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We continue to experience rapid growth in our headcount and operations.
−Removed: In particular, we grew from 570 employees as of December 31, 2015, to 1,275 employees as of December 31, 2019.
We have also significantly increased the size of our customer base over the last several years.
−Removed: We anticipate that we will continue to significantly expand our operations and headcount in the near term.
+Added: We anticipate we will continue to significantly expand our operations and headcount in the near term.
Our growth has placed, and any future growth will place, a significant strain on our management, administrative, operational, and financial infrastructure.
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Any of these difficulties could adversely impact our business performance and results of operations.
−Removed: Our rapid growth also makes it difficult to evaluate our future prospects.
−Removed: Our ability to forecast our future operating results is subject to a number of uncertainties, including our ability to plan for and model future growth.
−Removed: If our assumptions regarding these uncertainties, which we use to plan our business, are incorrect or change in reaction to changes in our markets, or if we do not address these risks successfully, our operating and financial results could differ materially from our expectations, our business could suffer and the trading price of our stock may decline.
If we are unable to sustain our revenue growth rate, we may not achieve or maintain profitability in the future.
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Although we have experienced rapid revenue growth historically, we may not continue to grow as rapidly in the future, and our revenue growth rates may decline.
−Removed: Any success that we may experience in the future will depend in large part on our ability to, among other things:
+Added: Any success we may experience in the future will depend in large part on our ability to, among other things:
• Maintain and expand our customer base;
• Increase revenue from existing customers through increased or broader use of our platform within their organizations;
−Removed: • further penetrate the existing industry verticals that we serve and expand into other industry verticals;
−Removed: • improve the performance and capabilities of our platform through research and development;
+Added: • Further penetrate the existing industry verticals we serve and expand into other industry verticals;
• Continue to successfully expand our business domestically and internationally.
−Removed: • successfully compete with other companies.
If we are unable to maintain consistent revenue or revenue growth, our stock price could be volatile, and it may be difficult to achieve and maintain profitability.
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As usage of our platform grows and as customers use our platform for more advanced and more frequent projects, we may need to devote additional resources to improving our software architecture, integrating with third-party systems, and maintaining infrastructure performance.
−Removed: In addition, we will need to appropriately scale our internal business as well as grow
−Removed: our partner services systems, including our professional services organization and operations, to serve our growing customer base, particularly as our customer base expands over time.
+Added: In addition, we will need to appropriately scale our internal business operations as well as grow our partner services systems, including our Customer Success organization and operations, to serve our growing customer base, particularly as our customer base expands over time.
Any failure of or delay in these efforts could cause impaired system performance and reduced customer satisfaction.
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We could also face inefficiencies or operational failures as a result of our efforts to scale our infrastructure.
−Removed: Moreover, there are inherent risks associated with upgrading, improving and expanding our information technology systems.
−Removed: We cannot be sure that the expansion and improvements to our infrastructure and systems will be fully or effectively implemented on a timely basis, if at all.
+Added: Moreover, there are
+Added: inherent risks associated with upgrading, improving, and expanding our information technology systems.
+Added: We cannot be sure the expansion and improvements to our infrastructure and systems will be fully or effectively implemented on a timely basis, if at all.
These efforts may reduce revenue and our margins and adversely impact our financial results.
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Sales of our software platform account for substantially all of our subscriptions revenue and are the source of substantially all of our professional services revenue.
−Removed: We expect that we will be substantially dependent on our platform to generate revenue for the foreseeable future.
−Removed: As a result, our operating results could suffer due to:
−Removed: • any decline in demand for our platform;
+Added: We expect we will be substantially dependent on our platform to generate revenue for the foreseeable future.
+Added: As a result, our operating results or revenue growth rates could suffer due to:
+Added: • Any decline or lower than expected growth in demand for our platform;
• The failure of our platform to achieve continued market acceptance;
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• Sensitivity to current or future prices offered by us or competing solutions;
+Added: • The inability to further penetrate our existing industry verticals or expand our customer base;
• Our inability to release enhanced versions of our platform on a timely basis.
−Removed: If the market for our platform grows more slowly than anticipated or if demand for our platform does not grow as quickly as anticipated, whether as a result of competition, pricing sensitivities, product obsolescence, technological change, unfavorable economic conditions, uncertain geopolitical environment, budgetary constraints of our customers or other factors, we may not be able to grow our revenue.
−Removed: If we are unable to further penetrate our existing industry verticals or expand our customer base, our revenue may not grow and our operating results may be harmed.
−Removed: Moreover, if we fail to comply with government contracting regulations, we could suffer a loss of revenue or incur price adjustments or other penalties.
−Removed: Currently, a significant majority of our revenue is derived from companies in the financial services, pharmaceuticals, insurance and life sciences industries, and from the U.S.
−Removed: federal government.
−Removed: We are investing substantial resources to expand and train our sales force to enable it to better understand these industry verticals and drive sales to customers in these industry verticals, but there can be no assurance that these investments will be successful.
−Removed: Further, an important part of our strategy is to expand our customer base in a wide variety of industries.
−Removed: We have less experience in some industries and our expansion may require us to grow our expertise in certain areas and add sales and support personnel possessing familiarity with the relevant industries.
−Removed: There may be competitors in these verticals that may be entrenched and difficult to dislodge.
−Removed: As a result of these and other factors, our efforts to expand our customer base may be expensive and may not succeed, and we therefore may be unable to grow our revenue.
−Removed: If we fail to further penetrate our existing industry verticals or expand our customer base, we may be unable to grow our revenue and our operating results may be harmed.
Our sales cycle is long and unpredictable, particularly with respect to large customers, and our sales efforts require considerable time and expense, all of which may cause our operating results to fluctuate.
−Removed: Our operating results may fluctuate, in part, because of the resource-intensive nature of our sales efforts, the length and variability of the sales cycle of our platform and the difficulty that we face in adjusting our short-term operating expenses.
+Added: Our operating results may fluctuate, in part, because of the resource-intensive nature of our sales efforts, the length and variability of the sales cycle of our platform, and the difficulty we face in adjusting our short-term operating expenses.
Our operating results depend in part on sales to large customers and promotion of increasing usage by those large customers.
−Removed: The length of our sales cycle, from initial evaluation to delivery of, and payment for, our software, varies substantially from customer to customer.
−Removed: Our sales cycle can extend to more than a year for certain large customers.
−Removed: It is difficult to predict if or when we will make a sale to a potential customer.
−Removed: Prospective customers, especially larger organizations, often undertake a
−Removed: prolonged evaluation process, which typically involves not only our platform, but also those of our competitors and can last from four to nine months or longer.
−Removed: We may spend substantial time, effort and money on our sales and marketing efforts without any assurance that our efforts will result in revenue.
−Removed: In addition, events affecting our customers’ businesses may occur during the sales cycle that could affect the size or timing of a purchase, contributing to more unpredictability in our business and operating results.
+Added: The length of our sales cycle, from initial evaluation to delivery of and payment for our software, varies substantially from customer to customer, and it is difficult to predict if or when we will make a sale to a potential customer.
+Added: We may spend substantial time, effort, and money on our sales and marketing efforts without any assurance our efforts will result in revenue.
As a result of these factors, we may face greater costs, longer sales cycles, and less predictability in the future.
In the past, certain individual sales have occurred in periods later than we expected or have not occurred at all.
−Removed: The loss or delay of one or more large transactions in a quarter could impact our operating results for that quarter and any future quarters in which such revenue otherwise would have been recognized.
+Added: The loss or delay of one or more large transactions in a quarter could impact our operating results for that quarter and any future quarters in which such revenue otherwise would have been recognized because a substantial portion of our expenses are relatively fixed in the short-term.
As a result of these factors, it is difficult for us to forecast our revenue accurately in any quarter, and our quarterly results may fluctuate substantially.
−Removed: Further, because a substantial portion of our expenses are relatively fixed in the short-term, our operating results will suffer if revenue falls below our expectations in a particular quarter.
Market adoption of low-code platforms to drive digital transformation is new and unproven and may not grow as we expect, which may harm our business and prospects.
We believe our future success will depend in large part on growth in the demand for low-code platforms to drive software-enabled digital transformation.
−Removed: We have customers in a wide variety of industries, including financial services, life sciences, government, telecommunications, media, energy, manufacturing and transportation.
It is difficult to predict customer demand for our platform, renewal rates, the rate at which existing customers expand their subscriptions, the size and growth rate of the market for our platform, the entry of competitive products, or the success of existing competitive products.
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Any expansion in our addressable market depends on a number of factors, including businesses continuing to desire to differentiate themselves through software-enabled digital transformation, increasing their reliance on low-code solutions, changes in the competitive landscape, technological changes, budgetary constraints of our customers, and changes in economic conditions.
−Removed: If our platform does not achieve widespread adoption or there is a reduction in demand for low-code solutions caused by a lack of customer acceptance, technological challenges, competing technologies and products, decreases in corporate or IT infrastructure spending, weakening economic conditions, or other factors, it could result in reduced customer purchases, reduced renewal rates and decreased revenue, any of which will adversely affect our business, operating results and financial condition.
+Added: If our platform does not achieve widespread adoption or there is a reduction in demand for low-code solutions caused by these factors, it could result in reduced customer purchases, reduced renewal rates, and decreased revenue, any of which will adversely affect our business, operating results, and financial condition.
We currently face significant competition.
The markets for low-code automation platforms, business process management, case management software, and custom software are highly competitive, rapidly evolving, and have relatively low barriers to entry.
−Removed: The principal competitive factors in our market include:
+Added: The principal competitive factors in our market include the following:
platform features, reliability, performance, and effectiveness;
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If we fail to compete effectively with respect to any of these competitive factors, we may fail to attract new customers or lose or fail to renew existing customers, which would cause our operating results to suffer.
−Removed: We primarily compete with low-code automation platforms sold by companies such as salesforce.com, ServiceNow, Outsystems, Mendix and Bizagi.
−Removed: We also compete with companies that provide business process management and case management software, including Oracle, Pegasystems, SAP, Microsoft and K2.
−Removed: Further, because our platform is used by our customers to create custom applications, there are software companies that offer commercial, off-the-shelf applications as well as custom software solutions that compete with us.
−Removed: In addition, large software and internet companies may seek to enter our primary markets.
+Added: Our main competitors fall into three categories:
+Added: (1) providers of custom software and customer software solutions that address, or are developed to address, some of the use cases that can be addressed by applications developed on our platform, (2) providers of low-code development platforms, such as Microsoft, Salesforce.com, ServiceNow, OutSystems, and Mendix, and (3) providers of business process management and case management software, such as Pegasystems, IBM, Bizagi, Oracle, and Nintex.
Some of our actual and potential competitors have advantages over us such as longer operating histories, more established relationships with current or potential customers and commercial partners, significantly greater financial, technical, marketing, or other resources, stronger brand recognition, larger intellectual property portfolios, and broader global distribution and presence.
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In addition, some of our larger competitors have substantially broader offerings and can bundle competing products with other software offerings.
−Removed: As a result, customers may choose a bundled offering from our competitors, even if individual products have more limited
−Removed: functionality than our platform.
+Added: As a result, customers may choose a bundled offering from our competitors, even if individual products have more limited functionality than our platform.
These larger competitors are also often in a better position to withstand any significant reduction in capital spending and will therefore not be as susceptible to economic downturns.
−Removed: Furthermore, our actual and potential competitors may establish cooperative relationships among themselves or with third parties that may further enhance their resources and offerings in the markets we address.
−Removed: In addition, current or potential competitors may be acquired by third parties with greater available resources.
−Removed: As a result of such relationships and acquisitions, our actual or potential competitors might be able to adapt more quickly to new technologies and customer needs, devote greater resources to the promotion or sale of their products, initiate or withstand substantial price competition, take advantage of other opportunities more readily or develop and expand their offerings more quickly than we do.
−Removed: For all of these reasons, we may not be able to compete successfully against our current or future competitors.
If our security measures are breached or unauthorized access to our platform or customer data is otherwise obtained, our platform may be perceived as not being secure, customers may reduce the use of or stop using our platform, and we may incur significant liabilities.
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Any actual or perceived unauthorized access to, or security breaches affecting, our platform or the information stored on or transmitted by our platform, including through unauthorized and/or malicious activity by one of our employees, could result in the loss of information, litigation, regulatory investigations, penalties, indemnity obligations and other costs, expenses, and liability, which could exceed our existing insurance coverage and could result in a substantial financial loss.
−Removed: While we have security measures in place designed to protect customer information and prevent data loss and other security breaches, there can be no assurance that these measures will be effective in protecting against unauthorized access to our platform or our customers’ information.
+Added: While we have security measures in place designed to protect customer information and prevent data loss and other security breaches, there can be no assurance these measures will be effective in protecting against unauthorized access to our platform or our customers’ information.
Similarly, if cyber incidents such as phishing attacks, viruses, denial of service attacks, malware installation, server malfunction, software or hardware failures, loss of data or other computer assets, adware, or other similar issues impair the integrity or availability of our systems by affecting our data or reducing access to or shutting down one or more of our computing systems or our IT network, we may be subject to negative treatment by our customers, our business partners, the press, and the public at large.
