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About the Agent
ZBrain Technical Language Interpreter Agent converts complex technical documents into clear, comprehensible content for non-technical users. Powered by a Large Language Model (LLM), it interprets domain-specific jargon and expands abbreviations in context, while preserving the document’s original structure, tone, and intent, ensuring readability without compromising critical detail.
Challenges the ZBrain Technical Language Interpreter Agent Addresses
Enterprise teams often work with technical documents containing specialized language, such as compliance briefs, audit reports, and technical evaluations. Non-technical users frequently struggle to interpret this content, resulting in reliance on subject matter experts and delays in decision-making. Manual clarification is inconsistent, error-prone, and unsustainable as document volumes scale. Existing tools tend to oversimplify or strip context, leading to misinterpretation. Organizations need a solution that accurately interprets complex content without compromising structure or introducing errors.
ZBrain Technical Language Interpreter Agent leverages an LLM to convert complex, jargon-heavy documents into clear, plain-language content, without altering structure or meaning. It interprets technical terms, expands abbreviations in context, and preserves original formatting such as bullet points, tables, and headings. An LLM-powered validation layer ensures the output is accurate, free of redundancy or AI artifacts, and ready for seamless cross-functional use. This enables teams to independently understand technical content, reduces clarification loops, and accelerates informed decision-making.
How the Agent Works?
ZBrain technical language interpreter agent is designed to automate the extraction and simplification of text from diverse document formats while ensuring high precision and context. Below, we outline the detailed steps that illustrate the agent's workflow, from the initial input of documents through to continuous improvement:
Step 1: Document Upload and File Type Identification
The interpretation process starts when a document is uploaded via the agent interface or captured from connected enterprise systems such as cloud drives or document repositories.
Key Tasks:
- Document Type Detection: Upon submitting a new document, the agent automatically identifies its type, such as a Word document, a PDF file, a TXT file, or an unsupported format. This helps effectively tailor the content extraction and interpretation, leveraging multimodal LLM capabilities suited for relevant document types.
- Routing Based on Type: Documents are routed to the corresponding extraction mechanisms based on their identified format.
Outcome:
- Document Type Identification: The agent accurately classifies the submitted document type and initiates the relevant extraction flow, ensuring error handling for unsupported formats.
Step 2: Content Extraction for Supported File Formats
Once the file type is recognized, the content is extracted using an appropriate technique suitable for that format.
Key Tasks:
- PDFs: Each PDF file page is converted into an image, and then a multimodal LLM extracts content from each image iteratively through a loop. While extracting the content, the LLM follows specific guidelines:
- Extracts clearly visible and legible text.
- Preserves natural reading order (top-to-bottom, left-to-right).
- Excludes formatting tags, metadata, comments, or any non-textual elements.
- Does not interpret or correct partially unreadable content, ensuring only verifiable text is returned.
- Text and Word Files: For text documents, the agent uses a file helper utility to directly extract content. Word documents use a file helper utility along with a custom code block to extract the content.
- Unsupported Formats: Users are notified of unsupported file types via the agent interface.
Outcome:
- Comprehensive Content Extraction: From submitted documents, content is extracted from each page or section while maintaining context, structure and coherence.
Step 3: Conditional Tokenization and Chunk Management
This step ensures documents remain within token limits by segmenting long documents into smaller chunks.
Key Tasks:
- Token Limit Evaluation: The agent assesses document length and applies chunking when necessary. For longer documents, the content is segmented into manageable chunks to facilitate context-aware interpretation. For shorter documents, the agent interprets the entire content directly, avoiding chunking.
- Chunk Looping: For multi-part documents, each chunk is processed sequentially to preserve order and continuity.
Outcome:
- Conditional Tokenization and Processing: This step ensures that larger documents are chunked and effectively processed without loss of context.
Step 4: Content Interpretation and Output Validation
After content extraction, the agent transforms complex, technical content into a fully understandable version for non-technical users without altering structure, intent, or meaning.
Key Tasks:
- Content Interpretation: An LLM processes document chunks or the entire document to simplify the content while preserving structure:
- Structural Preservation: Reproduces the exact layout of the original content, including paragraphs, bullet points, numbered lists, headings, and tables, without omission, reordering, or summarization.
- Jargon Simplification: An LLM translates technical, legal, or domain-specific language into clear, plain English that a non-technical reader can understand without altering intent.
- Abbreviation Expansion: An LLM expands acronyms and abbreviations at first mention with brief inline explanations (e.g., "SLA (Service Level Agreement)").
- Glossary Generation: Adds a glossary with simple definitions for newly introduced terms that may be unfamiliar to a general audience.
- Markdown Formatting: An LLM ensures all content is formatted using Markdown, including headers, lists, and tables.
- Output Validation: After processing a document, the agent performs a comprehensive validation pass through an LLM to deliver a seamless, review-ready output.
- Redundancy Removal: Eliminates duplicated content and phrasing introduced at chunk boundaries (e.g., "as mentioned earlier," "in this section," or repeated headings).
- Artifact Cleanup: Strips any references to chunking, such as "previous section," "see above," or "this part," ensuring a natural flow.
- Glossary Consolidation: Merges all per-chunk glossaries into one final, alphabetically sorted glossary placed at the end of the document, ensuring no duplicate or out-of-place terms remain.
- Formatting Consistency: Standardizes Markdown structure across the full document, including headings, bullets, numbered steps, and tables, ensuring clarity and consistency.
Outcome:
- Plain-English, Structurally Intact Output: The result is a clear, accurate, and well-structured Markdown version of the original document, simplified for easier understanding by non-expert readers. Every technical term is explained, all formatting is preserved, and the final output is free from chunking traces or AI-induced distortions.
Step 5: Continuous Improvement Through Human Feedback
To improve the clarity and accuracy of interpreted outputs across complex business and technical documents, human feedback is integrated into the agent's processing.
Key Tasks:
- Feedback Collection: Users review the interpreted and validated outputs and provide feedback on clarity, terminology, tone consistency, relevance and formatting accuracy.
- Feedback Analysis and Learning: The agent analyzes feedback to identify common interpretation gaps, missed jargon clarifications, structural inconsistencies, or glossary issues, using these insights to improve its performance in future runs.
Outcome:
- Improved Performance: By learning from user input, the agent refines its outputs to enhance readability, contextual accuracy and trust in the final output.
Why use Technical Language Interpreter Agent?
- Improved Accessibility: Simplifies complex technical language, acronyms, and domain-specific jargon, making documents understandable for non-technical stakeholders across departments.
- Faster Knowledge Transfer: Enables quicker onboarding, reporting, and review cycles by making dense documentation more digestible and usable.
- Context Preservation: Maintains original document structure, context, and tone while enhancing readability, without altering or summarizing the source content.
- Scalable Processing: Seamlessly interprets single and high-volume document sets by integrating with enterprise workflows, ensuring consistent performance and output quality at scale.
- Accelerated Decision-making: Converts complex documents into clear, structured formats that empower teams to act faster and make well-informed decisions across functions.
- Lower Manual Overhead: Reduces the need for manual clarification or SME involvement, enabling teams to focus on strategic tasks instead of decoding technical content.
