filings.toolsItem 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements generally relate to future events or our future financial or operating performance and may include statements concerning, among other things, our business strategy (including anticipated trends and developments in, and management plans for, our business and the markets in which we operate), financial results, the impact of macroeconomic uncertainty on our business, operations, and the markets and communities in which we, our clients, and partners operate, results of operations, revenues, operating expenses, income taxes, including the impact of the OBBBA, capital expenditures including share repurchases, sales and marketing initiatives and competition. In some cases, you can identify forward-looking statements because they contain words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “suggests,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. These statements are not guarantees of future performance; they reflect our current views with respect to future events and are based on assumptions and are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from expectations or results projected or implied by forward-looking statements.
We discuss many of these risks in Part II of this Quarterly Report on Form 10-Q in greater detail under the heading “Risk Factors” and in other filings we make from time to time with the Securities and Exchange Commission (the “SEC”). Also, these forward-looking statements represent our estimates and assumptions only as of the date of this Quarterly Report on Form 10-Q, which are inherently subject to change and involve risks and uncertainties. Unless required by federal securities laws, we assume no obligation to update any of these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated, to reflect circumstances or events that occur after the statements are made. Given these uncertainties, investors should not place undue reliance on these forward-looking statements.
Investors should read this Quarterly Report on Form 10-Q and the documents that we reference in this report and have filed with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2024, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.
References to “Notes” are notes included in our unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.
Overview
We offer a self-service, cloud-based ad-buying platform that empowers our clients to plan, manage, optimize and measure more expressive data-driven digital advertising campaigns. Our platform allows clients to execute integrated campaigns across ad formats and channels, including CTV and other video, display, audio and native, on a multitude of devices, such as televisions, streaming devices, mobile devices, computers and digital-out-of-home devices. Our platform’s integrations with major inventory, publisher and data partners provide ad buyers reach and decisioning capabilities, and our enterprise APIs enable our clients to customize and expand platform functionality.
Our clients are advertising agencies, advertisers and other service providers for agencies or advertisers, with whom we enter into ongoing MSAs. We generate revenue by charging our clients a platform fee generally based on a percentage of our clients’ total spend on our platform and from providing value-added services and data to support their advertising campaigns.
Executive Summary
Highlights
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| Dollars | Change | Dollars | Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ | % | 2025 | 2024 | $ | % | ||||||||||||||||||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 694,039 | $ | 584,550 | $ | 109,489 | 19 | % | $ | 1,310,060 | $ | 1,075,803 | $ | 234,257 | 22 | % | |||||||||||||||||||||||||||||||
| Net income | $ | 90,129 | $ | 85,029 | $ | 5,100 | 6 | % | $ | 140,807 | $ | 116,689 | $ | 24,118 | 21 | % |
Trends, Opportunities and Challenges
The growing digitization of media and fragmentation of audiences has increased the complexity of advertising and thereby increased the need for automation in ad buying, which we provide on our platform. In order to grow, we will need to continue to develop our platform’s programmatic capabilities and expand our advertising inventory, value-added services and data to support our clients’ advertising campaigns. We believe that key opportunities include our ongoing global expansion, continuing development of our omnichannel ad inventory (including in channels such as CTV and other video, mobile, audio and others), adoption and utilization of retail data and continuing development and adoption of the data usage, measurement and targeting capabilities provided by our platform.
We believe that growth of the programmatic advertising market is important for our ability to grow our business. Adoption of programmatic advertising by advertisers allows us to acquire new clients and grow revenue from existing clients. Although our clients include some of the largest advertising agencies and advertisers in the world, we believe there is significant room for us to expand our business relationships with these clients to gain a larger portion of their advertising spend through our platform. We also believe that the industry trends noted above will lead to advertisers adopting programmatic advertising through platforms such as ours.
Similarly, the adoption of programmatic advertising by inventory owners and content providers allows us to expand the volume and type of advertising inventory we present to our clients. For example, we have expanded our CTV, audio and other advertising offerings through our integrations with supply-side partners and publishers. Even if the programmatic advertising market continues to grow, the future of our business will depend on our ability to position ourselves within the market.
