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• Our business depends, in part, on the success of our strategic relationships with third parties.
−Removed: • Although we have previously identified and remediated material weaknesses in our internal controls over financial reporting, we could experience material weaknesses in the future and the failure to achieve and maintain effective internal controls over financial reporting could harm our business and negatively impact the value of our common stock.
+Added: • Although we have previously identified and remediated material weaknesses in our internal controls over financial reporting, we could experience material weaknesses in the future and the failure to achieve and maintain effective internal controls over financial reporting could harm our business and negatively impact the value of our Class A common stock.
Risks Related to Our Business and Our Industry
We have a history of cumulative losses, and we do not expect to be profitable for the foreseeable future.
−Removed: We incurred net losses of $48.5 million and $59.7 million for the years ended December 31, 2024 and 2023, respectively.
+Added: We incurred net losses of $25.6 million, $48.5 million, and $59.7 million for the years ended December 31, 2025, 2024, and 2023, respectively.
Following our 18 plus years of operations, we had an accumulated deficit of $221.6 million as of December 31, 2025.
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Our competitors may also be able to respond more quickly and effectively to new or changing opportunities, technologies, standards, or customer requirements, including offering multiple types of storage solutions with various price points, feature sets and performance levels.
−Removed: Competition may intensify in the future, particularly as we seek to move up-market and may also include new market entrants, including storage offerings by some of our partners.
+Added: Competition may intensify in the future, particularly as we seek to move up-market and may also include new market entrants, including storage offerings by some of our partners., customers or other third parties in the industry.
+Added: For example, Cloudflare, CoreWeave, DigitalOcean and Vultr offer at least some form of their own storage solutions.
Our competitors could offer their products or services at a lower price or in some combination with other services or applications that we do not offer, which could result in pricing pressures on our business.
We have raised prices in the past, including price increases which took effect in the fourth quarter of 2023.
−Removed: While we believe that these price increases resulted in increased revenue without a material negative impact on our business, any future price increases by us, or reductions in prices by our competitors, could have a material adverse effect on our business, including potential loss of customers who do not wish to renew their subscriptions at the higher prices, reduction in the number of new customers, or a decrease in the amount of data that existing (or new) customers store with us or subscriptions they purchase from us.
+Added: While we believe that these price increases resulted in increased revenue without a material negative impact on our business, any future price increases by us, or reductions in prices by our competitors, could
+Added: have a material adverse effect on our business, including potential loss of customers who do not wish to renew their subscriptions at the higher prices, reduction in the number of new customers, or a decrease in the amount of data that existing (or new) customers store with us or subscriptions they purchase from us.
Increased competition generally could result in reduced sales, increased customer churn, lower margins, losses, or the failure of our cloud services to achieve or maintain widespread market acceptance, any of which could harm our business.
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For example, our facilities as well as the data centers that we use are subject to extreme weather events and natural disasters, such as earthquakes, hurricanes and tornados, storms, floods, fires and droughts, which may become more frequent and intense due to climate change.
−Removed: Our facilities and data centers are also vulnerable to damage or interruption from human error, intentional bad acts, war or other military conflict, including the conflicts between Russia-Ukraine and Israel-Hamas, which may further escalate and could directly or indirectly involve other countries, including the United States, terrorist attacks, cybersecurity attacks or the risk of potential cybersecurity attacks, power losses, hardware failures, systems failures, telecommunications failures, and similar events, any of which could disrupt our service, destroy user content, or prevent us from being able to continuously back up or record changes in our users’ content.
−Removed: For example, a third party vendor that operated one of our multiple data center locations, filed for bankruptcy under Chapter 11 of the United States
−Removed: Bankruptcy Code in 2022.
−Removed: This bankruptcy matter was resolved without disruption to our normal operations, but future bankruptcies or similar events affecting our third-party hosted data center providers could result in disruptions to our Company, access to customer data may become unavailable or customer data could be lost, and it may take a significant period of time to achieve full resumption of our cloud services.
−Removed: Also, in response to the Russian attack on Ukraine that began in February 2022, the United States and many other countries began imposing sanctions on Russia and certain parts of Ukraine, including restrictions on the import and export of goods and services to those regions.
−Removed: These restrictions have also been expanded to other countries, including Belarus.
−Removed: Although we do not have a significant number of customers located in those regions, such actions have had some immaterial impact on our business.
−Removed: It is difficult to predict how long the conflict may last, how the conflict could escalate, and how the sanctions may evolve, which could cause a greater adverse impact on our business and operations.
−Removed: While we maintain incident response plans that include defined processes, roles, communications, responsibilities and procedures for responding to cybersecurity incidents and other events that impact our operations, and such plans are tested and evaluated on a regular basis, o ur disaster recovery planning cannot account for all eventualities and even if we anticipate an incident, our disaster recovery plans may not be sufficient to timely and effectively address the issue.
−Removed: Moreover, our platform and technical infrastructure may not be adequately designed with sufficient reliability and redundancy to avoid delays or outages or other issues that could be harmful to our business.
+Added: Our facilities and the data centers that we use are also vulnerable to damage or interruption from human error, intentional bad acts, war or other military conflict, terrorist attacks, cybersecurity attacks or the risk of potential cybersecurity attacks, power losses, hardware failures, systems failures, telecommunications failures, vendor consolidations, restructurings or bankruptcies, and similar events, any of which could disrupt our service, destroy user content, or prevent us from being able to continuously back up or record changes in our users’ content.
+Added: For example, one of the data centers we use had a cooling problem due to equipment failure in October 2025.
+Added: While the issue was resolved without significantly impacting access to customer data, such events could occur in the future with adverse consequences.
+Added: We also periodically refresh the hardware infrastructure underlying our Backblaze Storage Cloud platform to improve performance, scalability, and cost-efficiency.
+Added: These refresh cycles involve operational complexity and capital investment, and any delays, cost overruns, integration issues, or unforeseen performance challenges could adversely affect service reliability, customer satisfaction, and our financial results.
+Added: While we maintain incident response plans that include defined processes, roles, communications, responsibilities and procedures for responding to cybersecurity incidents and other events that impact our operations, and such plans are tested and evaluated on a regular basis, our disaster recovery planning cannot account for all eventualities and even if we anticipate an incident, our disaster recovery plans may not be sufficient to timely and effectively address the issue.
+Added: Moreover, our platform and technical infrastructure as well as the infrastructure of our data center partners may not be adequately designed or operate with sufficient reliability and redundancy to avoid delays or outages or other issues that could be harmful to our business.
If our platform is unavailable when users attempt to access it, or if it does not perform as quickly as they expect, or if data is lost, users may not use our platform as often in the future, or at all.
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and our ability to successfully differentiate our cloud services from competitive products and services.
−Removed: Our brand promotion activities may not be successful or yield increased revenue.
−Removed: The promotion of our brand may require us to make substantial expenditures, particularly as our markets become more competitive and we expand into new markets or offer new products or services, or additional features.
+Added: Our promotional activities may not be successful or yield increased revenue.
+Added: The promotion of our brand has in the past, and may in the future cause us to make substantial expenditures, particularly as our markets become more competitive and we expand into new markets or offer new products or services, or additional features.
Expenditures intended to maintain and enhance our brand may not be cost-effective or effective at all.
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If our information technology systems, including the data of our customers stored in our systems, are breached or subject to cybersecurity attacks, our reputation and business may be harmed.
−Removed: Our customers rely on our solutions to store or use their files, which may include confidential or personally identifiable information, critical business information, photos, and other meaningful content.
+Added: Our customers rely on our solutions to store or use their data, which may include confidential or personally identifiable information, critical business information, photos, and other meaningful content.
To manage and maintain such data, we are highly dependent on internal and external information technology systems and infrastructure, including the internet, to securely process, transmit, and store critical information.
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Although we were not aware of any unauthorized access to our systems due to the Log4j vulnerability, out of an abundance of caution and because Log4j was leveraged widely in our environment, we decided it was in our customers’ best interest to take our systems offline for a short period of time until we could apply the security patch.
−Removed: In addition, we regularly encounter attempts to create false or undesirable user accounts and various types of DDoS attacks, which can disrupt our systems, impair system performance and impact analytics.
+Added: In addition, we regularly encounter attempts to create false or undesirable user accounts, phishing attacks and various types of DDoS attacks, which can disrupt our systems, impair system performance and impact analytics.
Moreover, cybersecurity attacks evolve rapidly and are expected to continue to accelerate in both frequency and sophistication, and bad actors may utilize new methods not recognized because they are designed to circumvent controls, avoid detection, and remove or obfuscate forensic evidence.
−Removed: Although we have taken, and continue to take, various actions to prevent and mitigate potential cybersecurity attacks, it is very difficult to successfully identify, stop, or resolve such attacks, or implement adequate preventative measures and we will
−Removed: continue to incur costs in our efforts to protect against and respond to cyber-attacks and potential cyber-attacks.
−Removed: Also, the use of generative artificial intelligence, or other societal or political developments resulting in periods of increased political tensions and military conflicts, could result in a greater likelihood of cybersecurity incidents that could either directly or indirectly impact our operations.
+Added: Although we have taken, and continue to take, various actions to prevent and mitigate potential cybersecurity attacks, it is very difficult to successfully identify, stop, or resolve such attacks, or implement adequate preventative measures and we will continue to incur costs in our efforts to protect against and respond to cyber-attacks and potential cyber-attacks.
+Added: Also, the use of generative AI, or other societal or political developments resulting in periods of increased political tensions and military conflicts, could result in a greater likelihood of cybersecurity incidents that could either directly or indirectly impact our operations.
In addition, employee or consultant error, malfeasance, or other errors in the storage, use, or transmission of customer data could result in a breach.
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In addition, our business utilizes information technology systems of our partners and vendors, who are also subject to similar cybersecurity risks that could adversely impact the security of our systems and business.
−Removed: Although we take steps to secure customer information that is provided to or accessible by our partners and vendors, such measures may not always be effective and w e may have limited or no control over how cybersecurity attacks on our partners or vendors are addressed.
+Added: Although we take steps to secure customer information that is provided to or accessible by our partners and vendors, such measures may not always be effective, and we may have limited or no control over how cybersecurity attacks on our partners or vendors are addressed.
An actual or perceived breach of our network security and systems or other cybersecurity-related events that cause the loss, theft or unauthorized disclosure of our customers’ information, including any delay in determining the full extent of a potential breach, could have a material adverse impact on our business, results of operations, and financial condition, including harm to our reputation and brand, reduced demand for our solutions, time-consuming and expensive litigation, fines, penalties, and other damages.
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We generate substantially all of our revenue from the sale of our cloud services either on a consumption or subscription model.