Accuracy
TBD
Speed
TBD
Input Data Set
Sample of data set required for Technical Language Interpreter AI Agent:
NEXTECH SOLUTIONS, INC.
ANNUAL FINANCIAL REPORT
For the Fiscal Year Ended December 31, 2024
TABLE OF CONTENTS
- LETTER TO SHAREHOLDERS
- MANAGEMENT DISCUSSION AND ANALYSIS
- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- FORWARD-LOOKING STATEMENTS
LETTER TO SHAREHOLDERS
Dear Valued Shareholders,
Fiscal year 2024 represented a pivotal period for NexTech Solutions as we navigated complex macroeconomic headwinds while continuing to execute our long-term strategic vision. Despite persistent inflationary pressures and supply chain disruptions in H1 2024, we successfully achieved a 12.3% year-over-year revenue growth, surpassing our guidance range of 8-10% projected at the beginning of the fiscal year.
Our SaaS division delivered exceptional performance with 29.7% growth in ARR, while maintaining a best-in-class net dollar retention rate of 118%. The strategic acquisition of CloudSecure in Q2 2024 has significantly enhanced our cybersecurity offerings, contributing $28.4M in revenue since acquisition. Our hardware segment faced continued challenges with a modest 3.2% revenue increase, though our transition toward higher-margin enterprise solutions has begun yielding positive results as evidenced by the 140bps improvement in gross margin.
The Board of Directors has approved a quarterly dividend of $0.28 per share, representing a 12% increase from the previous quarter. Additionally, we have authorized a new share repurchase program of up to $500 million to be executed over the next 24 months, underscoring our confidence in NexTech's future prospects and our commitment to delivering shareholder value.
As we look ahead to FY2025, we remain cautiously optimistic as we anticipate stabilization in the broader economic landscape. Our robust product pipeline, including the upcoming release of NexTech AI Suite 3.0 in Q2 2025, positions us favorably to capitalize on emerging opportunities in the enterprise AI market. We are reaffirming our long-term target of reaching $5 billion in annual revenue by FY2027, representing a 21% CAGR from our current baseline.
On behalf of the entire NexTech team, I want to express my sincere gratitude for your continued support and confidence in our mission to transform businesses through innovative technology solutions.
Sincerely,
Alexandra Chen
President and Chief Executive Officer
NexTech Solutions, Inc.
MANAGEMENT DISCUSSION AND ANALYSIS
Executive Summary
NexTech Solutions, Inc. ("NexTech," the "Company," "we," "us," or "our") is a leading provider of enterprise software, cloud services, and integrated hardware solutions. This Management Discussion and Analysis (MD&A) presents our financial condition and results of operations for the fiscal year ended December 31, 2024, as compared to the fiscal year ended December 31, 2023.
FY2024 was characterized by strategic expansion of our product portfolio through organic development and targeted acquisitions, notably the $420 million acquisition of CloudSecure, Inc. in April 2024. Despite macroeconomic uncertainties, we achieved consolidated revenue of $2.84 billion, representing a 12.3% increase from $2.53 billion in FY2023. Non-GAAP operating income reached $723 million, or 25.4% of total revenue, compared to $628 million, or 24.8% of total revenue in FY2023.
Our strategic focus remains on accelerating the transition toward a subscription-based business model, expanding our enterprise solutions segment, and leveraging AI technologies across our product suite to enhance customer value proposition. These initiatives have yielded tangible results, with subscription-based revenue now accounting for 68% of total revenue, up from 61% in FY2023.
Industry Trends and Business Environment
The enterprise software and technology sector continued to evolve rapidly in 2024, driven by:
- Accelerated digital transformation initiatives across industries
- Growing emphasis on cybersecurity and data privacy
- Increased adoption of AI and machine learning technologies
These trends present significant growth opportunities for NexTech, particularly in the areas of:
-
Enterprise AI Integration: Businesses increasingly seek AI-powered solutions to enhance operational efficiency and decision-making processes. Our NexTech AI Suite continues to gain traction, with customer adoption increasing 78% year-over-year.
-
Cybersecurity Solutions: Amid escalating cyber threats and regulatory requirements, demand for robust cybersecurity solutions remains strong. The acquisition of CloudSecure has substantially enhanced our capabilities in this high-growth segment.
-
Cloud Migration: Organizations continue to prioritize cloud migration to improve scalability and reduce infrastructure costs. Our Cloud Services division experienced 24.6% growth in FY2024, outpacing the overall market growth of approximately 18%.
-
Supply Chain Resilience: Following persistent disruptions in recent years, enterprises are investing in technologies to enhance supply chain visibility and resilience. Our SupplyIQ platform has experienced accelerated adoption, with new customer acquisitions increasing by 42% year-over-year.
Results of Operations
Revenue
Total revenue for FY2024 was $2.84 billion, representing a 12.3% increase from $2.53 billion in FY2023. The following table presents our revenue by segment:
| Segment | FY2024 Revenue (in millions) | FY2023 Revenue (in millions) | YoY Growth |
|---|---|---|---|
| Software & Services | $1,930 | $1,648 | 17.1% |
| Hardware Solutions | $910 | $882 | 3.2% |
| Total | $2,840 | $2,530 | 12.3% |
Our Software & Services segment, which includes our SaaS offerings, cloud services, cybersecurity solutions, and professional services, generated $1.93 billion in revenue, representing a 17.1% increase from FY2023. This growth was primarily driven by:
- A 29.7% increase in Annual Recurring Revenue (ARR) from our SaaS offerings
- $28.4 million in revenue contribution from the CloudSecure acquisition
- 24.6% growth in our Cloud Services division
- Expansion of our professional services practice, which grew 12.3% year-over-year
Our Hardware Solutions segment, which includes enterprise servers, networking equipment, and integrated systems, generated $910 million in revenue, representing a modest 3.2% increase from FY2023. While this segment faced headwinds from supply chain constraints and component shortages, particularly in H1 2024, our strategic pivot toward higher-margin enterprise solutions has begun yielding positive results.
Geographic Revenue Distribution
| Region | FY2024 Revenue (in millions) | FY2023 Revenue (in millions) | YoY Growth |
|---|---|---|---|
| North America | $1,647 | $1,493 | 10.3% |
| Europe, Middle East, and Africa | $738 | $670 | 10.1% |
| Asia-Pacific | $339 | $279 | 21.5% |
| Latin America | $116 | $88 | 31.8% |
| Total | $2,840 | $2,530 | 12.3% |
Our Asia-Pacific and Latin America regions demonstrated particularly strong performance, growing 21.5% and 31.8% respectively, reflecting our successful execution of market expansion initiatives in these high-growth regions.