We invest for long-term growth. We anticipate that our operating expenses will continue to increase in the foreseeable future as we invest in platform operations for our hosting capabilities as well as technology and development to enhance our platform and related offerings, such as programmatic buying of CTV advertising inventory. We also anticipate that our sales and marketing expenses will continue to increase to acquire new clients and reinforce our relationships with existing clients. In addition, we expect to continue making investments in our infrastructure, including our information technology, financial and administrative systems and controls to support our growing operations.
We believe the markets outside of the United States, and in particular across Europe and Asia in markets such as the U.K, Germany, France, China, Japan, India and Australia, offer opportunities for growth. However, such markets may also pose challenges relating to compliance with local laws and regulations, restrictions on foreign ownership or investment, uncertainty relating to trade relations and a variety of additional risks. We intend to make additional investments in sales and marketing and product development to expand in international markets where we are making significant investments in our platform and growing our team.
We believe that these investments will contribute to our long-term growth, although they may negatively impact profitability in the near term.
Our business model has allowed us to grow significantly, and we believe that our operating leverage enables us to support future long-term growth profitably.
Macroeconomic Uncertainty
Changes in interest rates, foreign currency exchange rates, inflation, trade policies and practices and other geopolitical developments have resulted, and may continue to result, in a global slowdown of economic activity, which may decrease demand for a broad variety of goods and services in various industries, including those provided by our clients, while also disrupting supply channels, sales channels and advertising and marketing activities for an unknown period of time until economic activity normalizes. As a result of the current uncertainty in economic activity, we are unable to predict the size and duration of the impact on our revenue and our results of operations. The extent of the impact of these macroeconomic factors on our operational and financial performance will depend on a variety of factors, and the duration and extent of geopolitical and global economic disruption and their respective impacts on our clients, partners, industry and employees, all of which are uncertain at this time and cannot be accurately predicted. See “Item 1A. Risk Factors” in Part II. Other Information for further discussion of the adverse impacts of macroeconomic uncertainty on our business.
Results of Operations for the Three and Six Months Ended June 30, 2025 Compared with the Three and Six Months Ended June 30, 2024
The following tables set forth our condensed consolidated results of operations for the periods presented.
| Three Months Ended June 30, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands) | (% of Revenue) | (in thousands) | (% of Revenue) | ||||||||||||||||||||
| Revenue | $ | 694,039 | 100 | % | $ | 584,550 | 100 | % | |||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Platform operations | 150,980 | 22 | % | 110,459 | 19 | % | |||||||||||||||||
| Sales and marketing | 161,131 | 23 | % | 133,867 | 23 | % | |||||||||||||||||
| Technology and development | 134,251 | 19 | % | 110,035 | 19 | % | |||||||||||||||||
| General and administrative | 130,900 | 19 | % | 135,469 | 23 | % | |||||||||||||||||
| Total operating expenses | 577,262 | 83 | % | 489,830 | 84 | % | |||||||||||||||||
| Income from operations | 116,777 | 17 | % | 94,720 | 16 | % | |||||||||||||||||
| Other expense (income): | |||||||||||||||||||||||
| Total other income, net | (16,424) | (2) | % | (17,772) | (3) | % | |||||||||||||||||
| Income before income taxes | 133,201 | 19 | % | 112,492 | 19 | % | |||||||||||||||||
| Provision for income taxes | 43,072 | 6 | % | 27,463 | 5 | % | |||||||||||||||||
| Net income | $ | 90,129 | 13 | % | $ | 85,029 | 15 | % |
| Six Months Ended June 30, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands) | (% of Revenue) | (in thousands) | (% of Revenue) | ||||||||||||||||||||
| Revenue | $ | 1,310,060 | 100 | % | $ | 1,075,803 | 100 | % | |||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Platform operations | 293,819 | 22 | % | 214,089 | 20 | % | |||||||||||||||||
| Sales and marketing | 313,874 | 24 | % | 255,592 | 24 | % | |||||||||||||||||
| Technology and development | 266,653 | 20 | % | 217,721 | 20 | % | |||||||||||||||||
| General and administrative | 264,485 | 20 | % | 265,024 | 25 | % | |||||||||||||||||
| Total operating expenses | 1,138,831 | 87 | % | 952,426 | 89 | % | |||||||||||||||||
| Income from operations | 171,229 | 13 | % | 123,377 | 11 | % | |||||||||||||||||
| Other expense (income): | |||||||||||||||||||||||
| Total other income, net | (37,741) | (3) | % | (35,148) | (3) | % | |||||||||||||||||
| Income before income taxes | 208,970 | 16 | % | 158,525 | 15 | % | |||||||||||||||||
| Provision for income taxes | 68,163 | 5 | % | 41,836 | 4 | % | |||||||||||||||||
| Net income | $ | 140,807 | 11 | % | $ | 116,689 | 11 | % |
Note: Percentages may not sum due to rounding.