−Removed: To grow, we must continue to attract a large number of customers on a cost-effective basis.
+Added: To grow, we must continue to attract customers on a cost-effective basis.
Any price increases could make it more difficult to attract new customers and retain existing customers or cause existing customers to reduce the amount of data that they store with us, thus negatively impacting our revenue and business.
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We may also incur increased sales and marketing expenses and engineering and operating expenses, including infrastructure expenditures, significantly in advance of the time we anticipate recognizing any revenue generated by such expenses, and we may only at a later date, or never, experience an increase in revenue or other benefits as a result of such expenditures.
+Added: For example, in April 2025 we announced B2 Overdrive, a premium priced high-performance cloud storage solution,
+Added: which is intended to meet the demands of data-intensive workloads such as AI and ML training, high-performance computing, large-scale analytics, and media processing.
+Added: While this expansion opens new market opportunities, it also introduces risks associated with entering a competitive and rapidly evolving sector, including the need for substantial investment in infrastructure, often in advance of corresponding revenue generation, and potential challenges in meeting specialized customer requirements.
If we are unable to achieve effective advertising and marketing programs or successfully expand our solution offerings and operations, our ability to attract new customers could be adversely affected, our advertising and marketing expenses could increase substantially, and our operating results may suffer.
−Removed: A portion of our potential customers locate our website through search engines, such as Google, Bing, and Yahoo!.
−Removed: I n 2023 we modernized our website to help improve the user experience and increase traffic through search engine optimization to accelerate lead generation, although such efforts may not be as successful as anticipated to increase web traffic and improve the user experience.
+Added: A portion of our potential customers locate our website through search engines and social media platforms.
O ur ability to maintain the number of visitors directed to our website is not entirely within our control.
−Removed: If search engine companies modify their search algorithms in a manner that reduces the prominence of our listing, or if our competitors’ search engine optimization efforts are more successful than ours, or if AI results replace traffic from search engines, fewer potential customers may click through to our website.
+Added: If search engine companies modify their search algorithms in a manner that reduces the prominence of our listing, or if our competitors’ search engine optimization efforts are more successful than ours, or if AI technologies replace traffic from search engines, fewer potential customers may click through to our website.
In addition, the cost of purchased listings has increased in the past and may increase in the future.
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In addition, because we offer our Computer Backup cloud service at a fixed price, the amount of data our customers back up affects our costs and gross margins.
−Removed: Subject to certain limitations, we also offer up to three times free egress for our B2 Cloud Storage customers.
+Added: Subject to certain limitations, we also offer free egress for our B2 Cloud Storage customers.
To the extent current or future customers back up unusually large amounts of data, use an excessive amount of egress or growth in the amount of data backed up per customer outpaces decreases in storage costs, our costs and gross margins and infrastructure could be adversely affected.
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Our industry is marked by rapid technological developments and new and enhanced applications and cloud services.
−Removed: If we are unable to provide enhancements and new features for our existing services or new services that achieve market acceptance or that keep pace with rapid technological developments, our business could be adversely affected.
−Removed: We have recently launched various new product features and other changes, including Event Notification and Live Read.
+Added: If we are unable to provide enhancements and new features for our existing services or develop new services that achieve market acceptance, our business could be adversely affected.
+Added: We have recently launched various new solutions, product features and other changes, including B2 Overdrive.
We cannot be certain whether such features and other changes will achieve a desired level of market adoption and return on investment.
+Added: We have also launched product features that utilize AI, and may offer additional AI related solutions in the future.
+Added: Embedding AI in our solutions exposes us to additional risks for potential inaccuracies or bias in AI outputs as well as data privacy, intellectual property, or other regulatory and compliance requirements.
In addition, because our cloud services are designed to operate on a variety of systems, we will need to continuously modify and enhance our cloud services to keep pace with changes in internet-related hardware, operating systems, and other software, communication, browser, and database technologies, including the systems of our partners, vendors, and competitors.
−Removed: We also have limited internal resources and thus need to selectively prioritize features and other development and infrastructure projects, and de-prioritize other such projects.
+Added: We also have limited internal resources and thus need to selectively prioritize features and other development and infrastructure projects, and de-prioritize certain other projects.
Although we seek to prioritize the projects that we believe are the most important and de-prioritize projects of lesser importance based on the information available to us at any given time, there is no guarantee that our prioritization efforts will achieve the desired market adoption or infrastructure improvements and we may not be successful in either developing these modifications and enhancements or in bringing them to market in a timely fashion.
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The costs incurred in correcting such defects or errors may be substantial and could negatively impact our business.
−Removed: Backblaze employees could also introduce defects or errors through incompetence, malfeasance, or a mistake that would lead to data loss.
−Removed: For example, to the extent that the encryption keys for encrypted customer data stored by Backblaze were to be deleted or corrupted, the data could become unrecoverable.
−Removed: In addition, we rely on hardware purchased or leased and software licensed from third parties to offer our cloud services.
−Removed: Hardware is susceptible to failures over time and may require increased maintenance effort and costs.
+Added: For example, to the extent that the encryption keys for encrypted customer data stored by us were to be deleted or corrupted, the data could become unrecoverable.
+Added: In addition, we rely on hardware
+Added: purchased or leased and software licensed from third parties to offer our cloud services.
+Added: Hardware is susceptible to failures and may require ongoing maintenance and periodic replacement throughout its useful life.
Any defects in, or unavailability of, our software or hardware failures that cause interruptions to the availability of our cloud services or that otherwise impact our business could, among other things:
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• negatively impact our results of operations.
−Removed: If we fail to effectively manage our growth, our business would be harmed.
−Removed: We have recently experienced, and continu e to experience, a period of rapid growth.
−Removed: T he amount of data stored with us and the storage infrastructure deployed by us has increased significantly.
−Removed: The number of customer requests on our network has also increased rapidly in recent years.
−Removed: Our growth may not be sustainable.
−Removed: In 2023 and 2024, we initiated measures to reduce headcount and took other actions to pursue greater cost efficiency and align strategic initiatives.
−Removed: Nevertheless, in the long term, we expect to continue to expand our operations and to increase our headcount, network, and product offerings significantly.
−Removed: Our growth has placed, and future growth may continue to place, a significant strain on our management, corporate culture, quality of our cloud services, and administrative, operational, security, and financial infrastructure.
−Removed: headcount needs may also fluctuate on a quarterly and annual basis and we may seek, and have sought by way of the recent restructuring measures, to “right size” our workforce from time to time due to changing business needs and other conditions.
−Removed: It may also be difficult to effectively manage our workforce on a timely basis in response to such changes.
−Removed: It is also important that we successfully leverage our existing employee base and any headcount growth, particularly as our business grows and the corresponding demands on our business increase.
−Removed: Our success will depend in part on our ability to manage this growth effectively, which will require that we, among other things, continue to improve our administrative, operational, financial, and management systems and controls.
−Removed: If we fail to manage our growth, the quality of our services may suffer, which could negatively affect our brand and reputation and harm our ability to retain and attract customers and employees.
−Removed: Our business could be materially harmed to the extent that we do not effectively manage our data center capacity and the costs associated with our data centers.
+Added: If we fail to effectively manage our workforce and operational needs, our business would be harmed.
+Added: Our business requires that we continuously evaluate and align our workforce, operational capacity, and organizational structure with evolving strategic priorities and market conditions.
+Added: In 2024 and 2025, we initiated measures to reduce headcount, implemented a hiring freeze, and took other actions to pursue greater cost efficiency and align strategic initiatives.
+Added: While we believe these actions were necessary to position the company for long-term success, they involve inherent risks, including the loss of institutional knowledge, reduced capacity to execute on strategic initiatives, challenges retaining key employees during periods of organizational uncertainty, and potential adverse effects on employee morale, productivity, and company culture.
+Added: Our headcount needs fluctuate, and we may continue to seek to adjust our workforce from time to time in response to changing business needs, market conditions, and other factors.
+Added: It may be difficult to manage these workforce transitions effectively or on a timely basis.
+Added: If our workforce reductions or hiring constraints are too aggressive, we may lack the personnel necessary to support customer commitments, deliver on our product roadmap, or capitalize on emerging opportunities, including those related to AI and neocloud.
+Added: If they are insufficient, we may not achieve the cost efficiencies required to sustain the business through periods of slower growth.
+Added: At the same time, the amount of data stored with us and the storage infrastructure deployed by us has continued to increase, and customer demands on our platform, including the complexity of workloads we support, continue to grow.
+Added: Managing this operational growth with a constrained workforce places additional strain on our management, administrative, operational, security, and financial infrastructure.
+Added: If and when we resume headcount expansion, we will need to effectively recruit, onboard, and integrate new employees while maintaining the operational discipline and cost structure we have worked to establish.
+Added: Our success will depend in part on our ability to manage these workforce dynamics effectively, which will require that we continue to improve our administrative, operational, financial, and management systems and controls.
+Added: If we fail to appropriately align our workforce and operational capacity with the needs of our business, the quality of our services may suffer, which could negatively affect our brand and reputation and harm our ability to retain and attract customers and employees.
+Added: Our business could be materially harmed to the extent that we do not effectively manage our data center capacity and the costs associated with our data center spaces.
We must continue to effectively manage our infrastructure, including capital expenditures to maintain and expand our data center capacity, servers and equipment, and locations.
−Removed: The costs of building out and maintaining our data centers, including the purchase and leasing of equipment, constitute a significant portion of our capital and operating expenses.
+Added: The costs of building out and maintaining our data center spaces, including the purchase and leasing of equipment, constitute a significant portion of our capital and operating expenses.
To manage our data center capacity and the associated capital expenditures, we continuously evaluate our short and long-term data center capacity requirements.
−Removed: However, because our customer retention and the amount of data that they store with us may increase, decline or fluctuate as a result of a number of factors, it is difficult to accurately predict our capacity needs over time.
+Added: However, because our customer retention and the amount of data that they store with us may increase, decline or fluctuate as a result of a number of factors, potentially with little or no advance notice, it is difficult to accurately predict our capacity needs over time.
If we underestimate the data center capacity needed to address increases in volume usage, or there is not enough capacity at the data centers at commercially acceptable rates, or at all, we may be unable to increase our data center capacity in an expedient and cost-effective manner, which could result in materially adverse effects on our business and our results of operations.
−Removed: For example, if we are not able to obtain data center capacity on a timely basis, the ability for customers to upload or download data could be negatively impacted.
+Added: For example, if we are not able to obtain sufficient
+Added: data center capacity on a timely basis, the ability for customers to upload or download data could be negatively impacted.
As a result, we might be unable to attract new customers or retain existing customers and could cause existing customers to reduce the amount of data that they store with us.