Operating Expenses
Total operating expenses for FY2024 were $1.52 billion, or 53.5% of total revenue, compared to $1.36 billion, or 53.8% of total revenue in FY2023. The following table presents our operating expenses by category:
| Category | FY2024 (in millions) | % of Revenue | FY2023 (in millions) | % of Revenue |
|---|---|---|---|---|
| Cost of Revenue | $892 | 31.4% | $809 | 32.0% |
| Research and Development | $326 | 11.5% | $278 | 11.0% |
| Sales and Marketing | $587 | 20.7% | $531 | 21.0% |
| General and Administrative | $215 | 7.6% | $196 | 7.7% |
| Total | $2,020 | 71.1% | $1,814 | 71.7% |
Despite inflationary pressures on labor costs and expenses associated with the CloudSecure acquisition, we effectively managed our operating expenses, reducing them as a percentage of revenue by 60 basis points compared to FY2023. This improvement reflects our ongoing commitment to operational efficiency and disciplined expense management.
Research and Development expenses increased to $326 million, or 11.5% of total revenue, compared to $278 million, or 11.0% of total revenue in FY2023. This increase reflects our strategic investments in AI technologies, cybersecurity capabilities, and next-generation cloud infrastructure.
Operating Income and Margin
GAAP operating income for FY2024 was $623 million, or 21.9% of total revenue, compared to $542 million, or 21.4% of total revenue in FY2023. Non-GAAP operating income, which excludes stock-based compensation expenses, amortization of acquired intangible assets, and acquisition-related expenses, was $723 million, or 25.4% of total revenue, compared to $628 million, or 24.8% of total revenue in FY2023.
The following table reconciles our GAAP to Non-GAAP operating income:
| Item | FY2024 (in millions) | FY2023 (in millions) |
|---|---|---|
| GAAP Operating Income | $623 | $542 |
| Stock-based Compensation | $58 | $49 |
| Amortization of Acquired Intangible Assets | $27 | $21 |
| Acquisition-related Expenses | $15 | $16 |
| Non-GAAP Operating Income | $723 | $628 |
The 60 basis point improvement in our Non-GAAP operating margin reflects our successful execution of margin enhancement initiatives, particularly the shift toward higher-margin subscription-based offerings and the realization of synergies from the CloudSecure acquisition.
Net Income and Earnings Per Share
GAAP net income for FY2024 was $486 million, or $4.82 per diluted share, compared to $418 million, or $4.15 per diluted share in FY2023. Non-GAAP net income, which excludes the items noted above as well as the tax effects of these adjustments, was $562 million, or $5.57 per diluted share, compared to $485 million, or $4.81 per diluted share in FY2023.
Business Segment Analysis
Software & Services Segment
Our Software & Services segment, which includes our SaaS offerings, cloud services, cybersecurity solutions, and professional services, generated $1.93 billion in revenue, representing a 17.1% increase from FY2023. Segment operating income was $598 million, or 31.0% of segment revenue, compared to $491 million, or 29.8% of segment revenue in FY2023.
Key metrics for our Software & Services segment include:
- Annual Recurring Revenue (ARR): $1.72 billion, up 29.7% year-over-year
- Net Dollar Retention Rate: 118%, compared to 116% in FY2023
- Subscription Gross Margin: 78.4%, compared to 77.6% in FY2023
- Average Contract Value: $287,000, up 14.8% year-over-year
The performance of our Software & Services segment was driven by strong customer adoption of our NexTech AI Suite, continued momentum in our Cloud Services division, and the successful integration of CloudSecure's cybersecurity offerings into our product portfolio.
Hardware Solutions Segment
Our Hardware Solutions segment, which includes enterprise servers, networking equipment, and integrated systems, generated $910 million in revenue, representing a 3.2% increase from FY2023. Segment operating income was $182 million, or 20.0% of segment revenue, compared to $165 million, or 18.7% of segment revenue in FY2023.
Key metrics for our Hardware Solutions segment include:
- Gross Margin: 34.2%, compared to 32.8% in FY2023
- Enterprise Solutions Revenue Mix: 68%, compared to 62% in FY2023
- Average Deal Size: $428,000, up 7.0% year-over-year
While our Hardware Solutions segment faced headwinds from supply chain constraints and component shortages, particularly in H1 2024, our strategic pivot toward higher-margin enterprise solutions has begun yielding positive results, as evidenced by the 140 basis point improvement in gross margin.
Financial Condition, Liquidity, and Capital Resources
Balance Sheet
As of December 31, 2024, our cash, cash equivalents, and short-term investments totaled $1.68 billion, compared to $1.92 billion as of December 31, 2023. The decrease primarily reflects the $420 million acquisition of CloudSecure, partially offset by strong operating cash flow generation.
Total assets were $5.72 billion as of December 31, 2024, compared to $5.18 billion as of December 31, 2023. The increase primarily reflects the acquisition of CloudSecure and the capitalization of incremental operating lease right-of-use assets following the expansion of our R&D facilities in Austin, TX and Bangalore, India.
Total liabilities were $2.86 billion as of December 31, 2024, compared to $2.53 billion as of December 31, 2023. The increase primarily reflects the assumption of CloudSecure's liabilities and the issuance of $300 million in senior unsecured notes to partially fund the acquisition.
Shareholders' equity was $2.86 billion as of December 31, 2024, compared to $2.65 billion as of December 31, 2023, reflecting our strong net income generation, partially offset by share repurchases and dividend payments.
Cash Flow
Operating cash flow for FY2024 was $742 million, compared to $685 million in FY2023, representing an 8.3% increase. This improvement reflects our strong operating performance and effective working capital management.
Free cash flow, defined as operating cash flow less capital expenditures, was $638 million for FY2024, compared to $576 million in FY2023, representing a 10.8% increase. Capital expenditures for FY2024 were $104 million, or 3.7% of total revenue, compared to $109 million, or 4.3% of total revenue in FY2023.
Capital Allocation
We remain committed to a balanced capital allocation strategy that prioritizes:
- Organic Growth Investments: We continue to invest in R&D to drive innovation and maintain our technological leadership.
- Strategic Acquisitions: We seek opportunities to expand our product portfolio and addressable market through targeted acquisitions.
- Shareholder Returns: We are committed to returning capital to shareholders through dividends and share repurchases.
During FY2024, we returned $398 million to shareholders, including $112 million in dividends and $286 million in share repurchases. The Board of Directors has approved a 12% increase in our quarterly dividend to $0.28 per share and authorized a new share repurchase program of up to $500 million to be executed over the next 24 months.
Risk Factors
While we remain optimistic about our long-term prospects, our business is subject to various risks and uncertainties, including:
- Macroeconomic Conditions: Persistent inflation, restrictive monetary policy, or economic slowdown could adversely impact enterprise technology spending.
- Competitive Pressures: The enterprise software and technology markets remain highly competitive, with rapid innovation and evolving customer preferences.
- Cybersecurity Threats: As a provider of technology solutions and custodian of sensitive customer data, we face an evolving landscape of cybersecurity threats.
- Supply Chain Disruptions: While improving, global supply chains remain susceptible to disruptions that could impact our hardware business.
- Regulatory Environment: Evolving data privacy regulations, antitrust scrutiny, and international trade policies could impact our operations and growth strategies.
We have implemented comprehensive risk management frameworks and continue to invest in enhancing our operational resilience to mitigate these risks.