Revenue
Revenue increased by $109 million, or 19%, and $234 million, or 22%, for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024, respectively. The increase was primarily due to higher gross spend in the current year on our platform, which was primarily driven by higher spend per campaign, new clients and more campaigns executed by existing clients. The increase in revenue was also due to changes in the mix of value-added services and data utilized by clients for their campaigns, which fluctuates from period to period.
Platform Operations
Platform operations expense increased by $41 million, or 37%, for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. The increase was primarily due to increases of $33 million in hosting costs and $6 million in personnel costs, which included a $2 million increase in stock-based compensation. The increase in hosting costs was primarily attributable to support costs relating to the increased use of our platform by our clients, increased use of features by our technical teams in support of our platform and investment in new data centers to support the continued growth of our platform. The increase in personnel costs was primarily due to headcount growth as well as the increase in stock-based compensation driven by new equity awards and the impact of stock price volatility on our ESPP.
Platform operations expense increased by $80 million, or 37%, for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024. The increase was primarily due to increases of $63 million in hosting costs and $14 million in personnel costs, which included a $5 million increase in stock-based compensation. The increase in hosting costs was primarily attributable to support costs relating to the increased use of our platform by our clients, increased use of features by our technical teams in support of our platform and investment in new data centers to support the continued growth of our platform. The increase in personnel costs was primarily due to headcount growth as well as the increase in stock-based compensation driven by new equity awards and the impact of stock price volatility on our ESPP.
We expect platform operations expenses to increase in absolute dollars in future periods as we continue to experience increased volumes of media impressions through our platform, invest in our hosting capabilities, including supporting new technical features and functionality of our platform and related offerings, and hire additional personnel to support our growth.
Sales and Marketing
Sales and marketing expense increased by $27 million, or 20%, for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. The increase was primarily due to increases of $20 million in personnel costs, which included a $5 million increase in stock-based compensation, $5 million in marketing costs and $2 million in allocated facilities costs. The increase in personnel costs was primarily due to headcount growth to support our sales efforts and to continue to develop and maintain relationships with our clients and an increase in incentive compensation driven by gross spend growth. The increase in stock-based compensation was primarily driven by new equity awards and the impact of stock price volatility on our ESPP. The increase in marketing costs was primarily due to an increase in marketing campaigns, events, creatives, sponsorships and client engagement. The increase in allocated facilities costs was primarily driven by new leases for additional office space to support our future growth as well as office support expenses.
Sales and marketing expense increased by $58 million, or 23%, for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024. The increase was primarily due to increases of $45 million in personnel costs, which included a $14 million increase in stock-based compensation, $8 million in marketing costs and $5 million in allocated facilities costs. The increase in personnel costs was primarily due to headcount growth to support our sales efforts and to continue to develop and maintain relationships with our clients and an increase in incentive compensation driven by gross spend growth. The increase in stock-based compensation was primarily driven by new equity awards and the impact of stock price volatility on our ESPP. The increase in marketing costs was primarily due to an increase in marketing campaigns, events, creatives, sponsorships and client engagement. The increase in allocated facilities costs was primarily driven by new leases for additional office space to support our future growth as well as office support expenses.
We expect sales and marketing expenses to increase in absolute dollars in future periods, as we continue to hire additional personnel and focus on increasing the adoption of our platform and related offerings with existing and new clients and expanding our international business.
Technology and Development
Technology and development expense increased by $24 million, or 22%, for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. The increase was primarily due to increases of $21 million in personnel costs, which included a $10 million increase in stock-based compensation, and $3 million in allocated facilities costs. The increase in stock-based compensation was primarily driven by new equity awards and the impact of stock price volatility on our ESPP. The increase in other personnel costs was primarily attributable to headcount growth to maintain and support further development of our platform and related offerings. The increase in allocated facilities costs was primarily driven by new leases for additional office space to support our future growth as well as office support expenses.
