	As of			As of
	December 31,			September 30,
	2017			2017				As of June 30, 2022		As of September 30, 2021
Assets							Assets
Current assets:
Current assets							Current assets
Cash and cash equivalents	$	48,324		$	57,558		Cash and cash equivalents	$	184,486	$	165,467
Accounts receivable, net of allowance for doubtful accounts of $43 as of December 31, 2017 and $85 as of September 30, 2017		38,679			24,784
Funds held for customers							Funds held for customers	174		316
Accounts receivable, net of allowance for doubtful accounts of $101 as of June 30, 2022 and $225 as of September 30, 2021							Accounts receivable, net of allowance for doubtful accounts of $101 as of June 30, 2022 and $225 as of September 30, 2021	38,485		43,185
Prepaid expenses		2,800			3,733		Prepaid expenses	4,804		4,920
Other current assets		1,202			1,013		Other current assets	8,500		8,442
Total current assets		91,005			87,088		Total current assets	236,449		222,330
Property and equipment, net		3,823			4,611		Property and equipment, net	1,584		1,907
Operating lease right-of-use assets							Operating lease right-of-use assets	16,689		20,565
Goodwill		39,283			39,283		Goodwill	65,665		65,665
Intangible assets, net		38,738			40,156		Intangible assets, net	39,370		45,394
Other assets		1,104			798		Other assets	9,942		7,929
Total assets	$	173,953		$	171,936		Total assets	$	369,699	$	363,790
Liabilities And Stockholders' Equity
Current liabilities:
Liabilities and Stockholders’ Equity							Liabilities and Stockholders’ Equity
Current liabilities							Current liabilities
Accounts payable	$	4,240		$	3,002		Accounts payable	$	3,278	$	4,802
Customer funds payable							Customer funds payable	174		316
Accrued employee compensation		9,143			14,996		Accrued employee compensation	20,379		24,662
Accrued liabilities		4,028			4,979		Accrued liabilities	5,072		4,719
Operating lease liabilities, current portion							Operating lease liabilities, current portion	4,585		4,529
Deferred revenue, current portion		57,135			49,186		Deferred revenue, current portion	54,060		57,431
Long term debt, current portion		4,831			4,753

Total current liabilities		79,377			76,916		Total current liabilities	87,548		96,459
Long term debt		52,610			52,452		Long term debt	132,512		124,301
Operating lease liabilities, less current portion							Operating lease liabilities, less current portion	13,454		17,229
Other long-term liabilities		1,266			1,307		Other long-term liabilities	3,112		2,283
Total liabilities		133,253			130,675		Total liabilities	236,626		240,272
Commitments and contingencies							Commitments and contingencies	0		0
Stockholders' equity:
Common Stock, $0.00015 par value; 200,000 shares authorized; 29,474 and 29,323 shares issued and outstanding at December 31, 2017 and September 30, 2017, respectively		4			4
Stockholders’ equity							Stockholders’ equity
Common Stock, $0.00015 par value; 200,000 shares authorized; 37,040 and 36,059 shares issued and outstanding at June 30, 2022 and September 30, 2021, respectively							Common Stock, $0.00015 par value; 200,000 shares authorized; 37,040 and 36,059 shares issued and outstanding at June 30, 2022 and September 30, 2021, respectively	6		5
Preferred Stock, $0.00015 par value; 5,000 shares authorized; no shares issued and outstanding		—			—		Preferred Stock, $0.00015 par value; 5,000 shares authorized; no shares issued and outstanding	—		—
Additional paid-in capital		221,639			217,052		Additional paid-in capital	411,557		380,528
Accumulated other comprehensive loss		(393	)		(502	)	Accumulated other comprehensive loss	(2,157)		(1,205)
Accumulated deficit		(180,550	)		(175,293	)	Accumulated deficit	(276,333)		(255,810)
Total stockholders' equity		40,700			41,261
Total liabilities and stockholders' equity	$	173,953		$	171,936

Total stockholders’ equity							Total stockholders’ equity	133,073		123,518
Total liabilities and stockholders’ equity							Total liabilities and stockholders’ equity	$	369,699	$	363,790

Operating lease costs were $1.4 million and ~~goodwill of $32.3 million. The key factors attributable to the creation of goodwill by the transaction are synergies in skill-sets, return on future technology and customer development.~~

~~We do not expect the goodwill recognized as a part of the acquisition to be deductible for income tax purposes. See Note 4, “Goodwill” for additional information.~~

~~Unaudited Pro Forma Combined Consolidated Financial Information~~

The results of operations for Revitas and the estimated fair values of the assets acquired and liabilities assumed have been included in the Company’s consolidated financial statements since the respective dates of acquisition.

The unaudited pro forma combined consolidated financial information is presented for illustrative purpose only and is not necessarily indicative of the result of operations that would have actually been reported had the acquisitions occurred on the above dates, nor is it necessarily indicative of the future results of operations of the combined company. The unaudited pro forma combined consolidated financial information reflects certain adjustments, such as amortization, interest expense, deferred tax valuation allowance and transaction related costs.

~~MODEL N, INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

The following unaudited pro forma combined consolidated financial information has been prepared by the Company using the acquisition method of accounting to give effect to the Revitas acquisition as if it had occurred on October 1, 2015.~~The following table sets forth the unaudited pro forma consolidated combined results of operations:~~

Three Months Ended December 31,

2016

(in thousands, except per share data)

Revenue
$
37,121

Net loss

(10,910
)
Net loss per shares-basic and diluted
$
(0.39
)

3.	~~Consolidated Balance Sheet Components~~

~~Components of property and equipment, and intangible assets consisted of the following:~~

~~Property and Equipment~~

As of

As of

December 31,

September 30,

2017

2017

(in thousands)

Computer software and equipment

$
10,211

$
10,274

Furniture and fixtures

1,257

1,284

Leasehold improvements

1,397

1,466

Software development costs

9,416

9,416

Total property and equipment

22,281

22,440

Less: Accumulated depreciation and amortization

(18,458
)

(17,829
)
Total property and equipment, net

$
3,823

$
4,611

~~Depreciation expense totaled $0.8 million and $0.7~~$4.4 million for the three and nine months ended ~~December 31, 2017~~June 30, 2022, respectively, and ~~2016, respectively.~~

~~Intangible Assets~~

Estimated

As of December 31, 2017

Useful Life

Gross Carrying

Accumulated

Net Carrying

(in Years)

Amount

Amortization

Amount

(in thousands)

Intangible Assets:

Developed technology

5-6

$
12,083

$
(5,020
)

$
7,063

Backlog

5

280

(230
)

50

Customer relationships

3-10

36,599

(4,974
)

31,625

Trade name

1

260

(260
)

—

Total

$
49,222

$
(10,484
)

$
38,738

~~MODEL N, INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

Estimated

As of September 30, 2017

Useful Life

Gross Carrying

Accumulated

Net Carrying

(in Years)

Amount

Amortization

Amount

(in thousands)

Intangible Assets:

Developed technology

5-6

$
12,083

$
(4,545
)

$
7,538

Backlog

5

280

(215
)

65

Non-competition agreement

3

100

(100
)

—

Customer relationships

3-10

36,599

(4,084
)

32,515

Trade name

1

260

(222
)

38

Total

$
49,322

$
(9,166
)

$
40,156

~~The Company recorded amortization expense related to the acquired intangible assets of~~ $1.4 million and ~~$0.4~~$3.3 million for the three and nine months ended ~~December 31, 2017~~June 30, 2021, respectively. Short-term lease costs, variable lease costs, and ~~2016, respectively.~~

~~Estimated future amortization expense~~sublease income were immaterial for the ~~intangible assets as of December 31, 2017~~three and nine months ended June 30, 2022 and 2021.

~~The Company’s cash equivalents as of December 31, 2017~~ and September 30, 2017 consisted of a money market funds with original maturity dates of less than three months from the date of their respective purchase. Cash equivalents are classified as Level 1. The fair value of the Company’s money market funds approximated amortized cost and, as such, there were no unrealized gains or losses on money market funds as of December 31~~, 2017~~ ~~and September 30, 2017.~~

We derive revenues primarily from the sale of subscriptions to our cloud-based solutions, ~~and professional services,~~ as well as subscriptions for maintenance and support and managed support ~~services.~~services related to on-premise solutions. We price our solutions based on a number of factors, including revenues under management and number of users. Subscription revenues are recognized ratably over the coverage period. We also derive revenues from selling professional services related to past sales of perpetual ~~licenses. Maintenance~~licenses and ~~support revenues are recognized ratably over the support period, which is typically one year. SaaS revenues for cloud-based solutions are derived from subscription fees from customers accessing~~implementation and professional services associated with our cloud-based solutions as ~~well as from associated implementation~~ and ~~professional services.~~related to the solutions provided by the recent acquisition of Deloitte & Touche LLP’s pricing and contracting solutions business. The actual timing of revenue recognition may vary based on our customers’ implementation requirements and the availability of our services personnel.

Net cash ~~used in~~provided by operating activities during the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2022 was primarily the result of non-cash adjustments of $43.2 million exceeding our net loss of $20.5 million partially offset by net cash outflows of $5.3 million ~~and a $10.5 million change~~from changes in operating assets and ~~liabilities, partially offset by $6.0 million~~liabilities. Non-cash expenses consisted primarily of ~~non-cash adjustments of deferred income taxes benefits,~~ stock-based compensation of $25.2 million, amortization of debt discount and issuance costs of $8.2 million, depreciation and ~~amortization. The $10.5 million net change in operating assets and liabilities consisted~~amortization of ~~a $13.8 million increase in accounts receivable, primarily reflective of invoicing in excess of collections during the period,~~ ~~a $0.2 million decrease in deferred cost of implementation services, a $0.4 million decrease in prepaid expense and other assets,~~ ~~an $8.1 million increase in deferred revenue primarily~~ ~~due to timing of amount invoiced and revenue recognized, a $0.7 million decrease in other accrued and long term liabilities,~~ ~~a $5.9 million decrease in accrued employee compensation primarily due to payment of~~ ~~bonuses and other employee benefits, and a $1.2 million increase in accounts payable.~~

~~Net cash used in operating activities during the three months ended December 31, 2016 was primarily the result of our net loss of $7.6~~$6.7 million, and ~~$3.7 million change in operating assets and liabilities, partially offset by $3.0 million~~amortization of ~~non-cash adjustments comprised~~capitalized contract acquisition costs of ~~$1.9 million in stock-based compensation and $1.1 million in depreciation and amortization.~~$3.2 million. The net change in operating assets and liabilities ~~consisted~~primarily reflects an outflow from the changes of a $0.7 million decrease in accounts receivable primarily due to collections exceeding amounts invoiced during the quarter, a $0.7 million decrease in deferred cost of implementation services, a $0.8 million decrease in prepaid ~~expense~~expenses and other assets ~~a $4.3~~of $1.6 million, ~~decrease~~accounts payable of $1.5 million, accrued employee compensation of $0.8 million, the changes in other current and long-term liabilities of $3.0 million, deferred revenue ~~primarily~~of $3.3 million caused by the timing of invoicing, offset by an inflow from accounts receivable of $4.9 million due to timing of ~~amount invoiced~~billing and ~~revenue recognized, a $1.3~~cash collections.