−Removed: In such a scenario, we may also be required to enter into leases or other agreements for data centers, servers and other equipment that are more expensive than they otherwise would be as a result of the increased demand and competition in the market for data center capacity.
−Removed: It can also take time to add data center capacity, whether at existing data center locations or new locations, and therefore, we may also not be able to expand our data center capacity to address customer needs on a timely basis.
−Removed: In addition, many of our data center sites are subject to multi-year leases.
−Removed: If our capacity needs are reduced, or if we decide to close a data center, we may nonetheless be committed to perform our obligations under the applicable leases including, among other things, paying the base rent for the balance of the lease term and continuing to pay for any servers or other equipment.
+Added: In such a scenario, we may also be required to enter into leases or other agreements for data center spaces, servers and other equipment that are more expensive than they otherwise would be as a result of the increased demand and competition in the market for data center capacity.
+Added: The competition for data center space, infrastructure and equipment has intensified significantly, particularly due to increased demand from AI and other compute-intensive workloads.
+Added: As a result, available capacity in key markets is limited, and data center and other vendors have implemented, and may in the future implement, more stringent qualification and other requirements.
+Added: These heightened requirements may favor larger, better-capitalized companies and could make it more difficult or costly for us to secure additional data center space or renew existing agreements on favorable terms.
+Added: Adding data center capacity, whether at existing locations or new locations, requires significant lead time, capital investment, and coordination with third-party providers.
+Added: As a result, our ability to scale infrastructure in line with the storage demands of our customers may be constrained, particularly during periods of accelerated data growth or supply chain disruption.
+Added: In addition, many of our data center spaces are subject to multi-year leases.
+Added: If our capacity needs are reduced, or if we decide to close a data center space, we may nonetheless be committed to perform our obligations under the applicable leases including, among other things, paying the base rent for the balance of the lease term and continuing to pay for any servers or other equipment.
If we overestimate our data center capacity requirements, and therefore secure excess data center capacity and servers or other equipment, then our capital expenditures could be materially increased, and our operating margins could be materially reduced.
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regulations intended to regulate carbon emissions and other pollutants, laws requiring enhanced energy efficiency measures, surcharges related to recovering the cost of extreme weather events and natural disasters, geopolitical conflicts, military conflicts, grid modernization charges, as well as other charges.
−Removed: Such increases could adversely affect our business financial conditions and results of operations.
+Added: If we are unable to obtain sufficient data center capacity, or if we are forced to accept less favorable terms, our ability to scale, maintain service levels, or otherwise grow our business could be adversely affected.
Our business depends on our ability to retain and increase revenue from customers, and if we are unable to do so, our revenue and operating results would be adversely affected.
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and overall general economic conditions.
−Removed: Our recent price increase for Computer Backup and B2 Cloud Storage could make it more difficult to attract new customers and retain existing customers, or cause existing customers to reduce the amount of data that they store with us or
−Removed: subscriptions they purchase from us.
−Removed: Our future financial performance also depends in part on our ability to continue to increase revenue from our customers through new features and additional paid products, such as Event Notifications, Live Read, Enterprise Control and multi-region selection.
+Added: The consumer portion of the market for our Computer Backup has also been experiencing downward pressure as the market for standalone consumer backup solutions has matured.
+Added: Future price increases for Computer Backup and B2 Cloud Storage could make it more difficult to attract new customers and retain existing customers or cause existing customers to reduce the amount of data that they store with us or subscriptions they purchase from us.
+Added: Our future financial performance also depends in part on our ability to continue to increase revenue from our customers through new features and additional paid products, such as B2 Overdrive, Enterprise Control and multi-region selection.
Our customers’ decision whether to opt for additional paid products is driven by a number of factors.
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We may also face greater peak demands on our infrastructure from customers using our platform that could temporarily impact the quality of our services, strain our resources, increase our operating costs or require additional capital expenditures.
−Removed: We may face increased competition from some of our competitors that typically target larger businesses and organizations and that may have pre-existing relationships or purchase commitments, that may have more experienced sales personnel or greater budgetary resources available to target larger customers, or that may be able to bundle other services with an offering that is competitive with ours.
+Added: For example, we have experienced an increasing number of AI technology companies using our platform and have increased our focus on AI customer opportunities.
+Added: The market for AI is evolving rapidly and subject to significant changes and demands.
+Added: Our focus on AI customers subjects us to significant risks including rapid technological obsolescence, intense competition from established companies as well as new market entrants, and high volatility.
+Added: The AI market is characterized by rapid innovation cycles that could render our solutions obsolete, and may involve significant investments and dedication of resources in engineering, technical operations, sales and marketing.
+Added: In addition, the nature of AI workloads often requires higher performance, lower latency, and increased utilization of storage infrastructure compared to traditional customers.
+Added: Certain data heavy use cases, including various AI use cases, place greater demands on our storage systems, including higher throughput, increased hard drive processing, and more intensive data access patterns.
+Added: These requirements could increase our infrastructure costs, accelerate hardware wear, and require additional investment in technology and capacity.
+Added: If we are unable to meet the evolving needs of these types of customers or manage the associated operational challenges, our business, infrastructure, and financial results could be adversely affected.
+Added: As a result, our business may also fluctuate more significantly as our customers experience volatility and fluctuating demands as the AI market and the business needs of our customers evolve.
+Added: We may also face increased competition from some of our competitors that typically target larger businesses and organizations and that may have pre-existing relationships or purchase commitments, that may have more experienced sales personnel or greater budgetary resources available to target larger customers, or that may be able to bundle other services with an offering that is competitive with ours.
Certain types of customers may also have longer sales cycles, less predictability or higher volatility in the amount of data they store with us, increased pricing or negotiation leverage, and increased customer education, prolonged contract negotiations and overall customer engagement needs.
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Our quarterly results may fluctuate significantly and may not fully reflect the underlying performance of our business.
−Removed: Our quarterly results of operations may vary significantly in the future.
+Added: Our quarterly results of operations have fluctuated in the past and may vary significantly in the future.
Accordingly, the results of any one quarter should not be relied upon as an indication of future performance.
−Removed: Our quarterly results of operations may fluctuate as a result of a variety of factors, many of which are outside of our control, and as a result may not fully reflect the underlying performance of our business.
−Removed: Fluctuation in quarterly results may negatively impact the trading price of our common stock.
+Added: Our quarterly results of operations fluctuate as a result of a variety of factors, many of which are outside of our control, and as a result may not fully reflect the underlying performance of our business.
+Added: Fluctuation in quarterly results may negatively impact the trading price of our Class A common stock.
Factors that may cause fluctuations in our quarterly results of operations include, without limitation:
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• interruptions or loss of service of our offerings;
−Removed: • the timing and success of new product feature and service introductions by us or our competitors;
+Added: • the timing and success of new product features and service introductions by us or our competitors;
• our ability to retain and increase revenue from customers;
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• the amount and timing of sales commissions, particularly with respect to pipeline, that may precede or exceed the actual corresponding revenue we receive;
−Removed: • outbreaks of war or other hostilities, such as the Russia-Ukraine and Israel-Hamas hostilities;
−Removed: • inflation in the United States, which has recently hit a four decade high, and other regions;
+Added: • outbreaks of war or other hostilities, such as the Russia-Ukraine, the joint U.S-Israeli strikes on Iran in February 2026 and other conflicts in the Middle East;
+Added: • inflation in the United States and other regions;
• the impact of pandemics on our business or that of our customers and partners;
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• general economic and market conditions.
−Removed: For example, although we do not have a significant amount of customers located in Ukraine and Russia, the Russian-Ukraine conflict has caused oil prices to rise and increased the risk of disruption to the supply chain for oil.
−Removed: The Israel-Hamas conflict also resulted in some similar effects.
−Removed: The hostilities in various places around the world could also escalate further and directly or indirectly involve other countries, including the United States, which could cause a greater impact on us and our customers, partners and supplies.
Further, as we continue to grow and scale our business to meet the needs of our customers, we may overestimate or underestimate our infrastructure capacity requirements, which could adversely affect our results of operations.
−Removed: The costs associated with leasing and maintaining our custom-built infrastructure in co-location facilities and third-party data centers already constitute a significant portion of our capital and operating expenses.
+Added: The costs associated with leasing and maintaining our custom-built infrastructure in data center spaces and third-party data center spaces already constitute a significant portion of our capital and operating expenses.
We continuously evaluate our short and long-term infrastructure capacity requirements and seek to ensure adequate capacity for new and existing users while minimizing unnecessary excess capacity costs.
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Substantially all of our employees, including our senior management, are employed on an at-will basis.
−Removed: We cannot ensure that we will be able to retain the services of any member of our senior management or other key employees,
−Removed: particularly given that some of these employees may hold equity of the Company that is largely vested, or that we would be able to timely replace members of our senior management or other key employees should any of them depart.
−Removed: The loss of one or more members of our senior management or other key employees could harm our business.
+Added: cannot ensure that we will be able to retain the services of any member of our senior management or other key employees, particularly given that some of these employees may hold equity of the Company that is largely vested, or that we would be able to timely replace members of our senior management or other key employees should any of them depart.
+Added: Various personnel actions, including the restructurings and reductions in force we previously announced in November 2025 and November 2024, can also create disruption and result in additional turnover.
+Added: Changes in key personnel may result in a loss of institutional knowledge, delay near term decision making, and create uncertainty for employees, customers and partners.
+Added: The loss of experienced personnel, or delays in hiring and onboarding qualified successors, could adversely affect our go to market success, product development, engineering execution, and overall business performance.
The failure to attract and retain additional qualified personnel could prevent us from executing our business strategy.
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In addition, we believe that the success of our business and corporate culture depends on employing a diverse workforce, and the competition for such personnel is significant.
−Removed: The market for such talented personnel is particularly competitive in the San Francisco Bay Area, where our headquarters is located.
Many of the companies with which we compete for experienced personnel have greater resources than we do and can frequently offer such personnel substantially greater compensation than we can offer.
−Removed: In addition, in 2024 we implemented a new commission structure for our sales team and expect to periodically optimize our commission structure.
+Added: In addition, in 2024, we implemented a new commission structure for our sales team and expect to adjust our commission structure at least annually.
If our sales commission program does not effectively incentivize our sales team at appropriate compensation levels, we may not be successful in retaining or hiring qualified sales personnel, obtaining new customers, increasing sales to our existing customer base, or effectively managing compensation levels.
−Removed: We also rely from time to time on hiring employees from foreign countries, which may require immigration requirements.
−Removed: The immigration process can be subject to frequent changes and limitations, and we may experience difficulty in obtaining visas permitting entry for some of our employees that are foreign nationals into the United States, and delays in obtaining visas permitting entry into other key countries, which could negatively impact our ability to strategically locate our personnel.
