Item 1A. Risk Factors
Item 1A. RISK FACTORS
Our business is subject to risks and events that, if they occur, could adversely affect our financial condition and results of operations and the trading price of our securities. In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors described in “Part I, Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 16, 2023. Other than as set forth below, there have been no material changes from the risk factors described in that report.
We maintain cash deposits in excess of federally insured limits. Adverse developments affecting financial institutions, including bank failures, could adversely affect our liquidity and financial performance.
We regularly maintain domestic cash deposits in banks insured by the Federal Deposit Insurance Corporation (the “FDIC”) that exceed the FDIC insurance limits. Bank failures, events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, or concerns or rumors about such events, may lead to liquidity constraints. For example, on March 10, 2023, Silicon Valley Bank (“SVB”) was closed by the California Department of Financial Protection and Innovation, and the FDIC was appointed receiver of SVB. If other banks and financial institutions enter receivership or become insolvent in the future due to financial conditions affecting the banking system and financial markets, our ability to access our cash, cash equivalents, and investments, including transferring funds, making payments or receiving funds, may be threatened and could have a material adverse effect on our business and financial condition. There can be no assurance our deposits in excess of the FDIC or other comparable insurance limits will be backstopped by the U.S. or that any bank or financial institution with which we do business will be able to obtain needed liquidity from other banks, government institutions, or by acquisition in the event of a failure or liquidity crisis.
The failure to address the Federal debt ceiling in a timely matter may adversely affect our business, financial condition, results of operations and prospects.
A government shutdown or the U.S. government’s failure to raise the debt ceiling, which increases the possibility of a default by the U.S. government on its debt obligations, could adversely affect our business, financial condition, results of operations, and prospects. Revenue generated from government agencies represented 19.2%, 19.6%, and 18.1% of our revenue for the years ended December 31, 2022, 2021, and 2020, respectively, of which
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the top three U.S. federal government agencies generated 4.5%, 5.6%, and 6.6% of our revenue for the years ended December 31, 2022, 2021, and 2020, respectively. The failure of the U.S. government to raise the debt ceiling could cause our revenue to decline in the near-term as our U.S. federal government customers may be unable to renew existing contracts or enter into new agreements with us and could affect our prospects for future revenue generated from such customers.
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