We rely almost exclusively on our direct sales force to sell our solutions. We believe that our future growth will depend, to a significant extent, on the continued development of our direct sales force and its ability to manage and retain our existing customer base, expand the sales of our solutions to existing customers and obtain new customers. Because our software is complex and often must interoperate with complex computing requirements, it can take longer for our sales personnel to become fully productive compared to other software companies. Our ability to achieve significant growth in revenues in the future will depend, in large part, on our success in recruiting, training and retaining a sufficient number of direct sales personnel. New hires require significant training and may, in some cases, take more than a year before becoming fully productive, if at all. If we are unable to hire and develop sufficient numbers of productive direct sales personnel, and if these sales personnel are unable to achieve full productivity, sales of our solutions will suffer and our growth will be impeded.

~~Our sales cycles are time-consuming, and it is difficult for us to predict when or if sales will occur.~~

Our sales efforts are often targeted at larger enterprise customers, and as a result, we face greater costs, must devote greater sales support to individual customers, have longer sales cycles and have less predictability in completing some of our sales. Also, sales to large enterprises often require us to provide greater levels of education regarding the use and benefits of our solutions. We believe that our customers view the purchase of our solutions as a significant and strategic decision. As a result, customers carefully evaluate our solutions, often over long periods with a variety of internal constituencies. In addition, the sales of our solutions may be subject to delays if the customer has lengthy internal budgeting, approval and evaluation processes, which are quite common in the context of introducing large enterprise-wide technology solutions. As a result it is difficult to predict the timing of our future sales.

~~Our transition from an on-premise to a cloud-based business model is subject to numerous risks and uncertainties.~~

Our business model has shifted away from sales of on premise software licenses to focus on sales of subscriptions for our cloud-based solutions, which provide our customers the right to access certain of our software in a hosted environment for a specified subscription period. This cloud-based strategy may give rise to a number of risks, including the following:

if customers are uncomfortable with cloud-based solutions and desire only perpetual licenses, we may experience longer than anticipated sales cycles and sales of our cloud-based solutions may lag behind our expectations;

our cloud-based strategy may raise concerns among our customer base, including concerns regarding changes to pricing over time, service availability, information security of a cloud-based solution and access to files while offline or once a subscription has expired;

~~we may be unsuccessful in maintaining our target pricing, adoption and projected renewal rates;~~

~~we may select a target price that is not optimal and could negatively affect our sales or earnings; and~~

~~we may incur costs at a higher than forecasted rate as we expand our cloud-based solutions.~~

Our cloud-based strategy also requires a considerable investment of technical, financial, legal and sales resources, and a scalable organization. Market acceptance of such offerings is affected by a variety of factors, including but not limited to: security, reliability, scalability, customization, performance, current license terms, customer preference, customer concerns with entrusting a third party to store and manage their data, public concerns regarding privacy and the enactment of restrictive laws or regulations. Whether our business model transition will prove successful and will accomplish our business and financial objectives is subject to numerous uncertainties, including but not limited to: customer demand, renewal rates, channel acceptance, our ability to further develop and scale infrastructure, our ability to include functionality and usability in such solutions that address customer requirements, tax and accounting implications, pricing and our costs. In addition, the metrics we use to gauge the status of our business may evolve over the course of the transition as significant trends emerge.

If we are unable to successfully execute our cloud-based strategy and navigate our business model transition in light of the foregoing risks and uncertainties, our results of operations could be negatively impacted.

~~Our revenues are dependent on our ability to maintain and expand existing customer relationships and our ability to attract new customers.~~

The continued growth of our revenues is dependent in part on our ability to expand the use of our solutions by existing customers and attract new customers. Likewise, it is also important that customers using our on-premise solutions renew their maintenance agreements and that customers using our cloud-based solutions renew their subscription agreements with us. Our customers have no obligation to renew their agreements after the expiration of the initial term, and there can be no assurance that they will do so. We have had in the past and may in the future have disputes with customers regarding our solutions, which may impact such customers’ decisions to continue to use our solutions and pay for maintenance and support in the future.

If we are unable to expand our customers’ use of our solutions, sell additional solutions to our customers, maintain our renewal rates for maintenance and subscription agreements and expand our customer base, our revenues may decline or fail to increase at historical growth rates, which could adversely affect our business and operating results. In addition, if we experience customer dissatisfaction with customers in the future, we may find it more difficult to increase use of our solutions within our existing customer base and it may be more difficult to attract new customers, or we may be required to grant credits or refunds, any of which could negatively impact our operating results and materially harm our business.

~~The loss of one or more of our key customers could slow our revenue growth or cause our revenues to decline.~~

A substantial portion of our total revenues in any given period may come from a relatively small number of customers. As of September 30, 2017, we had 162 customers. Although our largest customers typically change from period to period, for the fiscal year ended September 30, 2017, our 15 largest customers accounted for more than 53% of our total revenues, and one customer, Johnson & Johnson, accounted for approximately 11% of our total revenues in fiscal 2017. However, during the fiscal year ended September 30, 2017, no customer represented more than 10% of our subscription revenues. We expect that we will continue to depend upon a relatively small number of customers for a significant portion of our total revenues for the foreseeable future. The loss of any of our significant customers or groups of customers for any reason, or a change of relationship with any of our key customers may cause a significant decrease in our total revenues.

Additionally, mergers or consolidations among our customers in the life sciences and semiconductor industries, both of which are currently undergoing significant consolidation, could reduce the number of our customers and could adversely affect our revenues and sales. In particular, if our customers are acquired by entities that are not also our customers, that do not use our solutions or that have more favorable contract terms and choose to discontinue, reduce or change the terms of their use of our solutions, our business and operating results could be materially and adversely affected.

If our solutions experience data security breaches, and there is unauthorized access to our customers’ data, we may lose current or future customers, our reputation and business may be harmed and we may incur significant liabilities.

Our solutions are used by our customers to manage and store personally identifiable information, proprietary information and sensitive or confidential data relating to their business. Although we maintain security features in our solutions, our security measures may not detect or prevent hacker interceptions, break-ins, security breaches, the introduction of viruses or malicious code, such as “ransomware,” and other disruptions that may jeopardize the security of information stored in and transmitted by our solutions. Cyber-attacks and other malicious Internet-based activity continue to increase generally. A party that is able to circumvent our security measures in our solutions could misappropriate our or our customers’ proprietary or confidential information, cause interruption in their operations, damage or misuse their computer systems and misuse any information that they misappropriate. Because techniques used to obtain unauthorized access or sabotage systems change frequently and generally are not identified until they are launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures.

There can be no assurance that limitation of liability, indemnification or other protective provisions in our contracts would be applicable, enforceable or adequate in connection with a security breach, or would otherwise protect us from any such liabilities or damages with respect to any particular claim. We also cannot be sure that our existing general liability insurance coverage and coverage for errors or omissions will continue to be available on acceptable terms or will be available in sufficient amounts to cover one or more large claims, or that the insurer will not deny coverage as to any future claim. One or more large claims may be asserted against us that exceed our available insurance coverage, or changes in our insurance policies may occur, including premium increases or the imposition of large deductible or co-insurance requirements. If any compromise of the security of our solutions were to occur, we may be subject to litigation, indemnity obligations and other possible liabilities, and we may lose existing customers and the ability to attract future customers, any of which could harm our reputation, business, financial condition and results of operations and result in significant liability.

~~Changes in privacy laws, regulations and standards may cause our business to suffer.~~

Personal privacy and data security have become significant issues in the United States, Europe and in many other jurisdictions where we offer our solutions. The regulatory framework for privacy and security issues worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future. For example, the Court of Justice of the European Union ruled in October 2015 that the US-EU Safe Harbor framework was invalid, and the framework’s successor, the US-EU Privacy Shield, while adopted, has been criticized and challenged by multiple privacy advocacy groups. Furthermore, federal, state or foreign government bodies or agencies have in the past adopted, and may in the future adopt, laws and regulations affecting data privacy. Industry organizations also regularly adopt and advocate for new standards in this area. In the United States, these include rules and regulations promulgated under the authority of federal agencies and state attorneys general and legislatures and consumer protection agencies. Internationally, many jurisdictions in which we operate have established their own data security and privacy legal framework with which we or our customers must comply, including but not limited to, the Data Protection Directive (Directive) established in the European Union and data protection legislation of the individual member states subject to the Directive. The Directive will be replaced starting in May 2018 with the European General Data Protection Regulation, which will impose additional obligations and risks upon our business. In many jurisdictions, enforcement actions and consequences for noncompliance are also rising. In addition to government regulation, privacy advocates and industry groups may propose new and different self-regulatory standards that either legally or contractually applies to us.

Any inability to adequately address privacy and security concerns, even if unfounded, or comply with applicable privacy and data security laws, regulations and policies, could result in additional cost and liability to us, damage our reputation, inhibit sales and adversely affect our business. Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulations, and policies that are applicable to the businesses of our customers may limit the use and adoption of, and reduce the overall demand for, our solutions. Privacy and data security concerns, whether valid or not valid, may inhibit market adoption of our solutions, particularly in foreign countries. If we are not able to adjust to changing laws, regulations and standards related to privacy or security, our business may be harmed.

Our acquisition of other companies could require significant management attention, disrupt our business, dilute stockholder value and adversely affect our operating results.

We ~~depend~~rely on ~~our management team~~third parties and their systems as we introduce a variety of new services, including the processing of transaction data and settlement of funds to us and our ~~key sales~~counterparties, and ~~development~~these third parties’ failure to perform these services adequately could materially and ~~services personnel, and the loss of one or more key employees or groups could harm our business and prevent us from implementing our business plan in a timely manner.~~

Our success depends on the expertise, efficacy and continued services of our executive officers, who are geographically dispersed. We have in the past and may in the future continue to experience changes in our executive management team resulting from the departure of executives or subsequent hiring of new executives, which may be disruptive to our business. The impact of hiring new executives may not be immediately realized. We are also substantially dependent on the continued service of our existing development and services personnel because of their familiarity with the inherent complexities of our solutions.

Our personnel do not have employment arrangements that require them to continue to work for us for any specified period and, therefore, they could terminate their employment with us at any time. We do not maintain key person life insurance policies on any of our employees. The loss of one or more of our key employees or groups could seriously harm our business.

Because we recognize a majority of our SaaS and maintenance revenues from our customers over the term of their agreements, downturns or upturns in sales of our cloud-based solutions may not be immediately reflected in our operating results.

SaaS and maintenance revenues primarily include subscription and related implementation fees from customers accessing our cloud-based solutions and revenues associated with maintenance contracts from license customers. We recognize a majority of our SaaS and maintenance revenues over the terms of our customer agreements, which are typically one year or longer in some cases. As a result, most of our quarterly SaaS and maintenance revenues result from agreements entered into during previous quarters. Consequently, a shortfall in sales of our cloud-based solutions or renewal of maintenance and support agreements in any quarter may not significantly reduce our SaaS and maintenance revenues for that quarter but would negatively affect SaaS and maintenance revenues in future quarters. Accordingly, the effect of significant downturns in sales of our cloud-based solutions or renewals of our maintenance and support agreements may not be fully reflected in our results of operations until future periods. We may be unable to adjust our cost structure to compensate for this potential shortfall in SaaS and maintenance revenues. Our revenue recognition model for our cloud-based solutions and maintenance and support agreements also makes it difficult for us to rapidly increase our revenues through additional sales in any period, as a significant amount of our revenues are recognized over the applicable agreement term. As a result, changes in the volume of sales of our cloud-based solutions or the renewals of our maintenance and support agreements in a particular period would not be fully reflected in our revenues until future periods.

products may believe that these products sufficiently address their revenue management needs. Because this market is relatively undeveloped, we must spend considerable time educating customers as to the benefits of our solutions. If revenue management solutions do not achieve widespread adoption, or if there is a reduction in demand for revenue management solutions caused by a lack of customer acceptance, technological challenges, competing technologies and products, decreases in corporate spending or otherwise, it could result in lower sales, reduced renewal and upsell rates and decreased revenues and our business could be adversely affected.