Technology and development expense increased by $49 million, or 22%, for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024. The increase was primarily due to increases of $42 million in personnel costs, which included a $23 million increase in stock-based compensation, and $6 million in allocated facilities costs. The increase in stock-based compensation was primarily driven by new equity awards and the impact of stock price volatility on our ESPP. The increase in other personnel costs was primarily attributable to headcount growth to maintain and support further development of our platform and related offerings. The increase in allocated facilities costs was primarily driven by new leases for additional office space to support our future growth as well as office support expenses.
We expect technology and development expense to increase in absolute dollars as we continue to hire additional personnel, invest in the development of our platform and related offerings to support additional features and functionality, increase the number of advertising inventory and data suppliers and support the anticipated increase in volume of advertising spending by our clients on our platform.
General and Administrative
General and administrative expense decreased by $5 million, or 3%, for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, primarily due to a $15 million decrease in stock-based compensation, partially offset by increases of $6 million in administrative costs, $2 million in personnel costs and $1 million in allocated facilities costs. The decrease in stock-based compensation was primarily due to a $17 million decrease relating to the CEO Performance Option driven by the graded-vesting attribution method, under which more expense is recognized earlier in the option’s life, partially offset by a $2 million increase primarily driven by new equity awards and the impact of stock price volatility on our ESPP. The increase in administrative costs was primarily driven by increases in external professional fees, including legal expenses for various litigation, regulatory and governance matters. The increase in personnel costs was primarily attributable to increased headcount to support our growth, partially offset by a decrease in cash incentive award expenses. The increase in allocated facilities costs was primarily driven by new leases for additional office space to support our future growth as well as office support expenses.
General and administrative expense decreased by $0.5 million, or 0.2%, for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, primarily due to a $23 million decrease in stock-based compensation, partially offset by increases of $13 million in administrative costs, $6 million in personnel costs and $2 million in allocated facilities costs. The decrease in stock-based compensation was primarily due to a $28 million decrease relating to the CEO Performance Option driven by the graded-vesting attribution method, under which more expense is recognized earlier in the option’s life, partially offset by a $5 million increase primarily driven by new equity awards and the impact of stock price volatility on our ESPP. The increase in administrative costs was primarily driven by increases in external professional fees, including legal expenses for various litigation, regulatory and governance matters. The increase in personnel costs was primarily attributable to increased headcount to support our growth, partially offset by a decrease in cash incentive award expenses. The increase in allocated facilities costs was primarily driven by new leases for additional office space to support our future growth as well as office support expenses.
Excluding the impact of the CEO Performance Option, we expect general and administrative expenses to increase primarily due to continued investment in corporate infrastructure, headcount to support growth and various litigation, regulatory and governance matters, for which expenses may fluctuate from period to period.
Total Other Income, Net
Total other income, net, decreased by $1 million for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. The decrease was primarily due to losses on foreign currency forwards driven by changes in foreign currency exchange rates against the U.S. Dollar, partially offset by foreign currency transaction gains.
Total other income, net, increased by $3 million for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024. The increase was primarily due to higher interest income on our cash and cash equivalents and short-term investments driven by higher amounts invested as well as foreign currency transaction gains driven by changes in foreign currency exchange rates against the U.S. Dollar, partially offset by losses on foreign currency forwards and falling portfolio interest rates.
Provision for Income Taxes
The U.S. federal statutory tax rate was 21% for the three and six months ended June 30, 2025 and 2024.
The provision for income taxes increased by $16 million for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. The increase was primarily due to lower tax benefits associated with employee stock-based awards and higher pre-tax profitability, partially offset by a lower impact attributable to nondeductible stock-based compensation.
The provision for income taxes increased by $26 million for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024. The increase was primarily due to higher pre-tax profitability and lower tax benefits associated with employee stock-based awards, partially offset by a lower impact attributable to nondeductible stock-based compensation.