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We may be subjected to indemnity demands, regulatory proceedings, audits, penalties, or litigation based on our customers’ misuse of our platform with respect to such sensitive information and defending against such litigation and otherwise addressing such matters may be expensive, cause distraction, and may result in us incurring liability, all of which may affect our operating results.
−Removed: While we maintain general liability insurance coverage and coverage for errors or omissions, we cannot assure you that such coverage will be adequate or otherwise protect us from liabilities or damages with respect to claims alleging compromises of personal data or that such coverage will continue to be available on acceptable terms or at all.
+Added: While we maintain general liability insurance coverage and coverage for errors or omissions, we cannot assure you such coverage will be adequate or otherwise protect us from liabilities or damages with respect to claims alleging compromises of personal data or that such coverage will continue to be available on acceptable terms or at all.
We derive a material portion of our revenue from a limited number of customers, and the loss of one or more of these customers could adversely impact our business, results of operations, and financial condition.
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The loss of one or more of our significant customers could adversely affect our business, results of operations, and financial condition.
−Removed: In addition, due to our dependence on a limited number of customers, we face a concentration of credit and customer risk.
−Removed: As of December 31, 2019, one customer accounted for 8% of our accounts receivable.
−Removed: In the case of insolvency by one of our significant customers, accounts receivable with respect to that customer might not be collectible, might not be fully collectible, or might be collectible over longer than normal terms, each of which could adversely affect our financial condition.
A portion of our revenue is generated from subscriptions sold to governmental entities and heavily regulated organizations, which are subject to a number of challenges and risks.
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Additionally, many of our current and prospective customers such as those in the financial services, pharmaceuticals, insurance, and life sciences industries are highly regulated and may be required to comply with more stringent regulations in connection with subscribing to and implementing our platform.
−Removed: Selling subscriptions to these entities can be highly competitive, expensive and time-consuming, often requiring significant upfront time and expense without any assurance that we will successfully complete a sale.
+Added: Selling subscriptions to these entities can be highly competitive, expensive, and time-consuming, often requiring significant upfront time and expense without any assurance we will successfully complete a sale.
In addition, if our software does not meet the standards of new or existing regulations, we may be in breach of our contracts with our customers, allowing them to terminate their agreements.
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We will need to generate and sustain increased revenue levels in future periods in order to achieve or sustain profitability in the future.
−Removed: We also expect our costs to increase in future periods, which could negatively affect our future operating results if our revenue does not increase commensurately.
+Added: We also expect our costs to increase in future
+Added: periods, which could negatively affect our future operating results if our revenue does not increase commensurately.
For example, we intend to continue to expend significant funds to expand our sales and marketing operations, develop and enhance our platform, meet the increased compliance requirements associated with our operation as a public company, and expand into new markets.
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Our future quarterly results of operations may fluctuate significantly due to a wide range of factors, which makes our future results difficult to predict.
−Removed: Our revenue and results of operations have historically varied from period to period, and we expect that they will continue to do so as a result of a number of factors, many of which are outside of our control, including:
+Added: Our revenue and results of operations have historically varied from period to period, and we expect they will continue to do so as a result of a number of factors, many of which are outside of our control, including:
• The level of demand for our platform and our professional services;
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• Unforeseen litigation and intellectual property infringement;
+Added: • Any changes in accounting principles generally accepted in the United States, or GAAP;
• Fluctuations in our effective tax rate;
• General economic and political conditions, both domestically and internationally, as well as economic conditions specifically affecting industries in which our customers operate.
−Removed: Any one of these or other factors discussed elsewhere in this Annual Report on Form 10-K or the cumulative effect of some of these factors may result in fluctuations in our revenue and operating results, meaning that quarter-to-quarter comparisons of our revenue, results of operations and cash flows may not necessarily be indicative of our future performance and may cause us to miss our guidance and analyst expectations and may cause our stock price to decline.
+Added: Any one of these or other factors discussed elsewhere in this Annual Report on Form 10-K or the cumulative effect of some of these factors may result in fluctuations in our revenue and operating results, meaning quarter-to-quarter comparisons of our revenue, results of operations, and cash flows may not necessarily be indicative of our future performance, may cause us to miss our guidance or analyst expectations, and may cause our stock price to decline.
In addition, we have historically experienced seasonality in terms of when we enter into agreements with customers.
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Furthermore, we usually enter into a significant portion of agreements with customers during the last month, and often the last two weeks, of each quarter.
−Removed: This seasonality is reflected to a much lesser extent, and sometimes is not immediately apparent, in revenue, due to the fact that we recognize cloud subscription revenue over the term of the subscription agreement, which is generally one to three years.
−Removed: We expect that seasonality will continue to affect our operating results in the future and may reduce our ability to predict cash flow and optimize the timing of our operating expenses.
+Added: This seasonality is reflected to a much lesser extent, and sometimes is not immediately apparent, in revenue, due to the fact we recognize cloud subscription revenue over the term of the subscription agreement, which is generally one to three years.
+Added: We expect seasonality will continue to affect our operating results in the future and may reduce our ability to predict cash flow and optimize the timing of our operating expenses.
+Added: We may fail to meet our publicly announced guidance or other expectations about our business and future operating results, which could cause our stock price to decline.
+Added: We have provided and may continue to provide guidance about our business, future operating results, and other business metrics.
+Added: In developing this guidance, our management must make certain assumptions and judgments about our future performance.
+Added: Some of those key assumptions relate to the impact of the COVID-19 pandemic and the associated economic uncertainty on our business and the timing and scope of economic recovery globally, which are inherently difficult to predict.
+Added: Furthermore, analysts and investors may develop and publish their own projections of our business, which may form a consensus about our future performance.
+Added: Our business results may vary significantly from such guidance or that consensus due to a number of factors, many of which are outside of our control, including due to the global economic uncertainty and financial market conditions caused by the COVID-19 pandemic, which could adversely affect our operations and operating results.
+Added: Furthermore, if our publicly announced guidance of future operating results fails to meet our previously announced guidance or the expectations of securities analysts, investors, or other interested parties, the price of our common stock would decline.
+Added: If we are unable to successfully transition to new leadership in key departments, our results could suffer.
+Added: Appian has undergone change in departments directly responsible for substantially all of Appian's revenue.
+Added: While Appian believes its new leaders in these departments are highly qualified and will perform well in their roles, there can be no assurances the transition to new leadership will be executed without any disruption or effect on performance.
+Added: New leadership requires time to become familiar with Appian's product offerings and its customer base, and such transition could lead to delayed implementation of strategies, revision of key practices and policies, re-training of personnel, and other disruptions.
+Added: While we will make efforts to mitigate such risk through extensive collaboration at the executive level, the effects of this transition could have an impact on our ability to sustain our growth in revenues or our ability to retain existing talent within the organization.
We rely on the performance of highly skilled personnel, including senior management and our engineering, professional services, sales, and technology professionals;
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From time to time, there may be changes in our senior management team resulting from the termination or departure of our executive officers and key employees.
−Removed: Our senior management and key employees are employed on an at-will basis, which means that they could terminate their employment with us at any time.
+Added: Our senior management and key employees are employed on an at-will basis, which means they could terminate their employment with us at any time.
Many of our executive officers and key employees receive equity compensation as a significant portion of their overall compensation package.
−Removed: A substantial decrease in the market price of our Class A common stock would effectively reduce the compensation of such persons and could increase the risk that they depart from our company.
+Added: A substantial decrease in the market price of our Class A common stock would effectively reduce the compensation of such persons and could increase the risk they depart from our company.
The loss of any of our senior management or key employees, particularly Mr.
−Removed: Calkins, could adversely affect our ability to build on the efforts they have undertaken and to execute our business plan, and we may not be able to find adequate replacements.
−Removed: We cannot ensure that we will be able to retain the services of any members of our senior management or other key employees.
+Added: Calkins, could adversely affect our ability to build on the efforts they
+Added: have undertaken and to execute our business plan, and we may not be able to find adequate replacements.
+Added: We cannot ensure we will be able to retain the services of any members of our senior management or other key employees.
Our ability to successfully pursue our growth strategy also depends on our ability to attract, motivate, and retain our personnel.
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If we do not succeed in attracting well-qualified employees or retaining and motivating existing employees, our business would be adversely affected.
−Removed: We may not be able to increase subscriptions revenue as a percentage of total revenue.
−Removed: Currently, our revenue is divided between subscriptions and professional services revenue.
−Removed: Our strategic focus has been to grow cloud subscriptions revenue faster than professional services revenue because our marginal costs of delivering our cloud subscriptions are lower than the marginal costs of delivering professional services.
−Removed: An increase in the percentage of subscriptions revenue as a percentage of total revenue therefore results in a higher overall gross profit margin.
−Removed: In 2015 and 2016, the proportion of our revenue attributable to subscriptions increased as a proportion of our total revenue, thereby increasing our overall gross profit margin during such period.
−Removed: Although the proportion of our revenue attributable to subscriptions for the year ended December 31, 2017 decreased slightly from such amount for the year ended December 31, 2016, the proportion of our revenue attributable to subscriptions increased as a proportion of our total revenue for each of the years ended December 31, 2018 and December 31, 2019.
−Removed: We intend to continue focusing on growing cloud subscriptions revenue faster than professional services revenue in the future.
−Removed: There can be no guarantee that we will successfully increase subscriptions revenue as a percentage of total revenue in the future.
−Removed: Our customers may demand more professional services from us, or demand for our cloud subscriptions may grow slower than demand for our professional services.
−Removed: Should we fail to increase subscriptions revenue as a percentage of our total revenue our earnings may suffer and our stock price may decline.
If we do not continue to innovate and provide a platform that is useful to our customers, we may not remain competitive, and our revenue and operating results could suffer.
−Removed: Our success depends on continued innovation to provide features that make our platform useful for our customers.
+Added: Our success depends on continued innovation to provide features that make our platform useful for our customers, our ability to persuade existing customers to expand their use of our platform to additional use cases and additional applications, and to purchase additional software licenses to our platform.
We must continue to invest significant resources in research and development in order to continually improve the simplicity and power of our platform.
We may introduce significant changes to our platform or develop and introduce new and unproven products, including using technologies with which we have little or no prior development or operating experience.
−Removed: If we are unable to continue offering innovative solutions or if new or enhanced solutions fail to engage our customers, we may be
−Removed: unable to attract additional customers or retain our current customers, which may adversely affect our business, operating results and financial condition.
+Added: If we are unable to continue offering innovative solutions or if new or enhanced solutions fail to engage our customers, we may be unable to attract additional customers or retain our current customers, which may adversely affect our business, operating results, and financial condition.
We may need to reduce or change our pricing model to remain competitive.
We generally sell our software on a per-user basis and, to a lesser degree, non-user based single application licenses.
−Removed: We have changed and expect that we will continue to need to change our pricing model from time to time.
+Added: We have changed and expect we will continue to need to change our pricing model from time to time.
As competitors introduce new products that compete with ours or reduce their prices, we may be unable to attract new customers or retain existing customers based on our historical pricing.
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As a result, we may be required or choose to reduce our prices or change our pricing model, which could adversely affect our business, operating results, and financial condition.
−Removed: If the estimates and assumptions we have used to calculate the size of our target market are inaccurate, our future growth rate may be limited.
−Removed: Our projections, assumptions and estimates of future opportunities within our target market are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in this Annual Report on Form 10-K.
−Removed: If third-party or internally generated data prove to be inaccurate or we make errors in our assumptions based on that data, our future growth rate may be limited.
−Removed: In addition, these inaccuracies or errors may cause us to misallocate capital and other business resources, which could harm our business.
−Removed: Even if our target market meets our size estimates and experiences the forecasted growth, we may not grow our business at similar rates, or at all.
−Removed: Our growth is subject to many factors, including our success in implementing our business strategy, which is subject to many risks and uncertainties.
−Removed: Accordingly, the forecasts of market growth included in this Annual Report on Form 10-K should not be taken as indicative of our future growth.
Our business could be adversely affected if our customers are not satisfied with the deployment services provided by us or our partners.
−Removed: The success of our business depends on our customers’ satisfaction with our platform, the support that we provide for our platform and the professional services that we provide to help our customers deploy our platform.
+Added: The success of our business depends on our customers’ satisfaction with our platform, the support we provide for our platform, and the professional services we provide to help our customers deploy our platform.
Professional services may be performed by our own staff, by a third party, or by a combination of the two.
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In addition, negative publicity related to our customer relationships, regardless of accuracy, may further damage our business by affecting our ability to compete for new business with actual and prospective customers.
−Removed: If customers do not expand their use of our platform beyond initial use cases and applications, our ability to grow our business and our operating results may be adversely affected.
−Removed: Our ability to grow our business depends, in part, on our ability to persuade existing customers to expand their use of our platform to additional use cases and additional applications, and to purchase additional software licenses to our platform.
−Removed: Our goal is for customer satisfaction with initial applications developed on our platform to drive increased sales of licenses to our platform.
−Removed: However, if customers are not satisfied with their initial experience using our platform, they may choose not to renew licenses upon expiration or purchase additional software licenses, which would adversely affect our operating results.
We are substantially dependent upon customer renewals, the addition of new customers, and the continued growth of our subscriptions revenue.
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As a result, we may be forced to reduce the prices we charge for software and may be required to offer terms less favorable to us for new and renewing agreements.
−Removed: In order for us to improve our operating results, it is important that our customers renew their subscriptions with us when their initial term expires, as well as purchase additional subscriptions from us.