If we are unable to enhance existing solutions and develop new solutions that achieve market acceptance or that keep pace with technological developments, our business could be harmed.

Our efforts to expand our solutions into other verticals within the life sciences and technology industries or other industries may not succeed and may reduce our revenue growth rate. Even if we are successful in doing so, such efforts may be costly and may impact our ability to achieve profitability.

Our solutions are currently designed primarily for customers in certain verticals of the life sciences and technology industries and potentially into other industries outside of the life sciences and technology industries. Our ability to attract new customers and increase our revenues depends in part on our ability to enter into new industries and verticals. Developing and marketing new solutions to serve other industries and verticals will require us to devote substantial additional resources in advance of consummating new sales or realizing additional revenues. Our ability to leverage the expertise we have developed in the life sciences and technology industries into new industries is unproven and it is likely that we will be required to hire additional personnel, partner with additional third parties and incur considerable research and development expense in order to gain and develop additional expertise for new industries where we lack experience and expertise.

Our efforts to expand our solutions beyond the verticals within the life sciences and technology industries in which we have already developed expertise may not be successful and may reduce our revenue growth rate. Any early stage interest in our solutions in areas beyond the industries we already address may not result in long term success or significant revenues for us. Even if we achieve long-term success in expanding our solutions into other industries and verticals, the costs associated with such expansion may be high, which may impact our ability to achieve profitability.

The market for cloud-based solutions is at an ~~early~~earlier stage of acceptance relative to on-premise solutions, and if it ~~does not develop or~~ develops more slowly than we expect, our business could be harmed.

•perceived security capabilities and reliability;

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•perceived concerns about ability to scale operations for large enterprise customers;

•concerns with entrusting a third party to store and manage critical data;

•the level of configurability or customizability of the solutions; and

•ability to perform at or near the capabilities of our on-premise solutions.

If organizations do not perceive the benefits of our cloud-based solutions, or if our competitors or new market entrants are able to develop cloud-based solutions that are or are perceived to be more effective than ours, our plan to accelerate the shift in our business model to recurring revenues may not succeed or may develop more slowly than we expect, if at all, or may result in short-term declines in recognized revenue, any of which would adversely affect our business.

If we or our solutions fail to perform properly, our reputation and customer relationships could be harmed, our market share could decline, and we could be subject to liability claims.

Our solutions are inherently complex and may contain material vulnerabilities, defects or errors. Any defects in solution functionality or that cause interruptions in availability could result in:

•lost or delayed market acceptance and sales;

•reductions in current-period total revenues;

•breach of warranty or other contract breach or misrepresentation claims;

•sales credits or refunds to our customers;

•loss of customers;

•diversion of development and customer service resources; and

•injury to our reputation.

The costs incurred in correcting any material vulnerabilities, defects or errors might be substantial and could adversely affect our operating results. Because our customers often use our solutions as a system of record and many of our customers are subject to regulation of pricing of their products or otherwise have complex pricing commitments and revenue recognition policies, errors could result in an inability to process sales or lead to a violation of pricing requirements or misreporting of revenues by our customers that could potentially expose them to fines or other substantial claims or penalties. Accordingly, we could face increased exposure to product liability and warranty claims, litigation and other disputes and claims, resulting in potentially material losses and costs. Our limitation of liability provisions in our customer agreements may not be sufficient to protect us against any such claims.

Given the large amount of data that our solutions process and manage, it is possible that failures, vulnerabilities or errors in our software could result in unauthorized access, data loss or corruption, or cause the information that we process to be incomplete or contain inaccuracies that our customers regard as significant. We may be required to issue credits or refunds or indemnify or otherwise be liable to our customers or third parties for damages they may incur resulting from certain of these events.

Our insurance may be inadequate or may not be available in the future on acceptable terms, or at all. In addition, our policy may not cover any claim against us for claims related to any product defects or errors or other indirect or consequential damages and defending a suit, regardless of its merit, could be costly and divert management’s attention.

The market in which we participate is highly competitive, and if we do not compete effectively, our operating results could be harmed.

The market for revenue management solutions is highly competitive, fragmented and subject to rapid changes in technology. We face competition from spreadsheet-assisted manual processes, internally developed solutions, large integrated systems vendors, providers of business process outsourcing services and smaller companies that offer point solutions.

Companies lacking IT resources often resort to spreadsheet-assisted manual processes or personal database applications. In addition, some potential customers, particularly large enterprises, may elect to develop their own internal solutions, including custom-built solutions that are designed to support the needs of a single organization. Companies with large investments in packaged ERP or CRM applications, which do not typically provide revenue management capabilities, may extend these horizontal applications with configurations or point solution applications in order to address one or a small set of revenue management sub processes or drivers. Common horizontal applications that customers attempt to configure for this purpose in the life sciences and high tech industries include large integrated systems vendors like SAP AG and Oracle Corporation. We also encounter competition from small independent companies which compete based on price, unique product features or functions and custom developments.

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Many of our competitors have greater name recognition, larger sales and marketing budgets and greater resources than we do and may have pre-existing relationships with our potential customers, including relationships with, and access to, key decision makers within these organizations, and major distribution agreements with consultants and system integrators. Moreover, many software vendors could bundle solutions or offer them at a low price as part of a larger product sale.

With the introduction of new technologies and market entrants, as well as due to our acquisition of Deloitte & Touche LLP’s pricing and contracting solutions business, we expect competition to intensify in the future. We also expect enterprise software vendors that focus on enterprise resource planning or back-office applications to enter our market with competing products. In addition, we expect sales force automation vendors to acquire or develop additional solutions that may compete with our solutions. If we fail to compete effectively, our business will be harmed. In addition, pricing pressures and increased competition generally could result in reduced sales, reduced margins, losses or the failure of our solutions to achieve or maintain more widespread market acceptance, any of which could harm our business.

If we are not able to maintain and enhance our brand, our business and operating results may be adversely affected.

We believe that maintaining and enhancing the “Model N” brand identity is critical to our relationships with our customers and partners and to our ability to attract new customers and partners. The successful promotion of our brand will depend largely upon our marketing efforts, our ability to continue to offer high-quality solutions and our ability to successfully differentiate our solutions from those of our competitors. Our brand promotion activities may not be successful or yield increased revenues. In addition, independent industry analysts often provide reviews of our solution, as well as those of our competitors, and perception of our solution in the marketplace may be significantly influenced by these reviews. If these reviews are negative, or less positive as compared to those of our competitors’ products and services, our brand may be adversely affected. Further, stockholder activism has been increasing in recent years. Any such activism or public criticism of our company or management team may harm our brand and reputation.

The promotion of our brand requires us to make substantial expenditures, and we anticipate that the expenditures will increase as our market becomes more competitive and as we expand into new verticals within the life sciences and high tech industries. To the extent that these activities yield increased revenues, these revenues may not offset the increased expenses we incur. If we do not successfully maintain and enhance our brand, our business may not grow, we may have reduced pricing power relative to competitors with stronger brands and we could lose customers, partners, current employees and prospective employees, all of which would adversely affect our business operations and financial results.

If we are unable to maintain successful relationships with system integrators, our business operations, financial results and growth prospects could be adversely affected.

Our relationships with system integrators are generally non-exclusive, which means they may recommend to their customers the solutions of several different companies, including solutions that compete with ours, and they may also assist in the implementation of software or systems that compete with ours. If our system integrators do not choose to continue to refer our solutions, assist in implementing our solutions, choose to use greater efforts to market and sell their own solutions or those of our competitors, or fail to meet the needs of our customers, our ability to grow our business and sell our solutions may be adversely affected. The loss of a substantial number of our system integrators, our possible inability to replace them or the failure to recruit additional system integrators could harm our business.

Our ability to achieve revenue growth in the future will depend in part on our success in maintaining successful relationships with our system integrators and in helping our system integrators enhance their ability to independently market and implement our solutions. Our growth in revenues, particularly in international markets, will be influenced by the development and maintenance of relationships with these companies. Although we have established relationships with some of the leading system integrators, our solutions compete directly against the solutions of other leading system integrators. We are unable to control the resources that our system integrators commit to implementing our solutions or the quality of such implementation. If they do not commit sufficient resources to these activities, or if we are unable to maintain our relationships with these system integrators or otherwise develop and expand our indirect distribution channel, our business, results of operations, financial condition or cash flows could be adversely affected.

Any failure to offer high-quality customer support for our cloud platform may adversely affect our relationships with our customers and harm our financial results.

Once our solutions are implemented, our customers use our support organization to resolve technical issues relating to our solutions. In addition, we also believe that our success in selling our solutions is highly dependent on our business reputation and on favorable recommendations from our existing customers. Any failure to maintain high-quality customer support, or a market perception that we do not maintain high-quality support, could harm our reputation, adversely affect our ability to maintain existing customers or sell our solutions to existing and prospective customers, and harm our business, operating results and financial condition.

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We may be unable to respond quickly enough to accommodate short-term increases in customer demand for support services. Increased customer demand for these services, without corresponding revenues, could also increase costs and adversely affect our operating results.

Incorrect or improper implementation or use of our solutions could result in customer dissatisfaction and negatively affect our business, operations, financial results and growth prospects.

Our customers and third-party partners may need training in the proper use of and the variety of benefits that can be derived from our solutions to maximize their potential. We have implemented the Model N Align Program, which gives our customers full access to expert knowledge through a portal for easy and fast access to information, experienced customer success managers and defined customer success plans, in order to help our customers maximize the value of our solutions. However, our customers may choose not to use such programs or may not use such programs efficiently or effectively and as a result may become dissatisfied with our solutions. If our solutions are not implemented or used correctly or as intended, inadequate performance may result. Since our customers rely on our solutions and customer support to manage key areas of their businesses, the incorrect or improper implementation or use of our solutions, our failure to train customers on how to efficiently and effectively use our solutions or our failure to provide services to our customers, may result in negative publicity, failure of customers to renew their SaaS maintenance agreements or subscriptions or potentially make legal claims against us. Also, as we continue to expand our customer base, any failure by us to properly provide these services will likely result in lost opportunities for follow-on sales of our solutions.

Competition for our target employees is intense, and we may not be able to attract and retain the quality employees we need to support our planned growth.

Our future success depends, in part, upon our ability to recruit and retain key management, technical, sales, marketing, finance, and other critical personnel. Competition for qualified management, technical and other personnel is intense, and we may not be successful in attracting and retaining such personnel. If we fail to attract and retain qualified employees, including internationally, our ability to grow our business could be harmed. Competition for people with the specific skills that we require is significant. In order to attract and retain personnel in a competitive marketplace, we believe that we must provide a competitive compensation package, including cash and equity-based compensation. Volatility in our stock price may from time to time adversely affect our ability to recruit or retain employees. If we are unable to hire and retain qualified employees, or conversely, if we fail to manage employee performance or reduce staffing levels when required by market conditions, our business and operating results could be adversely affected.