On July 4, 2025, the United States enacted the OBBBA, which changes or makes permanent certain tax laws for corporations. Currently, the Company does not expect the provisions of the OBBBA to have a material impact on its effective tax rate or total provision for income taxes. However, depending on the Company’s elections under the OBBBA, it could experience an increase in income taxes receivable and a reduction in deferred tax assets relating to domestic research and development expenses. Refer to Note 9 - Income Taxes for further information regarding the impact of the OBBBA in future periods.
Liquidity and Capital Resources
As of June 30, 2025, we had working capital of $2,105 million, which included $896 million in cash and cash equivalents, $120 million of which was held by our international subsidiaries, and $791 million in short-term investments in marketable securities. Additionally, we had $443 million available under our Amended Credit Facility (refer to the “Credit Facility” section below). For the six months ended June 30, 2025, we generated $456 million in cash flows from operating activities.
We believe our existing cash and cash equivalents, cash flow from operations, and our undrawn available balance under our Amended Credit Facility will be sufficient to meet our working capital requirements and investments we make from time to time for at least the next 12 months. We believe our existing cash and cash equivalents, short-term investments and cash flow from operations will be sufficient to fund our share repurchase program. Further, we have a shelf registration statement on Form S-3 on file with the SEC (the “Shelf Registration”), which permits us to issue equity securities and equity-linked securities from time to time, subject to certain limitations. The Shelf Registration is intended to provide us with additional flexibility to access capital markets for general corporate purposes, subject to market conditions and our capital needs. Our future capital requirements and the adequacy of available funds will depend on many factors, including those set forth in *“*Item 1A. Risk Factors” within this Quarterly Report on Form 10-Q.
In the future, we may attempt to raise additional capital through the sale of equity securities or through equity-linked or debt-financing arrangements. If we raise additional funds by issuing equity or equity-linked securities, the ownership of our existing stockholders will be diluted. If we raise additional financing by incurring additional indebtedness, we may be subject to increased fixed payment obligations and could also be subject to additional restrictive covenants, such as limitations on our ability to incur additional debt, and other operating restrictions that could adversely impact our ability to conduct our business. Any future indebtedness we incur may result in terms that could be unfavorable to equity investors.
There can be no assurance that we will be able to raise additional capital. The inability to raise capital would adversely affect our ability to achieve our business objectives. In addition, if our operating performance during the next 12 months is below our expectations, our liquidity and ability to operate our business could be adversely affected. We are closely monitoring the effect that current macroeconomic factors may have on our working capital requirements.
Credit Facility
On June 15, 2021, we and a syndicate of banks, led by JPMorgan Chase Bank, N.A., as agent, entered into a Loan and Security Agreement (the “Credit Facility”). The Credit Facility consists of a $450 million revolving loan facility, with a $20 million sublimit for swingline borrowings and a $15 million sublimit for the issuance of letters of credit. Under certain circumstances, we have the right to increase the Credit Facility by an amount not to exceed $300 million.
On December 17, 2021, we amended the Credit Facility to expand the process for issuing letters of credit and the related invoicing, particularly with respect to letters of credit not denominated in U.S. Dollars. On February 9, 2023, we further amended the Credit Facility (as amended, the “Amended Credit Facility”) to transition from a variable interest rate based on the London Interbank Offered Rate to a variable interest rate based on the secured overnight financing rate (“SOFR”).
As of June 30, 2025, we did not have an outstanding debt balance under the Amended Credit Facility. Availability under the Amended Credit Facility was $443 million as of June 30, 2025, which is net of outstanding letters of credit of $7 million. The Amended Credit Facility matures, and all outstanding amounts become due and payable, on June 15, 2026. As of June 30, 2025, we were in compliance with all covenants.
For additional information regarding the Amended Credit Facility, refer to Note 6—Debt.
Other Short-Term Borrowings
On June 30, 2025, we had an outstanding balance of $74 million relating to an overdraft of an account pursuant to customary conditions governing our depositary relationship with JPMorgan Chase Bank, N.A. This outstanding balance is included in accounts payable in the condensed consolidated balance sheets and as proceeds from short-term borrowings in the condensed consolidated statements of cash flows.
