0001603015-26-000014
SEC filingRevenue grew 29% YoY to $127.4M, but gross margin slipped to 39% due to mix shift; net loss widened.
Revenue for Q1 2026 was $127.4 million, up 29% from $98.6 million in Q1 2025, driven by a 23% increase in customer count (to 838) and rapid expansion with existing customers. Recurring subscription fees represented 99% of total revenue, up from 95% a year ago, as one-time implementation and consulting services declined. Gross profit rose 26% to $50.1 million, but gross margin contracted 100 bps to 39%, primarily due to a revenue mix shift toward lower-margin contracts and a reduction in high-margin implementation services. Operating expenses increased 29% to $73.6 million, with the largest dollar increase in general and administrative ($8.1 million) driven by stock-based compensation from IPO equity awards. Research and development expenses grew 15% to $24.5 million, partly due to a strengthening Israeli Shekel. Net loss widened to $20.1 million from $16.3 million, reflecting higher operating loss partially offset by a $2.2 million increase in interest income from IPO proceeds and lower interest expense after debt conversion.
Revenue growth was broad-based across geographies. In the United States, revenue increased $24.8 million (36% YoY), reflecting strong momentum. Rest of world excluding Germany also grew 36% YoY ($3.3 million increase), while Germany lagged with only 3% growth ($0.7 million increase). The company noted that subscription fees now dominate the revenue mix, with one-time services dropping to 1% from 5%.
Management expects cost of revenue to continue increasing in absolute dollars as the business scales. Operating expenses (R&D, sales & marketing, G&A) are anticipated to grow in absolute terms but gradually decrease as a percentage of revenue over time, aided by efficiency gains from AI tools. The company maintains a strong liquidity position with $348.2 million in cash and $79.4 million available under its $100 million credit facility, sufficient for at least 12 months. No quantitative guidance was provided, but strategic priorities remain customer acquisition, platform expansion, and leveraging operating leverage to improve adjusted EBITDA margins, which improved from -8% to -5% in Q1.
Total assets were $723.3M as of March 31, 2026, down from $733.1M at year-end 2025. Cash and cash equivalents stood at $348.2M, with an additional $1.2M in restricted cash. The company had no debt outstanding; the $100M revolving credit facility was fully undrawn, with $79.4M available after accounting for $20.6M in outstanding letters of credit. Stockholders' equity was $622.1M.
Remaining performance obligations (RPO) totaled $275.5M as of March 31, 2026. Approximately 55% of this is expected to be recognized as revenue in the remainder of 2026 and 30% in 2027. Deferred revenue was $25.3M ($24.0M current, $1.3M noncurrent). Letters of credit outstanding were $20.8M, primarily under the credit agreement. No other material purchase commitments or contractual obligations were disclosed in the notes.
No share buybacks or dividends were reported. The company had no debt outstanding during the quarter. Capital expenditures totaled $2.3M ($0.3M for property and equipment, $2.0M for capitalized internal-use software), representing 1.8% of revenue. No equity or debt issuance occurred in the quarter.
The company reports as a single operating segment. Revenue by geography: United States $94.3M (74.0%), Germany $20.5M (16.1%), all other countries $12.6M (9.9%). Revenue by customer type: government $118.5M (93.0%), commercial $8.9M (7.0%).
Operating cash flow (CFO) of -$21.2 million in Q1 2026 was significantly worse than the -$5.6 million in the prior-year quarter, driven by a larger net loss (-$20.1M vs -$16.3M) and adverse working capital changes. The primary working capital drag was a $13.8 million increase in accounts receivable, compared to only $0.5 million in Q1 2025, indicating slower collections or revenue growth. Other negative swings included accrued expenses (-$3.7M vs +$2.6M) and deferred revenue (-$3.2M vs -$1.0M).
Capital expenditure intensity remained moderate at $2.3 million (1.9% of revenue implied), split between property and equipment ($0.3M) and capitalized software ($2.0M). Free cash flow (CFO minus capex) was -$23.5 million, deteriorating from -$6.9 million in the prior year. The company did not return capital to shareholders via buybacks or dividends.
Financing activities provided only $1.0 million from stock option exercises, a sharp contrast to the $22.9 million raised in Q1 2025 (which included $20M from warrant exercises and $7.5M from convertible notes). The company ended the period with $349.4 million in cash and restricted cash, down from $372.1 million at year-end 2025.