Our significant international operations subject us to additional risks that can adversely affect our business, results of operations and financial condition.

We have significant international operations, including in emerging markets such as India, and we are continuing to expand our international operations as part of our growth strategy. As of September 30, 2020, approximately 47% of our total employees were located in India, where we conduct a portion of our development activities, implementation services and support services. Our current international operations and our plans to expand our international operations have placed, and will continue to place, a strain on our employees, management systems and other resources.

Operating in international markets requires significant resources and management attention and will subject us to regulatory, economic and political risks and competition that are different from those in the United States. Because of our limited experience with international operations, we cannot assure you that our international expansion efforts will be successful or that returns on such investments will be achieved in the future. In addition, our international operations may fail to succeed due to other risks inherent in operating businesses internationally, including:

•our lack of familiarity with commercial and social norms and customs in countries which may adversely affect our ability to recruit, retain and manage employees in these countries;

•difficulties and costs associated with staffing and managing foreign operations;

•the potential diversion of management’s attention to oversee and direct operations that are geographically distant from our U.S. headquarters;

•compliance with multiple, conflicting and changing governmental laws and regulations, including employment, tax, privacy and data protection laws and regulations;

•legal systems in which our ability to enforce and protect our rights may be different or less effective than in the United States and in which the ultimate result of dispute resolution is more difficult to predict;

•greater difficulty collecting accounts receivable and longer payment cycles;

•higher employee costs and difficulty in terminating non-performing employees;

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•differences in workplace cultures;

•unexpected changes in regulatory requirements;

•the need to adapt our solutions for specific countries;

•our ability to comply with differing technical and certification requirements outside the United States;

•tariffs, export controls and other non-tariff barriers such as quotas and local content rules;

•more limited protection for intellectual property rights in some countries;

•adverse tax consequences, including as a result of transfer pricing adjustments involving our foreign operations;

•fluctuations in currency exchange rates;

•anti-bribery compliance by us or our partners;

•restrictions on the transfer of funds;

•global epidemics, pandemics, or contagious diseases;

•geopolitical turmoil; and

•new and different sources of competition.

Our failure to manage any of these risks successfully could harm our existing and future international operations and seriously impair our overall business.

The ongoing COVID-19 pandemic has had a material impact on the U.S. and global economies and could have a material adverse impact on our employees, suppliers and customers, which could adversely and materially impact our business, financial condition and results of operations.

The ongoing COVID-19 pandemic may adversely affect our customers’ operations, our employees, and our employee productivity, including in India where a substantial number of our employees are located and which experienced a significant surge in COVID-19 cases during 2021.

The COVID-19 pandemic has caused us to modify our business practices including employee travel, employee work locations, and cancellation of physical participation in meetings, events and conferences, and we may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers, and business partners. Many of our customers have previously implemented similar measures, which may limit our ability to sell or provide professional services to them. Customers may also delay or cancel purchasing decisions or projects in light of uncertainties to their businesses arising from the COVID-19 pandemic. A prolonged disruption or any further unforeseen delay in our operations or within any of our business activities could continue to result in increased costs and reduced revenue. We could also be adversely affected if government authorities impose additional restrictions or extend the length of restrictions on public gatherings, human interactions, mandatory closures, seek voluntary closures, restrict hours of operations, or impose curfews. There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus or otherwise be satisfactory to government authorities.

Both the health and economic aspects of the COVID-19 virus are highly fluid and the future course of each is uncertain. While our financial results for the quarter ended June 30, 2022 have not been materially impacted by the ongoing COVID-19 pandemic, at this point, we cannot reasonably estimate the duration and severity of this pandemic. For these reasons and other reasons that may come to light if the ongoing coronavirus pandemic and associated protective or preventative measures expand, we may experience a material adverse effect on our business, results of operations, financial position, and cash flows; however, its ultimate impact is highly uncertain and subject to change.

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Risks Related to Regulatory Compliance

Changes in privacy laws, regulations and standards may cause our business to suffer.

Personal privacy and data security have become significant issues in the United States, Europe and in many other jurisdictions where we offer our solutions. The regulatory framework for privacy and security issues worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future. For example, the Court of Justice of the European Union (the “ECJ”) ruled in October 2015 that the US-EU Safe Harbor framework was invalid, and on July 16, 2020, invalidated its successor program the US-EU Privacy Shield as a mechanism for managing personal data transfers between the European Union and the United States (and other countries). While the ECJ upheld the adequacy of EU-specified standard contractual clauses (a form of contract approved by the EU commission as an adequate data transfer mechanism), it made clear that reliance on them alone may not necessarily be sufficient in all circumstances and that their use must be assessed on a case-by-case basis taking into account the surveillance laws and right of individuals in the destination country. The ECJ went on to state that, if the competent supervisory authority believes that the standard contractual clauses cannot be complied with in the recipient country and the required level of protection cannot be secured by other means, such supervisory authority is under an obligation to suspend or prohibit that transfer unless the data exporter has already done so itself. Further, on June 4, 2021 the European Commission finalized new versions of the Standard Contractual Clauses, with the Implementing Decision now in effect as of June 27, 2021. Under the Implementing Decision, we will have until December 27, 2022 to update any existing agreements, or any new agreements executed before September 27, 2021, that rely on Standard Contractual Clauses as the data transfer mechanism. To comply with the Implementing Decision and the new Standard Contractual Clauses, we may need to implement additional safeguards to further enhance the security of data transferred out of the EEA, which could increase our compliance costs, expose us to further regulatory scrutiny and liability, and adversely affect our business. We rely on a mixture of mechanisms to transfer personal data from our EU business to the U.S. (including having previously relied on US-EU Privacy Shield) and are evaluating what additional mechanisms may be required to establish adequate safeguards for personal data transfer.

Furthermore, federal, state or foreign government bodies or agencies have in the past adopted, and may in the future adopt, laws and regulations affecting data privacy. Evolving and changing definitions of personal data and personal information, within the European Union, the United States, and elsewhere, especially relating to classification of IP addresses, machine identification, location data, and other information, may limit or inhibit our ability to operate or expand our business, including limiting strategic partnerships that may involve the sharing of data. For example, California recently enacted legislation, the California Consumer Privacy Act (CCPA), that, among other things, requires covered companies to provide new disclosures to California consumers, and afford such consumers new abilities to opt out of certain sales of personal information. The CCPA took effect on January 1, 2020 and became enforceable by the California Attorney General on July 1, 2020. The CCPA has been amended on multiple occasions and additional regulations of the California Attorney General came into effect on August 14, 2020 and were most recently amended on March 15, 2021. However, aspects of the CCPA and its interpretation remain unclear. The effects of the CCPA are significant and may require us to modify our data processing practices and policies and to incur substantial costs and expenses in an effort to comply. Moreover, a new privacy law, the California Privacy Rights Act (CPRA) was recently approved by California voters in connection with the election on November 3, 2020. The CPRA creates obligations relating to consumer data beginning on January 1, 2022, with implementing regulations expected on or before July 1, 2022, and enforcement beginning July 1, 2023. The CCPA requires (and the CPRA will require) covered companies to, among other things, provide new disclosures to California consumers, and affords such consumers new privacy rights such as the ability to opt-out of certain sales of personal information and expanded rights to access and require deletion of their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is collected, used and shared. The CCPA provides for civil penalties for violations, as well as a private right of action for security breaches that may increase security breach litigation. Potential uncertainty surrounding the CCPA and CPRA may increase our compliance costs and potential liability, particularly in the event of a data breach, and could have a material adverse effect on our business, including how we use personal information, our financial condition, the results of our operations or prospects. The CCPA has also prompted a number of proposals for new federal and state privacy legislation that, if passed, could increase our potential liability, increase our compliance costs and adversely affect our business. Two states have recently passed personal information laws: the Colorado Privacy Act, which goes in effect on July 1, 2023; and Virginia’s Consumer Data Protection Act, which goes in effect on January 1, 2023.

Industry organizations also regularly adopt and advocate for new standards in this area. In the United States, these include rules and regulations promulgated under the authority of federal agencies and state attorneys general and legislatures and consumer protection agencies. In many jurisdictions, enforcement actions and consequences for noncompliance are also rising. In addition to government regulation, privacy advocates and industry groups may propose new and different self-regulatory standards that either legally or contractually applies to us.

Internationally, many jurisdictions in which we operate have established their own data security and privacy legal framework with which we or our customers must comply, including but not limited to, the European General Data Protection Regulation (GDPR), which imposes additional obligations and risks upon our business. Notably, the U.K. implemented the

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Data Protection Act, effective May 2018 and statutorily amended in 2019, that contains provisions, including its own derogations, for how GDPR is applied in the U.K. These developments in the European Union could increase the risk of non-compliance and the costs of providing our products and services in a compliant manner. From the beginning of 2021 (when the transitional period following Brexit expired), we have to continue to comply with the GDPR and also the Data Protection Act, with each regime having the ability to fine up to the greater of €20 million (£17.5 million) or 4% of global turnover. The relationship between the U.K. and the EU remains uncertain, for example how data transfers between the U.K. and the EU and other jurisdictions will be treated and the role of the U.K.’s supervisory authority. For example, on June 28, 2021, the European Commission adopted the adequacy decision (“the UK Adequacy Decision”) in the wake of a non-binding vote by the European Parliament against the then-Draft UK Adequacy Decision the month prior. Consequently, personal data can continue to flow from the EEA to the U.K. without the need for appropriate safeguards. The UK Adequacy Decision includes a “sunset clause”, rendering the decision valid for four years only, after which it will be reviewed by the European Commission and renewed only if the European Commission considers that the U.K. continues to ensure an adequate level of data protection. The European Commission also stated that it would intervene at any point within the four years if the U.K. deviates from the level of protection presently in place. If this adequacy decision is reversed by the European Commission, it would require that companies implement protection measures such as the Standard Contractual Clauses for data transfers between the EU and the UK. These changes will lead to additional costs as we try to ensure compliance with new privacy legislation and will increase our overall risk exposure. We have incurred substantial expense in complying with the obligations imposed by the GDPR and we may be required to make further significant changes in our business operations as regulatory guidance changes, all of which may adversely affect our revenue and our business overall. Despite our efforts to attempt to comply with the GDPR, a regulator may determine that we have not done so and subject us to fines and public censure, which could harm our company.

As mentioned, changing definitions of personal data and information may also limit or inhibit our ability to operate or expand our business, including limiting strategic partnerships that may involve the sharing of data. Also, some jurisdictions require that certain types of data be retained on servers within these jurisdictions. Our failure to comply with applicable laws, directives, and regulations may result in enforcement action against us, including fines, and damage to our reputation, any of which may have an adverse effect on our business and operating results.

Failure to comply with certain certifications and standards pertaining to our solutions, as may be required by governmental authorities or other standards-setting bodies could harm our business. Additionally, failure to comply with governmental laws and regulations could harm our business.