−Removed: In general, our customers have no renewal obligation after their initial term expires, and we cannot assure you that we will be able to renew subscriptions with any of our customers at the same or higher contract value.
+Added: In order for us to improve our operating results, it is important our customers renew their subscriptions with us when their initial term expires, as well as purchase additional subscriptions from us.
+Added: In general, our customers have no renewal obligation after their initial term expires, and we cannot assure you we will be able to renew subscriptions with any of our customers at the same or higher contract value.
Further, while we offer access to our platform primarily through multi-year subscription agreements, some agreements may have shorter durations.
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We offer our solution primarily through multi-year cloud subscription agreements and generally recognize revenue ratably over the related subscription period.
−Removed: As a result, much of the revenue that we report in each quarter is derived from the recognition of previously unbilled contract value relating to agreements entered into during prior periods.
+Added: As a result, much of the revenue we report in each quarter is derived from the recognition of previously unbilled or deferred contract value relating to agreements entered into during prior periods.
Accordingly, a decline in new or renewal subscription agreements in any quarter is not likely to be reflected immediately in our revenue results for that quarter.
Such declines, however, would negatively affect our revenue, and to a lesser extent, deferred revenue balance in future periods, and the effect of significant downturns in sales and market acceptance of our platform and potential changes in our rate of renewals may not be fully reflected in our results of operations until future periods.
−Removed: Failure to effectively develop and expand our sales and marketing capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our platform.
−Removed: Our ability to increase our customer base and achieve broader market acceptance of our platform will depend to a significant extent on our ability to expand our sales and marketing operations.
−Removed: We plan to continue expanding our sales force and third-party strategic sales partners, both domestically and internationally;
−Removed: however, there is no assurance that we will be successful in attracting and retaining talented sales personnel or strategic partners or that any new sales personnel or strategic partners will be able to achieve productivity in a reasonable period of time or at all.
−Removed: We also plan to dedicate significant resources to sales and marketing programs, including through electronic marketing campaigns and trade event sponsorship and participation.
−Removed: All of these efforts will require us to invest significant financial and other resources and our business will be harmed if our efforts do not generate a correspondingly significant increase in revenue.
If we are not able to maintain and enhance our brand, our business and operating results may be adversely affected.
−Removed: We believe that developing and maintaining widespread awareness of our brand in a cost-effective manner is critical to achieving widespread acceptance of our platform and attracting new customers.
+Added: We believe developing and maintaining widespread awareness of our brand in a cost-effective manner is critical to achieving widespread acceptance of our platform and attracting new customers.
Brand promotion activities may not generate customer awareness or increase revenue and, even if they do, any increase in revenue may not offset the expenses we incur in building our brand.
−Removed: If we fail to successfully promote and maintain our brand, or incur substantial expenses, we may fail to attract or retain customers necessary to realize a sufficient return on our brand-building efforts, or to achieve the widespread brand awareness that is critical for broad customer adoption of our platform.
+Added: If we fail to successfully promote and maintain our brand or incur substantial expenses, we may fail to attract or retain customers necessary to realize a sufficient return on our brand-building efforts or to achieve the widespread brand awareness critical for broad customer adoption of our platform.
If our platform fails to perform properly or there are defects or disruptions in the rollout of our platform updates or enhancements, our reputation could be adversely affected, our market share could decline, and we could be subject to liability claims.
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Our customer agreements often provide service level commitments on a monthly basis.
−Removed: If we are unable to meet the stated service level commitments or suffer extended periods of unavailability for our platform, we may be contractually obligated to provide these customers with service credits, refunds for prepaid amounts or we could face contract terminations.
+Added: If we are unable to meet the stated service level commitments or suffer extended periods of unavailability for our platform, we may be contractually obligated to provide these customers with service credits or refunds for prepaid amounts, or we could face contract terminations.
Our revenue could be significantly affected if we suffer unscheduled downtime that exceeds the allowed downtimes under our agreements with our customers.
−Removed: Because of the large amount of data that we collect and manage, it is possible that hardware failures or errors in our systems could result in data loss or corruption, or cause the information that we collect to be incomplete or contain inaccuracies that our customers regard as significant.
−Removed: Furthermore, the availability or performance of our platform could be adversely affected by a number of factors, including customers’ inability to access the internet, the failure of our network or software systems, security breaches or variability in user traffic for our services.
+Added: Because of the large amount of data we collect and manage, it is possible hardware failures or errors in our systems could result in data loss or corruption, or cause the information we collect to be incomplete or contain inaccuracies our customers regard as significant.
+Added: Furthermore, the availability or performance of our platform could be adversely affected by a number of factors, including customers’ inability to access the internet, our customers' increased usage of our cloud offering, the failure of our network or software systems, security breaches, or variability in user traffic for our services.
For example, our cloud offering customers access our platform through their internet service providers.
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The occurrence of any of these events could result in an increase in our bad debt expense, an increase in collection cycles for accounts receivable, decreased future revenue and earnings, require us to increase our warranty provisions, or incur the risk or expense of litigation.
−Removed: If we fail to offer high-quality support, our business and reputation would suffer.
−Removed: Our customers rely on our personnel for support of our platform.
−Removed: High-quality support is important for the renewal of our agreements with existing customers and to our existing customers purchasing additional software.
−Removed: The importance of high-quality support will increase as we expand our business and pursue new customers.
−Removed: If we do not help our customers quickly resolve issues and provide effective ongoing support, our ability to sell new software to existing and new customers would suffer and our reputation with existing or potential customers would be harmed.
−Removed: As a result of our customers’ increased usage of our cloud offering, we will need to continually improve our computer network and infrastructure to avoid service interruptions or slower system performance.
−Removed: As usage of our cloud offering grows and as customers use it for more complicated applications and with increased data requirements, we will need to devote additional resources to improving our platform architecture and our infrastructure in
−Removed: order to maintain the performance of our cloud offering.
−Removed: Any failure or delays in our computer systems could cause service interruptions or slower system performance.
−Removed: If sustained or repeated, these performance issues could reduce the attractiveness of our platform to customers.
−Removed: These performance issues could result in lost customer opportunities and lower renewal rates, any of which could hurt our revenue growth, customer loyalty and reputation.
−Removed: We rely upon Amazon Web Services to operate our cloud offering;
−Removed: any disruption of or interference with our use of Amazon Web Services would adversely affect our business, results of operations and financial condition.
+Added: We rely upon AWS to operate our cloud offering;
+Added: any disruption of or interference with our use of AWS would adversely affect our business, results of operations, and financial condition.
We outsource substantially all of the infrastructure relating to our cloud offering to AWS, which hosts our platform on our customers’ behalf.
Customers of our cloud offering need to be able to access our platform at any time, without interruption or degradation of performance, and we provide them with service level commitments with respect to uptime.
−Removed: AWS runs its own platform that we access, and we are, therefore, vulnerable to service interruptions at AWS.
+Added: AWS runs its own platform we access, and we are, therefore, vulnerable to service interruptions at AWS.
We may experience interruptions, delays, and outages in service and availability from time to time as a result of problems with our AWS provided infrastructure, which could render our cloud offering inaccessible to customers.
Additionally, AWS has suffered outages at specific customer locations in the past, rendering the customer unable to access our offering for periods of time.
−Removed: Lack of availability of our AWS infrastructure could be due to a number of potential causes including technical failures, natural disasters, fraud or security attacks that we cannot predict or prevent.
+Added: Lack of availability of our AWS infrastructure could be due to a number of potential causes including technical failures, natural disasters, fraud, or security attacks we cannot predict or prevent.
Such outages could lead to the triggering of our service level agreements and the issuance of credits to our cloud offering customers, which may impact our operating results.
In addition, if the security of the AWS infrastructure is compromised or believed to have been compromised, our business, results of operations, and financial condition could be adversely affected.
−Removed: It is possible that our customers and potential customers would hold us accountable for any breach of security affecting the AWS infrastructure and we may incur significant liability from those customers and from third parties with respect to any breach affecting AWS systems.
+Added: It is possible our customers and potential customers would hold us accountable for any breach of security affecting the AWS infrastructure, and we may incur significant liability from those customers and from third parties with respect to any breach affecting AWS systems.
Because our agreement with AWS limits AWS’s liability for damages, we may not be able to recover a material portion of our liabilities to our customers and third parties from AWS.
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Our agreement with AWS allows AWS to terminate the agreement by providing two years' prior written notice and may allow AWS to terminate in case of a breach of contract if such breach is uncured for 30 days or to terminate upon thirty days' advance written notice if AWS’s further provision of services to us becomes impractical for legal or regulatory reasons.
−Removed: Although we expect that we could receive similar services from other third parties if any of our arrangements with AWS are terminated, we could experience interruptions on our platform and in our ability to make our platform available to customers, as well as delays and additional expenses in arranging alternative cloud infrastructure services.
−Removed: If we cannot maintain our corporate culture as we grow, we could lose the innovation, teamwork, passion and focus on execution that we believe contribute to our success, and our business may be harmed.
−Removed: We believe that a critical component to our success has been our corporate culture.
−Removed: We have invested substantial time and resources in building our team and maintaining that corporate culture through the growth of our company.
−Removed: As we grow and develop the infrastructure of a public company, we may find it difficult to maintain important aspects of our corporate culture.
−Removed: Any failure to preserve our culture could negatively affect our future success, including our ability to retain and recruit personnel and to effectively focus on and pursue our corporate objectives.
+Added: Although we expect we could receive similar services from other third parties if any of our arrangements with AWS are terminated, we could experience interruptions on our platform and in our ability to make our platform available to customers, as well as delays and additional expenses in arranging alternative cloud infrastructure services.
Our growth depends in part on the success of our strategic relationships with third parties.
−Removed: In order to grow our business, we anticipate that we will continue to depend on relationships with strategic partners to provide broader customer coverage and solution delivery capabilities.
+Added: In order to grow our business, we anticipate we will continue to depend on relationships with strategic partners to provide broader customer coverage and solution delivery capabilities.
Identifying partners, and negotiating and documenting relationships with them, requires significant time and resources.
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If we are unsuccessful in establishing or maintaining our relationships with third parties, our ability to compete in the marketplace or to grow our revenue could be impaired and our operating results may suffer.
−Removed: Even if we are successful, we cannot assure you that these relationships will result in increased customer usage of our platform or increased revenue.
+Added: Even if we are successful, we cannot assure you these relationships will result in increased customer usage of our platform or increased revenue.
Because our long-term growth strategy involves further expansion of our sales to customers outside the United States, our business will be susceptible to risks associated with international operations.
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In 2020, 2019, and 2018, revenue generated from customers outside the United States was 33.8%, 32.3%, and 28.7%, respectively, of our total revenue.
−Removed: We currently have international offices in the United Kingdom, continental Europe, Australia and Singapore, which focus primarily on selling and implementing our platform in those regions.
+Added: We currently have international offices in the United Kingdom, Italy, and Australia, which focus primarily on selling and implementing our platform in those regions.
In the future, we may expand to other international locations.
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• Adverse tax burdens and foreign exchange controls that could make it difficult to repatriate earnings and cash.
−Removed: Our limited experience in operating our business internationally increases the risk that any potential future expansion efforts that we may undertake will not be successful.
+Added: Our limited experience in operating our business internationally increases the risk any potential future expansion efforts we may undertake will not be successful.
If we invest substantial time and resources to expand our international operations and are unable to do so successfully and in a timely manner, our business and operating results will suffer.
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If we raise additional funds through future issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences, and privileges superior to those of holders of our Class A common stock.
−Removed: Our loan and security agreement with Silicon Valley Bank for our current line of credit includes restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions, and any debt financing that we secure in the future could include similar restrictive covenants.
+Added: Our loan and security agreement with Silicon Valley Bank for our current revolving line of credit includes restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions, and any debt financing we secure in the future could include similar restrictive covenants.
We may not be able to obtain additional financing on terms favorable to us, if at all.
−Removed: If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our
−Removed: business growth and to respond to business challenges could be significantly impaired, and our business may be adversely affected.
+Added: If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly impaired, and our business may be adversely affected.
We may not achieve market acceptance of our pre-built solutions, which may adversely impact our financial results.
We have begun the process of developing and releasing pre-built solutions on our software platform in order to maximize the value of our platform to our customers and to reduce the sales cycles associated with software sales to new and existing customers.
−Removed: For example, in the fall of 2019, we introduced the Institutional On-Boarding Solution for sale to financial institutions to manage the processes relating to on-boarding new institutional customers.
Each solution requires an investment in development, marketing, sales, support, finance, and legal resources to bring the solution to market.
−Removed: Although we make efforts to identify the solutions that will receive favorable market acceptance, there can be no guarantee that any solution will become the source of material revenue, and the investment in the solution could not produce a positive return.
−Removed: If unsuccessful, such solutions may adversely impact our financial results to the extent that our expenses increase without any increase in sales, or to the extent that attempted sales of such solutions reduce sales of our existing platform.
−Removed: Legal, political and economic uncertainty surrounding the exit of the United Kingdom, or UK, from the European Union, or EU, may be a source of instability in international markets, create significant currency fluctuations, adversely affect our operations in the United Kingdom and pose additional risks to our business, revenue, financial condition, and results of operations.
