Rippling’s goal is to decompose all business software into its underlying constituent elements and then rebuild this software across each vertical out of these common lego blocks. So, yes, in each software vertical, we have a different set of competitors. But our long-term competition is with companies that share our point of view that business software should be built in this particular way—companies that believe in building many thin applications on top of thick platform layers, with data layers underneath. There are four companies in particular that seem to think about the world in this way—Salesforce, Microsoft, Oracle, and ServiceNow. None of them are direct competitors to Rippling today, but if you believe that point-SaaS is doomed, then what will replace it will probably look a lot like those four companies. Seizing the Means of Distribution Compound software businesses have inherent CAC and terminal operating margin advantages over point-SaaS competitors. Compound software businesses, including Rippling, have: • A longer and deeper R&D investment phase, eventually followed by better R&D ef昀椀ciency. Up front, there is simply more to build. Because Rippling is building multiple business lines in parallel, the engineering investment required is a multiple of what you’d expect for a point-SaaS company. 2 of ARR, think Instead of thinking of Rippling as a single business at $XXXM+ of it as a collection of a dozen or more businesses, each of which are still sub-scale. They’re each on a much steeper portion of the growth curve than you’d expect from our total revenue and are much further from hitting any kind of saturation or exhausting their TAM, but they’re also earlier in the R&D lifecycle and still require substantial up-front investment to build the product. In our 2024 operating plan, we expect to spend 46% of our revenue on R&D 3 we expect to spend on a cash basis. Adding in stock-based compensation, between 67% and 82% of our revenue on R&D, depending on whether you value this stock at our 409a or last preferred round valuation. This R&D spend is what’s most anomalous about Rippling’s 昀椀nances today. 2 Source: Rippling Internal Data. Financial 昀椀gures are under review and subject to change. Note: Data as of Mar-2024. 3 Source: Rippling Internal Data. Note: Figures represent our 2024 Board Plan. Stock-based compensation expense includes both options and RSUs. RSU expense is calculated based on time-vested shares * the 409a value or preferred value at the time of grant.