Customers may require our solutions to comply with certain security or other certifications and standards, which are promulgated by governmental authorities or other standards-setting bodies. The requirements necessary to comply with these certifications and standards are complex and often change significantly. If our solutions are late in achieving or fail to achieve compliance with these certifications and standards, including when they are revised or otherwise change, or our competitors achieve compliance with these certifications and standards, we may be disqualified from selling our solutions to such customers, or at a competitive disadvantage, which would harm our business, operating results and financial condition.

We are subject to governmental export and import controls that could subject us to liability or impair our ability to compete in international markets.

Certain of our solutions are subject to U.S. export controls and may be exported outside the United States only with the required export license or through an export license exception. Additionally, we incorporate encryption technology into our solutions, which may require additional filings prior to export. If we were to fail to comply with U.S. export licensing requirements, U.S. customs regulations, U.S. economic sanctions or other laws, we could be subject to substantial civil and criminal penalties, including fines, incarceration for responsible employees and managers, and the possible loss of export or import privileges. Obtaining the necessary export license for a particular sale may be time-consuming and may result in the delay or loss of sales opportunities. Furthermore, U.S. export control laws and economic sanctions prohibit the shipment of certain products to U.S. embargoed or sanctioned countries, governments and persons. Even though we take precautions to ensure that our channel partners comply with all relevant regulations, any failure by our channel partners to comply with such regulations could have negative consequences, including reputational harm, government investigations and penalties.

In addition, various countries regulate the import of certain encryption technology, including through import permit and license requirements, and have enacted laws that could limit our ability to distribute our solutions or could limit our customers’ ability to implement our solutions in those countries. Changes in our solutions or changes in export and import regulations may

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create delays in the introduction of our solutions into international markets, prevent our customers with international operations from deploying our solutions globally or, in some cases, prevent the export or import of our solutions to certain countries, governments or person’s altogether. Any change in export or import regulations, economic sanctions or related legislation, shift in the enforcement or scope of existing regulations, or change in the countries, governments, persons or technologies targeted by such regulations, could result in decreased use of our solutions by, or in our decreased ability to export or sell our solutions to, existing or potential customers with international operations. Any decreased use of our solutions or limitation on our ability to export or sell our solutions would likely adversely affect our business, financial condition, and operating results.

Changes to government regulations may reduce the size of the market for our solutions, harm demand for our solutions, force us to update our solutions or implement changes in our services and increase our costs of doing business.

Any changes in government regulations that impact our customers or their end customers could have a harmful effect on our business by reducing the size of our addressable market, forcing us to update the solutions we offer or otherwise increasing our costs. For example, with respect to our life sciences customers, regulatory developments related to government-sponsored entitlement programs or U.S. Food and Drug Administration or foreign equivalent regulation of, or denial, withholding or withdrawal of approval of, our customers’ products could lead to a lack of demand for our solutions. Other changes in government regulations, in areas such as privacy, export compliance or anti-bribery statutes, such as the U.S. Foreign Corrupt Practices Act, could require us to implement changes in our solutions, services or operations that increase our cost of doing business and thereby adversely affecting our financial performance.

Any new implementation of or changes made to laws, regulations or other industry standards affecting our business in any of the geographic regions in which we operate may require significant development efforts or have an unfavorable effect on our business operations.

Various U.S. laws and regulations, such as the Bank Secrecy Act of 1970 (the “Bank Secrecy Act”) and many states jurisdictions impose license and registration obligations on those companies engaged in the business of money transmission, with varying definitions of what constitutes money transmission. Evaluation of our compliance efforts, as well as the questions of whether and to what extent our products and services require licensure is subject to regulatory interpretation and could change over time. Such changes could subject us to investigations and resulting liability, including governmental fines, restrictions on our business, or other sanctions, and we could be forced to cease conducting certain aspects of our business with customers of certain jurisdictions, or be required to obtain additional licenses or regulatory approvals. There can be no assurance that we will be able to obtain any such licenses, and, even if we were able to do so, there could be substantial costs and potential product changes involved in maintaining such licenses, which could have a material and adverse effect on our business. In addition, as our business and products continue to develop and expand, we may become subject to additional rules, regulations, and industry standards. We may not always be able to accurately predict the scope or applicability of certain regulations to our business, particularly as we expand into new areas of operations, which could have a significant negative effect on our existing business and our ability to pursue future plans.

We may be the target of illegitimate or other improper transaction settlement despite compliance systems.

We are legally or contractually required to comply with the anti-money laundering laws and regulations, such as, the Bank Secrecy Act, and other compliance standards related to providing managed payments and processing services for our customers. In some contexts, we are directly subject to these requirements; in other contexts, we have contractually agreed to assist our financial institutions with their obligation to comply with compliances requirements that apply to them. We have developed procedures and controls that are designed to monitor and address legal and regulatory requirements and developments and that are applicable to our payments sector. However, when our products and services are used to process illegitimate transactions, or if our products and services are subject to internal data and transaction reporting errors, and invoice or other payments settlements are improperly processed, we may suffer losses and liability. These types of illegitimate transactions or improper settlements can also expose us to governmental and regulatory sanctions and potentially prevent us from satisfying our contractual obligations to our customers or other third parties, which may cause us to be in breach of our obligations.

Risks Related to Our Technology and Security

If our solutions do not interoperate with our customers’ IT infrastructure, sales of our solutions could be negatively affected, which would harm our business.

Our solutions must interoperate with our customers’ existing IT infrastructure, which often have different specifications, complex configuration, utilize multiple protocol standards, deploy products from multiple vendors and contain multiple generations of products that have been added over time. As a result, when problems occur in a network, it may be difficult to identify the sources of these problems. If we find errors in the existing products or defects in the hardware used in our customers’ IT infrastructure or problematic network configurations or settings, we may have to modify our solutions or platform so that our solutions will interoperate with our customers’ IT infrastructure. Any delays in identifying the sources of

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problems or in providing necessary modifications to our solutions could have a negative impact on our reputation and our customers’ satisfaction with our solutions, and our ability to sell solutions could be adversely affected.

Because techniques used to obtain unauthorized access, exploit vulnerabilities or sabotage systems change frequently and generally are not identified until they are launched against a target, we may be unable to anticipate these techniques, patch vulnerabilities, or implement adequate preventative measures. Certain of our customers may have a greater sensitivity to security defects or breaches in our software than to defects in other, less critical, software solutions. Any actual or perceived security breach or theft of the business-critical data of one or more of our customers, regardless of whether the breach is attributable to the failure of our software or solutions, may adversely affect the market’s perception of our solutions. There can be no assurance that limitation of liability, indemnification or other protective provisions in our contracts would be applicable, enforceable or adequate in connection with a security breach, or would otherwise protect us from any such liabilities or damages with respect to any particular claim. We also cannot be sure that our existing general liability insurance coverage and coverage for errors or omissions will continue to be available on acceptable terms or will be available in sufficient amounts to cover one or more large claims, or that the insurer will not deny coverage as to any future claim. One or more large claims may be asserted against us that exceed our available insurance coverage, or changes in our insurance policies may occur, including premium increases or the imposition of large deductible or co-insurance requirements.

Furthermore, a party that is able to circumvent our security measures or exploit any vulnerabilities in our solutions could misappropriate our or our customers’ proprietary or confidential information, cause interruption in their operations, damage or misuse their computer systems, misuse any information that they misappropriate, cause early termination of our contracts, subject us to notification and indemnity obligations, litigation, and regulatory investigation or governmental sanctions, cause us to lose existing customers, and harm our ability to attract future customers. Any such breach could cause harm to our reputation, business, financial condition and results of operations, and we may incur significant liability, and as a result our business and financial position may be harmed.

We rely on a small number of third-party service providers to host and deliver our cloud-based solutions, and any interruptions or delays in services from these third parties could impair the delivery of our cloud-based solutions and harm our business.

We currently operate our cloud-based solutions primarily through ~~third party~~third-party data centers. We do not control the operation of these facilities. These facilities and third-parties are vulnerable to damage or interruption from natural disasters, fires, power loss, telecommunications failures, geopolitical turmoil, global epidemics, pandemics, or contagious diseases, such as COVID-19, and similar ~~events.~~events, such as the current invasion of Ukraine by Russia. They are also subject to break-ins, computer viruses, sabotage, intentional acts of vandalism and other misconduct. The occurrence of a natural disaster or an act of terrorism, a decision to close the facilities without adequate notice or other unanticipated problems could result in lengthy interruptions, which would have a serious adverse impact on our business. Additionally, our data center agreements are of limited duration, subject to early termination rights in certain circumstances, may include inadequate indemnification and liability provisions, and the providers of our data centers have no obligation to renew their agreements with us on commercially reasonable terms, or at all.

If we continue to add data centers and add capacity in our existing data centers, we may transfer data to other locations. Despite precautions taken during this process, any unsuccessful data transfers may impair the delivery of our service. Interruptions in our service, data loss or corruption may subject us to liability to our customers, cause customers to terminate their agreements and

adversely affect our renewal rates and our ability to attract new customers. Data transfers may also subject us to regional privacy and data protection laws that apply to the transmission of customer data across international borders.

We also depend on access to the Internet through third-party bandwidth providers to operate our cloud-based solution. If we lose the services of one or more of our bandwidth providers, or if these providers experience outages, for any reason, we could experience disruption in delivering our cloud-based solutions or we could be required to retain the services of a replacement bandwidth provider. Any Internet outages or delays could adversely affect our ability to provide our solutions to our customers. Our data center operations also rely heavily on the availability of electricity, which also comes from third-party providers. If we or the third-party data center facilities that we use to deliver our services were to experience a major power outage or if the cost of electricity were to increase significantly, our operations and financial results could be harmed. If we or

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our third-party data centers were to experience a major power outage, we or they would have to rely on back-up generators, which might not work properly or might not provide an adequate supply during a major power outage. Such a power outage could result in a significant disruption of our business.

Additionally, defects in our systems or those of third parties, errors or delays in the processing of payment transactions, telecommunications failures, or other difficulties (including those related to system relocation) could result in loss of revenues, loss of customers, loss of data, harm to our business or reputation, exposure to fraud losses or other liabilities, negative publicity, additional operating and development costs, fines and other sanctions imposed by counterparties, and/or diversion of technical and other resources.

Our use of open source and third-party technology could impose limitations on our ability to commercialize our solutions.

We use open source software in our solutions and in our services engagements on behalf of customers. As we increasingly handle configured implementation of our solutions on behalf of customers, we use additional open source software that we obtain from all over the world. Although we try to monitor our use of open source software, the terms of many open source licenses have not been interpreted by U.S. courts, and there is a risk that such licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to market our solutions. In such event, we could be required to seek licenses from third parties in order to continue offering our solutions, to re-engineer our technology or to discontinue offering our solutions in the event re-engineering cannot be accomplished on a timely basis, any of which could cause us to breach contracts, harm our reputation, result in customer losses or claims, increase our costs or otherwise adversely affect our business, operating results and financial condition.

Some open source licenses contain requirements that we make available source code for modifications or derivative works we create based upon the type of open source software we use. If we combine our proprietary software with open source software in a certain manner, we could, under certain open source licenses, be required to release the source code of our proprietary software to the public. This would allow our competitors to create similar solutions with lower development effort and time and ultimately could result in a loss of product sales for us.