−Removed: The uncertainty concerning the UK’s legal, political and economic relationship with the EU after the Transition Period may be a source of instability in the international markets, create significant currency fluctuations, and/or otherwise adversely affect trading agreements or similar cross-border co-operation arrangements (whether economic, tax, fiscal, legal, regulatory or otherwise).
−Removed: These developments, or the perception that any of them could occur, have had, and may continue to have, a significant adverse effect on global economic conditions and the stability of global financial markets, and could significantly reduce global market liquidity and limit the ability of key market participants to operate in certain financial markets.
−Removed: In particular, it could also lead to a period of considerable uncertainty in relation to the UK financial and banking markets, as well as on the regulatory process in Europe.
−Removed: Asset valuations, currency exchange rates and credit ratings may also be subject to increased market volatility.
−Removed: If the UK and the EU are unable to negotiate acceptable trading and customs terms or if other EU Member States pursue withdrawal, barrier-free access between the UK and other EU Member States or among the European Economic Area, or EEA, overall could be diminished or eliminated.
−Removed: The long-term effects of Brexit will depend on any agreements (or lack thereof) between the UK and the EU and, in particular, any arrangements for the UK to retain access to EU markets after the Transition Period.
−Removed: Such a withdrawal from the EU is unprecedented, and it is unclear how the UK’s access to the European single market for goods, capital, services and labor within the EU, or single market, and the wider commercial, legal and regulatory environment, will impact our UK operations and customers following the expiry of the Transition Period.
−Removed: Our UK operations service customers in the UK as well as in other countries in the EU and EEA and these operations could be disrupted by Brexit, particularly if there is a change in the UK’s relationship to the single market.
−Removed: We may also face new regulatory costs and challenges as a result of Brexit that could have an adverse effect on our operations.
−Removed: For example, the European Parliament and the Council of the EU adopted a comprehensive general data protection regulation, or GDPR, in 2016 to replace the current European Union Data Protection Directive and related country-specific legislation.
−Removed: Although the United Kingdom enacted the Data Protection Act 2018 which is consistent with the GDPR, uncertainty remains regarding how data transfers to and from the United Kingdom will be regulated following the Transition Period.
−Removed: There may continue to be legal, political and economic uncertainty surrounding the consequences of Brexit which could adversely impact customer confidence resulting in customers reducing their spending budgets on our solutions, which, in turn, could adversely affect our business, revenue, financial condition and results of operations.
+Added: Although we make efforts to identify the solutions that will receive favorable market acceptance, there can be no guarantee any solution will become the source of material revenue, and the investment in the solution may not produce a positive return.
+Added: If unsuccessful, such solutions may adversely impact our financial results to the extent our expenses increase without any increase in sales, or to the extent that attempted sales of such solutions reduce sales of our existing platform.
If currency exchange rates fluctuate substantially in the future, our financial results, which are reported in U.S.
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This could have a negative impact on our reported operating results.
−Removed: To date, we have not engaged in any hedging strategies, and any such strategies, such as forward contracts, options and foreign exchange swaps related to transaction exposures that we may implement to mitigate this risk may not eliminate our exposure to foreign exchange fluctuations.
+Added: To date, we have not engaged in any hedging strategies, and any such strategies such as forward contracts, options, and foreign exchange swaps related to transaction exposures we may implement to mitigate this risk may not eliminate our exposure to foreign exchange fluctuations.
We employ third-party licensed software for use in or with our software, and the inability to maintain these licenses or errors in the software we license could result in increased costs, or reduced service levels, which would adversely affect our business.
Our software incorporates certain third-party software obtained under licenses from other companies, including database software from Kx.
−Removed: We anticipate that we will continue to rely on such third-party software and development tools from third parties in the future.
−Removed: Although we believe that there are commercially reasonable alternatives to the third-party software we currently license, including open source software, this may not always be the case, or it may be difficult or costly to migrate to other third-party software.
+Added: We anticipate we will continue to rely on such third-party software and development tools from third parties
+Added: in the future.
+Added: Although we believe there are commercially reasonable alternatives to the third-party software we currently license, including open source software, this may not always be the case, or it may be difficult or costly to migrate to other third-party software.
Our use of additional or alternative third-party software would require us to enter into license agreements with third parties.
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If we do not or cannot maintain the compatibility of our platform with third-party applications that our customers use in their businesses, our revenue will decline.
−Removed: The functionality and attractiveness of our platform depends, in part, on our ability to integrate our platform with third-party applications and platforms, including customer relationship management, human resources information, accounting and enterprise resource planning systems that our customers use and from which they obtain data.
+Added: The functionality and attractiveness of our platform depends, in part, on our ability to integrate our platform with third-party applications and platforms, including customer relationship management, human resources information, accounting, and enterprise resource planning systems our customers use and from which they obtain data.
Third-party providers of applications and APIs may change the features of their applications and platforms, restrict our access to their applications and platforms, or alter the terms governing use of their applications and APIs and access to those applications and platforms in an adverse manner.
Such changes could functionally limit or terminate our ability to use these third-party applications and platforms in conjunction with our platform, which could negatively impact our offerings and harm our business.
−Removed: If we fail to integrate our software with new third-party applications and platforms that our customers use, we may not be able to offer the functionality that our customers need, which would negatively impact our ability to generate revenue and adversely impact our business.
−Removed: Portions of our platform utilize open source software, and any failure to comply with the terms of one or more of these open source licenses could negatively affect our business.
−Removed: Our software contains software licensed to us by third parties under so-called “open source” licenses, including the GNU Lesser General Public License, the BSD License and others.
−Removed: From time to time, there have been claims against companies that distribute or use open source software in their products and services, asserting that such open source software infringes the claimants’ intellectual property rights.
−Removed: We could be subject to suits by parties claiming that what we believe to be licensed open source software infringes their intellectual property rights.
−Removed: Use and distribution of open source software may entail greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the code.
−Removed: In addition, certain open source licenses require that source code for software programs that are subject to the license be made available to the public and that any modifications or derivative works to such open source software continue to be licensed under the same terms.
−Removed: Although we monitor our use of open source software in an effort both to comply with the terms of the applicable open source licenses and to avoid subjecting our software to conditions we do not intend, the terms of many open source licenses have not been interpreted by U.S.
−Removed: courts, and there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to commercialize our platform.
−Removed: By the terms of certain open source licenses, we could be required to release the source code of our software and to make our software available under open source licenses, if we combine or distribute our software with open source software in a certain manner.
−Removed: In the event that portions of our software are determined to be subject to an open source license, we could be required to publicly release the affected portions of our source code, re-engineer all, or a portion of, that software or otherwise be limited in the licensing of our software, each of which could reduce or eliminate the value of our platform.
−Removed: Many of the risks associated with usage of open source software cannot be eliminated, and could negatively affect our business, results of operations and financial condition.
+Added: If we fail to integrate our software with new third-party applications and platforms our customers use, we may not be able to offer the functionality our customers need, which would negatively impact our ability to generate revenue and adversely impact our business.
Catastrophic events may disrupt our business.
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The area around Washington, D.C.
−Removed: could be subjected to terrorist attacks.
+Added: could be subjected to domestic or foreign terrorist attacks.
Additionally, we rely on our network and third-party infrastructure and enterprise applications, internal technology systems, and our website for our development, marketing, operational support, hosted services, and sales activities.
In the event of a major hurricane, earthquake, or catastrophic event such as fire, power loss, telecommunications failure, cyberattack, outbreak of regional or global pandemic diseases, war, or terrorist attack, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in our software development, lengthy interruptions in our services, breaches of data security, and loss of critical data, all of which could have an adverse effect on our future operating results.
−Removed: For example, the ongoing coronavirus outbreak emanating from China at the beginning of 2020 has resulted in increased travel restrictions and extended shutdown of certain businesses in the region.
+Added: For example, the ongoing coronavirus outbreak at the beginning of 2020 has resulted in increased travel restrictions and extended shutdown of certain businesses in the region.
At this point, the extent to which the coronavirus may impact our operating results is uncertain.
−Removed: Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States.
−Removed: Accounting principles generally accepted in the United States, or GAAP, is subject to interpretation by the Financial Accounting Standards Board, or FASB, the SEC, and various bodies formed to promulgate and interpret appropriate accounting principles.
−Removed: A change in these principles or interpretations could have a significant effect on our reported financial results and could affect the reporting of transactions completed before the announcement of a change.
−Removed: In particular, in May 2014, the FASB issued ASC 606, which supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition , or ASC 605.
−Removed: The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
−Removed: Because we were an “emerging growth company” until December 31, 2019, the Jumpstart Our Business Startups Act, or the JOBS Act, allowed us to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies.
−Removed: We elected to use this extended transition period under the JOBS Act with respect to ASC 606, which means ASC 606 became applicable to us for the annual period beginning on January 1, 2019.
−Removed: In accordance with guidance, the new standard has been adopted in this Annual Report on Form 10-K but was not adopted in prior periods.
−Removed: Therefore, such periods are not directly comparable.
−Removed: While the new standard has not had a material impact on the timing of revenue recognition related to our cloud-based subscriptions and standalone professional services, the new standard has had a significant impact on the timing of revenue recognition related to our on-premises term licenses since we are now required to recognize a portion of revenue from the on-premises term license contracts upon delivery of the software.
−Removed: These changes may cause variability in our reported operating results due to periodic or long-term changes in the mix between term license subscriptions and cloud subscriptions to our platform.
−Removed: For more information about ASC 606, see Note 2, Summary of Significant Accounting Policies, to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
−Removed: Additionally, in February 2016, the FASB issued ASU No.
−Removed: 2016-2, Leases (Topic 842) , or ASU 2016-2, which requires that lessees recognize assets and liabilities for leases with lease terms greater than 12 months in the statement of financial position.
−Removed: ASU 2016-2 also requires improved disclosures to help users of financial statements better understand the amount, timing and uncertainty of cash flows arising from leases.
−Removed: The update is effective for fiscal years beginning after
−Removed: December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020.
−Removed: Early adoption is permitted.
−Removed: At December 31, 2019, we no longer qualified as an emerging growth company, at which point we were required to retrospectively adopt ASU 2016-2 effective January 1, 2019, in line with the adoption requirements for large accelerated filers.
−Removed: For more information about ASU 2016-2, see Note 2, Summary of Significant Accounting Policies, to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
−Removed: If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected.
−Removed: The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.
−Removed: We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report on Form 10-K.
−Removed: The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities and equity, and the amount of revenue and expenses that are not readily apparent from other sources.
−Removed: Significant assumptions and estimates used in preparing our consolidated financial statements include those related to revenue recognition, income taxes and the related valuation allowance, stock-based compensation and fair value measurements for our previously outstanding preferred stock warrant.
−Removed: Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below the expectations of securities analysts and investors, resulting in a decline in the trading price of our Class A common stock.
Adverse economic conditions may negatively impact our business.
Our business depends on the overall demand for enterprise software and on the economic health of our current and prospective customers.
−Removed: The economies of countries in Europe have been experiencing weakness associated with high sovereign debt levels, weakness in the banking sector and uncertainty over the future of the Euro zone and the United Kingdom's membership in the European Union.
+Added: The economies of countries in Europe have been experiencing weakness associated with high sovereign debt levels, weakness in the banking sector, and uncertainties surrounding the future of the Euro zone and the United Kingdom's relationship with the European Union.
We have operations in the United Kingdom and in Europe and current and potential new customers in Europe.
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Any of these events would likely have an adverse effect on our business, operating results, and financial position.
−Removed: Our services revenue is highly dependent on selling software to new and existing customers.
−Removed: We derive a majority of our services revenue from professional services that relate to the development and delivery of new applications using our platform, after a customer has made an initial or additional software purchase.
−Removed: Accordingly, our failure to sell software may have a collateral adverse impact on our services revenue and our overall operational results.
Future acquisitions could disrupt our business and adversely affect our business operations and financial results.
We may choose to expand by acquiring businesses or technologies.
−Removed: For instance, in January 2020, we acquired Novayre Solutions S.L., developer of the Jidoka RPA platform, which we are continuing to integrate along with their personnel.
+Added: For instance, in January 2020, we acquired Novayre Solutions S.L., or Novayre, developer of the Jidoka RPA platform, which we are continuing to integrate along with their personnel.
Our ability as an organization to successfully acquire and integrate technologies or businesses is unproven.
Acquisitions involve many risks, including the following:
−Removed: • an acquisition may negatively affect our financial results because it may require us to incur charges or assume substantial debt or other liabilities, may cause adverse tax consequences or unfavorable accounting treatment, may expose us to claims and disputes by third parties, including intellectual property claims and disputes, or may not generate sufficient financial return to offset additional costs and expenses related to the acquisition;
−Removed: • we may encounter difficulties or unforeseen expenditures in integrating the business, technologies, products, personnel or operations of any company that we acquire, particularly if key personnel of the acquired company decide not to work for us;
+Added: • An acquisition may negatively affect our financial results because it may require us to incur charges or assume substantial debt or other liabilities, may cause adverse tax consequences or unfavorable accounting treatment, may expose us to
+Added: claims and disputes by third parties, including intellectual property claims and disputes, or may not generate sufficient financial return to offset additional costs and expenses related to the acquisition;
+Added: • We may encounter difficulties or unforeseen expenditures in integrating the business, technologies, products, personnel, or operations of any company we acquire, particularly if key personnel of the acquired company decide not to work for us;
• An acquisition may disrupt our ongoing business, divert resources, increase our expenses, and distract our management;
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In addition, we may only be able to conduct limited due diligence on an acquired company’s operations.