Outlook and Forward-Looking Statements
Looking ahead to FY2025, we are providing the following guidance:
- Revenue: $3.15 billion to $3.25 billion, representing 10.9% to 14.4% growth
- Non-GAAP Operating Margin: 25.5% to 26.0%
- Non-GAAP Earnings Per Share: $6.10 to $6.30
- Free Cash Flow: $680 million to $720 million
This guidance reflects our confidence in the continued execution of our strategic initiatives, including the expansion of our AI capabilities, acceleration of our subscription transition, and realization of synergies from the CloudSecure acquisition.
Our long-term financial targets remain unchanged:
- Revenue CAGR: 12% to 15% through FY2027
- Non-GAAP Operating Margin: 27% to 29% by FY2027
- Free Cash Flow Conversion: 85% to 90% of Non-GAAP Net Income
These statements constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from our forecasts due to various factors, including those discussed in the Risk Factors section.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
| ASSETS | December 31, 2024 | December 31, 2023 |
|---|---|---|
| Current assets: | ||
| Cash and cash equivalents | $892,741 | $1,237,629 |
| Short-term investments | $783,526 | $678,392 |
| Accounts receivable, net | $589,327 | $512,489 |
| Inventories | $127,346 | $138,621 |
| Prepaid expenses and other current assets | $98,253 | $82,417 |
| Total current assets | $2,491,193 | $2,649,548 |
| Non-current assets: | ||
| Property and equipment, net | $312,874 | $287,536 |
| Operating lease right-of-use assets | $198,426 | $167,329 |
| Goodwill | $1,823,517 | $1,453,821 |
| Intangible assets, net | $742,935 | $528,762 |
| Deferred tax assets | $67,583 | $54,268 |
| Other non-current assets | $83,472 | $38,736 |
| Total non-current assets | $3,228,807 | $2,530,452 |
| TOTAL ASSETS | $5,720,000 | $5,180,000 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | December 31, 2024 | December 31, 2023 |
|---|---|---|
| Current liabilities: | ||
| Accounts payable | $178,935 | $164,872 |
| Accrued expenses and other current liabilities | $342,617 | $291,835 |
| Deferred revenue, current | $647,283 | $541,726 |
| Operating lease liabilities, current | $42,178 | $38,426 |
| Total current liabilities | $1,211,013 | $1,036,859 |
| Non-current liabilities: | ||
| Long-term debt | $892,500 | $592,500 |
| Deferred revenue, non-current | $217,842 | $193,517 |
| Operating lease liabilities, non-current | $172,648 | $149,687 |
| Deferred tax liabilities | $186,934 | $142,716 |
| Other non-current liabilities | $179,063 | $415,721 |
| Total non-current liabilities | $1,648,987 | $1,494,141 |
| TOTAL LIABILITIES | $2,860,000 | $2,531,000 |
| Commitments and contingencies | ||
| Shareholders' equity: | ||
| Common stock, $0.001 par value | $103 | $104 |
| Additional paid-in capital | $1,178,897 | $1,239,896 |
| Retained earnings | $1,728,000 | $1,442,000 |
| Accumulated other comprehensive loss | $(47,000) | $(33,000) |
| Total shareholders' equity | $2,860,000 | $2,649,000 |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $5,720,000 | $5,180,000 |
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
| Year Ended December 31, 2024 | Year Ended December 31, 2023 | |
|---|---|---|
| Revenue: | ||
| Software & Services | $1,930,000 | $1,648,000 |
| Hardware Solutions | $910,000 | $882,000 |
| Total revenue | $2,840,000 | $2,530,000 |
| Cost of revenue: | ||
| Software & Services | $416,000 | $368,000 |
| Hardware Solutions | $476,000 | $441,000 |
| Total cost of revenue | $892,000 | $809,000 |
| Gross profit | $1,948,000 | $1,721,000 |
| Operating expenses: | ||
| Research and development | $326,000 | $278,000 |
| Sales and marketing | $587,000 | $531,000 |
| General and administrative | $215,000 | $196,000 |
| Amortization of acquired intangible assets | $27,000 | $21,000 |
| Acquisition-related expenses | $15,000 | $16,000 |
| Restructuring charges | $18,000 | $22,000 |
| Total operating expenses | $1,188,000 | $1,064,000 |
| Income from operations | $760,000 | $657,000 |
| Other income (expense): | ||
| Interest income | $48,000 | $52,000 |
| Interest expense | $(37,000) | $(28,000) |
| Other, net | $(10,000) | $(7,000) |
| Total other income, net | $1,000 | $17,000 |
| Income before income taxes | $761,000 | $674,000 |
| Provision for income taxes | $175,000 | $156,000 |
| Net income | $586,000 | $518,000 |
| Net income per share: | ||
| Basic | $5.65 | $4.93 |
| Diluted | $5.57 | $4.87 |
| Weighted-average shares used in computing net income per share: | ||
| Basic | 103,732 | 105,126 |
| Diluted | 105,143 | 106,389 |
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| Year Ended December 31, 2024 | Year Ended December 31, 2023 | |
|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||
| Net income | $586,000 | $518,000 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Depreciation and amortization | $143,000 | $127,000 |
| Stock-based compensation | $58,000 | $49,000 |
| Deferred income taxes | $(8,000) | $(12,000) |
| Provision for doubtful accounts | $5,000 | $4,000 |
| Other non-cash items | $12,000 | $9,000 |
| Changes in operating assets and liabilities: | ||
| Accounts receivable | $(37,000) | $(48,000) |
| Inventories | $17,000 | $(23,000) |
| Prepaid expenses and other assets | $(15,000) | $(7,000) |
| Accounts payable | $(5,000) | $12,000 |
| Accrued expenses and other liabilities | $38,000 | $27,000 |
| Deferred revenue | $83,000 | $69,000 |
| Net cash provided by operating activities | $877,000 | $725,000 |
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||
| Purchases of property and equipment | $(92,000) | $(87,000) |
| Capitalized software development costs | $(12,000) | $(22,000) |
| Purchases of short-term investments | $(583,000) | $(478,000) |
| Maturities and sales of short-term investments | $478,000 | $412,000 |
| Business combinations, net of cash acquired | $(420,000) | $(138,000) |
| Other investing activities | $(5,000) | $(3,000) |
| Net cash used in investing activities | $(634,000) | $(316,000) |
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||
| Proceeds from issuance of long-term debt | $300,000 | $- |
| Repayments of long-term debt | $(100,000) | $(75,000) |
| Payments of debt issuance costs | $(3,000) | $- |
| Repurchases of common stock | $(278,000) | $(192,000) |
| Dividends paid | $(112,000) | $(97,000) |
| Proceeds from issuance of common stock under employee stock plans | $48,000 | $42,000 |
| Taxes paid related to net share settlement of equity awards | $(39,000) | $(31,000) |
| Net cash used in financing activities | $(184,000) | $(353,000) |
| Effect of exchange rate changes on cash and cash equivalents | $(4,000) | $(2,000) |
| Net increase (decrease) in cash and cash equivalents | $55,000 | $54,000 |
| Cash and cash equivalents at beginning of period | $838,000 | $784,000 |
| Cash and cash equivalents at end of period | $893,000 | $838,000 |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||
| Cash paid for interest | $35,000 | $27,000 |
| Cash paid for income taxes, net of refunds | $183,000 | $168,000 |
| SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
| Accrued property and equipment purchases | $8,000 | $6,000 |
| Right-of-use assets obtained in exchange for operating lease liabilities | $42,000 | $37,000 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Description of Business and Summary of Significant Accounting Policies
Organization and Nature of Operations
NexTech Solutions, Inc. ("NexTech," the "Company," "we," "us," or "our") is a leading provider of enterprise software, cloud services, and integrated hardware solutions. The Company was incorporated in Delaware in 2004 and is headquartered in San Francisco, California.
