In September 2024, the Company acquired all outstanding shares of WarpStream Labs, Inc. (“WarpStream Labs”), an Apache Kafka-compatible data streaming platform. The Company acquired WarpStream Labs primarily for its talent and to add WarpStream Labs’ BYOC data streaming solution to the Company’s product portfolio to serve customers who want a cloud-native streaming offering in their own cloud environment.

The total purchase consideration of $135.1 million consisted of $132.5 million of cash and $2.6 million for the fair value of 132,476 shares of the Company’s Class A common stock. In allocating the purchase consideration, the Company recorded $16.9 million of cash acquired, $6.8 million as a developed technology intangible asset, to be amortized on a straight-line basis over an estimated useful life of five years, and $112.4 million of goodwill. The goodwill is primarily attributed to the assembled workforce and expected synergies arising from the acquisition, and is not deductible for income tax purposes.

The Company also entered into holdback agreements with certain employees of WarpStream Labs, pursuant to which the Company issued $7.9 million in restricted Class A common stock and will pay up to an aggregate of $76.2 million in cash. The vesting and payout of the restricted common stock and holdback cash is subject to continued employment over three years and achievement of certain milestones, and is recorded as post-combination compensation expense within operating expenses over the requisite service period for accounting purposes. The Company deposited $8.6 million of the holdback cash into an escrow account upon closing of the acquisition, and the Company recorded this amount within prepaid expenses and other current assets on the consolidated balance sheets. Total compensation expense related to the holdback agreements was $29.8 million and $9.5 million for the years ended December 31, 2025 and 2024, respectively. See Note 11, Stockholders’ Equity, for further information.

In January 2023, the Company acquired all outstanding shares of immerok GmbH (“Immerok”), an Apache Flink stream processing managed services company, for purchase consideration of $54.9 million in cash. The Company acquired Immerok primarily for its talent and developed technology. In allocating the purchase consideration, the Company recorded $9.1 million of cash acquired, $2.6 million as a developed technology intangible asset, to be amortized on a straight-line basis over an estimated useful life of five years, and $43.5 million of goodwill. The goodwill is primarily attributed to the assembled workforce and expected synergies arising from the acquisition, and is not deductible for income tax purposes.

The Company also entered into holdback agreements with certain employees of Immerok, pursuant to which the Company could pay up to an aggregate of $52.3 million in cash. The vesting and payout of the holdback is subject to continued employment and achievement of certain milestones over a minimum of three years, and is recorded as post-combination compensation expense within operating expenses over the requisite service period for accounting purposes. Compensation expense related to the holdback agreements was $4.3 million, $17.4 million, and $17.4 million for the years ended December 31, 2025, 2024, and 2023, respectively.

Transaction costs associated with each of the business combinations above were not material during the years ended December 31, 2025, 2024, and 2023 and were recorded as general and administrative expenses in the consolidated statements of operations. From the respective dates of acquisition, the results of operations of the business combinations included in the Company’s consolidated financial statements were not material. Pro forma results of operations have not been presented because they were not material to the consolidated results of operations.

There were no additions to goodwill during the year ended December 31, 2025. Additions to goodwill were $112.4 million during the year ended December 31, 2024. Goodwill as of December 31, 2025 and 2024 was $164.4 million.