Risks Related to Our Intellectual Property

Any failure to protect our intellectual property rights could impair our ability to protect our proprietary technology and our brand, which would substantially harm our business and operating results.

The success of our business and the ability to compete depend in part upon our ability to protect and enforce our patents, trade secrets, trademarks, copyrights and other intellectual property rights. We primarily rely on patent, copyright, trade secret and trademark laws, trade secret protection and confidentiality or license agreements with our employees, customers, partners and others to protect our intellectual property rights. However, the steps we take to protect our intellectual property rights may be inadequate or we may be unable to secure intellectual property protection for all of our solutions. Any of our copyrights, trademarks or other intellectual property rights may be challenged by others or invalidated through administrative process or litigation. Competitors may independently develop technologies or solutions that are substantially equivalent or superior to our solutions or that inappropriately incorporate our proprietary technology into their solutions. Competitors may hire our former employees who may misappropriate our proprietary technology or misuse our confidential information. Although we rely in part upon confidentiality agreements with our employees, consultants and other third parties to protect our trade secrets and other confidential information, those agreements may not effectively prevent disclosure of trade secrets and other confidential information and may not provide an adequate remedy in the event of misappropriation of trade secrets or unauthorized disclosure of confidential information. In addition, others may independently discover our trade secrets and confidential information, and in such cases we could not assert any trade secret rights against such parties.

In order to protect our intellectual property rights, we may be required to spend significant resources to monitor and protect these rights. Litigation to protect and enforce our intellectual property rights could be costly, time-consuming and distracting to management and could result in the impairment or loss of portions of our intellectual property. Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of our intellectual property rights. Any litigation, whether or not it is resolved in our favor, could result in significant expense to us and divert the efforts of our technical and management personnel, which may adversely affect our business, operating results and financial condition. Certain jurisdictions may not provide adequate legal infrastructure for effective protection of our intellectual property rights. Changing legal interpretations of liability for unauthorized use of our solutions or lessened sensitivity by corporate, government or institutional users to refraining from intellectual property piracy or other infringements of intellectual property could also harm our business.

It is possible that innovations for which we seek patent protection may not be protectable. Additionally, the process of obtaining patent protection is expensive and time consuming, and we may not be able to prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. Given the cost, effort, risks and downside of obtaining patent protection, including the requirement to ultimately disclose the invention to the public, we may not choose to seek patent protection for certain innovations. However, such patent protection could later prove to be important to our business. Even if

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issued, there can be no assurance that any patents will have the coverage originally sought or adequately protect our intellectual property, as the legal standards relating to the validity, enforceability and scope of protection of patent and other intellectual property rights are uncertain. Any patents that are issued may be invalidated or otherwise limited, or may lapse or may be abandoned, enabling other companies to better develop products that compete with our solutions, which could adversely affect our competitive business position, business prospects and financial condition.

We cannot assure you that the measures we have taken to protect our intellectual property will adequately protect us, and any failure to protect our intellectual property could harm our business.

We may not be able to enforce our intellectual property rights throughout the world, which could adversely impact our international operations and business.

The laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Many companies have encountered significant problems in protecting and enforcing intellectual property rights in certain foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection. This could make it difficult for us to stop the infringement or misappropriation of our intellectual property rights. Proceedings to enforce our proprietary rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business. Accordingly, our efforts to enforce our intellectual property rights in such countries may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop, which could have a material adverse effect on our business, financial condition and results of operations.

We license technology from third parties, and our inability to maintain those licenses could harm our business. Certain third-party technology that we use may be difficult to replace or could cause errors or failures of our service.

We incorporate technology that we purchase or license from third parties, including hardware and software, into our solutions. We cannot be certain that this technology will continue to be available on commercially reasonable terms, or at all. We cannot be certain that our licensors are not infringing the intellectual property rights of third parties or that our licensors have sufficient rights to the licensed intellectual property in all jurisdictions in which we may sell our solutions. Some of our agreements with our licensors may be terminated for convenience by them. If we are unable to continue to license any of this technology because of intellectual property infringement claims brought by third parties against our licensors or against us, or if we are unable to continue our license agreements or enter into new licenses on commercially reasonable terms, our ability to develop and sell solutions containing that technology would be severely limited and our business could be harmed. Additionally, if we are unable to license or obtain the necessary technology from third parties, we may be forced to acquire or develop alternative technology of lower quality or performance standards. This would limit and delay our ability to offer new or competitive solutions and increase our costs of production. In addition, errors or defects in third-party hardware or software used in our cloud-based solutions could result in errors or a failure of our cloud-based solutions, which could harm our business.

~~If our solutions fail to perform properly, our reputation and customer relationships could be harmed, our market share could decline and we could be subject to liability claims.~~

~~Our solutions are inherently complex and may contain material defects or errors. Any defects in solution functionality or that cause interruptions in availability could result in:~~

~~lost or delayed market acceptance and sales;~~

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~~reductions in current-period total revenues;~~

~~breach of warranty or other contract breach or misrepresentation claims;~~

~~sales credits or refunds to our customers;~~

~~loss of customers;~~

~~diversion of development and customer service resources; and~~

~~injury to our reputation.~~

The costs incurred in correcting any material defects or errors might be substantial and could adversely affect our operating results. Because our customers often use our solutions as a system of record and many of our customers are subject to regulation of pricing of their products or otherwise have complex pricing commitments and revenue recognition policies, errors could result in an inability to process sales or lead to a violation of pricing requirements or misreporting of revenues by our customers that could potentially expose them to fines or other substantial claims or penalties. Accordingly, we could face increased exposure to product liability and warranty claims, litigation and other disputes and claims, resulting in potentially material losses and costs. Our limitation of liability provisions in our customer agreements may not be sufficient to protect us against any such claims.

Given the large amount of data that our solutions collect and manage, it is possible that failures or errors in our software could result in data loss or corruption, or cause the information that we collect to be incomplete or contain inaccuracies that our customers regard as significant. We may be required to issue credits or refunds or indemnify or otherwise be liable to our customers or third parties for damages they may incur resulting from certain of these events.

~~The market in which we participate is highly competitive, and if we do not compete effectively, our operating results could be harmed.~~

Companies lacking IT resources often resort to spreadsheet-assisted manual processes or personal database applications. In addition, some potential customers, particularly large enterprises, may elect to develop their own internal solutions, including custom-built solutions that are designed to support the needs of a single organization. Companies with large investments in packaged ERP or CRM applications, which do not typically provide revenue management capabilities, may extend these horizontal applications with configurations or point solution applications in order to address one or a small set of revenue management sub processes or drivers. Common horizontal applications that customers attempt to configure for this purpose in the life sciences and technology industries include large integrated systems vendors like SAP AG and Oracle Corporation. We also encounter competition from small independent companies, which compete on the basis of price, unique product features or functions and custom developments.

With the introduction of new technologies and market entrants, we expect competition to intensify in the future. We also expect enterprise software vendors that focus on enterprise resource planning or back-office applications to enter our market with competing products. In addition, we expect sales force automation vendors to acquire or develop additional solutions that may compete with our solutions. If we fail to compete effectively, our business will be harmed. In addition, pricing pressures and increased competition generally could result in reduced sales, reduced margins, losses or the failure of our solutions to achieve or maintain more widespread market acceptance, any of which could harm our business.

~~If we are not able to maintain and enhance our brand, our business and operating results may be adversely affected.~~

The promotion of our brand requires us to make substantial expenditures, and we anticipate that the expenditures will increase as our market becomes more competitive and as we expand into new verticals within the life sciences and technology industries. To the extent that these activities yield increased revenues, these revenues may not offset the increased expenses we incur. If we do not successfully maintain and enhance our brand, our business may not grow, we may have reduced pricing power relative to competitors with stronger brands and we could lose customers and partners, all of which would adversely affect our business operations and financial results.

Our organization continues to grow and experience rapid changes. If we fail to manage our growth, we may be unable to execute our business plan, maintain high levels of service or adequately address competitive challenges, and our business and operating results could be adversely affected.

We have experienced and may continue to experience growth in our headcount and operations, which has placed and will continue to place significant demands on our management and our operational and financial infrastructure. For example, in connection with the Revitas acquisition, we hired 145 employees from Revitas. As we grow, we must effectively integrate, develop and motivate a significant number of new employees, while maintaining the effectiveness of our business execution and the beneficial aspects of our corporate culture. In particular, we intend to continue to make directed and substantial investments to expand our research and development, sales and marketing, and general and administrative organizations, as well as our international operations. Failure to

effectively manage organizational changes as well as integrating and training new sales and marketing personnel, could result in attrition of existing employees and difficulties in executing on our business plan, implementing customer requests, declines in quality or customer satisfaction, increases in costs and difficulties in introducing new features or other operational difficulties, and any of these difficulties could adversely impact our business performance and results of operations.

Additionally, our growth could require significant capital expenditures and may divert financial resources from other projects, such as the development of new solutions or enhancements to existing solutions. For example, since it may take as long as six months to hire and train a new member of our implementation services staff, we make decisions regarding the size of our implementation services staff based upon our expectations with respect to customer demand for our solutions. If these expectations are incorrect, and we increase the size of our implementation services organization without experiencing an increase in sales of our solutions, we will experience reductions in our gross and operating margins and net income.

~~To effectively manage growth, we must continue to improve our operational, financial and management controls, and our reporting systems and procedures by, among other things:~~

~~improving our key business applications, processes and IT infrastructure to support our business needs;~~

enhancing information and communication systems to ensure that our employees and offices around the world are well-coordinated and can effectively communicate with each other and our growing base of customers;

~~enhancing our internal controls to ensure timely and accurate reporting of all of our operations and financial results; and~~

~~appropriately documenting our IT systems and our business processes.~~

~~If we are unable to maintain successful relationships with system integrators, our business operations, financial results and growth prospects could be adversely affected.~~

~~Any failure to offer high-quality customer support services may adversely affect our relationships with our customers and harm our financial results.~~

~~If our solutions do not interoperate with our customers’ IT infrastructure, sales of our solutions could be negatively affected, which would harm our business.~~

~~Incorrect or improper implementation or use of our solutions could result in customer dissatisfaction and negatively affect our business, operations, financial results and growth prospects.~~

Our customers and third-party partners may need training in the proper use of and the variety of benefits that can be derived from our solutions to maximize their potential. If our solutions are not implemented or used correctly or as intended, inadequate performance may result. Since our customers rely on our solutions and customer support to manage key areas of their businesses, the incorrect or improper implementation or use of our solutions, our failure to train customers on how to efficiently and effectively use our solutions or our failure to provide services to our customers, may result in negative publicity, failure of customers to renew their SaaS or maintenance agreements or potentially make legal claims against us. Also, as we continue to expand our customer base, any failure by us to properly provide these services will likely result in lost opportunities for follow-on sales of our solutions.

~~Competition for our target employees is intense, and we may not be able to attract and retain the quality employees we need to support our planned growth.~~

~~Our significant international operations subject us to additional risks that can adversely affect our business, results of operations and financial condition.~~

We have significant international operations, including in emerging markets such as India, and we are continuing to expand our international operations as part of our growth strategy. As of September 30, 2017, approximately 45% of our total employees were located in India, where we conduct a portion of our research and development activities, implementation services and support services. Our current international operations and our plans to expand our international operations have placed, and will continue to place, a strain on our employees, management systems and other resources.