+Added: We also rely from time to time on hiring employees from foreign countries, which may require immigration requirements and pose additional risks related to increased operations in foreign countries detailed elsewhere in these risk factors.
+Added: In particular, the immigration process can be subject to frequent changes and limitations, and we may experience difficulty in obtaining visas permitting entry for some of our employees that are foreign nationals into the United States, and delays in obtaining visas permitting entry into other countries, which could negatively impact our ability to fully leverage our personnel.
+Added: For example, the United States government recently announced significant fee changes to the H-1B process.
In addition, we may be unsuccessful at retaining our key employees, and it may take significant time for new employees to achieve full productivity, either of which would adversely impact our business, results of operations, and financial condition.
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As our business grows and becomes more complex, it may become more difficult to maintain culture aligned across the company.
−Removed: Any failure to preserve our culture could negatively affect our ability to retain and recruit personnel, which is critical to our growth, and to effectively focus on and pursue our strategies.
+Added: Any failure to preserve our culture and core values could negatively affect our ability to retain and recruit personnel, which is critical to our growth, and to effectively focus on and pursue our strategies.
If we fail to maintain our company culture, our business and competitive position may be harmed.
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In 2025, we derived approximatel y 28% of our revenue from customers outside of the United States and have customers in over 175 countries worldwide.
−Removed: In addition to a previously existing data center region based in Amsterdam, the Netherlands, we also opened a new data center region in Toronto, Canada and wholly owned subsidiary in Canada in January 2025.
−Removed: We may continue to expand our international operations, which may include the establishment of foreign subsidiaries, the opening and expansion of data centers, hiring employees, building out technical infrastructure, and opening offices in foreign jurisdictions.
+Added: In addition to a previously existing data center region based in Amsterdam, the Netherlands, we also opened a new data center region in Toronto, Canada and established a wholly owned subsidiary in Canada in January 2025.
+Added: We expect to continue to expand our international operations, which may include the establishment of foreign subsidiaries, the opening and expansion of data center spaces, hiring employees, building out technical infrastructure, and opening offices in foreign jurisdictions.
Any new markets or countries into which we attempt to market and sell our cloud services may not be receptive.
For example, we may be unable to expand further in some markets if we are unable to satisfy various government- and region-specific requirements, and the increased costs of compliance with local laws and regulations or standards in other countries may further increase the costs and result in delays, and, as a result, we may not be able to recover the cost of these investments, which could materially adversely affect our business and results of operations.
−Removed: In addition, our ability to manage our business and conduct our operations internationally requires considerable management attention and resources and is subject to the particular challenges and complexities of deploying infrastructure internationally and supporting a rapidly growing business in an environment of multiple languages, cultures, customs, legal and regulatory systems, alternative dispute systems, and commercial markets.
−Removed: International expansion has required, and will continue to require, investment of significant funds and other resources.
+Added: In addition, our ability to manage our business and conduct our operations internationally
+Added: requires considerable management attention and resources and is subject to the particular challenges and complexities of deploying infrastructure internationally and supporting a rapidly growing business in an environment of multiple languages, cultures, customs, legal and regulatory systems, alternative dispute systems, and commercial markets.
+Added: International expansion has required, and will continue to require, investment of significant upfront and on-going investments and other resources.
Growth in our international operations will subject us to new risks and may increase risks that we currently face, including risks associated with:
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• providing our platform, building out the necessary infrastructure and operating our business across a significant distance, in different languages and among different cultures, including the potential need to modify our platform and features to ensure that they are culturally appropriate and relevant in different countries;
+Added: • recouping any upfront investments for new or expanded operations and locations and achieving a reasonable return on a timely basis with respect to any such investments;
• compliance with applicable international laws and regulations, including laws and regulations with respect to privacy, data protection, consumer protection, data sovereignty, and unsolicited email, and the risk of penalties to our users and individual members of management or employees if our practices are deemed to be out of compliance, and additional laws and regulations in the United States that are applicable to international operations;
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Expanding our international operations and complying with applicable laws and regulations may substantially increase our cost of doing business in international jurisdictions.
+Added: For example, in September 2025, the EU Data Act imposes new requirements on cloud service providers, including enhanced data portability, interoperability, customer switching rights and early termination rights, as well as restrictions on data transfer and access by non-EU authorities.
+Added: Compliance with these obligations will require changes to customer contracts and internal processes, and could increase our operational costs.
We may also be unable to keep current with changes in laws and regulations as they develop, and we or our employees, contractors, partners, and agents may fail to maintain compliance with applicable laws and regulations.
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If we, or our partners and suppliers, are unable to comply with these laws and regulations or manage the complexity of our global operations successfully, our business, results of operations, and financial condition could be adversely affected.
+Added: We use AI technologies internally to increase employee productivity and efficiency, but our business is also increasingly exposed to risks related to our customers, including neocloud partners and AI model builders, and their use of AI on our platform, any of which could harm our business.
+Added: A significant and growing part of our strategy is to serve data-heavy workloads, including AI model builders and neocloud platforms through our Powered by Backblaze program, who use our Backblaze Storage Cloud to store data for their AI workflows, such as model training.
+Added: We are investing in capabilities to serve this market, including our B2 Neo solution, a high-performance storage offering designed for AI and neocloud workloads, and a substantial portion of our growth strategy depends on attracting and retaining these customers.
+Added: This reliance exposes us to risks arising from their business practices and the evolving regulatory landscape governing AI use.
+Added: The legal and regulatory landscape around AI is rapidly evolving, including issues of data usage, intellectual property (e.g., training data provenance), and algorithmic transparency.
+Added: For example, the European Union's AI Act, which took effect in 2024, imposes significant obligations on AI systems and could affect how our customers develop, train, or deploy AI models using data stored on our platform.
+Added: In the United States, states such as California and Colorado have enacted AI-specific legislation, and additional federal or state regulations may follow.
+Added: New or stricter laws or regulations, or new interpretations of existing laws, could impact our customers' ability to use our platform for their AI model training or data storage, which could negatively affect the growth and adoption of B2 Cloud Storage.
+Added: Furthermore, if an AI model developed by a customer is found to produce discriminatory, harmful, or legally questionable outputs, or is subject to an intellectual property infringement claim related to its training data (which is stored on our platform), our brand and reputation could be harmed.
+Added: While our contracts seek to limit our liability, we could still be drawn into litigation or regulatory actions against our customers, incurring defense costs and management distraction.
+Added: Additionally, our growth strategy depends on attracting these data-intensive neocloud customers and AI model builders;
+Added: factors that negatively affect their business, such as failure to successfully commercialize their AI products, migration to alternative storage, or broader market downturns affecting AI investment, could materially impact our revenue growth and financial condition.
+Added: Because revenue from these customers can be concentrated among a small number of large agreements, the loss of even one significant neocloud customer could have a disproportionate effect on our results.
+Added: We also use AI, including generative AI tools, in our internal operations, such as for software development, content generation, and streamlining business workflows.
+Added: While this has the potential to enhance efficiency, AI models can produce inaccurate, biased, or incomplete outputs that may affect critical internal decision-making.
+Added: If we fail to effectively monitor and validate AI-generated outcomes, we could inadvertently introduce bugs or security vulnerabilities into our proprietary software, or disseminate flawed customer communications, which could harm our platform performance, reliability, or customer trust.
+Added: Moreover, our reliance on third-party AI tools may involve the processing of sensitive company or customer data.
+Added: Despite contractual obligations for data protection, we face risks related to inadvertent data leakage, the training of third-party models on our proprietary information, or noncompliance with evolving data privacy and security regulations.
+Added: Our reliance on third-party AI services also exposes us to potential service disruptions, price increases, or changes in terms that could increase our operating costs or require us to find alternative solutions.
+Added: Our use of generative AI in coding and content creation may also introduce intellectual property risks, including uncertainty around ownership of AI-generated materials and inadvertent incorporation of third-party proprietary content.
+Added: The intellectual property rights surrounding AI-generated outputs have not been fully addressed by U.S.
+Added: courts or federal law, and we could face claims that our use of AI tools infringes third-party rights or that we lack clear ownership of AI-assisted work product.
+Added: As AI regulation develops globally, we may face increased compliance burdens and restrictions on how we deploy AI internally.
+Added: We may also fail to achieve anticipated efficiency gains, fall behind competitors who more successfully adopt these technologies, or incur additional costs without realizing expected benefits.
+Added: Our failure to manage these evolving risks related to both customer and internal use of AI could adversely impact our operations, business, and financial results.
We store personal information and other customer data, which subjects us to various data privacy laws, governmental regulations, and other related legal obligations, and any actual or perceived failure to comply with such requirements could harm our business.
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Other comprehensive data privacy or data protection laws or regulations requiring local data residency and/or restricting the international transfer of data have been passed or are under consideration in other jurisdictions.
−Removed: In addition, some industries have industry-specific requirements relating to compliance with certain security and regulatory standards, such as those required by the Health Insurance Portability and Accountability Act (HIPAA).
−Removed: For example, HIPAA imposes privacy, security, and breach reporting obligations with respect to individually identifiable health information upon “covered entities” (e.g., health plans, health care clearinghouses, and certain health care providers), and their respective business associates, individuals, or entities that create, receive, maintain or transmit protected health information in connection with providing a service for or on behalf of a covered entity.
−Removed: Such laws give rise to an increasingly complex set of compliance obligations on us regarding our ability to gather, use, and store customer data and customer account data.
+Added: In addition, some industries have industry-specific requirements relating to compliance with certain privacy, security and regulatory standards, such as those required by the Health Insurance Portability and Accountability Act (“HIPAA”).
+Added: Such laws give rise to an increasingly complex set of compliance obligations regarding our ability to gather, use, and store customer data and customer account data.
These privacy and data protection laws are subject to rapid change and differing interpretations, may require limited timeframes to implement changes, and can be inconsistent among regulatory frameworks or conflict with other rules or our business practices.
We strive to comply with all applicable laws, policies, legal obligations, and industry codes of conduct relating to privacy and data protection to the extent possible.
−Removed: Our efforts to comply with the complex matrix of data privacy laws around the world subjects us to increasing costs to review and comply with such laws, including updating our policies, procedures, and business practices to address such evolving privacy laws.
+Added: Our efforts to comply with the complex matrix of data privacy laws around the world subject us to increasing costs to review and comply with such laws, including updating our policies, procedures, and business practices to address such evolving privacy laws.
We also make public statements and commitments regarding our use and disclosure of personal information through our privacy policy, information provided on our website, and data processing agreements with customers and other third parties.