Basis of Presentation and Principles of Consolidation
The accompanying consolidated financial statements include the accounts of NexTech Solutions, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period.
Significant items subject to such estimates and assumptions include, but are not limited to:
- Determination of the fair value of assets acquired and liabilities assumed in business combinations
- Goodwill and intangible asset impairment assessment
- Fair value of stock-based awards
- Fair value of financial instruments
- Realizability of deferred tax assets
- Recognition and measurement of loss contingencies
- Capitalization of software development costs
Actual results could differ materially from those estimates.
Cash, Cash Equivalents, and Investments
Cash and cash equivalents include cash on hand, demand deposits with banks, and highly liquid investments with original maturities of three months or less at the date of purchase. Short-term investments primarily consist of corporate debt securities, U.S. government agency securities, U.S. treasury securities, commercial paper, and certificates of deposit with original maturities greater than three months but less than one year at the date of purchase.
The Company classifies its investments as available-for-sale at the time of purchase and reevaluates such classification at each balance sheet date. Available-for-sale investments are carried at fair value with unrealized gains and losses reported as a component of accumulated other comprehensive income (loss) in shareholders' equity. Realized gains and losses are determined using the specific identification method and are included in "Other, net" in the consolidated statements of operations.
Fair Value Measurements
The Company categorizes assets and liabilities recorded at fair value on the consolidated balance sheets based upon the level of judgment associated with inputs used to measure their fair value. The categories are as follows:
- Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.
- Level 2 - Inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments.
- Level 3 - Inputs are unobservable inputs based on the Company's assumptions.
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company maintains an allowance for doubtful accounts to reserve for potentially uncollectible receivables. The allowance is based on management's assessment of the collectability of specific customer accounts and the aging of the accounts receivable. If circumstances change, such as higher than expected defaults or an unexpected material adverse change in a major customer's ability to meet its financial obligations, the Company's estimate of the recoverability of the amounts due could be reduced by a material amount.
Inventories
Inventories consist primarily of finished goods and component parts and are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out method. The Company regularly reviews inventory quantities on hand and records a provision for excess and obsolete inventories based primarily on its estimated forecast of product demand and production requirements.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets:
- Computer equipment and software: 3 to 5 years
- Furniture and fixtures: 5 to 7 years
- Buildings: 30 years
Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or the estimated useful life of the asset.
Goodwill and Intangible Assets
Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. Goodwill is not amortized but is tested for impairment annually on October 1 or more frequently if events or changes in circumstances indicate that it might be impaired. The Company has the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. If the Company determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then the quantitative goodwill impairment test is not required. If the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or if the Company does not elect the qualitative assessment option, the quantitative goodwill impairment test is performed.
[Note: Document appears to be incomplete - ending at this point]
FORWARD-LOOKING STATEMENTS
This section would typically contain additional forward-looking statements and disclaimers beyond those mentioned earlier in the document.
Deliverable Example
Sample output delivered by the Technical Language Interpreter AI Agent:
NEXTECH SOLUTIONS, INC.
ANNUAL FINANCIAL REPORT
For the Fiscal Year Ended December 31, 2024
TABLE OF CONTENTS
- LETTER TO SHAREHOLDERS
- MANAGEMENT DISCUSSION AND ANALYSIS
- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- FORWARD-LOOKING STATEMENTS
LETTER TO SHAREHOLDERS
Dear Valued Shareholders,
The year 2024 was crucial for NexTech Solutions as we dealt with difficult global economic conditions while continuing to focus on our long-term plans. Even with ongoing issues like rising prices and supply chain problems in the first half of 2024, we achieved a 12.3% rise in revenue compared to the previous year, which was better than our initial expectation of an 8-10% increase.
Our Software as a Service (SaaS) division performed very well, growing its Annual Recurring Revenue (ARR) by 29.7% and keeping a high net dollar retention rate (the percentage of recurring revenue retained from existing customers) of 118%. We bought CloudSecure in the second quarter of 2024, which greatly improved our cybersecurity services and added $28.4 million in revenue since the purchase. Our hardware section had a smaller increase of 3.2% in revenue, but our move towards more profitable enterprise solutions is starting to pay off, as shown by a 1.4% improvement in gross margin (the difference between sales and the cost of goods sold).
The Board of Directors has approved a quarterly dividend (a payment made to shareholders) of $0.28 per share, a 12% increase from the last quarter. We also approved a new program to buy back shares worth up to $500 million over the next two years, showing our belief in the company's future and our commitment to giving value to shareholders.
Looking towards 2025, we are cautiously optimistic, expecting the economy to stabilize. Our strong lineup of products, including the release of NexTech AI Suite 3.0 in the second quarter of 2025, puts us in a good position to take advantage of new opportunities in the enterprise AI market. We are sticking to our long-term goal of reaching $5 billion in annual revenue by 2027, which means growing by 21% each year from where we are now.
Thank you for your continued support and trust in our mission to change businesses through advanced technology.
Sincerely,
Alexandra Chen
President and Chief Executive Officer
NexTech Solutions, Inc.MANAGEMENT DISCUSSION AND ANALYSIS
Executive Summary
NexTech Solutions, Inc. ("NexTech," the "Company," "we," "us," or "our") is a top provider of business software, cloud services, and integrated hardware solutions. This section explains our financial health and operations for the year ending December 31, 2024, compared to the previous year.
In 2024, we expanded our product range through new developments and acquisitions, notably buying CloudSecure, Inc. for $420 million in April. Despite global economic challenges, our total revenue was $2.84 billion, a 12.3% increase from $2.53 billion in 2023. Our non-GAAP operating income (profit from regular business operations) was $723 million, which is 25.4% of our total revenue, up from $628 million or 24.8% in 2023.
We are focused on moving towards a subscription-based business model, growing our enterprise solutions section, and using AI in our products to add value for customers. These efforts have shown results, with subscription-based revenue now making up 68% of our total revenue, up from 61% in 2023.
Industry Trends and Business Environment
The enterprise software and technology sector changed quickly in 2024, driven by:
Enterprise AI Integration: Many businesses want AI-powered solutions to improve efficiency and decision-making. Our NexTech AI Suite is becoming more popular, with a 78% increase in customer adoption year-over-year.
Cybersecurity Solutions: With more cyber threats and rules, demand for strong cybersecurity solutions is high. Buying CloudSecure has greatly improved our abilities in this fast-growing area.
Cloud Migration: Companies are moving to cloud services to be more scalable and reduce costs. Our Cloud Services division grew by 24.6% in 2024, beating the general market growth of about 18%.