Operating in international markets requires significant resources and management attention and will subject us to regulatory, economic and political risks and competition that are different from those in the United States. Because of our limited experience with international operations, we cannot assure that our international expansion efforts will be successful or that returns on such investments will be achieved in the future. In addition, our international operations may fail to succeed due to other risks inherent in operating businesses internationally, including:

~~our lack of familiarity with commercial and social norms and customs in international countries which may adversely affect our ability to recruit, retain and manage employees in these countries;~~

~~difficulties and costs associated with staffing and managing foreign operations;~~

~~the potential diversion of management’s attention to oversee and direct operations that are geographically distant from our U.S. headquarters;~~

~~compliance with multiple, conflicting and changing governmental laws and regulations, including employment, tax, privacy and data protection laws and regulations;~~

legal systems in which our ability to enforce and protect our rights may be different or less effective than in the United States and in which the ultimate result of dispute resolution is more difficult to predict;

~~greater difficulty collecting accounts receivable and longer payment cycles;~~

~~higher employee costs and difficulty in terminating non-performing employees;~~

~~differences in workplace cultures;~~

~~unexpected changes in regulatory requirements;~~

~~the need to adapt our solutions for specific countries;~~

~~our ability to comply with differing technical and certification requirements outside the United States;~~

~~tariffs, export controls and other non-tariff barriers such as quotas and local content rules;~~

~~more limited protection for intellectual property rights in some countries;~~

~~adverse tax consequences, including as a result of transfer pricing adjustments involving our foreign operations;~~

~~fluctuations in currency exchange rates;~~

~~anti-bribery compliance by us or our partners;~~

~~restrictions on the transfer of funds; and~~

~~new and different sources of competition.~~

~~Our failure to manage any of these risks successfully could harm our existing and future international operations and seriously impair our overall business.~~

~~We are exposed to fluctuations in currency exchange rates, which could negatively affect our financial condition and operating results.~~

Our sales contracts are primarily denominated in U.S. dollars, and therefore, substantially all of our revenues are not subject to foreign currency risk. However, a strengthening of the U.S. dollar could increase the real cost of our solutions to our customers outside of the United States, which could adversely affect our financial condition and operating results. In addition, an increasing portion of our operating expenses are incurred in India, are denominated in Indian Rupees and are subject to fluctuations due to changes in foreign currency exchange rates.

We may be sued by third parties for alleged infringement of their proprietary rights which could result in significant costs and harm our business.

~~If our estimates or judgments relating to our critical accounting policies are based on assumptions that ch~~a~~nge or prove to be incorrect, our operating results could fall below expectations of securities analysts and investors, resulting in a decline in our stock price.~~

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. For example, our revenue recognition policy is complex and we often must make estimates and assumptions that could prove to be inaccurate. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about revenue recognition, capitalized software, the carrying values of assets, taxes, liabilities, equity, revenues and expenses that are not readily apparent from other sources. Our operating results may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our operating results to fall below the expectations of securities analysts and investors, resulting in a decline in our stock price. Significant assumptions and estimates used in preparing our Consolidated Financial Statements include those related to revenue recognition, share-based compensation and income taxes.

~~We incur significant costs and devote substantial management time as a result of operating as a public company, which may increase when we are no longer an “emerging growth company.”~~

As a public company, we incur significant legal, accounting and other expenses. For example, we are required to comply with the requirements of the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley Act) and the Dodd Frank Wall Street Reform and Consumer Protection Act, as well as rules and regulations subsequently implemented by the SEC and the New York Stock Exchange, including the establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices. Despite reform made possible by the Jumpstart Our Business Startups Act (JOBS Act), which allows us to take advantage of certain exemptions from various reporting requirements as long as we remain an “emerging growth company,” compliance with these requirements results in legal and financial compliance costs and make some activities more time consuming.

Additionally, as of September 30, 2018, we will no longer be an emerging growth company and will need to comply with additional disclosure and reporting requirements, including an attestation report on internal control over financial reporting as of September 30, 2018 issued by our independent registered public accounting firm. We will also be required to include additional information regarding executive compensation in our 2019 proxy statement and hold a nonbinding advisory vote on executive compensation at our 2019 annual meeting of stockholders. These additional reporting requirements may increase our legal and financial compliance costs and cause management and other personnel to divert attention from operational and other business matters to devote substantial time to these public company requirements.

If we fail to maintain an effective system of internal controls, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.

In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we have expended, and anticipate that we will continue to expend, significant resources, including accounting-related costs, and provide significant management oversight. Any failure to maintain the adequacy of our internal controls, or consequent inability to produce accurate financial statements on a timely basis, could increase our operating costs and could materially impair our ability to operate our business. In the event that our internal controls are perceived as inadequate or that we are unable to produce timely or accurate financial statements, investors may lose confidence in our operating results and our stock price could decline. In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the New York Stock Exchange.

operating performance of those companies. These broad market fluctuations, as well as general economic, systemic, political and market conditions, such as recessions, interest rate changes or international currency fluctuations, may negatively affect the market price of our common stock.

In the past, many companies that have experienced volatility in the market price of their stock have become subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert our management’s attention, which could harm our business.

If securities analysts do not publish research or reports or if they publish unfavorable or inaccurate research about our business and our stock, the price of our stock and the trading volume could decline.


Delaware		77-0528806
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

777 Mariners Island Boulevard,	Suite 300 ~~San Mateo, California~~	94404
San Mateo,	California
(Address of Principal Executive Offices)		(Zip Code)

	~~Page~~
		Page

PART I. FINANCIAL INFORMATION

Item 1.		Financial Statements (Unaudited)	3 2

		Condensed Consolidated Balance Sheets as of ~~December 31, 2017~~June 30 , 2022 and September 30, ~~2017~~2021	3 2

		Condensed Consolidated Statements of Operations for the Three and N ine Months Ended ~~December 31, 2017~~June 30 , 2022 and ~~2016~~2021	4 3

		Condensed Consolidated Statements of Comprehensive Loss for the Three and N i n e Months Ended ~~December 31, 2017~~June 30 , 2022 and ~~2016~~2021	5 4

		Condensed Consolidated Statements of Cash Flows for the ~~Three~~Nine Months Ended ~~December 31, 2017~~June 30 , 2022 and ~~2016~~2021	6 5

		Notes to Condensed Consolidated Financial Statements	7 6

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	19 21

Item 3.		Quantitative and Qualitative Disclosures about Market Risk	27 31

Item 4.		Controls and Procedures	28 31

PART II. OTHER INFORMATION

Item 1.		Legal Proceedings	29 32

Item 1A.		Risk Factors	29 32

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	49 61

Item 3.		Defaults Upon Senior Securities	49 61

Item 4.		Mine Safety Disclosures	49 61

Item 5.		Other Information	49 61

Item 6.		Exhibits	49 62

		Signatures	50 63

	Three Months Ended December 31,
	2017			2016				Three Months Ended June 30,				Nine Months Ended June 30,
Revenues:
SaaS and maintenance	$	32,323		$	22,640
License and implementation		6,744			5,423
								2022		2021		2022		2021
Revenues							Revenues
Subscription							Subscription	$	40,554	$	36,908	$	116,885	$	104,284
Professional services							Professional services	15,618		14,130		44,109		37,680
Total revenues		39,067			28,063		Total revenues	56,172		51,038		160,994		141,964
Cost of revenues:
SaaS and maintenance		13,024			10,208
License and implementation		3,785			3,614
Cost of revenues							Cost of revenues
Subscription							Subscription	14,869		13,799		43,249		36,525
Professional services							Professional services	9,938		9,651		28,260		27,418
Total cost of revenues		16,809			13,822		Total cost of revenues	24,807		23,450		71,509		63,943
Gross profit		22,258			14,241		Gross profit	31,365		27,588		89,485		78,021
Operating expenses:
Operating expenses							Operating expenses
Research and development		9,068			5,975		Research and development	11,797		11,674		35,035		32,866
Sales and marketing		8,492			8,734		Sales and marketing	11,795		11,146		34,873		32,111
General and administrative		8,731			7,185		General and administrative	9,857		8,653		27,618		25,052
Total operating expenses		26,291			21,894		Total operating expenses	33,449		31,473		97,526		90,029
Loss from operations		(4,033	)		(7,653	)	Loss from operations	(2,084)		(3,885)		(8,041)		(12,008)
Interest expense (income), net		1,423			(33	)
Interest expense, net							Interest expense, net	3,794		3,631		11,420		10,645
Other expenses (income), net		125			(154	)	Other expenses (income), net	(271)		(39)		(283)		175
Loss before income taxes		(5,581	)		(7,466	)	Loss before income taxes	(5,607)		(7,477)		(19,178)		(22,828)
(Benefit) provision for income taxes		(324	)		134
Provision for income taxes							Provision for income taxes	611		352		1,345		840
Net loss	$	(5,257	)	$	(7,600	)	Net loss	$	(6,218)	$	(7,829)	$	(20,523)	$	(23,668)
Net loss per share attributable to common stockholders:							Net loss per share attributable to common stockholders:
Basic and diluted	$	(0.18	)	$	(0.27	)	Basic and diluted	$	(0.17)	$	(0.22)	$	(0.56)	$	(0.67)
Weighted average number of shares used in computing net loss per share attributable to common stockholders:							Weighted average number of shares used in computing net loss per share attributable to common stockholders:
Basic and diluted		29,401			28,008		Basic and diluted	36,935		35,679		36,591		35,305


	Three Months Ended December 31,							Three Months Ended June 30,				Nine Months Ended June 30,
	2017			2016				2022		2021		2022		2021
Net loss	$	(5,257	)	$	(7,600	)	Net loss	$	(6,218)	$	(7,829)	$	(20,523)	$	(23,668)
Other comprehensive (loss) income, net
Change in foreign currency translation adjustment		109			(114	)
Other comprehensive loss, net of tax							Other comprehensive loss, net of tax
Unrealized loss on cash flow hedges							Unrealized loss on cash flow hedges	(240)		(16)		(375)		(7)
Foreign currency translation loss							Foreign currency translation loss	(415)		(87)		(577)		(11)
Total comprehensive loss	$	(5,148	)	$	(7,714	)	Total comprehensive loss	$	(6,873)	$	(7,932)	$	(21,475)	$	(23,686)