−Removed: Following an acquisition, we may be subject to unforeseen liabilities arising from an acquired company’s past or present operations and these liabilities may be greater than the warranty and indemnity limitations that we negotiate.
−Removed: Any unforeseen liability that is greater than these warranty and indemnity limitations could have a negative impact on our financial condition.
−Removed: Risks Related to Government Regulation, Data Collection, Intellectual Property and Litigation
+Added: Following an acquisition, we may be subject to unforeseen liabilities arising from an acquired company’s past or present operations, and these liabilities may be greater than the warranty and indemnity limitations we negotiate.
+Added: Any unforeseen liability greater than these warranty and indemnity limitations could have a negative impact on our financial condition.
+Added: Risks Related to Regulatory Compliance and Governmental Matters
Failure to comply with governmental laws and regulations could harm our business.
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Enforcement actions and sanctions could harm our business, reputation, results of operations, and financial condition.
−Removed: Because our software could be used to collect and store personal information, domestic and international privacy concerns could result in additional costs and liabilities to us or inhibit sales of our software.
+Added: Because our software could be used to collect and store personal information, domestic and international privacy concerns could result in additional costs and liabilities to us or inhibit sales of our software and subject us to complex and evolving federal, state, and foreign laws and regulations regarding privacy, data protection, and other related matters.
Personal privacy has become a significant issue in the United States and in many other countries where we offer our software for sale.
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The CCPA, which became effective on January 1, 2020, drastically changes the ability for individuals to control the use of their personal data.
−Removed: It contains detailed requirements regarding collecting and processing personal information, imposes certain limitations on how such information may be used, and provides rights to consumers that have never before been available in the past, all of which may be imposed on us by our customers.
+Added: It contains detailed requirements regarding collecting and processing personal information, imposes certain limitations on how such information may be used, and provides rights to
+Added: consumers that have never before been available in the past, all of which may be imposed on us by our customers.
This could increase our costs of doing business.
−Removed: Internationally, the European Union adopted the GDPR, which took effect in May 2018 and virtually every jurisdiction in which we operate has established its own data security and privacy legal framework with which we or our customers must comply.
+Added: Further, California voters approved a new privacy law, the California Privacy Rights Act, or CPRA, in the November 3, 2020 election.
+Added: Effective starting on January 1, 2023, the CPRA will significantly modify the CCPA, including by expanding consumers’ rights with respect to certain sensitive personal information.
+Added: The CPRA also creates a new state agency that will be vested with authority to implement and enforce the CCPA and the CPRA.
+Added: New legislation proposed or enacted in various other states will continue to shape the data privacy environment nationally.
+Added: Certain state laws may be more stringent or broader in scope, or offer greater individual rights, with respect to confidential, sensitive, and personal information than federal, international, or other state laws, and such laws may differ from each other, which may complicate compliance efforts.
+Added: Internationally, the European Union adopted a comprehensive general data protection regulation, or the GDPR, which took effect in May 2018 and contains numerous requirements and changes related to rights of data subjects in their personal data, including more robust obligations on data processors and heavier documentation requirements for data protection compliance programs by companies.
+Added: In addition, recent rulings in the European Union related to the EU-U.S.
+Added: Privacy Shield and Standard Contractual Clauses have called into question how to legally transfer data from the European Economic Area to the United States.
+Added: Virtually every jurisdiction in which we operate has established its own data security and privacy legal framework with which we or our customers must comply.
Since we are agnostic as to the data uploaded into our cloud offering by our cloud offering customers or processed by our platform in on-premises deployments, we may be hosting or otherwise processing substantial amounts of individually identifiable health information and other types of personally identifiable information.
+Added: The effects of any of this legislation could be potentially far-reaching and may require us to modify our data management practices and to incur substantial expense in an effort to comply.
In addition to government regulation, privacy advocates and industry groups may propose new and different self-regulatory standards that may apply to us.
−Removed: Because the interpretation and application of privacy and data protection laws are still uncertain, it is possible that these laws and other actual or alleged legal obligations, such as contractual or self-regulatory obligations, may be interpreted and applied in a manner that is inconsistent with our existing data management practices or the
−Removed: features of our platform.
+Added: Because the interpretation and application of privacy and data protection laws are still uncertain, it is possible these laws and other actual or alleged legal obligations such as contractual or self-regulatory obligations may be interpreted and applied in a manner inconsistent with our existing data management practices or the features of our platform.
If so, in addition to the possibility of fines, lawsuits, and other claims, we could be required to fundamentally change our business activities and practices or modify our software, which could have an adverse effect on our business.
Any inability to adequately address privacy concerns, even if unfounded, or comply with applicable privacy or data protection laws, regulations, and policies, could result in additional cost and liability to us, damage our reputation, inhibit sales, and adversely affect our business.
−Removed: Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulations, and policies that are applicable to the businesses of our customers may limit the use and adoption of, and reduce the overall demand for, our platform.
+Added: Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulations, and policies applicable to the businesses of our customers may limit the use and adoption of, and reduce the overall demand for, our platform.
Privacy concerns, whether valid or not valid, may inhibit market adoption of our platform particularly in certain industries and foreign countries.
+Added: If our platform fails to function in a manner that allows our customers to operate in compliance with regulations and/or industry standards, our revenue and operating results could be harmed.
+Added: Certain of our customers use our platform to create applications that ensure secure communications given the nature of the content being distributed and associated applicable regulatory requirements.
+Added: Governmental and other customers may also require our platform to comply with certain privacy, security, and other certifications and standards.
+Added: Our cloud platform holds various security certifications from government agencies and industry organizations, including the Federal Risk and Authorization Management Program (FedRAMP) compliance, HITRUST certification, and meets the ISO 27001, Payment Card Industry Data Security Standard (PCI DSS), and the various United States Health Insurance Portability and Accountability Act (HIPAA) standards.
+Added: Governments and industry organizations may also adopt new laws, regulations, or requirements or make changes to existing laws or regulations that could impact the demand for, or value of, our applications such as the European Banking Authority's regulations updated in September 2019 and the CCPA that took effect January 1, 2020.
+Added: If we fail to maintain our current security certifications and/or to continue to meet security standards, or if we are unable to adapt our platform to changing legal and regulatory standards or other requirements in a timely manner, our customers may lose confidence in our platform, and our business could be negatively impacted.
+Added: Changes in laws and regulations related to the internet or changes in the internet infrastructure itself may diminish the demand for our platform and could have a negative impact on our business.
+Added: The future success of our business, and particularly our cloud offering, depends upon the continued use of the internet as a primary medium for commerce, communication, and business applications.
+Added: Federal, state, or foreign government bodies or agencies have in the past adopted, and may in the future adopt, laws or regulations affecting the use of the internet as a commercial medium.
+Added: Changes in these laws or regulations could require us to modify our platform in order to comply with these changes.
+Added: In addition, government agencies or private organizations may begin to impose taxes, fees, or other charges for accessing the internet or commerce conducted via the internet.
+Added: These laws or charges could limit the growth of internet-related commerce or communications generally, resulting in reductions in the demand for internet-based solutions such as ours.
+Added: In addition, the use of the internet as a business tool could be adversely affected due to delays in the development or adoption of new standards and protocols to handle increased demands of internet activity, security, reliability, cost, ease of use, accessibility, and quality of service.
+Added: The performance of the internet and its acceptance as a business tool have been adversely affected by viruses, worms, and similar malicious programs, along with distributed denial of service (DDoS) and similar attacks.
+Added: As a result, the internet has experienced a variety of outages and other delays as a result of such damage to or attacks on portions of its infrastructure.
+Added: If the use of the internet is adversely affected by these issues, demand for our platform could suffer.
+Added: We are subject to anti-corruption laws with respect to our domestic and international operations, and non-compliance with such laws can subject us to criminal and/or civil liability and materially harm our business.
+Added: We are subject to the U.S.
+Added: Foreign Corrupt Practices Act of 1977, as amended, or the FCPA, the U.S.
+Added: domestic bribery statute contained in 18 U.S.C.
+Added: § 201, the U.S.
+Added: Travel Act, the United Kingdom Bribery Act 2010, and other anti-corruption laws in countries in which we conduct activities.
+Added: Anti-corruption laws are interpreted broadly and prohibit our company from authorizing, offering, or providing, directly or indirectly, improper payments or benefits to recipients in the public or private sector.
+Added: We use third-party law firms, accountants, and other representatives for regulatory compliance, sales, and other purposes in several countries.
+Added: We can be held liable for the corrupt or other illegal activities of these third-party representatives, our employees, contractors, and other agents, even if we do not explicitly authorize such activities.
+Added: In addition, although we have implemented policies and procedures to ensure compliance with anti-corruption laws, there can be no assurance all of our employees, representatives, contractors, or agents will comply with these laws at all times.
+Added: Noncompliance with these laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, suspension and/or debarment from contracting with certain persons, the loss of export privileges, reputational harm, adverse media coverage, and other collateral consequences.
+Added: If any subpoenas or investigations are launched, or governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, results of operations, and financial condition could be materially harmed.
+Added: In addition, responding to any action will likely result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees.
+Added: Enforcement actions and sanctions could further harm our business, results of operations, and financial condition.
+Added: Moreover, as an issuer of securities, we also are subject to the accounting and internal controls provisions of the FCPA.
+Added: These provisions require us to maintain accurate books and records and a system of internal controls sufficient to detect and prevent corrupt conduct.
+Added: Failure to abide by these provisions may have an adverse effect on our business, operations, or financial condition.
+Added: We are subject to governmental export and import controls and economic and trade sanctions that could impair our ability to conduct business in international markets and subject us to liability if we are not in compliance with applicable laws and regulations.
+Added: The United States and other countries maintain and administer export and import laws and regulations, including various economic and trade sanctions including those administered by the Office of Foreign Assets Control, or OFAC, which apply to our business.
+Added: We are required to comply with these laws and regulations.
+Added: If we fail to comply with such laws and regulations, we and certain of our employees could be subject to substantial civil or criminal penalties, including the possible loss of export or import privileges, fines which may be imposed on us and responsible employees or managers, and, in extreme cases, the incarceration of responsible employees or managers.
+Added: Changes in our platform, or changes in applicable export or import laws and regulations, may create delays in the introduction and sale of our platform in international markets or, in some cases, prevent the export or import of our platform to certain countries, governments or persons altogether.
+Added: Any change in export or import laws and regulations or economic or trade sanctions, shift in the enforcement or scope of existing laws and regulations, or change in the countries, governments, persons, or technologies targeted by such laws and regulations could also result in decreased use of our platform, or in our decreased ability to export or sell our platform to existing or potential customers.
+Added: Any decreased use of our services or limitation on our ability to export or sell our services would likely adversely affect our business, financial condition, and results of operations.
+Added: We incorporate encryption technology into certain of our products.
+Added: Encryption products may be exported outside of the United States only with the required export authorization, including by license, license exception, or other appropriate government authorization.
+Added: Obtaining the necessary export license or other authorization for a particular sale may be time-consuming and may result in the delay or loss of sales opportunities.
+Added: In addition, various countries regulate the import of certain encryption technology, including import permitting and licensing requirements, and have enacted laws that could limit our ability to distribute our products or could limit our customers’ ability to implement our products in those countries.
+Added: Although we take precautions to prevent our products from being provided in violation of such laws, our products may have been in the past, and could in the future, be provided inadvertently in violation of such laws, despite the precautions we take.
+Added: Governmental regulation of encryption technology and regulation of imports or exports, or our failure to obtain required import or export approval for our products, could harm our international sales and adversely affect our revenue.
+Added: Moreover, U.S.
+Added: export control laws and economic sanctions programs prohibit the provision of services to countries, governments, and persons subject to U.S.
+Added: economic embargoes and trade sanctions.
+Added: Even though we take precautions to prevent our platform from being used by U.S.
+Added: sanctions targets, our platform could be used by a sanctioned person or in an embargoed country despite such precautions.
+Added: Any such shipment could have negative consequences, including government investigations, penalties, and reputational harm.
+Added: Risks Related to Our Intellectual Property
Any failure to protect our proprietary technology and intellectual property rights could substantially harm our business and operating results.
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To safeguard these rights, we rely on a combination of patent, trademark, copyright, and trade secret laws and contractual protections in the United States and other jurisdictions, all of which provide only limited protection and may not now or in the future provide us with a competitive advantage.
−Removed: As of December 31, 2019, we had five granted patents and three patents pending related to our platform and its technology.
−Removed: We cannot assure you that any of our patent applications will result in the issuance of a patent or that the examination process will not require us to narrow our claims.
−Removed: Any patents that issue from any patent applications may not give us the protection that we seek or may be challenged, invalidated or circumvented.
−Removed: Any patents that may issue in the future from our pending or future patent applications may not provide sufficiently broad protection and may not be valid and enforceable in actions against alleged infringers.
−Removed: Any patents we have obtained or may obtain in the future may be found to be invalid or unenforceable in light of recent and future changes in the law, or because of technology developed prior to the inventions we have sought to patent or because of defects in our patent prosecution process.
