for 2026. The legislation did not impact the Company’s U.S. net deferred tax assets or liabilities, as a full valuation allowance continues to be maintained against those balances.

15. Net Income Per Share

Basic and diluted net income per common share is presented in conformity with the two-class method required for participating securities. Basic and diluted net income per share is computed using the weighted-average number of shares of common stock outstanding during the period. The undistributed earnings are allocated based on the contractual participation rights of the Class A and Class B common stock as if the earnings for the year have been distributed. As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis. Further, as the conversion of Class B common stock is assumed in the computation of the diluted net income per share of Class A common stock, the undistributed earnings are equal to net income for that computation.

The following table presents the calculation of basic and diluted net income per share (in thousands, except per share data):


	Three Months Ended March 31,
	2026				2025
Basic net income per share:	Class A		Class B		Class A		Class B
Numerator:
Net income	$	48,893	$	3,681	$	22,808	$	1,834
Denominator:
Weighted-average shares used in calculating net income per share, basic	$	328,539	$	24,733	$	317,561	$	25,536
Basic net income per share	$	0.15	$	0.15	$	0.07	$	0.07

Diluted net income per share:
Numerator:
Allocation of distributed income, net of interest expense and related tax	$	49,625	$	3,736	$	24,101	$	1,938
Reallocation of undistributed net income as a result of conversion of Class B to Class A shares	3,736		—		1,938		—
Allocation of undistributed income	$	53,361	$	3,736	$	26,039	$	1,938
Denominator:
Number of shares used in basic calculation	328,539		24,733		317,561		25,536
Weighted-average effect of diluted securities:
Conversion of Class B to Class A common shares outstanding	24,733		—		25,536		—
Employee stock options	2,771		—		5,961		—
Employee stock purchase plan	21		—		86		—

Restricted stock units and performance stock units	3,627		—		3,404		—
Unvested restricted stock in connection with acquisition	444		—		194		—
Shares issuable upon conversion of the 2025 Notes	—		—		5,740		—
Shares issuable upon conversion of the 2029 Notes	4,596		—		4,596		—
Number of shares used in diluted calculation	364,731		24,733		363,078		25,536
Diluted net income per share	$	0.15	$	0.15	$	0.07	$	0.08

Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows (in thousands):


	As of March 31,
	2026	2025
Shares subject to outstanding stock options, RSUs and PSUs	4,359	2,868



Total	4,359	2,868

The Company uses the if-converted method for calculating any potential dilutive effect of the conversion options embedded in the Notes on diluted net income per share.

The Company entered into Capped Calls in connection with the issuance of the Notes. The effect of the Capped Calls was excluded from the calculation of diluted net income per share as the effect of the Capped Calls would have been anti-dilutive. The Capped Calls are expected to partially offset the potential dilution to the Company’s Class A common stock upon any conversion of the Notes.

16. Derivative Financial Instruments

The Company’s derivative financial instruments consist of foreign currency forward contracts used to manage exposure to fluctuations in foreign currency exchange rates, which all have maturities of 12 months or less.

As of March 31, 2026, the Company had foreign currency forward contracts designated as cash flow hedges with total notional amounts of approximately $194.0 million. The notional amounts of derivative instruments represent the amount of foreign currency to be exchanged under the contracts and do not represent the Company’s exposure to credit or market risk.

As of March 31, 2026, an estimated ($3.0) million of net gains (losses) included in accumulated other comprehensive income (loss) is expected to be reclassified into earnings within the next 12 months. Cash flows from the settlement of these contracts are classified in the same category as the underlying hedged transactions. Refer to Note 2, Basis of Presentation and Summary of Significant Accounting Policies and Note 4, Fair Value Measurements for additional information.

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