Share Repurchase Program
In February 2023, our board of directors approved a share repurchase program to repurchase our Class A common stock. The share repurchase program, which has no expiration date, is designed to help offset the impact of future share dilution from employee stock issuances. Repurchases under the program may be made in the open market, in privately negotiated transactions or otherwise, with the amount and timing of repurchases determined at our discretion, depending on market conditions and corporate needs. Open market repurchases are structured to occur in accordance with applicable federal securities laws, including within the pricing and volume requirements of Rule 10b-18 under the Exchange Act. We may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of shares under this authorization. This program does not obligate us to acquire any particular amount of Class A common stock, and may be modified, suspended or terminated at any time at the discretion of our board of directors.
As of December 31, 2024, $464 million remained available and authorized for repurchases. At the end of January 2025, an additional $564 million was authorized under this program, bringing the total amount available for future repurchases to $1 billion. During the three months ended June 30, 2025, we repurchased and subsequently retired 3.7 million shares of our Class A common stock for an aggregate repurchase amount of $257 million. During the six months ended June 30, 2025, we repurchased and subsequently retired 10 million shares of our Class A common stock for an aggregate repurchase amount of $657 million. The repurchase amounts included in the condensed consolidated statements of stockholders’ equity include immaterial amounts relating to the 1% excise tax on share repurchases, net of share issuances, as a result of the Inflation Reduction Act of 2022 (“IRA”). As of June 30, 2025, $375 million remained available and authorized for repurchases.
Cash Flows
The following table summarizes our cash flows for the periods presented:
| Six Months Ended June 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| (in thousands) | |||||||||||
| Net cash provided by operating activities | $ | 456,446 | $ | 266,731 | |||||||
| Net cash used in investing activities | $ | (346,155) | $ | (37,134) | |||||||
| Net cash used in financing activities | $ | (583,367) | $ | (115,363) |
Operating Activities
Our cash flows from operating activities are primarily influenced by growth in our operations, increases or decreases in collections from our clients and related payments to our suppliers for Supplier Components. We typically pay suppliers in advance of collections from our clients. Our collection and payment cycles can vary from period to period. In addition, we expect seasonality to impact cash flows from operating activities on a sequential quarterly basis during the year.
For the six months ended June 30, 2025, cash provided by operating activities of $456 million resulted primarily from net income adjusted for noncash items of $470 million and a net decrease from our operating assets and liabilities of $14 million. The net decrease from our operating assets and liabilities was due to a $32 million decrease in operating lease liabilities, a $24 million decrease in accrued expenses and other liabilities, a $20 million decrease in accounts payable and an $18 million increase in prepaid expenses and other assets, partially offset by an $80 million decrease in accounts receivable. The decrease in operating lease liabilities was due primarily to rent payments. The decrease in accrued expenses and other liabilities was primarily due to tax payments against the prior year income tax liability and a reduction of the liability relating to the ESPP due to the purchase of shares in accordance with the plan, partially offset by the timing of payment for certain personnel costs. The decrease in accounts payable was due to the timing and seasonality of payments to suppliers for Supplier Components. The increase in prepaid expenses and other assets was primarily due to estimated tax payments, partially offset by the current tax provision and the timing of payment for employee engagement costs, including for travel and in-person events that occurred in the first quarter of 2025. The decrease in accounts receivable was due to the timing and seasonality of cash receipts from clients.
For the six months ended June 30, 2024, cash provided by operating activities of $267 million resulted primarily from net income adjusted for noncash items of $419 million, and a net decrease from our operating assets and liabilities of $152 million. The net decrease from our operating assets and liabilities was primarily due to a $52 million increase in prepaid expenses and other assets, a $49 million increase in accounts receivable, a $27 million decrease in operating lease liabilities, a $13 million decrease in accounts payable and a $10 million decrease in accrued expenses and other liabilities. The increase in prepaid expenses and other assets was primarily due to cash paid for income taxes. The increase in accounts receivable was due to the timing and seasonality of cash receipts from clients and the growth of our business. The decrease in operating lease liabilities was due primarily to rent payments. The decrease in accounts payable was due to the timing and seasonality of payments to suppliers for Supplier Components. The decrease in accrued expenses and other liabilities was primarily due to incentive compensation payments and a reduction of the liability relating to the ESPP due to the purchase of shares in accordance with the plan.
Investing Activities
Our primary investing activities consist of investing in short-term marketable securities, capital expenditures for property and equipment for the expansion of facilities to support our hosting capabilities and growing headcount as well as capital expenditures to develop our software in support of enhancing our platform and related offerings. As our business grows, we expect our capital expenditures to increase, and our other investment activity may increase.
