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The year ended December 31, 2023, includes a $5.7 million loss from the mark-to-market adjustment of contingent consideration associated with acquisitions, $3.2 million of currency gains on acquisition-related intercompany loans, and $16.9 million of interest income. The following table provides a reconciliation of Free Cash Flow to net cash provided by operating activities, the most comparable GAAP financial measure: (Unaudited) Three Months Ended December 31, Year Ended December 31, (in thousands)2024 (1) 2023 2024 2023 Net cash provided by operating activities$37,530 $21,651 $154,084 $127,307 Capital expenditures (4,347) (2,311) (14,086) (10,193)Free Cash Flow$33,183 $19,340 $139,998 $117,114 (1)Free Cash Flow for the year ended December 31, 2024, was adversely impacted by approximately $13.2 million of expenses paid related to the pending Merger transaction. The following table provides a reconciliation of Non-GAAP gross profit to gross profit, the most comparable GAAP financial measure, and a comparison of Non-GAAP gross margin (Non-GAAP gross profit as a percentage of total revenue) to gross margin (gross profit as a percentage of total revenue), the most comparable GAAP financial measure: (Unaudited) Three Months EndedDecember 31, Year EndedDecember 31, (in thousands)2024 2023 2024 2023 Gross profit$159,252 $142,330 $540,985 $490,910 Stock-based compensation expense 2,167 2,303 8,397 10,095 Pending merger expenses 1,155 — 1,155 — Non-GAAP gross profit$162,574 $144,633 $550,537 $501,005 Gross profit margin 82.7% 83.0% 81.3% 80.1%Non-GAAP gross margin 84.4% 84.3% 82.7% 81.8% The following table provides a reconciliation of Non-GAAP operating expense to Total operating expense, the most comparable GAAP financial measure: (Unaudited) Three Months EndedDecember 31, Year EndedDecember 31, (in thousands)2024 2023 2024 2023 Total operating expense$148,287 $119,740 $523,300 $490,667 Stock-based compensation expense (14,803) (16,855) (59,283) (75,486)Amortization (8,709) (7,708) (33,022) (30,851)Loss on mark-to-market adjustment ofcontingent consideration (287) (1,212) (476) (5,706)Pending merger expenses (21,095) — (21,095) — Non-GAAP operating expense$103,393 $93,965 $409,424 $378,624 The following table provides the calculation of non-GAAP diluted common shares and non-GAAP net income per share, diluted: (Unaudited) Three Months EndedDecember 31, Year EndedDecember 31, 2024 2023 2024 2023 Numerator: Non-GAAP net income$47,362 $41,091 $119,582 $98,770 Interest expense related to convertible notes, net of tax 1,006 1,006 4,024 — Numerator for non-GAAP diluted income per share$48,368 $42,097 $123,606 $98,770 Denominator: Weighted average shares outstanding, basic 85,289 81,760 84,085 80,596 Effect of dilutive shares 7,266 7,217 7,682 3,837 Non-GAAP diluted shares outstanding 92,555 88,977 91,767 84,433 Non-GAAP net income per share, diluted$0.52 $0.47 $1.35 $1.17 The following table provides a reconciliation of Billings to revenue, the most comparable GAAP financial measure: (Unaudited) Three Months EndedDecember 31, Year EndedDecember 31, (in thousands)2024 2023 2024 2023 Revenue$192,631 $171,503 $665,788 $612,701 Ending deferred revenue 167,616 163,703 167,616 163,703 Beginning deferred revenue (140,835) (138,933) (163,703) (144,460)Deferred revenue acquired — (149) (1,825) (149)Billings$219,412 $196,124 $667,876 $631,795 The following table provides Software revenue, Total revenue, Billings and Adjusted EBITDA on a constant currency basis: (Unaudited) Three Months EndedDecember 31, 2024 Three Months Ended December 31, 2023 Increase/(Decrease) % (in thousands)As reported Currency changes As adjusted for constant currency As reported As reported As adjusted for constant currency Software revenue$179.4 $2.3 $181.7 $155.9 15.0% 16.5%Total revenue$192.6 $2.6 $195.2 $171.5 12.3% 13.8%Billings$219.4 $3.6 $223.0 $196.1 11.9% 13.7%Adjusted EBITDA$61.0 $1.3 $62.3 $53.6 13.9% 16.2% (Unaudited) Year EndedDecember 31, 2024 Year EndedDecember 31, 2023 Increase/(Decrease) % (in thousands)As reported Currency changes As adjusted for constant currency As reported As reported As adjusted for constant currency Software revenue$611.9 $6.8 $618.7 $550.0 11.3% 12.5%Total revenue$665.8 $7.2 $673.0 $612.7 8.7% 9.8%Billings$667.9 $8.1 $676.0 $631.8 5.7% 7.0%Adjusted EBITDA$149.9 $4.6 $154.5 $129.1 16.1% 19.