Because the interpretation and application of data protection laws, regulations, standards, and other obligations are often uncertain and in flux, and sometimes contradictory, it is possible that the scope and requirements of these laws and other obligations may be interpreted and applied in a manner that is inconsistent with our practices, and our efforts to comply with rapidly evolving data protection laws and obligations may be unsuccessful.
−Removed: For example, we previously relied on the EU-US Privacy Shield framework, which was invalidated by a European court in July 2020.
−Removed: As a result of such a decision, we have had to take additional steps to comply with applicable EU data protection requirements, including implementation of standard contractual clauses.
Any failure, or perceived failure, by us to comply with applicable privacy and security laws, policies, or related contractual obligations, or any compromise of security that results in unauthorized access, or the use or transmission of personal information or other customer data, could result in a variety of claims against us, including governmental enforcement actions and investigations, audits, inquiries, whistleblower complaints, class action privacy litigation in certain jurisdictions, and proceedings by data protection authorities.
−Removed: For example, under the GDPR we may be subject to fines of up to €20 million or up to 4% of the total worldwide annual group turnover of the preceding financial year, as well as potentially face claims from individuals.
+Added: For example, under the GDPR we may be subject to fines of up to €20 million or up to 4% of the total worldwide annual group turnover of the preceding financial year, as well as potentially facing claims from individuals.
The CCPA provides for civil penalties for violations, as well as a private right of action for certain data breaches that result in the loss of personal information.
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If we are unable to successfully market and sell our cloud services to mid-market organizations, our ability to grow our revenue and achieve profitability will be harmed.
−Removed: We expect it will be more difficult and expensive to attract and
−Removed: retain mid-market organization customers than other customers because mid-market organizations are more frequently forced to curtail or cease operations due to the sale or failure of their business;
+Added: We expect it will be more difficult and expensive to attract and retain mid-market organization customers than other customers because mid-market organizations are more frequently forced to curtail or cease operations due to the sale or failure of their business;
can be more difficult to identify and may require more expensive, targeted sales campaigns;
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In addition, mid-market organizations frequently have limited budgets and are more likely to be significantly affected by economic downturns than larger, more established companies.
−Removed: For example, recent high inflation and recession concerns in the United States could have a greater adverse impact on mid-market organizations.
+Added: For example, high inflation and recession
+Added: concerns in the United States could have a greater adverse impact on mid-market organizations.
As a result, mid-market organizations may choose to spend funds on items other than our cloud services, particularly during difficult economic times.
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As a result, our revenue could be reduced as a result of any general or industry decline in demand for cloud-based storage solutions, particularly given that we would not have meaningful revenue from other market sectors to offset any temporary or longer-term downturn in demand for cloud-based storage solutions.
−Removed: Adverse economic conditions may adversely impact our revenue and profitability.
+Added: Changes in global trade policies, including the imposition of tariffs and other trade restrictions, may adversely affect our business.
+Added: Global trade policies, including tariffs, have experienced, and may continue to experience, rapid and significant changes.
+Added: While a significant portion of our purchases of material or equipment is purchased from entities located in the United States (or otherwise assembled in the United States), we source some products or components from foreign countries that may be subject to new tariffs.
+Added: We also rely on various global suppliers, hardware vendors, and data center partners, many of whom procure equipment, components, or materials from regions affected by the changing trade policies.
+Added: The imposition of tariffs or other trade measures, particularly involving technology-related goods, could increase our direct costs as well as the costs for our partners and vendors, which may be passed on to us through higher service fees, hardware pricing, increased logistical expenses, or result in delays and longer lead times.
+Added: In addition, our customers may be adversely affected by the global trade changes, which, in turn, could lead to reduced demand for our solutions, delayed purchases, or lower customer or data retention rates.
+Added: Any efforts to mitigate these risks by diversifying or expanding our supply chain may not achieve the intended benefits.
+Added: The changes, including potential changes, to global trade policies have also led to uncertainty, and impacted broad segments of the financial markets, including the Russell 2000 Index, which tracks small-cap stocks such as Backblaze.
+Added: The long-term implications of changing global trade policies remain uncertain and may have unforeseen consequences for our business and stock.
+Added: Uncertainty in general economic conditions may adversely impact our revenue and profitability.
Our operations and financial performance depend in part on worldwide economic conditions and the impact these conditions have on levels of spending on cloud storage solutions.
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Some of our paying customers may view use of cloud storage services as a discretionary purchase and may reduce their discretionary spending on our cloud services during an economic downturn.
−Removed: Weak economic conditions, whether due to the banking and financial crises, a return of pandemic conditions, inflation, uncertainty relating to the hostilities with Russia-Ukraine and Israel-Hamas, and the potential escalation of geopolitical tensions that could also directly or indirectly involve other countries, including the United States, could cause a reduction in spending on products and solutions storage.
−Removed: Inflation has increased significantly over levels from the last few years in the United States amid a slowing economy and there are numerous indicators suggesting a potential economic recession in the United States and other regions of the world.
+Added: Weak economic conditions, whether due to the banking and financial crises, a return of pandemic conditions, inflation, uncertainty relating to the hostilities with Russia-Ukraine, the joint United States-Israeli strikes on Iran in February 2026 along with other conflicts in the Middle East, and the potential escalation of geopolitical tensions that could also directly or indirectly involve other countries, including the United States, could cause a reduction in spending on products and solutions storage.
Any such conditions could reduce sales, lengthen sales cycles, increase customer churn, and lower demand for our cloud services, which could adversely affect our business, results of operations, and financial condition.
We also have been, and may in the future be, subject to increased energy costs, particularly with respect to our data center operations in Europe and elsewhere, which could adversely affect our expenses and business.
−Removed: In addition, the change in administration as a result of the 2024 U.S.
−Removed: presidential election could lead to changes in economic conditions or economic uncertainties in the United States and globally.
−Removed: It is presently unclear exactly what actions the U.S.
−Removed: will implement, and if implemented, how these actions may impact our business.
−Removed: However, changes to global trade dynamics, including the imposition of tariffs, trade restrictions or retaliatory actions, could have a material adverse impact on our business and results of operations.
+Added: In addition, political uncertainty and changes to global trade dynamics, including the imposition of tariffs, trade restrictions or retaliatory actions, could have a material adverse impact on our business and results of operations.
Our ability to maintain customer adoption and satisfaction depends in part on the ease of use of our cloud services, and any such failure could have an adverse effect on our business.
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If our platform and cloud services, including new service offerings and features as they become available, become more complicated and less easy-to-use, customers could experience increased difficulties or disruption with storing or accessing their data, and we may lose existing customers or experience increased challenges obtaining new customers or existing customers may not choose to use additional features of our cloud services.
−Removed: In addition, our customers sometimes depend on our technical support services to resolve issues relating to our platform.
+Added: In addition, our customers sometimes
+Added: depend on our technical support services to resolve issues relating to our platform.
If we do not succeed in helping our customers quickly resolve issues or provide effective ongoing education related to our platform, our reputation and business may be harmed.
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Our success will depend, in part, on our ability to grow our business in response to changing technologies, customer demands, and competitive pressures.
−Removed: In some circumstances, we may choose to do so through the acquisition of
−Removed: complementary businesses and technologies rather than through internal development.
+Added: In some circumstances, we may choose to do so through the acquisition of complementary businesses and technologies rather than through internal development.
The identification of suitable acquisition candidates can be difficult, time-consuming, and costly, and we may be unable to successfully complete proposed acquisitions.
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Future acquisitions could also result in dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities, amortization expenses, incremental operating expenses, or the write-off of goodwill, any of which could harm our financial condition or operating results.
+Added: Restrictive covenants under our credit facility may constrain our strategic and operational flexibility.
+Added: On June 4, 2025, we entered into a senior secured revolving credit agreement with Citizens Bank, N.A.
+Added: (the “Lender”) providing borrowing capacity of up to $20 million, of which up to $3 million is available through a letter-of‑credit (the “Revolving Credit Facility”).
+Added: While we believe the credit facility generally strengthens our overall financial position, the credit agreement imposes various affirmative and negative covenants, including financial covenants requiring us to maintain specified minimum liquidity, minimum consolidated EBITDA, and maximum total leverage ratios, as well as limitations on our ability to incur additional indebtedness, create liens on our assets, make certain investments, and take other corporate actions, including mergers and acquisitions, without prior approval from the lender.
+Added: As a result, our operating and financial flexibility may be materially restricted by these provisions.
+Added: If we fail to comply with any covenant or other terms and conditions, the lender may accelerate amounts outstanding under the facility, require mandatory prepayment or repayment, terminate access to additional borrowings, or foreclose on any or all of the Company’s assets secured or otherwise pledged as collateral under the credit agreement.
+Added: These restrictions may limit our ability to respond effectively to changing market or economic conditions, pursue acquisitions, investments, or strategic transactions that we otherwise believe are value enhancing, return capital to stockholders via dividends, share repurchases or other distributions;
+Added: or make capital expenditures or other internal reinvestments, including investing in product enhancements or scaling key infrastructure.
+Added: Our ability to comply with these covenants, and to avoid defaults, may be adversely affected by changes in
+Added: our liquidity position, profitability, working capital, or capital structure that arise due to factors outside of our control, including economic downturns, competitive pressures, or unexpected expense events.
+Added: A default under the agreement could have a material adverse effect on our financial condition, results of operations, and cash flows.
We may require additional capital to support our operations or the growth of our business, and we cannot be certain that this capital will be available on reasonable terms when required, or at all.
We may need additional financing to operate or grow our business.
−Removed: Our ability to obtain additional financing, if and when required, will depend on investor and lender demand, our operating performance, the condition of the capital markets, and other factors.
−Removed: For example, we often use leases to finance the equipment we use to provide our cloud-based services.
+Added: Our ability to obtain additional financing, if and when required, will depend on investor and lender demand, our operating performance, the condition of the capital markets, our financial performance, including compliance with any applicable covenants, and other factors.
+Added: For example, we often use leases to finance the equipment we use to provide our cloud-based services, and we have a Revolving Credit Facility with the Lender.
In addition, the stock market has recently experienced significant volatility, including with respect to technology stocks, due to high inflation, various economic headwinds and other factors.
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Any such impact could have a material adverse effect upon our liquidity and business.
−Removed: In addition, in December 2024, we terminated our loan and security agreement with City National Bank, which included a revolving line of credit.
−Removed: While that line of credit was limited due to a requirement to fully collateralize any loan amounts by cash, we do not currently have a replacement line of credit or other equivalent arrangement.
−Removed: Without additional access to these kinds of capital on commercially reasonable terms, or at all, we may not be able to respond to increased demand for our cloud services on a timely or cost-effective basis.