Supply Chain Resilience: After ongoing disruptions, businesses are investing in technology to improve supply chain visibility and resilience. Our SupplyIQ platform is seeing faster adoption, with a 42% increase in new customers year-over-year.
Results of Operations
Revenue
For 2024, our total revenue was $2.84 billion, a 12.3% increase from $2.53 billion in 2023. Here is our revenue by segment:
| Segment | FY2024 Revenue (in millions) | FY2023 Revenue (in millions) | YoY Growth |
|---|---|---|---|
| Software & Services | $1,930 | $1,648 | 17.1% |
| Hardware Solutions | $910 | $882 | 3.2% |
| Total | $2,840 | $2,530 | 12.3% |
Our Software & Services segment, which includes SaaS, cloud services, cybersecurity, and professional services, made $1.93 billion, a 17.1% increase from 2023. This was mainly due to:
- A 29.7% rise in Annual Recurring Revenue (ARR) from SaaS
- $28.4 million from the CloudSecure acquisition
- A 24.6% increase in our Cloud Services division
- Growth of 12.3% in our professional services
Our Hardware Solutions segment, which includes servers, networking gear, and systems, made $910 million, a 3.2% increase from 2023. While facing challenges like supply chain issues and part shortages, especially in the first half of 2024, our shift towards more profitable enterprise solutions is starting to show positive results.
Geographic Revenue Distribution
Here is our revenue by region:
| Region | FY2024 Revenue (in millions) | FY2023 Revenue (in millions) | YoY Growth |
|---|---|---|---|
| North America | $1,647 | $1,493 | 10.3% |
| Europe, Middle East, and Africa | $738 | $670 | 10.1% |
| Asia-Pacific | $339 | $279 | 21.5% |
| Latin America | $116 | $88 | 31.8% |
| Total | $2,840 | $2,530 | 12.3% |
Asia-Pacific and Latin America showed strong growth, with 21.5% and 31.8% increases respectively, thanks to our successful market expansion efforts in these areas.
Operating Expenses
Total operating expenses for 2024 were $1.52 billion, or 53.5% of total revenue, down from $1.36 billion, or 53.8% of total revenue in 2023. Here are the operating expenses by category:
| Category | FY2024 (in millions) | % of Revenue | FY2023 (in millions) | % of Revenue |
|---|---|---|---|---|
| Cost of Revenue | $892 | 31.4% | $809 | 32.0% |
| Research and Development | $326 | 11.5% | $278 | 11.0% |
| Sales and Marketing | $587 | 20.7% | $531 | 21.0% |
| General and Administrative | $215 | 7.6% | $196 | 7.7% |
| Total | $2,020 | 71.1% | $1,814 | 71.7% |
Despite rising costs for labor and expenses from the CloudSecure acquisition, we managed our expenses well, reducing them as a percentage of revenue by 0.6%. This shows our focus on efficiency and careful expense management. Research and Development expenses went up to $326 million, or 11.5% of revenue, from $278 million, or 11.0% in 2023, reflecting our investments in AI, cybersecurity, and cloud infrastructure.
Operating Income and Margin
Our GAAP operating income for 2024 was $623 million (21.9% of revenue), compared to $542 million (21.4% of revenue) in 2023. Non-GAAP operating income, which excludes certain expenses, was $723 million (25.4% of revenue), compared to $628 million (24.8% of revenue) in 2023.
Here is the reconciliation of GAAP to Non-GAAP operating income:
| Item | FY2024 (in millions) | FY2023 (in millions) |
|---|---|---|
| GAAP Operating Income | $623 | $542 |
| Stock-based Compensation | $58 | $49 |
| Amortization of Acquired Intangible Assets | $27 | $21 |
| Acquisition-related Expenses | $15 | $16 |
| Non-GAAP Operating Income | $723 | $628 |
The improvement in our Non-GAAP operating margin by 0.6% shows our success in moving towards more profitable subscription-based services and realizing benefits from the CloudSecure acquisition.
Net Income and Earnings Per Share
Our GAAP net income for 2024 was $486 million ($4.82 per diluted share), compared to $418 million ($4.15 per diluted share) in 2023. Non-GAAP net income, excluding certain adjustments, was $562 million ($5.57 per diluted share), up from $485 million ($4.81 per diluted share) in 2023.
Business Segment Analysis
Software & Services Segment
This segment includes our SaaS, cloud services, cybersecurity, and professional services, earning $1.93 billion, a 17.1% increase from 2023. Operating income was $598 million (31.0% of revenue), up from $491 million (29.8% of revenue) in 2023.
Key metrics include:
- Annual Recurring Revenue (ARR): $1.72 billion, up 29.7% year-over-year
- Net Dollar Retention Rate: 118%, compared to 116% in 2023
- Subscription Gross Margin: 78.4%, up from 77.6% in 2023
- Average Contract Value: $287,000, up 14.8% year-over-year
This segment's success was due to strong adoption of our NexTech AI Suite, continued growth in Cloud Services, and integrating CloudSecure's cybersecurity into our products.
Hardware Solutions Segment
This segment includes servers, networking equipment, and systems, earning $910 million, a 3.2% increase from 2023. Operating income was $182 million (20.0% of revenue), up from $165 million (18.7% of revenue) in 2023.
Key metrics include:
- Gross Margin: 34.2%, up from 32.8% in 2023
- Enterprise Solutions Revenue Mix: 68%, up from 62% in 2023
- Average Deal Size: $428,000, up 7.0% year-over-year
While facing supply chain challenges, our focus on more profitable enterprise solutions is showing positive results with a 1.4% improvement in gross margin.
Financial Condition, Liquidity, and Capital Resources
Balance Sheet
As of December 31, 2024, we had $1.68 billion in cash and short-term investments, down from $1.92 billion as of December 31, 2023. This decrease is mainly due to the $420 million CloudSecure purchase, offset by strong cash flow from operations.
Total assets were $5.72 billion as of December 31, 2024, up from $5.18 billion as of December 31, 2023, mainly due to the CloudSecure acquisition and increased operating lease assets from expanding our R&D facilities in Austin, TX, and Bangalore, India.
Total liabilities were $2.86 billion as of December 31, 2024, up from $2.53 billion as of December 31, 2023, mainly due to assuming CloudSecure's liabilities and issuing $300 million in senior notes to help fund the acquisition.
Shareholders' equity was $2.86 billion as of December 31, 2024, up from $2.65 billion as of December 31, 2023, due to strong net income, partly offset by share buybacks and dividends.
Cash Flow
Operating cash flow for 2024 was $742 million, up from $685 million in 2023, an 8.3% increase, reflecting strong operations and good working capital management.
Free cash flow (operating cash flow minus capital spending) was $638 million for 2024, up from $576 million in 2023, a 10.8% increase. Capital spending for 2024 was $104 million (3.7% of revenue), down from $109 million (4.3% of revenue) in 2023.
Capital Allocation
We are committed to a balanced strategy focusing on:
-
Organic Growth Investments: Investing in R&D for innovation and maintaining leadership.
