As of the Acquisition Date, we assumed outstanding equity incentive awards under the following Ansys equity incentive plans: (i) the Fourth Amended and Restated Ansys, Inc. 1996 Stock Option and Grant Plan, (ii) the Fifth Amended and Restated Ansys, Inc. 1996 Stock Option and Grant Plan, and (iii) the Ansys, Inc. 2021 Equity and Incentive Compensation Plan (each, an Assumed Equity Plan, and collectively the Assumed Equity Plans). The awards under the Assumed Equity Plans, previously issued in the form of stock options and RSUs, were generally settled as follows:

(1) Each award of Ansys restricted stock units (RSUs) held by non-employee directors and specified employees that were outstanding immediately prior to the Acquisition Date (the specified RSUs), including any RSUs deferred as part of Ansys' director deferred compensation program, was canceled and terminated and converted into the right to receive the Merger Consideration as of the Acquisition Date.

(2) Each award of Ansys stock options and RSUs (other than specified RSUs) that was outstanding and unvested immediately prior to the Acquisition Date was assumed by us (each, an Assumed Option and Assumed RSU, and collectively, the Assumed Equity Awards) and converted to stock options exercisable and RSUs settleable in the number of shares of our common stock equal to the product of (i) the number of Ansys shares underlying such Assumed Equity Awards as of immediately prior to the Acquisition Date multiplied by (ii) the conversion ratio defined in the Merger Agreement. Any Ansys performance-based RSUs that were assumed by us will only be

subject to time-based vesting. The number of Ansys shares underlying the performance-based RSUs for which the performance period was not complete as of the Acquisition Date was based on the target level of performance, and the number of Ansys shares underlying the performance-based RSUs for which the performance period was complete as of the Acquisition Date was based on the actual level of performance. The Assumed Equity Awards generally retain all of the rights, terms and conditions of the respective plans under which they were originally granted, including the same service-based vesting schedule, applicable thereto.

As of the Acquisition Date, the estimated fair value of the Assumed Equity Awards was $639.7 million, of which $131.0 million was recognized as goodwill and the balance of $508.7 million will be recognized as stock-based compensation expense over the remainder term of the Assumed Equity Awards. The fair value of the Assumed Equity Awards for services rendered through the Acquisition Date was recognized as a component of the purchase consideration, with the remaining fair value related to the post-combination services to be recorded as stock-based compensation over the remaining vesting period. A total of 1.1 million shares of our common stock underlying the Assumed Equity Awards that will be recognized as stock-based compensation expense have an estimated weighted average fair value at the Acquisition Date of $453.83 per share.

During the three months ended July 31, 2025, stock-based compensation expense included $67.2 million related to the Assumed Equity Awards in connection with the Ansys Merger. As of July 31, 2025, we had $432.5 million of total unrecognized stock-based compensation expense relating to RSUs underlying the outstanding Assumed Equity Awards, which is expected to be recognized over a weighted-average period of 1.74 years.


	Three Months Ended July 31,				Nine Months Ended July 31,
	2025		2024		2025		2024
	(in thousands)
Cost of products	$	22,943	$	14,645	$	66,470	$	44,824
Cost of maintenance and service	10,222		9,677		28,715		28,126
Research and development expense	113,861		89,279		326,274		269,087
Sales and marketing expense	45,564		30,251		117,214		91,811
General and administrative expense	75,133		20,502		117,236		58,702
Stock-based compensation expense from continuing operations before taxes	267,723		164,354		655,909		492,550
Stock-based compensation expense from discontinued operations before taxes	—		17,185		—		47,476
Total stock-based compensation expense before taxes	267,723		181,539		655,909		540,026
Income tax benefit	(38,686)		(29,972)		(94,779)		(89,158)
Stock-based compensation expense after taxes	$	229,037	$	151,567	$	561,130	$	450,868

During the three and nine months ended July 31, 2025 and 2024, we recognized stock-based compensation expense relating to RSUs granted to senior executives with certain market, performance and service conditions (market-based RSUs). The grant date fair value of the market-based RSUs and the assumptions used in the Monte Carlo simulation model to determine the grant date fair value during the periods are as follows:


	Nine Months Ended July 31,
		2025	2024
Expected life (in years)		2.67 - 2.79	2.89
Risk-free interest rate		3.90% - 4.39%	4.41%
Volatility		33.40% - 34.72%	34.03%
Grant date fair value		$409.94 - $464.17	$600.29

As of July 31, 2025, we had $1.7 billion of total unrecognized stock-based compensation expense relating to options, RSUs and restricted stock awards, which is expected to be recognized over a weighted-average period of 2.0 years. As of July 31, 2025, we had $109.2 million of unrecognized stock-based compensation expense relating