−Removed: We cannot guarantee that additional financing will be available to us on favorable terms when required, or at all.
+Added: Our Revolving Credit Facility with the Lender is subject to, among other things, various financial and operating covenants that place limits on our ability to incur indebtedness with the Lender and other financial institutions, and create liens on our property and assets.
+Added: We cannot guarantee that additional financing will be available to us on commercially reasonable terms when required, or at all.
If we raise additional funds through the issuance of equity, equity-linked, or debt securities, those securities may have rights, preferences, or privileges senior to the rights of our Class A common stock, and our existing stockholders may experience dilution.
−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 the operation or growth of our business could be significantly impaired and our operating results may be harmed.
−Removed: We are an emerging growth company, and any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors.
−Removed: We are an emerging growth company, and for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to “emerging growth companies,” including:
−Removed: not being required to have our independent registered public accounting firm audit our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002, as amended (the Sarbanes Oxley Act), reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
−Removed: Under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies.
−Removed: We have elected to avail ourselves of this accommodation allowing for delayed adoption of new or revised accounting standards, and therefore, we will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.
−Removed: We could be an emerging growth company for up to five years following the completion of our IPO or until we reach certain thresholds.
−Removed: Investors may find our common stock less attractive due to our election to rely on these exemptions and there may be a less active trading market for our common stock and the market price of our common stock may be more volatile.
+Added: If we are unable to obtain adequate financing or financing on terms satisfactory to us on a timely basis, our ability to continue to support the operation or growth of our business could be significantly impaired and our operating results may be harmed.
We are exposed to fluctuations in currency exchange rates, which could negatively affect our results of operations.
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dollars and therefore, our revenue and business operations are not directly subject to significant foreign currency risk.
−Removed: However, a strengthening of the U.S.
+Added: We do, however, earn revenue, pay expenses, and incur liabilities in countries using currencies other than the U.S.
+Added: dollar, which primarily includes the British pound, the Canadian dollar, and the Euro.
+Added: A strengthening of the U.S.
dollar could increase the real cost of our cloud services to our customers outside of the United States, which could reduce demand for our cloud services and adversely affect our financial condition and results of operations.
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Any future litigation against us could be costly and time-consuming to defend.
−Removed: We are and may become subject to legal proceedings, investigations, and claims that arise in the ordinary course of business.
−Removed: For example, we are and may be subject to claims brought by customers, vendors or other third parties in connection with various types of disputes, including relating to commercial or contract matters, violation of securities laws, intellectual property laws or other laws, or privacy or other data breaches, or employment claims made by our current or former employees.
+Added: We may become subject to legal proceedings, investigations, and claims that arise in the ordinary course of business.
+Added: For example, we may be subject to claims brought by customers, vendors or other third parties in connection with various types of disputes, including relating to commercial or contract matters, violation of securities laws, intellectual property laws or other laws, or privacy or other data breaches, or employment claims made by our current or former employees.
Litigation can often be expensive, even when there is a successful outcome, and can divert management’s attention and resources, which could harm our business and financial condition.
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Although we may have various insurance policies, insurance might not cover such claims or provide sufficient payments to cover all the costs to resolve one or more such claims, and might not continue to be available on terms acceptable to us, including premium increases or the imposition of large deductible or co-insurance requirements.
−Removed: In addition, we are also and may also be subject to subpoena requests from third parties as well as governmental agencies
−Removed: from time to time that require us to provide certain information relating to matters targeted against other third parties, which can be time consuming.
+Added: In addition, we may also be subject to subpoena requests from third parties as well as governmental agencies from time to time that require us to provide certain information relating to matters targeted against other third parties, which can be time consuming.
Risks Related to Reliance on Infrastructure and Third Parties
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We depend on a limited number of third-party data centers and other providers to safely house our equipment and provide sufficient power, bandwidth, and other infrastructure needs to support our operations and cloud services.
−Removed: To support our anticipated growth and as we develop and implement new product features we may require more computing infrastructure, which may include the opening and expansion of data centers.
−Removed: The risks we face in connection with the opening and expansion of data centers include:
−Removed: • we may not be able to find suitable third-party data center locations with sufficient power, or bandwidth, or such data center locations may not be available on commercially reasonable terms;
−Removed: • we will be required to commit substantial operational and financial resources to open new data centers, and we may not have sufficient customer demand in those markets to support the new data centers;
+Added: To support our anticipated growth and as we develop and implement new product features we may require more computing infrastructure, which may include the establishment and expansion of data center spaces.
+Added: The risks we face in connection with the establishment and expansion of data center spaces include:
+Added: • we may not be able to expand or find new suitable third-party data center locations with sufficient power, or bandwidth, or such expansion options or new data center locations may not be available on commercially reasonable terms;
+Added: • we will be required to commit substantial operational and financial resources to establish new data center spaces, and we may not have sufficient customer demand in those markets to support the new data center spaces;
• unanticipated delays in the completion of such projects or availability of components may lead to increased project costs, operational inefficiencies, or interruptions in the delivery or degradation of quality of our service;
• issues that are not identified during the testing phases of design and implementation, which may only become evident after we have started to fully utilize the underlying equipment, could disrupt the delivery of our cloud services to customers or increase our costs;
−Removed: • unanticipated technological changes could affect customer requirements for data centers, and we may not have built such requirements into our new data centers.
+Added: • unanticipated technological changes could affect customer requirements for data center spaces, and we may not have built such requirements into our new data center spaces.
We also rely on key components for our platform, including hard drives and semiconductors, which come from limited sources of supply.
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From time to time, we may also seek to mitigate the impact of potential supply chain disruptions by acquiring additional hard drives and related infrastructure, which can result in a higher balance of capital equipment and related lease liability, an increase in cash used in financing activities from principal payments, as well as a higher ongoing interest and depreciation expense related to any additional lease agreements.
−Removed: Current or future supply chain interruptions could be triggered or exacerbated by global political tensions, such as the imposition, or threat of potential imposition, of tariffs or other trade restrictions, hostilities or tensions such as the Russia-Ukraine, Israel-Hamas and China-Taiwan conflicts, particularly if those tensions escalate into an armed conflict or directly or indirectly involve other countries, which may include the implementation of trade barriers, including boycotts or the use of economic sanctions and export control restrictions, any of which could negatively impact our ability to acquire hard drives and semiconductors.
+Added: Current or future supply chain interruptions could be triggered or exacerbated by global political tensions, such as the imposition, or threat of potential imposition, of tariffs or other trade restrictions, hostilities or tensions such as the joint United States-Israeli strikes on Iran in February 2026 along with other conflicts in the Middle East, and conflicts between Russia-Ukraine, Israel-Hamas, and China-Taiwan, particularly if those tensions escalate into an armed conflict or directly or indirectly involve other countries, which may include the implementation of trade barriers, including boycotts or the use of economic sanctions and export control restrictions, any of which could negatively impact our ability to acquire hard drives and semiconductors.
In addition, our business could be harmed in the event of any industry consolidations, acquisitions, other restructuring events or bankruptcies.
−Removed: For example, in September 2023, Toshiba Corp., one of our hard drive suppliers, announced the completion of a buy-out by various private equity firms and others.
+Added: For example, in September 2023, Toshiba Corp., one of our hard drive suppliers, announced the completion of a buy-out by various private equity
+Added: firms and others.
Also, in October 2023, Western Digital, another one of our hard drive suppliers, announced that it would spin-out its hard drive and other selected businesses into a separate company.
−Removed: Although the Toshiba buyout and Western Digital spin-out have not resulted in any material impact to our business to date, such industry consolidations, acquisitions or other restructuring events of third party vendors or partners may increase the likelihood of closure or other changes at such vendors and partners that could adversely affect our business.
−Removed: Also, a third party vendor that operated one of our multiple data center locations filed for bankruptcy under Chapter 11 under the United States Bankruptcy Code in 2022.
−Removed: This bankruptcy matter was resolved without disruption to normal operations, but future bankruptcies or similar actions affecting our third-party hosted data center providers could result in disruptions to the company, and access to customer data may become unavailable or customer data could be lost, and it may take a significant period of time to achieve full resumption of our cloud services.
+Added: One of our data center vendors also went through bankruptcy proceedings in 2022.
+Added: Although none of these prior examples resulted in any material impact to our business, such industry consolidations, acquisitions or other restructuring events of third-party vendors or partners could result in disruptions to the company, and access to customer data may become unavailable or customer data could be lost, and it may take a significant period of time to achieve full resumption of our cloud services.
Any shortage of key components, including hard drives, could materially and adversely affect our ability to provide our cloud services, as well as negatively impact our financial results by increasing our costs, lease liabilities, interest and depreciation expenses, and inventory levels.
Shortages or pricing fluctuations could be material in the future.
−Removed: In the event of a shortage, supply interruption, material pricing change or other significant events involving
−Removed: one of our suppliers, we may be unable to develop alternate sources in a timely manner or at all.
+Added: In the event of a shortage, supply interruption, material pricing change or other significant events involving one of our suppliers, we may be unable to develop alternate sources in a timely manner or at all.
Developing alternate sources of supply for these infrastructure needs and transitioning our customers’ data from one provider to another, may result in loss of availability of our services for a period of time, be time-consuming, costly, difficult, and increase the risk of damage and loss.
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Acceptance and processing of these payment methods are subject to certain rules and regulations and require payment of interchange and other fees.
−Removed: To the extent there are increases in payment processing fees, material changes in the payment ecosystem, such as large re-issuances of payment cards, delays in receiving payments from payment processors, changes to rules or regulations concerning payment processing, loss of payment partners, and/or disruptions or failures in our payment processing systems or payment products, including products we use to update payment information, our revenue, operating expenses, and results of operation could be adversely impacted.
−Removed: For example, in response to the Russian attack on Ukraine that began in February 2022, the United States and many other countries began imposing sanctions on Russia and certain other regions, including goods and services imported and exported to Russia and certain other regions.
+Added: To the extent there are increases in payment processing fees, material changes in the payment ecosystem, such as large re-issuances of payment cards, delays in receiving payments from payment processors, changes to rules or regulations concerning payment processing, loss of payment partners, and/or disruptions or failures in our payment processing systems or payment products, including products we use to update payment information, our revenue, operating expenses, and results of operations could be adversely impacted.
+Added: For example, the conflict between Russia-Ukraine, the recent attacks on Iran and escalating conflicts in the Middle East and tariffs imposed by the current United Sates administration have each created extreme volatility in the global capital markets and may have further adverse consequences for the global economy, including disruptions of the global supply chain and energy markets.
In addition, various banking institutions and companies, including Stripe and credit card companies, began prohibiting any payments from persons located in Russia, which impacts our ability to receive payments from, and transact certain types of business operations with, our customers, and potential new customers, that are located in those regions.