+Added: As of December 31, 2020, we had five granted patents and six pending patent applications related to our platform and its technology.
We have registered the “Appian” name and logo in the United States and certain other countries.
We have registrations and/or pending applications for additional marks in the United States.
−Removed: however, we cannot assure you that any future trademark registrations will be issued for pending or future applications or that any registered trademarks will be enforceable or provide adequate protection of our proprietary rights.
−Removed: We also license software from third parties for integration into our products, including open source software and other software available on commercially reasonable terms.
−Removed: We cannot assure you that such third parties will maintain such software or continue to make it available.
+Added: We cannot assure you any current or future applications for registrations for patent or trademark applications will result in the grant of any valid, enforceable intellectual property rights.
+Added: Further, we cannot assure you any granted patent or trademark will provide the protection we seek, will be valid if challenged, or will be sufficiently broad in actions against alleged infringers.
+Added: Moreover, any of our granted intellectual property rights may be rendered invalid by future changes in the law, defects in our prosecution processes, or preexisting technology, rights, or marks.
In order to protect our unpatented proprietary technologies and processes, we rely on trade secret laws and confidentiality and invention assignment agreements with our employees, consultants, strategic partners, vendors, and others.
−Removed: Some of our customer contracts also require us to place our proprietary source code in escrow for the benefit of our customer in the event we go bankrupt, become insolvent or are unable to fulfill our support obligations under our customer contracts.
−Removed: Also, despite our efforts to protect our proprietary technology and trade secrets, unauthorized parties may attempt to misappropriate, copy, reverse engineer or otherwise obtain and use them.
+Added: Despite our efforts to protect our proprietary technology and trade secrets, unauthorized parties may attempt to misappropriate, copy, reverse engineer, or otherwise obtain and use them.
In addition, others may independently discover our trade secrets, in which case we would not be able to assert trade secret rights or develop similar technologies and processes.
−Removed: Further, the contractual provisions that we enter into may not prevent unauthorized use or disclosure of our proprietary technology or intellectual property rights and may not provide an adequate remedy in the event of unauthorized use or disclosure of our proprietary technology or intellectual property rights.
−Removed: Moreover, policing unauthorized use of our technologies, trade secrets and intellectual property is difficult, expensive and time-consuming, particularly in foreign countries where the laws may not be as protective of intellectual property rights as those in the United States and where mechanisms for enforcement of intellectual property rights may be weak.
−Removed: To the extent that we expand our activities outside of the United States, our exposure to unauthorized copying and use of our platform and proprietary information may increase.
+Added: Further, the contractual provisions we enter into may not prevent unauthorized use or disclosure of our proprietary technology or intellectual property rights and may not provide an adequate remedy in the event of any such unauthorized use or disclosure.
+Added: Policing unauthorized use of our technologies, trade secrets, and intellectual property is difficult, expensive, and time-consuming, particularly in foreign countries where the laws may not be as protective of intellectual property rights as those in
+Added: the United States and where mechanisms for enforcement of intellectual property rights may be weak.
+Added: To the extent we expand our activities outside of the United States, our exposure to unauthorized copying and use of our platform and proprietary information may increase.
We may be unable to determine the extent of any unauthorized use or infringement of our platform, technologies, or intellectual property rights.
−Removed: There can be no assurance that the steps that we take will be adequate to protect our proprietary technology and intellectual property, that others will not develop or patent similar or superior technologies, products or services, or that our trademarks, patents, and other intellectual property will not be challenged, invalidated or circumvented by others.
+Added: There can be no assurance the steps we take will be adequate to protect our proprietary technology and intellectual property, that others will not develop or patent similar or superior technologies, products or services, or that our trademarks, patents, and other intellectual property will not be challenged, invalidated, or circumvented by others.
Furthermore, effective trademark, patent, copyright, and trade secret protection may not be available in every country in which our software is available or where we have employees or independent contractors.
−Removed: In addition, the legal standards relating to the validity,
−Removed: enforceability, and scope of protection of intellectual property rights in internet and software-related industries are uncertain and still evolving.
In order to protect our intellectual property rights, we may be required to spend significant resources to monitor and protect these rights.
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The litigation may involve patent holding companies or other adverse patent owners that have no relevant product revenue and against which our patents may therefore provide little or no deterrence.
−Removed: In the past, we have been subject to allegations of patent infringement that were unsuccessful, and we may in the future be subject to claims that we have misappropriated, misused, or infringed other parties’ intellectual property rights, and, to the extent we gain greater market visibility or face increasing competition, we face a higher risk of being the subject of intellectual property infringement claims, which is not uncommon with respect to enterprise software companies.
−Removed: We also generally grant our customers ownership of any custom applications that we develop for them, subject to our continued ownership of our pre-existing intellectual property rights and, in the past, a customer for whom we have developed custom applications has incorrectly alleged that applications we have independently developed infringed the customer’s intellectual property rights.
−Removed: In addition, we have in the past and may in the future be subject to claims that employees or contractors, or we, have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of our competitors or other parties.
−Removed: To the extent that intellectual property claims are made against our customers based on their usage of our technology, we have certain obligations to indemnify and defend such customers from those claims.
+Added: In the past, we have been subject to allegations of patent infringement that were unsuccessful, and we may in the future be subject to claims we have misappropriated, misused, or infringed other parties’ intellectual property rights, and, to the extent we gain greater market visibility or face increasing competition, we face a higher risk of being the subject of intellectual property infringement claims, which is not uncommon with respect to enterprise software companies.
+Added: We also generally grant our customers ownership of any custom applications we develop for them, subject to our continued ownership of our pre-existing intellectual property rights and, in the past, a customer for whom we have developed custom applications has incorrectly alleged applications we have independently developed infringed the customer’s intellectual property rights.
+Added: In addition, we have in the past and may in the future be subject to claims employees or contractors, or we, have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of our competitors or other parties.
+Added: To the extent intellectual property claims are made against our customers based on their usage of our technology, we have certain obligations to indemnify and defend such customers from those claims.
The term of our contractual indemnity provisions often survives termination or expiration of the applicable agreement.
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We might be required to seek a license for the third-party intellectual property rights, which may not be available on reasonable terms or at all.
−Removed: Even if a license is available to us, we may be required to pay significant upfront fees, milestones or royalties, which would increase our operating expenses.
Moreover, to the extent we only have a license to any intellectual property used in our platform, there may be no guarantee of continued access to such intellectual property, including on reasonable terms.
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Any of these results would adversely affect our business, results of operations, financial condition, and cash flows.
−Removed: Changes in laws and regulations related to the internet or changes in the internet infrastructure itself may diminish the demand for our platform and could have a negative impact on our business.
−Removed: The future success of our business, and particularly our cloud offering, depends upon the continued use of the internet as a primary medium for commerce, communication and business applications.
−Removed: Federal, state or foreign government bodies or
−Removed: agencies have in the past adopted, and may in the future adopt, laws or regulations affecting the use of the internet as a commercial medium.
−Removed: Changes in these laws or regulations could require us to modify our platform in order to comply with these changes.
−Removed: In addition, government agencies or private organizations may begin to impose taxes, fees or other charges for accessing the internet or commerce conducted via the internet.
−Removed: These laws or charges could limit the growth of internet-related commerce or communications generally, resulting in reductions in the demand for internet-based solutions such as ours.
−Removed: In addition, the use of the internet as a business tool could be adversely affected due to delays in the development or adoption of new standards and protocols to handle increased demands of internet activity, security, reliability, cost, ease of use, accessibility, and quality of service.
−Removed: The performance of the internet and its acceptance as a business tool have been adversely affected by “viruses,” “worms” and similar malicious programs, along with distributed denial of service (DDoS) and similar attacks.
−Removed: As a result, the internet has experienced a variety of outages and other delays as a result of such damage to or attacks on portions of its infrastructure.
−Removed: If the use of the internet is adversely affected by these issues, demand for our platform could suffer.
−Removed: Our operating results may be negatively affected if we are required to pay additional state sales tax, value added, or other transaction taxes, and we could be subject to liability with respect to all or a portion of past or future sales.
+Added: Portions of our platform utilize open source software, and any failure to comply with the terms of one or more of these open source licenses could negatively affect our business.
+Added: Our software contains software licensed to us by third parties under so-called “open source” licenses, including the GNU Lesser General Public License, the BSD License, and others.
+Added: From time to time, there have been claims against companies that distribute or use open source software in their products and services, asserting such open source software infringes the claimants’ intellectual property rights.
+Added: We could be subject to suits by parties claiming what we believe to be licensed open source software infringes their intellectual property rights.
+Added: Use and distribution of open source software may entail greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the code.
+Added: In addition, certain open source licenses require source code for software programs subject to the license be made available to the public and that any modifications or derivative works to such open source software continue to be licensed under the same terms.
+Added: Although we monitor our use of open source software in an effort both to comply with the terms of the applicable open source licenses and to avoid subjecting our software to conditions we do not intend, the terms of many open source licenses have not been interpreted by U.S.
+Added: courts, and there is a risk these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to commercialize our platform.
+Added: By the terms of certain open source licenses, we could be required to release the source code of our software and to make our software available under open source licenses, if we combine or distribute our software with open source software in a certain manner.
+Added: In the event portions of our software are determined to be subject to an open source license, we could be required to publicly release the affected portions of our source code, re-engineer all, or a portion of, that software or otherwise be limited in the licensing of our software, each of which could reduce or eliminate the value of our platform.
+Added: Many of the risks associated with usage of open source software cannot be eliminated and could negatively affect our business, results of operations, and financial condition.
+Added: Risks Related to Tax and Accounting Matters
+Added: If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected.
+Added: The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.
+Added: We base our estimates on historical experience and on various other assumptions we believe to be reasonable under the circumstances, as provided in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report on Form 10-K.
+Added: The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities, and equity, and the amount of revenue and expenses.
+Added: Significant assumptions and estimates used in preparing our consolidated financial statements include those related to revenue recognition, income taxes and the related valuation allowance, and stock-based compensation.
+Added: Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below the expectations of securities analysts and investors, resulting in a decline in the trading price of our Class A common stock.
+Added: Our operating results may be negatively affected by additional tax liabilities.
We currently collect and remit sales and use, value added, and other transaction taxes in certain of the jurisdictions where we do business based on our assessment of whether tax is owed by us in such jurisdictions.
−Removed: However, in some jurisdictions in which we do business, we do not believe that we owe such taxes, and therefore we currently do not collect and remit such taxes in those jurisdictions or record contingent tax liabilities in respect of those jurisdictions.
+Added: However, in some jurisdictions in which we do business, we do not believe we owe such taxes, and therefore we currently do not collect and remit such taxes or record contingent tax liabilities in those jurisdictions.
Further, due to uncertainty in the application and interpretation of applicable tax laws in various jurisdictions, we may be exposed to sales and use, value added, or other transaction tax liability.
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Any increased tax burden may decrease our ability or willingness to compete in relatively burdensome tax jurisdictions, result in substantial tax liabilities related to past sales, or otherwise harm our business and operating results.
−Removed: We are a multinational organization faced with increasingly complex tax issues in many jurisdictions, and we could be obligated to pay additional taxes in various jurisdictions.
−Removed: As a multinational organization, we may be subject to taxation in several jurisdictions around the world with increasingly complex tax laws and the amount of taxes we pay in these jurisdictions could increase substantially as a result of changes in the applicable tax principles, including increased tax rates, new tax laws or revised interpretations of existing tax laws and precedents, which could have a material adverse effect on our liquidity and operating results.
−Removed: For example, we continue to maintain a full valuation allowance on the deferred tax assets of our subsidiary in Switzerland as we determined that it was not more likely than not that we would be able to realize a benefit from the gross net operating loss at that subsidiary.
−Removed: Based on our cumulative operating results as of December 31, 2019, and assessment of our expected future results of operations, we determined that it was not more-likely-than not that we would be able to realize the deferred tax assets prior to expiration.
−Removed: In addition, the authorities in these jurisdictions could review our tax returns and impose additional tax, interest and penalties, and the authorities could claim that various withholding requirements apply to us or our subsidiaries or assert that benefits of tax treaties are not available to us or our subsidiaries, any of which could have a material impact on us and the results of our operations.
+Added: In addition, as a multinational organization, we may be subject to taxation in several jurisdictions around the world with increasingly complex tax laws and the amount of taxes we pay in these jurisdictions could increase substantially as a result of changes in the applicable tax principles, including increased tax rates, new tax laws, or revised interpretations of existing tax laws and precedents.
+Added: Furthermore, the authorities in these jurisdictions could review our tax returns and impose additional tax, interest, and penalties, and the authorities could claim various withholding requirements apply to us or our subsidiaries or assert benefits of tax treaties are not available to us or our subsidiaries, any of which could have a material impact on us and the results of our operations.
Our ability to use net operating losses to offset future taxable income may be subject to certain limitations.
−Removed: As of December 31, 2019, we had U.S.
+Added: As of December 31, 2020, we had gross U.S.
federal and state net operating loss carryforwards, or NOLs, of $183.9 million and $177.2 million, respectively, available to offset future taxable income.
NOLs generated in tax years ended on or prior to December 31, 2017 will substantially expire by 2037 if unused.