The year ended December 31, 2023, includes a $5.7 million loss from the mark-to-market adjustment of contingent consideration associated with acquisitions and $3.2 million of currency gains on acquisition-related intercompany loans. The following table provides a reconciliation of Adjusted EBITDA to net income (loss), the most comparable GAAP financial measure: (Unaudited) Three Months EndedDecember 31, Year EndedDecember 31, (in thousands)2024 2023 2024 2023 Net income (loss)$996 $19,675 $14,175 $(8,926)Income tax expense 8,946 10,176 18,455 21,545 Stock-based compensation expense 16,970 19,158 67,680 85,581 Interest expense 1,339 1,533 5,836 6,116 Depreciation and amortization 11,044 9,853 42,164 39,124 Special adjustments, interest income and other(1) 21,746 (6,822) 1,602 (14,302)Adjusted EBITDA$61,041 $53,573 $149,912 $129,138 (1)The three months ended December 31, 2024, includes $22.3 million of expenses related to the pending Merger transaction, $4.7 million of currency losses on acquisition-related intercompany loans, a $0.3 million loss from the mark-to-market adjustment of contingent consideration associated with acquisitions, and $5.5 million of interest income.
AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOW(Unaudited) Year Ended December 31, (in thousands)2024 2023 2022 OPERATING ACTIVITIES: Net income (loss)$14,175 $(8,926) $(43,429)Adjustments to reconcile net income (loss) to net cash provided byoperating activities: Depreciation and amortization 42,164 39,124 35,504 Stock-based compensation expense 67,680 85,581 84,787 Deferred income taxes (707) (2,319) (4,164)Loss (gain) on mark-to-market adjustment of contingent consideration 476 5,706 (7,153)Expense on repurchase of convertible senior notes — — 16,621 Other, net 2,015 1,943 2,179 Changes in assets and liabilities: Accounts receivable 14,560 (19,141) (34,175)Prepaid expenses and other current assets (7,622) (1,915) 1,014 Other long-term assets 2,431 (52) 2,852 Accounts payable (2,127) (1,878) 3,771 Accrued compensation and benefits 7,013 1,783 280 Other accrued expenses and current liabilities 7,791 9,068 (59,463)Deferred revenue 6,235 18,333 40,946 Net cash provided by operating activities 154,084 127,307 39,570 INVESTING ACTIVITIES: Payments for acquisition of businesses, net of cash acquired (27,070) (3,236) (134,541)Capital expenditures (14,086) (10,193) (9,648)Other investing activities, net (4,974) (2,423) (10,322)Net cash used in investing activities (46,130) (15,852) (154,511)FINANCING ACTIVITIES: Settlement of convertible senior notes (81,729) — — Proceeds from the exercise of common stock options 65,537 36,140 3,577 Proceeds from employee stock purchase plan contributions 9,157 7,978 8,976 Payments for repurchase and retirement of common stock — (6,255) (19,659)Proceeds from issuance of convertible senior notes,net of underwriters' discounts and commissions — — 224,265 Repurchase of convertible senior notes — — (192,422)Payments for issuance costs of convertible senior notes — — (1,523)Other financing activities — (97) (233)Net cash (used in) provided by financing activities (7,035) 37,766 22,981 Effect of exchange rate changes on cash, cash equivalents and restricted cash (6,453) 1,397 (5,094)Net increase (decrease) in cash, cash equivalents and restricted cash 94,466 150,618 (97,054)Cash, cash equivalents and restricted cash at beginning of year 467,576 316,958 414,012 Cash, cash equivalents and restricted cash at end of period$562,042 $467,576 $316,958 Change in Presentation of Revenue and Cost of Revenue Effective in the first quarter of 2024, the Company changed the presentation of revenue and cost of revenue in its Consolidated Statements of Operations to combine the financial statement line items ("FSLIs”) labeled "Software related services”, "Client engineering services” and "Other” into one FSLI labeled "Engineering services and other”.