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It is also difficult to predict how long the conflict may last, how the conflict could escalate, and how the sanctions may evolve, which could cause a greater adverse impact on our business and operations than we expect.
−Removed: We rely on third-party software for certain essential financial and operational services, and a failure or disruption in these services could materially and adversely affect our ability to manage our business effectively.
−Removed: We rely on third-party software to provide many essential financial and operational services to support our business, including HubSpot, NetSuite, FireHydrant, and Zendesk.
−Removed: Some of these vendors are less established and have shorter operating histories than traditional software vendors.
−Removed: Moreover, many of these vendors provide their services to us via a cloud-based model instead of software that is installed on our premises.
−Removed: As a result, we depend upon these vendors to provide us with services that are always available and are free of errors or defects that could cause disruptions in our business processes.
−Removed: Any failure by these vendors to do so, or any disruption in our ability to access the internet, would materially and adversely affect our ability to manage our operations, disrupt the delivery of our cloud services to customers, and affect other areas such as our ability to timely provide required financial reporting.
+Added: We rely on third-party systems for certain essential financial and operational services, and a failure or disruption in these services could materially and adversely affect our ability to manage our business effectively.
+Added: We rely on third-party software to provide many essential financial, enterprise risk planning and operational services to support our business, including Stripe, HubSpot, NetSuite, FireHydrant, and Zendesk.
+Added: For example, many of our customers pay for our cloud services and products using credit cards.
+Added: We rely on internal systems as well as those of third parties,
+Added: including Stripe, to process such payments.
+Added: To the extent there are any issues with the payment processing, including increases in payment processing fees, delays in receiving payments from payment processors, or other disruptions or failures in our payment processing systems, our revenue, operating expenses, and results of operations could be adversely impacted.
+Added: We depend upon such third party vendors to provide us with services that are always available and are free of errors or defects that could cause disruptions in our business processes.
+Added: Any failure by these vendors to do so, or any disruption in our ability to access the internet, would materially and adversely affect our ability to manage our operations, disrupt the delivery of our cloud services to customers, and affect other areas of our business such as our ability to timely provide required financial reporting.
+Added: In addition, we periodically implement new third party systems, features, and software releases.
+Added: The implementation of new systems, features or releases may be complex and could introduce undetected errors, bugs, compatibility issues or other integration issues.
+Added: These issues could lead to service outages, data loss, security vulnerabilities, or other disruptions that negatively impact our customers and business operations.
+Added: If we fail to successfully manage risks associated with third-party dependencies, our business, financial condition, and results of operations could be materially and adversely affected.
We are an emerging growth company, which provides, among other things, reduced disclosure requirements, and any decision on our part to comply only with reduced reporting and disclosure requirements applicable to such companies could make our common stock less attractive to investors.
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By taking advantage of some or all of the reduced disclosure requirements available to emerging growth companies, investors may find our common stock less attractive, which may result in a less active trading market for our common stock and greater stock price volatility.
−Removed: We will remain an emerging growth company until the earlier of December 31, 2026 or (i) as of June 30, 2025, our public float is less than $700 million;
−Removed: (ii) our total annual gross revenues do not exceed $1.235 billion or more during a fiscal year, or (iii) we issue less than $1 billion in non-convertible debt over the past three years.
−Removed: We were previously a “smaller reporting company” under the securities laws, and therefore able to take advantage of various reduced financial and other disclosure obligations and requirements.
−Removed: However, as of June 30, 2024, we exceeded the applicable threshold to qualify as a smaller reporting company.
−Removed: As a result, while we are still able to utilize the reduced financial and other disclosure obligations and requirements applicable to smaller reporting companies for our 10-K for the year ended December 31, 2024 (and still qualify as an emerging growth company as noted above), we will not be able to utilize the smaller reporting company status for the foreseeable future thereafter.
−Removed: In addition, we now qualify as an “accelerated filer” pursuant to SEC rules and are subject to such requirements, including an accelerated timeframe to file our annual report on Form 10-K beginning for fiscal year 2024 and subsequent quarterly reports on Form 10-Q.
−Removed: Although we expect to be able to file such reports on a timely basis, compliance with the accelerated timeframe creates additional challenges and strain on resources, particularly in the finance and accounting department.
+Added: We will remain an emerging growth company until December 31, 2026, which is the last day of the fiscal year following the fifth anniversary of our initial public offering.
+Added: As a result, our Form 10-K for the year ended December 31, 2026 will no longer reflect any reduced disclosure requirements as an emerging growth company.
Risks Related to Accounting and Tax Matters
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As a result, investors may lose confidence in the accuracy and completeness of our financial reports, and the market price of our common stock may be materially impacted.
−Removed: We have dedicated significant effort and resources towards measures to remediate the identified material weaknesses (see Part II, Item 9A.
−Removed: Controls and Procedures included elsewhere in this Annual Report on Form 10-K for additional information regarding remediation efforts).
−Removed: Through testing of our internal controls completed during the quarter ended December 31, 2024, management has determined that the controls related to our remediation actions were effectively designed and operated effectively for a sufficient period of time to enable us to conclude that the material weaknesses have been remediated as of December 31, 2024.
Our independent registered public accounting firm is not required to attest to the effectiveness of our internal controls over financial reporting until after we are no longer an “emerging growth company” as defined in the JOBS Act.
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Any failure to maintain effective disclosure controls and internal controls over financial reporting could materially and adversely affect our business, results of operations, and financial condition and could cause a decline in the trading price of our Class A common stock.
−Removed: If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, we may be unable to produce timely and accurate financial statements or comply with applicable regulations, which could negatively impact the price of our common stock.
−Removed: As a public company, we are subject to the reporting requirements of the Exchange Act, as amended (the Exchange Act), the Sarbanes-Oxley Act, and the rules and regulations of the Nasdaq Global Market.
−Removed: We expect that the requirements of these rules and regulations will continue to increase our legal, accounting, and financial compliance costs, make some activities more difficult, time-consuming, and costly, and place significant strain on our personnel, systems, and resources.
−Removed: The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal controls over financial reporting.
−Removed: We are continuing to develop and refine our disclosure controls and other procedures and internal controls over financial reporting and expect that we will need to continue to expend significant resources, including accounting-related costs, and significant management oversight, to meet such requirements.
−Removed: However, our current controls and any new controls that we develop may not be adequate, and weaknesses in our disclosure controls may be discovered in the future.
−Removed: We have previously identified material weaknesses in our internal controls over financial reporting, which we subsequently remediated;
−Removed: however, new material weaknesses may be discovered in the future.
−Removed: Any failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement could harm our results of operations or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods.
−Removed: Any failure to implement and maintain effective internal controls over financial reporting also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal controls over financial reporting that we will eventually be required to include in our periodic reports that will be filed with the SEC.
−Removed: Ineffective disclosure controls and procedures and internal controls over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the trading price of our common stock.
+Added: As a public company, we are obligated to develop and maintain proper and effective internal control over financial reporting, and if we fail to develop and maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired.
+Added: As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), the listing requirements of
+Added: the Nasdaq Global Market (“Nasdaq”), and other applicable securities rules and regulations.
+Added: Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time consuming, or costly, and increase demand on our systems and resources, particularly after we are no longer an emerging growth company.
+Added: The Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business and operating results.
+Added: The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting.
+Added: It may require significant resources and management oversight to maintain and, if necessary, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard.
+Added: As a result, management’s attention may be diverted from other business concerns, which could adversely affect our business and operating results.
+Added: To comply with these requirements, we may need to hire more employees in the future or engage outside consultants, which would increase our costs and expenses.
+Added: As a public company, we are required, pursuant to Section 404 of the Sarbanes-Oxley Act (“Section 404”), to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting.
+Added: However, we are currently exempt from the requirement for an independent registered public accounting firm to attest to and report on management’s assessment of the effectiveness of our internal control over financial reporting under Section 404 until our Annual Report on Form 10-K for the fiscal year ending December 31, 2026.
+Added: Effective internal control over financial reporting is necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud.
+Added: Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could cause us to fail to meet our reporting obligations.
+Added: Ineffective internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.
+Added: This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting, as well as a statement that our independent registered public accounting firm has issued an opinion on the effectiveness of our internal control over financial reporting.
+Added: We expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the auditor attestation requirements of Section 404.
+Added: Furthermore, if and when we are deemed to be a “large accelerated filer”, we will also be required to file a more expansive proxy statement and be subject to shorter filing deadlines, which will require additional time and expense.
+Added: An independent assessment of the effectiveness of our internal controls could detect problems that our management’s assessment might not.
+Added: Undetected material weaknesses in our internal controls could lead to financial statement restatements and require us to incur costs to remediate them.
+Added: We will be required to disclose changes made in our internal control and procedures on a quarterly basis.
+Added: To comply with the requirements of being a public company, we have undertaken and may need to continue to undertake various actions, such as implementing new internal controls and procedures, hiring risk professionals, accounting and internal audit staff, and engaging outside consultants, which will increase our operating expenses.
+Added: We are in the early stages of the costly and challenging process of compiling the system and processing documentation necessary to perform the evaluation needed to comply with Section 404.
+Added: We may not be able to complete our evaluation, testing, and any required remediation in a timely fashion.
+Added: During the evaluation and testing process, if we identify material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal control over financial reporting is effective.
+Added: If we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an unqualified opinion on the effectiveness of our internal control, including as a result of a material weakness, we could lose investor confidence in the accuracy and completeness of our financial reports, which could cause the price of our common stock to decline, and we may be subject to investigation or sanctions by the SEC.
+Added: In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on Nasdaq.
Because we recognize revenue from our subscription services over the term of the subscription, downturns or upturns in new business may not be immediately reflected in our operating results.
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Accordingly, the corresponding revenue we report in each quarter from such arrangements is the result of subscription agreements entered into during previous quarters.
−Removed: Consequently, a decline in new or renewed subscriptions in any one quarter may only be partially reflected in our revenue results for that quarter.
+Added: Consequently, a decline in new or renewed subscriptions in any one quarter may only be
+Added: partially reflected in our revenue results for that quarter.
However, any such decline will negatively affect our revenue in future quarters.
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federal taxable income.
−Removed: Also, as of December 31, 2024, we had net operating loss carryforwards for state income tax purposes of $95.6 million av ailable to offset future state taxable income.
−Removed: If not utilized, the federal and state tax credit carryforwards will begin to expire in 2027.
+Added: Also, as of December 31, 2025, we had net operating loss carryforwards for state income tax purposes of $109.7 million available to offset future state taxable income.
+Added: If not utilized, the federal and state net operating loss carryforwards will begin to expire in 2029.