−Removed: As a result of certain provisions in the Tax Cuts and Jobs Act of 2017, or the TCJA, U.S.
−Removed: federal NOLs and certain state NOLs generated after 2017 have an indefinite carryforward period.
−Removed: A lack of future taxable income would adversely affect our ability to utilize these NOLs before they expire.
+Added: As a result of certain provisions in the Tax Cuts and Jobs Act of 2017, or the TCJA, as modified by the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, federal NOLs generated in tax years beginning after December 31, 2017 may be carried forward indefinitely but, in the case of tax years beginning after 2020, may only be used to offset 80% of our taxable income annually.
+Added: Under the TCJA, as modified by the CARES Act, federal NOLs generated in taxable years beginning in 2018, 2019, and 2020 will similarly carry forward indefinitely but will not be subject to such 80% of annual taxable income limitation.
Under the provisions of the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code, substantial changes in our ownership may limit the amount of pre-change NOLs that can be utilized annually in the future to offset taxable income.
Section 382 of the Internal Revenue Code imposes limitations on a company’s ability to use NOLs if a company experiences a more-than-50-percent ownership change over a three-year testing period.
−Removed: Based upon our analysis as of December 31, 2019, we have determined that we do not expect these limitations to impair our ability to use our NOLs prior to expiration.
+Added: Based upon our analysis as of December 31, 2020, we have determined we do not expect these limitations to impair our ability to use our NOLs prior to expiration.
However, if changes in our ownership occur in the future, our ability to use our NOLs may be further limited.
For these reasons, we may not be able to utilize a material portion of the NOLs, even if we achieve profitability.
−Removed: As of December 31, 2019, we also had foreign NOLs of $62.8 million, primarily at Appian Software Switzerland (k/n/a Appian Software International), our wholly-owned subsidiary.
+Added: As of December 31, 2020, we also had gross foreign NOLs of $78.6 million, primarily at our Swiss subsidiary, Appian Software International.
These NOLs will begin to expire in 2021 to 2027, if unused.
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If the mix of profits and losses, our ability to use tax credits, or effective tax rates by jurisdiction is different than those estimated, our actual tax rate could be materially different than forecasted, which could have a material impact on our results of business, financial condition, and results of operations.
−Removed: Department of Treasury has broad authority to issue regulations and interpretative guidance that may significantly impact how we will apply the law and impact our results of operations in the period issued.
−Removed: As additional regulatory guidance is issued by the applicable taxing authorities, as accounting treatment is clarified, as we perform additional analysis on the application of the law, and as we refine estimates in calculating the effect, our final analysis, which will be recorded in the period completed, may be different from our current provisional amounts, which could materially affect our tax obligations and effective tax rate.
−Removed: We are subject to anti-corruption laws with respect to our domestic and international operations and non-compliance with such laws can subject us to criminal and/or civil liability and materially harm our business.
−Removed: We are subject to the U.S.
−Removed: Foreign Corrupt Practices Act of 1977, as amended, or the FCPA, the U.S.
−Removed: domestic bribery statute contained in 18 U.S.C.
−Removed: § 201, the U.S.
−Removed: Travel Act, the United Kingdom Bribery Act 2010, and other anti-corruption laws in countries in which we conduct activities.
−Removed: Anti-corruption laws are interpreted broadly and prohibit our company from authorizing, offering, or providing, directly or indirectly, improper payments or benefits to recipients in the public or private sector.
−Removed: We use third-party law firms, accountants, and other representatives for regulatory compliance, sales, and other purposes in several countries.
−Removed: We can be held liable for the corrupt or other illegal activities of these third-party representatives, our employees, contractors, and other agents, even if we do not explicitly authorize such activities.
−Removed: In addition, although we have implemented policies and procedures to ensure compliance with anti-corruption laws, there can be no assurance that all of our employees, representatives, contractors, or agents will comply with these laws at all times.
−Removed: Noncompliance with these laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, suspension and/or debarment from contracting with certain persons, the loss of export privileges, reputational harm, adverse media coverage, and other collateral consequences.
−Removed: If any subpoenas or investigations are launched, or governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, results of operations and financial condition could be materially harmed.
−Removed: In addition, responding to any action will likely result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional
−Removed: Enforcement actions and sanctions could further harm our business, results of operations, and financial condition.
−Removed: Moreover, as an issuer of securities, we also are subject to the accounting and internal controls provisions of the FCPA.
−Removed: These provisions require us to maintain accurate books and records and a system of internal controls sufficient to detect and prevent corrupt conduct.
−Removed: Failure to abide by these provisions may have an adverse effect on our business, operations or financial condition.
−Removed: We are subject to governmental export and import controls and economic and trade sanctions that could impair our ability to conduct business in international markets and subject us to liability if we are not in compliance with applicable laws and regulations.
−Removed: The United States and other countries maintain and administer export and import laws and regulations, including various economic and trade sanctions including those administered by the Office of Foreign Assets Control, or OFAC, which apply to our business.
−Removed: We are required to comply with these laws and regulations.
−Removed: If we fail to comply with such laws and regulations, we and certain of our employees could be subject to substantial civil or criminal penalties, including the possible loss of export or import privileges;
−Removed: fines, which may be imposed on us and responsible employees or managers;
−Removed: and, in extreme cases, the incarceration of responsible employees or managers.
−Removed: Changes in our platform, or changes in applicable export or import laws and regulations may create delays in the introduction and sale of our platform in international markets or, in some cases, prevent the export or import of our platform to certain countries, governments or persons altogether.
−Removed: Any change in export or import laws and regulations or economic or trade sanctions, shift in the enforcement or scope of existing laws and regulations, or change in the countries, governments, persons or technologies targeted by such laws and regulations could also result in decreased use of our platform, or in our decreased ability to export or sell our platform to existing or potential customers.
−Removed: Any decreased use of our services or limitation on our ability to export or sell our services would likely adversely affect our business, financial condition, and results of operations.
−Removed: We incorporate encryption technology into certain of our products.
−Removed: Encryption products may be exported outside of the United States only with the required export authorization, including by license, license exception or other appropriate government authorization.
−Removed: Obtaining the necessary export license or other authorization for a particular sale may be time-consuming and may result in the delay or loss of sales opportunities.
−Removed: In addition, various countries regulate the import of certain encryption technology, including import permitting and licensing requirements, and have enacted laws that could limit our ability to distribute our products or could limit our customers’ ability to implement our products in those countries.
−Removed: Although we take precautions to prevent our products from being provided in violation of such laws, our products may have been in the past, and could in the future be, provided inadvertently in violation of such laws, despite the precautions we take.
−Removed: Governmental regulation of encryption technology and regulation of imports or exports, or our failure to obtain required import or export approval for our products, could harm our international sales and adversely affect our revenue.
−Removed: Moreover, U.S.
−Removed: export control laws and economic sanctions programs prohibit the provision of services to countries, governments and persons that are subject to U.S.
−Removed: economic embargoes and trade sanctions.
−Removed: Even though we take precautions to prevent our platform from being used by U.S.
−Removed: sanctions targets, our platform could be used by a sanctioned person or in an embargoed country despite such precautions.
−Removed: Any such shipment could have negative consequences, including government investigations, penalties and reputational harm.
−Removed: If our platform fails to function in a manner that allows our customers to operate in compliance with regulations and/or industry standards, our revenue and operating results could be harmed.
−Removed: Certain of our customers use our platform to create applications that ensure secure communications given the nature of the content being distributed and associated applicable regulatory requirements.
−Removed: Governmental and other customers may also require our platform to comply with certain privacy, security and other certifications and standards.
−Removed: Our cloud platform holds various security certifications from government agencies and industry organizations, including the Federal Risk and Authorization Management Program (FedRAMP) compliance, HITRUST certification, and meets the ISO 27001, Payment Card Industry Data Security Standard (PCI DSS) and the various United States Health Insurance Portability and Accountability Act (HIPAA) standards.
−Removed: Governments and industry organizations may also adopt new laws, regulations or requirements, or make changes to existing laws or regulations, that could impact the demand for, or value of, our applications, such as the European Banking Authority's regulations updated in September 2019 and the CCPA that took effect January 1, 2020.
−Removed: If we fail to maintain our current security certifications and/or to continue to meet security standards, or if we are unable to adapt our
−Removed: platform to changing legal and regulatory standards or other requirements in a timely manner, our customers may lose confidence in our platform and our business could be negatively impacted.
−Removed: Our business could be adversely affected if our employees cannot obtain and maintain required security clearances or we cannot maintain our facility security clearance.
−Removed: If and when awarded, certain U.S.
−Removed: government contracts require our employees to maintain various levels of security clearances, and we would be required to maintain our facility security clearance, to comply with Department of Defense, or DoD, requirements.
−Removed: The DoD has strict security clearance requirements for personnel who work on classified programs.
−Removed: Obtaining and maintaining security clearances for employees involves a lengthy process, and it is difficult to identify, recruit and retain employees who already hold security clearances.
−Removed: If our employees are unable to obtain security clearances in a timely manner, or at all, or if our employees who hold security clearances are unable to maintain their clearances or terminate employment with us, then a customer requiring classified work could terminate an existing contract or decide not to renew the contract upon its expiration.
−Removed: To the extent we are not able to maintain our facility security clearance, we may not be able to bid on or win new classified contracts.
+Added: We are obligated to develop and maintain proper and effective internal controls over financial reporting, and any failure to maintain the adequacy of these internal controls may adversely affect investor confidence in our company and, as a result, the value of our Class A common stock.
+Added: We are required, pursuant to Section 404 of the Sarbanes-Oxley Act, or Section 404, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting on an annual basis.
+Added: This assessment includes disclosure of any material weaknesses identified by our management in our internal control over financial reporting.
+Added: During the evaluation and testing process of our internal controls, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to assert our internal control over financial reporting is effective.
+Added: While we have established certain procedures and controls over our financial reporting processes, we cannot assure you these
+Added: efforts will prevent restatements of our financial statements in the future.
+Added: Our independent registered public accounting firm is also required, pursuant to Section 404, to attest to, and report on, management's assessment of our internal control over financial reporting, which report is included elsewhere in this Annual Report on Form 10-K.
+Added: This assessment is required to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting.
+Added: For future reporting periods, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed, or operating.
+Added: We may not be able to remediate any future material weaknesses or to complete our evaluation, testing, and any required remediation in a timely fashion.
+Added: Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition or results of operations.
+Added: If we are unable to conclude our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness or significant deficiency in our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our Class A common stock could decline, and we could be subject to sanctions or investigations by the Nasdaq Stock Market, the SEC, or other regulatory authorities.
+Added: Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.
Risks Related to Our Class A Common Stock
−Removed: Our stock price may be volatile, and you may lose some or all of your investment.
−Removed: The market price of our Class A common stock may be highly volatile and may fluctuate substantially as a result of a variety of factors.
−Removed: Since shares of our Class A common stock were sold in our initial public offering, or IPO, in May 2017 at a price of $12.00 per share, our stock price has ranged from an intraday low of $14.60 to an intraday high of $63.77 through February 19, 2020.
−Removed: Factors that may affect the market price of our Class A common stock include:
−Removed: • actual or anticipated fluctuations in our financial condition and operating results;
−Removed: • variance in our financial performance from expectations of securities analysts;
−Removed: • changes in the prices of subscriptions to our platform;
−Removed: • changes in our projected operating and financial results;
−Removed: • changes in laws or regulations applicable to our platform;
−Removed: • announcements by us or our competitors of significant business developments, acquisitions or new offerings;
−Removed: • our involvement in any litigation;
−Removed: • our sale of our Class A common stock or other securities in the future;
−Removed: • changes in senior management or key personnel;
−Removed: • the trading volume of our Class A common stock;
−Removed: • changes in the anticipated future size and growth rate of our market;
−Removed: • general economic, regulatory and market conditions.
−Removed: The stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies.
−Removed: These fluctuations have often been unrelated or disproportionate to the operating performance of those companies.
−Removed: Broad market and industry fluctuations, as well as general economic, political, regulatory and market conditions, may negatively impact the market price of our Class A common stock.
−Removed: In the past, companies that have experienced volatility in the market price of their securities have been subject to securities class action litigation.
−Removed: We may be the target of this type of litigation in the future, which could result in substantial costs and divert our management’s attention.
−Removed: An active public trading market may not be sustained.
−Removed: An active public trading market for our Class A common stock may not be sustained.
−Removed: The lack of an active market may impair your ability to sell your shares of Class A common stock at the time you wish to sell them or at a price that you consider reasonable.
−Removed: The lack of an active market may also reduce the fair value of your shares.
−Removed: An inactive market may also impair our ability to raise capital to continue to fund operations by selling shares and may impair our ability to acquire other companies or technologies by using our shares as consideration.
−Removed: Future sales of our Class A common stock in the public market could cause the market price of our Class A common stock to decline.
−Removed: Sales of a substantial number of shares of our Class A common stock in the public market, or the perception that these sales might occur, could depress the market price of our Class A common stock and could impair our ability to raise capital through the sale of additional equity securities.
−Removed: We are unable to predict the effect that such sales may have on the prevailing market price of our Class A common stock.
−Removed: As of December 31, 2019, there were 3,749,311 shares of Class B common stock and 709,300 shares of Class A common stock subject to outstanding options and 1,022,835 shares of Class A common stock to be issued upon the vesting of outstanding restricted stock units.