	Three Months Ended December 31,
	2017			2016				Nine Months Ended June 30,
Cash flows from operating activities:
								2022		2021
Cash flows from operating activities							Cash flows from operating activities
Net loss	$	(5,257	)	$	(7,600	)	Net loss	$	(20,523)	$	(23,668)
Adjustments to reconcile net loss to net cash used in operating activities
Adjustments to reconcile net loss to net cash provided by operating activities							Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation and amortization		2,265			1,094		Depreciation and amortization	6,725		5,740
Stock-based compensation		4,036			1,895		Stock-based compensation	25,186		21,850
Amortization of debt discount and issuance cost		236			—
Amortization of debt discount and issuance costs							Amortization of debt discount and issuance costs	8,211		7,286
Deferred income taxes							Deferred income taxes	414		84
Amortization of capitalized contract acquisition costs							Amortization of capitalized contract acquisition costs	3,152		2,223
Other non-cash charges		(491	)		49		Other non-cash charges	(515)		—
Changes in assets and liabilities, net of acquisition:
Changes in assets and liabilities, net of acquisition							Changes in assets and liabilities, net of acquisition
Accounts receivable		(13,846	)		655		Accounts receivable	4,908		(2,382)
Prepaid expenses and other assets		363			843		Prepaid expenses and other assets	(1,611)		(2,470)
Deferred cost of implementation services		191			701
Accounts payable		1,216			591		Accounts payable	(1,516)		1,849
Accrued employee compensation		(5,896	)		(898	)	Accrued employee compensation	(794)		745
Other accrued and long-term liabilities		(703	)		(1,298	)
Other current and long-term liabilities							Other current and long-term liabilities	(3,020)		(3,095)
Deferred revenue		8,145			(4,261	)	Deferred revenue	(3,284)		1,528
Net cash used in operating activities		(9,741	)		(8,229	)
Cash flows from investing activities:
Net cash provided by operating activities							Net cash provided by operating activities	17,333		9,690
Cash flows from investing activities							Cash flows from investing activities
Purchases of property and equipment		(60	)		(194	)	Purchases of property and equipment	(486)		(842)
Capitalization of software development costs		—			(275	)
Cash held in escrow for acquisition		—			(5,000	)
Acquisition of business							Acquisition of business	—		(57,849)

Net cash used in investing activities		(60	)		(5,469	)	Net cash used in investing activities	(486)		(58,691)
Cash flows from financing activities:
Proceeds from exercise of stock options		552			17
Cash flows from financing activities							Cash flows from financing activities
Proceeds from exercise of stock options and issuance of common stock under employee stock purchase plan							Proceeds from exercise of stock options and issuance of common stock under employee stock purchase plan	2,507		2,306

Net changes in customer funds payable							Net changes in customer funds payable	(142)		6,908
Net cash provided by financing activities		552			17		Net cash provided by financing activities	2,365		9,214
Effect of exchange rate changes on cash and cash equivalents		15			(22	)	Effect of exchange rate changes on cash and cash equivalents	(335)		(30)
Net decrease in cash and cash equivalents		(9,234	)		(13,703	)
Net increase (decrease) in cash and cash equivalents							Net increase (decrease) in cash and cash equivalents	18,877		(39,817)
Cash and cash equivalents							Cash and cash equivalents
Beginning of period		57,558			66,149		Beginning of period	165,783		200,491
End of period	$	48,324		$	52,446		End of period	$	184,660	$	160,674

☒
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	As of June 30, 2022		As of September 30, 2021
Accounts receivable, net	$	38,485	$	43,185
Contract asset	4,212		4,891
Deferred revenue	54,548		57,796
Capitalized contract acquisition costs	12,247		9,539

	Estimated Fair Value (in thousands)
Cash and cash equivalents	$	5,067
Accounts receivable		6,184
Prepaid expenses		1,067
Other current assets		47
Property, plant and equipment		1,506
Intangible assets		39,100
Goodwill		32,344
Other assets		25
Total assets acquired		85,340

Accounts payable		(1,352	)
Accrued employee compensation		(3,983	)
Accrued liabilities		(1,410	)
Deferred revenue liability		(12,856	)
Other liabilities		(4,256	)
Total liabilities assumed		(23,857	)
Net acquired assets	$	61,483

Intangible assets	Fair value (in thousands)		Estimated useful lives (years)		Weighted-average estimated useful lives (years)
Developed technology	$	6,770		6		6
Customer relationship		32,180	10		10
Trade name	$	150		1		1

	Three Months Ended December 31,
	2016
	(in thousands, except per share data)
Revenue	$	37,121
Net loss		(10,910	)
Net loss per shares-basic and diluted	$	(0.39	)

	Estimated	As of December 31, 2017
	Useful Life	Gross Carrying		Accumulated			Net Carrying
	(in Years)	Amount		Amortization			Amount
		(in thousands)
Intangible Assets:
Developed technology	5-6	$	12,083	$	(5,020	)	$	7,063
Backlog	5		280		(230	)		50
Customer relationships	3-10		36,599		(4,974	)		31,625
Trade name	1		260		(260	)		—
Total		$	49,222	$	(10,484	)	$	38,738

	Estimated	As of September 30, 2017
	Useful Life	Gross Carrying		Accumulated			Net Carrying
	(in Years)	Amount		Amortization			Amount
		(in thousands)
Intangible Assets:
Developed technology	5-6	$	12,083	$	(4,545	)	$	7,538
Backlog	5		280		(215	)		65
Non-competition agreement	3		100		(100	)		—
Customer relationships	3-10		36,599		(4,084	)		32,515
Trade name	1		260		(222	)		38
Total		$	49,322	$	(9,166	)	$	40,156

2018 (remaining 9 months)	$	4,142
2019		5,466
2020		4,751
2021		4,686
2022 and thereafter		19,693
Total future amortization	$	38,738


	Nine Months Ended June 30, 2022		Nine Months Ended June 30, 2021
Cash paid for amounts included in the measurement of operating lease liabilities	$	3,800	$	2,022
Operating lease ROU assets obtained in exchange for new operating lease liabilities	—		19,289

~~Delaware~~		~~77-0528806~~


Fiscal Year
Remaining fiscal 2022	$	1,234
2023	5,099
2024	4,947
2025	4,587
2026	2,622
2027 and thereafter	575
Total operating lease payments	19,064
Less imputed interest	1,025
Total operating lease liabilities	$	18,039

Balance as at September 30, 2016	$	6,939
Add: Goodwill from acquisition of business		32,344
Balance as at September 30, 2017	$	39,283
Add: Goodwill from acquisition of business		—
Balance as at December 31, 2017	$	39,283

	Amount
	(in thousands)
Principal	$	60,000
Unamortized debt discount and issuance costs		(2,559	)
Net carrying amount	$	57,441

Fiscal Year
2018 (remaining 9 months)		5,000
2019		937
2020		6,250
2021		1,250
2022		46,563
Total	$	60,000

	Level 1		Level 2		Level 3		Total
	(in thousands)
As of December 31, 2017:
Assets:
Cash equivalents:	$	39,052	$	—	$	—	$	39,052
Total	$	39,052	$	—	$	—	$	39,052
As of September 30, 2017:
Assets:
Cash equivalents:	$	47,754	$	—	$	—	$	47,754
Total	$	47,754	$	—	$	—	$	47,754


									Reported as:
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value		Cash and Cash Equivalents
As of June 30, 2022
Level 1:
Money market funds	$	33,415	$	—	$	—	$	33,415	$	33,415
US Treasury securities	84,881		—		(39)		84,842		84,842
Total	$	118,296	$	—	$	(39)	$	118,257	$	118,257

As of September 30, 2021
Level 1:
Money market funds	$	40,755	$	—	$	—	$	40,755	$	40,755
US Treasury securities	84,997		—		—		84,997		84,997
Total	$	125,752	$	—	$	—	$	125,752	$	125,752


	Acquisition Date Fair Value
Accounts receivable	$	3,844
Property and equipment, net	511
Operating lease right-of-use assets	2,764
Goodwill	26,382
Intangible assets	28,210
Total assets acquired	61,711
Operating lease liabilities, current portion	656
Deferred revenue, current portion	1,549
Operating lease liabilities, less current portion	1,657
Total liabilities assumed	3,862
Total purchase price	$	57,849


Balance at September 30, 2021	$	65,665
Additions	—
Balance at June 30, 2022	$	65,665


	Estimated	As of June 30, 2022
	Useful Life (in Years)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible Assets:
Customer relationships	3-15	$	52,109	$	(22,536)	$	29,573
Developed technology	5-6	22,333		(14,081)		8,252
Non-compete agreements	5	1,600		(480)		1,120
Trade name	3	850		(425)		425
Total		$	76,892	$	(37,522)	$	39,370


Fiscal Year
Remaining fiscal 2022	$	2,008
2023	7,186
2024	6,691
2025	6,620
2026	6,069
2027 and thereafter	10,796
Total future amortization	$	39,370


	As of June 30, 2022		As of September 30, 2021
Liability component:
Principal amount	$	172,500	$	172,500
Unamortized discount	(37,077)		(44,803)
Unamortized issuance costs	(2,911)		(3,396)
Net carrying amount	$	132,512	$	124,301

Equity component, net of issuance costs	$	55,227	$	55,227


	Three Months Ended June 30, 2022
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balance at March 31, 2022	36,816	$	6	$	403,539	$	(1,502)	$	(270,115)	$	131,928

Issuance of common stock upon exercise of stock options	9	—		106		—		—		106
Issuance of common stock upon release of restricted stock units	215	—		—		—		—		—
Issuance of common stock upon ESPP purchase	—	—		—		—		—		—
Stock-based compensation	—	—		7,912		—		—		7,912

Other comprehensive loss	—	—		—		(655)		—		(655)
Net loss	—	—		—		—		(6,218)		(6,218)
Balance at June 30, 2022	37,040	$	6	$	411,557	$	(2,157)	$	(276,333)	$	133,073


	Three Months Ended June 30, 2021
	Common Stock				Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity
	Shares		Amount
Balance at March 31, 2021	$	35,567	$	5	$	365,876	$	(1,128)	$	(241,912)	$	122,841
Issuance of common stock upon exercise of stock options	2		—		24		—		—		24
Issuance of common stock upon release of restricted stock units	215		—		—		—		—		—
Issuance of common stock upon ESPP purchase	—		—		—		—		—		—
Stock-based compensation	—		—		6,363		—		—		6,363

Other comprehensive loss	—		—		—		(103)		—		(103)
Net loss	—		—		—		—		(7,829)		(7,829)
Balance at June 30, 2021	35,784		$	5	$	372,263	$	(1,231)	$	(249,741)	$	121,296

						Weighted
				Weighted		Average
	Number of			Average		Remaining		Aggregate
	Shares			Exercised		Contract		Intrinsic
	(thousands)			Price		Term (in Years)		Value (in thousands)
Balance at September 30, 2017		453		$	7.71		3.53	$	3,281
Granted		—			—		—
Exercised		(62	)		8.97		—
Forfeited		—			—		—
Expired		—			—		—
Balance at December 31, 2017		391		$	7.51		3.17	$	3,224
Options exercisable as of December 31, 2017		391		$	7.51		3.17	$	3,224
Options vested and expected to vest as of December 31, 2017		391		$	7.51		3.17	$	3,224

				Weighted
				Average			Restricted Stock Units Outstanding (in thousands)	Weighted Average Grant Date Fair Value
	Restricted Stock			Grant Date
	Units Outstanding			Fair Value
	(in thousands)
Balance at September 30, 2017		2,917		$	12.55
Balance at September 30, 2021						Balance at September 30, 2021	1,748	$	30.54
Granted		65			14.55	Granted	1,597	32.25
Released		(89	)		10.68	Released	(856)	28.43
Forfeited		(138	)		10.39	Forfeited	(246)	30.74
Balance at December 31, 2017		2,755		$	12.76
Balance at June 30, 2022						Balance at June 30, 2022	2,243	$	32.54

*


*			This certification is deemed not filed for purpose of section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.


	MODEL N INC.

~~By:~~	By:	/s/ ~~David Barter~~ John Ederer
		~~David Barter~~ John Ederer
		Chief Financial Officer
		(Principal Financial Officer and Accounting Officer)