+Added: As of December 31, 2025, we also have federal research and development (“R&D”) credit carryforwards of $13.1 million which will begin to expire in 2032 and California R&D credit carryforwards of $6.6 million which do not expire.
+Added: The Company also has $0.1 million of California enterprise zone credits which will begin to expire in 2028.
Utilization of our net operating loss carryforwards and other tax attributes, such as research and development tax credits, may be subject to annual limitations, or could be subject to other limitations on utilization or benefit due to the ownership change limitations provided by Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), and other similar provisions.
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The rules dealing with U.S.
−Removed: federal, state and local income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the U.S.
−Removed: Treasury Department.
−Removed: In addition, the change in administration as a result of the 2024 U.S.
−Removed: presidential election could lead to changes in tax laws and enforcement practices.
−Removed: In 2017, the U.S.
−Removed: Congress and the Trump administration made substantial changes to U.S.
−Removed: policies, which included comprehensive corporate and individual tax reform.
−Removed: In addition, the Trump administration called for significant changes to U.S.
−Removed: trade, healthcare, immigration and government regulatory policy.
−Removed: With the transition to the Biden administration in early 2021, changes to U.
−Removed: policy occurred and since the start of the Trump Administration in 2025, U.S.
−Removed: policy changes have been implemented at a rapid pace and additional changes are likely.
+Added: federal, state and local income taxation are constantly under review by persons involved in the legislative process and by the U.S.
+Added: Department of Treasury.
Changes to U.S.
policy implemented by the U.S.
−Removed: Congress, the Trump administration or any new administration have impacted and may in the future impact, among other things, the U.S.
+Added: Congress, the current administration or any new administration have impacted and may in the future impact, among other things, the U.S.
and global economy, international trade relations, unemployment, immigration, healthcare, taxation, the U.S.
regulatory environment, inflation and other areas.
−Removed: Although we cannot predict the impact, if any, of these changes to our business, they could adversely affect our business.
−Removed: Until we know what policy changes are made, whether those policy changes are challenged and subsequently upheld by the court system and how those changes impact our business and the business of our competitors over the long term, we will not know if, overall, we will benefit from them or be negatively affected by them.
+Added: In July 2025, the federal government enacted the One Big Beautiful Bill Act (the “OBBB Act”), which permanently extended and modified several provisions of the 2017 Tax Cuts and Jobs Act and introduced significant new tax rules applicable to corporations.
+Added: Among other things, the OBBB Act is expected to increase our net operating losses and related valuation allowances.
+Added: We will continue to evaluate the specific impacts of the OBBB Act and further guidance or regulation may be issued by the U.S.
+Added: Department of the Treasury that could impact our business.
+Added: Although we cannot predict the full impact of these changes to our business, they could affect our business in a variety of ways, including some impacts that may benefit us and other impacts that may adversely affect our business, financial condition, results of operations or cash flows.
International tax laws also undergo frequent change.
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In recent years, many such changes have been made, and changes are likely to continue to occur in the future.
−Removed: It cannot be predicted whether, when, in what form or with what effective dates tax laws, regulations and rulings may be enacted, promulgated or issued, which could result in an increase in our or our stockholders’ tax liability or require changes in the manner in which we operate in order to minimize or mitigate any adverse effects of changes in tax law.
+Added: It cannot be predicted whether, when, in what form or with what effective dates tax laws, regulations and rulings may be enacted, promulgated or issued, which could result in an increase in
+Added: our or our stockholders’ tax liability or require changes in the manner in which we operate in order to minimize or mitigate any adverse effects of changes in tax law.
Any significant increase in our future effective tax rate could have a material adverse impact on our business, financial condition, results of operations, or cash flows.
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We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates.” 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 estimates and assumptions involve those related to costs to be capitalized as internal-use software, which include determining whether projects will result in new or additional functionality and those related to the valuation of our Employee Stock Purchase Plan expense.
+Added: Significant estimates and assumptions involve those related to costs to be capitalized as internal-use software, which include determining whether projects will result in new or additional functionality .
+Added: We also regularly review long-lived assets, including property and equipment, and intangible assets, for impairment whenever events or changes in circumstances indicate that their carrying value may not be recoverable.
+Added: If parts of our business, including products or features, market conditions or business opportunities change in ways that negatively impact these assets, we may be required to record impairment charges.
+Added: Any such charges could be material and adversely affect our results of operations and financial condition.
Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions.
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We do not currently own any issued patents and rely on a combination of trademark, copyright, and trade secret laws, as well as confidentiality procedures and contractual restrictions, to establish and protect our proprietary rights, all of which provide only limited protection and may not now or in the future provide us with a competitive advantage.
−Removed: While we currently have some patent applications pending, we may be unable to obtain patent protection for the technology covered in our patent applications, the patent protection may not be obtained quickly enough to meet our business needs, any patents issued in the future may not provide us with competitive advantages or they may be successfully challenged by third parties.
+Added: While we currently have patent applications pending, we may be unable to obtain patent protection for the technology covered in our patent applications, the patent protection may not be obtained quickly enough to meet our business needs, any patents issued in the future may not provide us with competitive advantages or they may be successfully challenged by third parties.
Additionally, the steps we have taken and will take may not prevent unauthorized use, reverse engineering, or misappropriation of our technologies and we may be unable to detect any of the foregoing.
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However, trade secrets and know-how can be difficult to protect.
−Removed: The use of generative artificial intelligence tools could also expose us to inadvertently disclosing trade secrets or other confidential information or inadvertently cause us to violate third party intellectual property rights.
+Added: The use of generative AI tools could also expose us to inadvertently disclosing trade secrets or other confidential information or inadvertently cause us to violate third party intellectual property rights.
We seek to protect these trade secrets and other proprietary technology, in part, by internal controls and policies as well as entering into non-disclosure and confidentiality agreements with parties who have access to them, such as our employees, outside contractors, consultants, advisors, and other third parties.
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The confidentiality agreements are designed to protect our proprietary information and, in the case of agreements or clauses containing invention assignment, to grant us ownership of technologies that are developed through a relationship with employees or third parties.
−Removed: We cannot guarantee that we have entered into such agreements with each
−Removed: party that may have or has had access to our trade secrets or proprietary information, including our technology and processes.
+Added: We cannot guarantee that we have entered into such agreements with each party that may have or has had access to our trade secrets or proprietary information, including our technology and processes.
Despite these efforts, no assurance can be given that the confidentiality agreements we enter into or our other internal controls and policies will be effective in controlling access to such proprietary information and trade secrets.
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In addition, the terms of open-source software licenses may require us to provide software that we develop using such open-source software to others on unfavorable license terms.
−Removed: As a result of our current or future use of open-source software, we may face claims or litigation, be required to release our proprietary source code, pay damages for breach of contract, re-engineer our solutions, discontinue making our solutions available in the event re-engineering cannot be accomplished on a timely basis or take other remedial action.
+Added: As a result of our current or future use of open-source software, we may face claims or litigation, be required to release our proprietary source code, pay damages for breach of contract, re-engineer our solutions, discontinue making
+Added: our solutions available in the event re-engineering cannot be accomplished on a timely basis or take other remedial action.
Any such re-engineering or other remediation efforts could require significant additional research and development resources, and we may not be able to successfully complete any such re-engineering or other remediation efforts on a timely basis, or at all.
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Prior to the listing of our common stock, there was no public market for shares of our common stock.
−Removed: Since our IPO, the stock price of our common stock has experienced very high volatility and the market prices of securities of other newly public companies have historically been highly volatile.
+Added: Since our initial public offering, the stock price of our common stock has experienced very high volatility and the market prices of securities of other newly public companies have historically been highly volatile.
The market price of our common stock could be subject to wide fluctuations in response to various factors, including those listed in this Annual Report on Form 10-K, some of which are beyond our control and may not be related to our operating performance.
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• general economic conditions and slow or negative growth of our markets.
+Added: Our stock and business may be adversely affected by the actions of third parties attempting to manipulate our share price.
+Added: We believe our stock and business has been, and may in the future be, subject to short sellers or other third parties who manipulate our share price through false or misleading reports to spark fear and drive down our share price for their personal financial gain at the expense of other stockholders.
+Added: This technique is also referred to as “short and distort.” These activities are often accompanied by announcements from various fee-chasing law firms trolling for potential plaintiffs and threatening litigation, often without conducting a thorough investigation.
+Added: Even when there is no merit to the underlying allegations, these campaigns, which may involve social media, anonymous sources, or coordinated trading activity, can materially impact investor sentiment, depress our stock price, harm our reputation and business, and divert management’s attention.
We may fail to meet our publicly announced guidance or other expectations about our business, which could cause our stock price to decline.
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Specifically, our Amended and Restated Certificate of Incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum provision for:
−Removed: (i) any derivative action or proceeding brought on behalf of us;
+Added: (i) any derivative action or proceeding
+Added: brought on behalf of us;
(ii) any action asserting a claim of breach of a fiduciary duty;
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As a public company, and particularly after we cease to be an “emerging growth company”, we have incurred and will continue to incur substantial legal, accounting, and other expenses that we did not incur as a private company.
−Removed: For example, we are subject to the reporting requirements of the Exchange Act, the applicable requirements of the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the rules and regulations of the SEC, and the listing standards of the Nasdaq Global Market.
+Added: For example, we are subject to the reporting requirements of the Exchange Act, the applicable requirements of the Sarbanes-Oxley Act, the Dodd-Frank Act, the rules and regulations of the SEC, and the listing standards of Nasdaq.
For example, the Exchange Act requires, among other things, we file annual, quarterly, and current reports with respect to our business, financial condition, and results of operations.
1 unchanged sentence
In addition, as a public company, we may be subject to stockholder activism, which can lead to additional substantial costs, distract management, and impact the manner in which we operate our business in ways we cannot currently anticipate.
−Removed: As a result of disclosure
−Removed: of information in filings required of a public company, our business and financial condition has become more visible, which may result in threatened or actual litigation, including by competitors.
+Added: As a result of disclosure of information in filings required of a public company, our business and financial condition has become more visible, which may result in threatened or actual litigation, including by competitors.
Some members of our management team also have limited experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws pertaining to public companies.
−Removed: Our management team may not successfully or efficiently manage our transition to being a public company subject to significant regulatory oversight and reporting obligations under the federal securities laws and the continuous scrutiny of securities analysts and investors.
−Removed: These new obligations and constituents will require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, financial condition, and results of operations.
+Added: Our management team may not successfully or efficiently manage the increased regulatory oversight and reporting obligations under the federal securities laws and the continuous scrutiny of securities analysts and investors.
+Added: These obligations and constituents require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, financial condition, and results of operations.
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.