−Removed: We have registered all of the shares of Class A common stock issuable (i) upon conversion of the shares of Class B common stock issuable upon exercise of outstanding options, (ii) upon the exercise of outstanding options, (iii) upon the vesting of outstanding restricted stock units and (iv) upon exercise or settlement of any options or other equity incentives we may grant in the future, for public resale under the Securities Act.
−Removed: Accordingly, these shares may be freely sold in the public market upon issuance as permitted by any applicable vesting requirements, subject to the lock-up agreements described above and compliance with applicable securities laws.
−Removed: The sale of shares of our Class A common stock by a single large stockholder could cause the market price of our Class A common stock to decline.
−Removed: As of December 31, 2019, approximately 20% of our publicly traded Class A common stock was held by a single stockholder.
−Removed: Should this stockholder elect to sell all or a significant portion of its shares of our Class A common stock, the market price of our Class A common stock and our ability to raise capital through the sale of additional equity securities could be negatively affected.
−Removed: We cannot predict the effect that such a sale may have on the prevailing market price of our Class A common stock.
The dual class structure of our common stock and the existing ownership of capital stock by Matthew Calkins, our founder and Chief Executive Officer, has the effect of concentrating voting control with Mr.
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Calkins and other holders of Class B common stock will generally result in those shares converting on a 1:1 basis to Class A common stock, which will have the effect, over time, of increasing the relative voting power of those holders of Class B common stock who retain their shares in the long-term.
−Removed: We have not elected to take advantage of the “controlled company” exemption to the corporate governance rules for publicly-listed companies but may do so in the future.
−Removed: Because our Chief Executive Officer, Mr.
−Removed: Calkins, owns in excess of 50% of the voting power of our outstanding capital stock, we are eligible to elect the “controlled company” exemption to the corporate governance rules for publicly-listed
−Removed: We have not elected to do so.
−Removed: If we decide to become a “controlled company” under the corporate governance rules for publicly-listed companies, we would not be required to have a majority of our board of directors be independent, nor would we be required to have a compensation committee or an independent nominating function.
−Removed: If we chose controlled company status in the future, our status as a controlled company could cause our Class A common stock to be less attractive to certain investors or otherwise harm our trading price.
−Removed: If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our stock price and trading volume could decline.
−Removed: The trading market for our Class A common stock depends, in part, on the research and reports that securities or industry analysts publish about us or our business.
−Removed: We do not have any control over these analysts.
−Removed: If our financial performance fails to meet analyst estimates or one or more of the analysts who cover us downgrade our shares or change their opinion of our shares, our share price would likely decline.
−Removed: If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.
We do not intend to pay dividends for the foreseeable future and, as a result, your ability to achieve a return on your investment will depend on appreciation in the price of our Class A common stock.
We have never declared or paid any cash dividends on our common stock, and we do not intend to pay any cash dividends in the foreseeable future.
−Removed: Although we paid a cash dividend in connection with the conversion of our Series A preferred stock to Class B common stock immediately prior to the closing of the IPO, which was agreed to at the time of the original issuance of the Series A preferred stock, we anticipate that we will retain all of our future earnings for use in the development of our business and for general corporate purposes.
+Added: Although we paid a cash dividend in connection with the conversion of our Series A preferred stock to Class B common stock immediately prior to the closing of the IPO, which was agreed to at the time of the original issuance of the Series A preferred stock, we anticipate we will retain all of our future earnings for use in the development of our business and for general corporate purposes.
Additionally, our ability to pay dividends on our common stock is limited by restrictions under the terms of our loan and security agreement with Silicon Valley Bank.
1 unchanged sentence
Accordingly, investors must rely on sales of their Class A common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments.
−Removed: We are obligated to develop and maintain proper and effective internal controls over financial reporting and any failure to maintain the adequacy of these internal controls may adversely affect investor confidence in our company and, as a result, the value of our Class A common stock.
−Removed: We are required, pursuant to Section 404 of the Sarbanes-Oxley Act, or Section 404, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting on an annual basis.
−Removed: This assessment includes disclosure of any material weaknesses identified by our management in our internal control over financial reporting.
−Removed: During the evaluation and testing process of our internal controls, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal control over financial reporting is effective.
−Removed: While we have established certain procedures and controls over our financial reporting processes, we cannot assure you that these efforts will prevent restatements of our financial statements in the future.
−Removed: Our independent registered public accounting firm is also required, pursuant to Section 404, to attest to, and report on, management's assessment of our internal control over financial reporting, which report is included elsewhere in this Annual Report on Form 10-K.
−Removed: This assessment is required to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting.
−Removed: For future reporting periods, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed or operating.
−Removed: We may not be able to remediate any future material weaknesses, or to complete our evaluation, testing and any required remediation in a timely fashion.
−Removed: Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition or results of operations.
−Removed: If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness or significant deficiency in our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our Class A common stock could decline, and we could be subject to sanctions or investigations by the Nasdaq Stock Market, the SEC or other regulatory authorities.
−Removed: Failure to remedy any material weakness in
−Removed: our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.
Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us more difficult, limit attempts by our stockholders to replace or remove our current management, and limit the market price of our Class A common stock.
2 unchanged sentences
In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally prohibit a Delaware corporation from engaging in any of a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder became an “interested” stockholder.
−Removed: Any of the foregoing provisions could limit the price that investors might be willing to pay in the future for shares of our Class A common stock, and they could deter potential acquirers of our company, thereby reducing the likelihood that you would receive a premium for your shares of our Class A common stock in an acquisition.
+Added: Any of the foregoing provisions could limit the price investors might be willing to pay in the future for shares of our Class A common stock, and they could deter potential acquirers of our company, thereby reducing the likelihood you would receive a premium for your shares of our Class A common stock in an acquisition.
Our amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us and limit the market price of our Class A common stock.
Pursuant to our amended and restated certificate of incorporation, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, or other employees to us or our stockholders, (3) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation, or our amended and restated bylaws, or (4) any action asserting a claim governed by the internal affairs doctrine.
−Removed: Our amended and restated certificate of incorporation also provides that the federal district courts of the United States will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act, subject to and contingent upon a final adjudication in the State of Delaware of the enforceability of such exclusive forum provision.
−Removed: Our amended and restated certificate of incorporation further provides that any person or entity purchasing or otherwise acquiring any interest in shares of our Class A common stock is deemed to have notice of and consented to the foregoing provisions.
+Added: Our amended and restated certificate of incorporation also provides the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act.
+Added: Our amended and restated certificate of incorporation further provides any person or entity purchasing or otherwise acquiring any interest in shares of our Class A common stock is deemed to have notice of and consented to the foregoing provisions.
The forum selection clause in our amended and restated certificate of incorporation may limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us and limit the market price of our Class A common stock.
−Removed: If a court were to find either exclusive-forum provision in our amended and restated certificate of incorporation to be inapplicable or unenforceable, we may incur additional costs associated with resolving the dispute in other jurisdictions.
−Removed: For example, the Court of Chancery of the State of Delaware recently determined that the exclusive forum provision of federal district courts of the United States for resolving any complaint asserting a cause of action arising under the Securities Act is not enforceable.
−Removed: However, this decision is being reviewed and may be ultimately overturned by the Delaware Supreme Court.
−Removed: If this ultimate adjudication were to occur, we would enforce the federal district court exclusive forum provision in our amended and restated certificate of incorporation.
+Added: GENERAL RISK FACTORS
+Added: The effects of national and global epidemics, including the recent COVID-19 pandemic, could have an adverse impact on our business, operations, and the markets and communities in which we operate.
+Added: In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic.
+Added: Our business and operations could be adversely affected by national and global epidemics, including the recent COVID-19 pandemic, impacting the markets and communities in which we operate.
+Added: In response to the COVID-19 pandemic, many state, local, and foreign governments have put in place, and others in the future may put in place, quarantines, executive orders, shelter-in-place orders, and similar government orders and restrictions in order to control the spread of the disease.
+Added: Such orders or restrictions, or the perception that such orders or restrictions could occur, have resulted in business closures, work stoppages, slowdowns and delays, work-from-home policies, and travel restrictions, among other effects that could negatively impact productivity and disrupt our operations.
+Added: For example, we have implemented a work-from-home policy for employees, and we may take further actions that alter our operations as may be required by federal, state, or local authorities or which we determine are in the best interests of our employees and stockholders.
+Added: In addition, while the potential impact and duration of the COVID-19 pandemic on the global economy and our business in particular may be difficult to assess or predict, the pandemic has resulted in, and may continue to result in, significant disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity.
+Added: The COVID-19 pandemic also could reduce the demand for our customers’ products and services, which could negatively impact our customers’ willingness to renew or enter into contracts with us or our ability to collect accounts receivable on a timely basis, which, if significant, could materially and adversely affect our business, results of operations, and financial condition.
+Added: The global pandemic of COVID-19 continues to rapidly evolve, and we will continue to monitor the COVID-19 situation closely.
+Added: The ultimate impact of the COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to change.
+Added: We do not yet know the full extent of potential delays or impacts on our business, operations, or the global economy as a whole, which makes our future results difficult to predict.
+Added: In addition, to the extent the ongoing COVID-19 pandemic adversely affects our business and results of operations, it may also have the effect of heightening many of the other risks and uncertainties described herein.
+Added: Unfavorable conditions in the global economy or the vertical markets we serve could limit our ability to grow our business and negatively affect our operating results.
+Added: General worldwide economic conditions have experienced significant instability due to the global economic uncertainty and financial market conditions caused by the COVID-19 pandemic.
+Added: These conditions make it extremely difficult for customers and us to accurately forecast and plan future business activities and could cause customers to reduce or delay their software spending.
+Added: For example, we believe there could be some short-term impact from the COVID-19 pandemic on spending by our customers.
+Added: At this time, the potential impact on customer spend from the COVID-19 pandemic is difficult to predict and, therefore, it is not possible to fully determine the impact on our future results.
+Added: Historically, economic downturns have resulted in overall reductions in software spending.
+Added: If macroeconomic conditions deteriorate or are characterized by uncertainty or volatility, customers may curtail or freeze spending on software in general and for software such as ours specifically, which could have an adverse impact on our business, financial condition, and operating results.
+Added: We have historically generated a majority of our revenue from customers in the financial services, government, and life sciences verticals.
+Added: While these verticals have not been affected as severely by weak economic conditions caused by COVID-19 as the retail, hospitality, and entertainment industries, we cannot assure these verticals will not suffer more severe losses in the future.
+Added: Furthermore, we cannot predict the timing, strength, or duration of any economic slowdown or recovery.
+Added: In addition, even if the overall economy is robust, we cannot assure the market for services such as ours will experience growth or that we will experience growth.
+Added: Our stock price may be volatile, and you may lose some or all of your investment.
+Added: The market price of our Class A common stock may be highly volatile and may fluctuate substantially as a result of a variety of factors.
+Added: Since shares of our Class A common stock were sold in our initial public offering, or IPO, in May 2017 at a price of $12.00 per share, our stock price has ranged from an intraday low of $14.60 to an intraday high of $260.00 through February 15, 2021.
+Added: Factors that may affect the market price of our Class A common stock and our ability to raise capital through the sale of additional equity securities include:
+Added: • Actual or anticipated fluctuations in our financial condition and operating results;
+Added: • Variance in our financial performance from expectations of securities analysts;
+Added: • Changes in the prices of subscriptions to our platform;
+Added: • Changes in our projected operating and financial results;
+Added: • Changes in laws or regulations applicable to our platform;
+Added: • Announcements by us or our competitors of significant business developments, acquisitions, or new offerings;
+Added: • Our involvement in any litigation;
+Added: • Our sale of our Class A common stock or other securities in the future;
+Added: • Changes in senior management or key personnel;
+Added: • The trading volume of our Class A common stock;
+Added: • Trading activity by one or both large stockholders who together owned approximately 32% of our publicly traded Class A common stock as of December 31, 2020;
+Added: • Changes in the anticipated future size and growth rate of our market;
+Added: • General economic, regulatory, and market conditions.
+Added: The stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies.
+Added: These fluctuations have often been unrelated or disproportionate to the operating performance of those companies.
+Added: Broad market and industry fluctuations, as well as general economic, political, regulatory, and market conditions, may negatively impact the market price of our Class A common stock.
+Added: In the past, companies that have experienced volatility in the market price of their securities have been subject to securities class action litigation.
+Added: We may be the target of this type of litigation in the future, which could result in substantial costs and divert our management’s attention.
+Added: If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our stock price and trading volume could decline.
+Added: The trading market for our Class A common stock depends, in part, on the research and reports securities or industry analysts publish about us or our business.
+Added: We do not have any control over these analysts.
+Added: If our financial performance fails to meet analyst estimates or one or more of the analysts who cover us downgrade our shares or change their opinion of our shares, our share price would likely decline.
+Added: If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.
Unresolved Staff Comments.
Not applicable.
−Removed: Our corporate headquarters occupies approximately 210,000 square feet in Tysons, Virginia under an operating lease that expires in October 2031.
−Removed: We also lease space in the United Kingdom and Australia under operating lease agreements with various expiration dates through 2026.
−Removed: We believe that our facilities are suitable and adequate to meet our needs.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.