-
Strategic Acquisitions: Looking for opportunities to expand our product range and market through acquisitions.
-
Shareholder Returns: Returning capital to shareholders via dividends and buybacks.
In 2024, we returned $398 million to shareholders, including $112 million in dividends and $286 million in buybacks. The Board approved a 12% increase in quarterly dividends to $0.28 per share and a new $500 million buyback program over the next two years.
Risk Factors
Our business faces various risks, including:
-
Macroeconomic Conditions: Issues like inflation, policy changes, or economic slowdowns can reduce technology spending.
-
Competitive Pressures: The market is competitive with rapid changes and evolving customer needs.
-
Cybersecurity Threats: As a technology provider, we face evolving cybersecurity risks.
-
Supply Chain Disruptions: Global supply chains can still face disruptions affecting our hardware business.
-
Regulatory Environment: Changing data privacy laws, antitrust reviews, and trade policies can impact our operations.
We have risk management plans and continue to invest in our resilience to reduce these risks.
Outlook and Forward-Looking Statements
For 2025, we expect:
- Revenue between $3.15 billion and $3.25 billion, a 10.9% to 14.4% increase
- Non-GAAP Operating Margin between 25.5% and 26.0%
- Non-GAAP Earnings Per Share between $6.10 and $6.30
- Free Cash Flow between $680 million and $720 million
These expectations show confidence in our strategic plans, including expanding AI capabilities and subscription transition, and realizing benefits from the CloudSecure acquisition.
Our long-term goals remain:
- Revenue growth of 12% to 15% per year through 2027
- Non-GAAP Operating Margin between 27% and 29% by 2027
- Free Cash Flow Conversion between 85% and 90% of Non-GAAP Net Income
These statements are forward-looking and actual results may differ due to various factors, including those in the Risk Factors section.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
ASSETS
| December 31, 2024 | December 31, 2023 | |
|---|---|---|
| Current assets: | ||
| Cash and cash equivalents | $892,741 | $1,237,629 |
| Short-term investments | $783,526 | $678,392 |
| Accounts receivable, net of allowance for doubtful accounts of $14,872 and $12,643 | $589,327 | $512,489 |
| Inventories | $127,346 | $138,621 |
| Prepaid expenses and other current assets | $98,253 | $82,417 |
| Total current assets | $2,491,193 | $2,649,548 |
| Non-current assets: | ||
| Property and equipment, net | $312,874 | $287,536 |
| Operating lease right-of-use assets | $198,426 | $167,329 |
| Goodwill | $1,823,517 | $1,453,821 |
| Intangible assets, net | $742,935 | $528,762 |
| Deferred tax assets | $67,583 | $54,268 |
| Other non-current assets | $83,472 | $38,736 |
| Total non-current assets | $3,228,807 | $2,530,452 |
| TOTAL ASSETS | $5,720,000 | $5,180,000 |
LIABILITIES AND SHAREHOLDERS' EQUITY
| December 31, 2024 | December 31, 2023 | |
|---|---|---|
| Current liabilities: | ||
| Accounts payable | $178,935 | $164,872 |
| Accrued expenses and other current liabilities | $342,617 | $291,835 |
| Deferred revenue, current | $647,283 | $541,726 |
| Operating lease liabilities, current | $42,178 | $38,426 |
| Total current liabilities | $1,211,013 | $1,036,859 |
| Non-current liabilities: | ||
| Long-term debt | $892,500 | $592,500 |
| Deferred revenue, non-current | $217,842 | $193,517 |
| Operating lease liabilities, non-current | $172,648 | $149,687 |
| Deferred tax liabilities | $186,934 | $142,716 |
| Other non-current liabilities | $179,063 | $415,721 |
| Total non-current liabilities | $1,648,987 | $1,494,141 |
| TOTAL LIABILITIES | $2,860,000 | $2,531,000 |
| Commitments and contingencies | ||
| Shareholders' equity: | ||
| Common stock, $0.001 par value; 200,000,000 shares authorized; 102,784,352 and 104,267,893 shares issued and outstanding | $103 | $104 |
| Additional paid-in capital | $1,178,897 | $1,239,896 |
| Retained earnings | $1,728,000 | $1,442,000 |
| Accumulated other comprehensive loss | $(47,000) | $(33,000) |
| Total shareholders' equity | $2,860,000 | $2,649,000 |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $5,720,000 | $5,180,000 |
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
| Year Ended December 31, 2024 | Year Ended December 31, 2023 | |
|---|---|---|
| Revenue: | ||
| Software & Services | $1,930,000 | $1,648,000 |
| Hardware Solutions | $910,000 | $882,000 |
| Total revenue | $2,840,000 | $2,530,000 |
| Cost of revenue: | ||
| Software & Services | $416,000 | $368,000 |
| Hardware Solutions | $476,000 | $441,000 |
| Total cost of revenue | $892,000 | $809,000 |
| Gross profit | $1,948,000 | $1,721,000 |
| Operating expenses: | ||
| Research and development | $326,000 | $278,000 |
| Sales and marketing | $587,000 | $531,000 |
| General and administrative | $215,000 | $196,000 |
| Amortization of acquired intangible assets | $27,000 | $21,000 |
| Acquisition-related expenses | $15,000 | $16,000 |
| Restructuring charges | $18,000 | $22,000 |
| Total operating expenses | $1,188,000 | $1,064,000 |
| Income from operations | $760,000 | $657,000 |
| Other income (expense): | ||
| Interest income | $48,000 | $52,000 |
| Interest expense | $(37,000) | $(28,000) |
| Other, net | $(10,000) | $(7,000) |
| Total other income, net | $1,000 | $17,000 |
| Income before income taxes | $761,000 | $674,000 |
| Provision for income taxes | $175,000 | $156,000 |
| Net income | $586,000 | $518,000 |
| Net income per share: | ||
| Basic | $5.65 | $4.93 |
| Diluted | $5.57 | $4.87 |
| Weighted-average shares used in computing net income per share: | ||
| Basic | 103,732 | 105,126 |
| Diluted | 105,143 | 106,389 |
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| Year Ended December 31, 2024 | Year Ended December 31, 2023 | |
|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||
| Net income | $586,000 | $518,000 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Depreciation and amortization | $143,000 | $127,000 |
| Stock-based compensation | $58,000 | $49,000 |
| Deferred income taxes | $(8,000) | $(12,000) |
| Provision for doubtful accounts | $5,000 | $4,000 |
| Other non-cash items | $12,000 | $9,000 |
| Changes in operating assets and liabilities: | ||
| Accounts receivable | $(37,000) | $(48,000) |
| Inventories | $17,000 | $(23,000) |
| Prepaid expenses and other assets | $(15,000) | $(7,000) |
| Accounts payable | $(5,000) | $12,000 |
| Accrued expenses and other liabilities | $38,000 | $27,000 |
| Deferred revenue | $83,000 | $69,000 |
| Net cash provided by operating activities | $877,000 | $725,000 |
| Year Ended December 31, 2024 | Year Ended December 31, 2023 | |
|---|---|---|
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||
| Purchases of property and equipment | $(92,000) | $(87,000) |
| Capitalized software development costs | $(12,000) | $(22,000) |
| Purchases of short-term investments | $(583,000) | $(478,000) |
| Maturities and sales of short-term investments | $478,000 | $412,000 |
| Business combinations, net of cash acquired | $(420,000) | $(138,000) |
| Other investing activities | $(5,000) | $(3,000) |
| Net cash used in investing activities | $(634,000) | $(316,000) |
| Year Ended December 31, 2024 | Year Ended December 31, 2023 | |
|---|---|---|
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||
| Proceeds from issuance of long-term debt | $300,000 | $- |
| Repayments of long-term debt | $(100,000) | $(75,000) |
| Payments of debt issuance costs | $(3,000) | $- |
| Repurchases of common stock | $(278,000) | $(192,000) |
| Dividends paid | $(112,000) | $(97,000) |