For the six months ended June 30, 2025, we used $346 million of cash in investing activities, consisting of $232 million of net purchases of short-term investments, $104 million to purchase property and equipment, $6 million of investments in capitalized software and $4 million for the acquisition of certain assets accounted for as a business combination.
For the six months ended June 30, 2024, we used $37 million of cash in investing activities, consisting of $29 million to purchase property and equipment, $4 million of investments in capitalized software and $3 million of net purchases of short-term investments.
Financing Activities
For the six months ended June 30, 2025, we used $583 million of cash in financing activities, consisting of $647 million of cash paid for repurchases of our Class A common stock and $57 million of taxes paid for restricted stock award settlements, partially offset by $74 million of proceeds from short-term borrowings, $32 million of proceeds from our ESPP and $14 million of proceeds from stock option exercises. Refer to Note 6 - Debt for further information regarding short-term borrowings.
For the six months ended June 30, 2024, we used $115 million of cash in financing activities, consisting of $125 million of cash paid for repurchases of Class A common stock and $58 million of taxes paid for restricted stock award settlements, partially offset by $38 million of proceeds from stock option exercises and $30 million of proceeds from our ESPP.
Off-Balance Sheet Arrangements
We do not have any relationships with other entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities that have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. We did not have any other off-balance sheet arrangements at June 30, 2025 other than the indemnification agreements described below.
Contractual Obligations
Our principal commitments consist of non-cancelable operating leases for our various office and hosting facilities and other contractual commitments consisting of obligations to our hosting services, hardware providers and providers of software as a service. In certain cases, the terms of the lease agreements provide for rental payments on a graduated basis.
The following table summarizes our non-cancelable contractual obligations as of June 30, 2025 (in thousands):
| Payments Due by Period | ||||||||||||||||||||
| Remainder of 2025 | 2026 and Thereafter | Total | ||||||||||||||||||
| Operating lease commitments | $ | 26,251 | $ | 782,993 | $ | 809,244 | ||||||||||||||
| Other contractual commitments | 225,751 | 170,805 | 396,556 | |||||||||||||||||
| Total | $ | 252,002 | $ | 953,798 | $ | 1,205,800 |
In the ordinary course of business, we enter into agreements in which we may agree to indemnify clients, suppliers, vendors, lessors, business partners, lenders, stockholders and other parties with respect to certain matters, including losses resulting from claims of intellectual property infringement, damages to property or persons, business losses or other liabilities. Generally, these indemnity and defense obligations relate to our own business operations, obligations and acts or omissions. However, under some circumstances, we agree to indemnify and defend contract counterparties against losses resulting from their own business operations, obligations and acts or omissions, or the business operations, obligations and acts or omissions of third parties. These indemnity provisions generally survive termination or expiration of the agreements in which they appear. In addition, we have entered into indemnification agreements with our directors, executive officers and other officers that will require us to indemnify them against liabilities that may arise by reason of their status or service as directors, officers or employees. In the ordinary course of business, demands have been made upon us to provide indemnification under such agreements, but we are not aware of any claims that could have a material effect on our condensed consolidated financial statements. Accordingly, no material amounts have been recorded at June 30, 2025.
Critical Accounting Policies and Estimates
Our condensed consolidated financial statements are prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported
amounts of assets, liabilities, revenue, expenses and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates.
We believe that the assumptions and estimates associated with the evaluation of revenue recognition criteria, including the determination of revenue recognition as net versus gross in our revenue arrangements, stock-based compensation expense and income taxes, including the realizability of deferred tax assets, have the greatest potential impact on our condensed consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates.
Refer to Note 8— Stock-Based Compensation for information regarding the amendment and restatement of our 2016 Plan. We do not currently expect that the new or modified provisions under the amended and restated 2016 Plan will have a material impact on our financial statements in the near term.
Refer to Note 9 - Income Taxes for information regarding the impact of the OBBBA on income taxes in future periods.
Recently Issued Accounting Pronouncements
Refer to Note 2—Basis of Presentation and Summary of Significant Accounting Policies of our condensed consolidated financial statements.
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