| Proceeds from issuance of common stock under employee stock plans | $48,000 | $42,000 |
| Taxes paid related to net share settlement of equity awards | $(39,000) | $(31,000) |
| Net cash used in financing activities | $(184,000) | $(353,000) |
| Year Ended December 31, 2024 | Year Ended December 31, 2023 | |
|---|---|---|
| Effect of exchange rate changes on cash and cash equivalents | $(4,000) | $(2,000) |
| Net increase (decrease) in cash and cash equivalents | $55,000 | $54,000 |
| Cash and cash equivalents at beginning of period | $838,000 | $784,000 |
| Cash and cash equivalents at end of period | $893,000 | $838,000 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
| Year Ended December 31, 2024 | Year Ended December 31, 2023 | |
|---|---|---|
| Cash paid for interest | $35,000 | $27,000 |
| Cash paid for income taxes, net of refunds | $183,000 | $168,000 |
| Accrued property and equipment purchases | $8,000 | $6,000 |
| Right-of-use assets obtained in exchange for operating lease liabilities | $42,000 | $37,000 |
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Description of Business and Summary of Significant Accounting Policies
Organization and Nature of Operations
NexTech Solutions, Inc. ("NexTech," the "Company," "we," "us," or "our") is a top provider of enterprise software, cloud services, and integrated hardware solutions. The Company was established in Delaware in 2004 and is based in San Francisco, California.
Basis of Presentation and Principles of Consolidation
The financial statements include NexTech Solutions, Inc. and its subsidiaries. All transactions within the company are removed in consolidation. The financial statements follow the accounting rules generally accepted in the United States ("GAAP").
Use of Estimates
Preparing financial statements according to GAAP needs management to estimate and assume certain things that affect reported assets and liabilities, as well as revenue and expenses. Important areas needing estimates include the fair value of assets and liabilities in business purchases, impairment of goodwill and intangible assets, value of stock-based rewards, financial instruments, deferred tax assets, loss contingencies, and software development costs. Actual results could be different from these estimates.
Cash, Cash Equivalents, and Investments
Cash and cash equivalents include money on hand, bank deposits, and investments that can be quickly turned into cash within three months or less. Short-term investments include corporate and government securities, commercial paper, and certificates of deposit with maturities of more than three months but less than a year. Investments are marked as available-for-sale and carried at fair value, with gains and losses reported in shareholders' equity.
Fair Value Measurements
Assets and liabilities at fair value are categorized based on input levels used to measure their value:
- Level 1: Unadjusted quoted prices for identical items in active markets.
- Level 2: Quoted prices for similar items or inputs observable for the items directly or indirectly.
- Level 3: Unobservable inputs based on the company's assumptions.
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable are recorded at the invoiced amount with no interest. An allowance for doubtful accounts is kept to cover possible uncollectible receivables, based on specific customer account collectability and the age of accounts receivable.
Inventories
Inventories, mainly finished goods and parts, are valued at the lower of cost or net realizable value using the first-in, first-out method. Inventory levels are reviewed regularly for excess and obsolete items based on expected demand and production needs.
Property and Equipment
Property and equipment are valued at cost minus depreciation, calculated using the straight-line method over the assets' useful lives (three to five years for computer equipment, five to seven years for furniture, and thirty years for buildings). Leasehold improvements are amortized over the lease term or asset life, whichever is shorter.
Goodwill and Intangible Assets
Goodwill, the excess purchase price over the fair value of net assets in acquisitions, is not amortized but tested for impairment at least once a year or when needed. A qualitative assessment can be done first to decide if a quantitative goodwill impairment test is necessary. If the fair value of a reporting unit is likely less than its carrying amount, a quantitative test is required.
Glossary
- Annual Recurring Revenue (ARR): The amount of money a company expects to receive from subscriptions every year.
- Basis Points (bps): A unit of measure used in finance to describe the percentage change in value. One basis point is equal to 1/100th of 1%, or 0.01%.
- Cash Equivalents: Short-term, highly liquid investments that are easily convertible to known amounts of cash and have a short maturity period.
- Deferred Revenue: Money received by a company for products or services yet to be delivered or completed.
- Diluted Share: A measure of a company's earnings per share if all convertible securities were exercised.
- Fair Value: The estimated market value of an asset or liability.
- GAAP (Generally Accepted Accounting Principles): A common set of accounting principles, standards, and procedures used by companies in the U.S. to compile their financial statements.
- Goodwill: An intangible asset that arises when a buyer acquires an existing business, representing the excess of the purchase price over the fair market value of its net identifiable assets.
- Gross Margin: The difference between revenue and cost of goods sold, divided by revenue, expressed as a percentage.
- Net Dollar Retention Rate: A measure of how much revenue is retained from existing customers over a time period, excluding revenue from new customers.
- Non-GAAP Operating Income: A measure of a company's operating performance, excluding certain expenses like stock-based compensation and amortization of acquired assets.
- Operating Lease Liabilities: Future payments a company is obligated to make for the use of leased assets.
- Par Value: The face value of a bond or the stock value stated in the corporate charter.
- Provisions for Doubtful Accounts: An estimated amount set aside for accounts receivable that may not be collected.
- Subscription Gross Margin: The profit margin from subscription services, calculated as revenue minus the cost of revenue, divided by revenue.
- Weighted-average Shares: The number of shares outstanding during a specific period, weighted by the amount of time they were outstanding.
Feature Release Outline Agent
Generates a simple outline for each feature flag, covering the overview, value proposition, and basic user flow.
Unified Calendar Insight Agent
Aggregates events from multiple calendar platforms into a unified, intelligent interface that offers real-time synchronization, context-aware summaries, and personalized scheduling recommendations.
Synthetic Training Data Creation Agent
Generates realistic and targeted synthetic data to train machine learning models for intelligent agents, ensuring the data aligns with specific use cases and workflows for better performance.
Technical Language Interpreter AI Agent
Transforms enterprise jargon into department-specific language, bridging gaps across teams by translating complex content into role-relevant insights.
Jira Conversational Insights Agent
Leverages JQL and NLP to provide quick, context-driven insights from Jira tickets, attachments, and procedural documents.
Multi-format Document Summary Agent
Automatically generates concise, contextual summaries from documents of various formats to speed up reviews, decisions, and knowledge sharing.