8 unchanged sentences
• We have a history of losses and may not be able to achieve or sustain profitability in the future.
−Removed: • Our limited operating history makes it difficult to evaluate our current business and future prospects, and may increase the risk of your investment.
• The COVID-19 pandemic could adversely affect global economic conditions and our business, operating results and future revenue.
• If organizations do not adopt cloud-based SaaS-delivered endpoint security solutions, our ability to grow our business and results of operations may be adversely affected.
+Added: • If we are unable to successfully enhance our existing products and services and introduce new products and services in response to rapid technological changes and market developments as well as evolving security threats, our competitive position and prospects will be harmed.
• If we are unable to attract new customers, our future results of operations could be harmed.
4 unchanged sentences
If our internal networks, systems, or data are or are perceived to have been breached, our reputation may be damaged and our financial results may be negatively affected.
−Removed: • Our business is focused on cloud-based data analytics, and cybersecurity, privacy, and other regulations may affect how we collect and process certain types of data.
• We rely on third-party data centers, such as Amazon Web Services, and our own colocation data centers, to host and operate our Falcon platform, and any disruption of or interference with our use of these facilities may negatively affect our ability to maintain the performance and reliability of our Falcon platform, which could cause our business to suffer.
−Removed: • If we do not effectively expand and train our direct sales force, we may be unable to add new customers or increase sales to our existing customers, and our business will be adversely affected.
+Added: • We rely on our key technical, sales and management personnel to grow our business, and the loss of one or more key employees could harm our business.
+Added: • If we are unable to attract and retain qualified personnel, our business could be harmed.
• Our results of operations may fluctuate significantly, which could make our future results difficult to predict and could cause our results of operations to fall below expectations.
• Claims by others that we infringe their proprietary technology or other intellectual property rights could result in significant costs and substantially harm our business, financial condition, results of operations, and prospects.
+Added: • If we are not able to comply with applicable data protection, security, privacy, and other government- and industry-specific laws, regulations, standards or requirements, our business, results of operations, and financial condition could be harmed.
• Future acquisitions, strategic investments, partnerships, or alliances could be difficult to identify and integrate, divert the attention of key management personnel, disrupt our business, dilute stockholder value and adversely affect our results of operations and financial condition.
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For example, our headcount grew from 2,309 employees as of January 31, 2020, to 4,965 employees as of January 31, 2022.
−Removed: Although we have experienced rapid growth historically, we may not sustain our current growth rates, nor can we assure you that our investments to support our growth will be successful.
+Added: Although we have experienced rapid growth historically, we may not sustain our current growth rates and our investments to support our growth may not be successful.
The growth and expansion of our business will require us to invest significant financial and operational resources and the continuous dedication of our management team.
−Removed: We have encountered and will continue to encounter risks and difficulties frequently experienced by rapidly growing companies in evolving industries, including market acceptance of our Falcon platform, adding new customers, intense competition, and our ability to manage our costs and operating expenses.
Our future success will depend in part on our ability to manage our growth effectively, which will require us to, among other things:
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As of January 31, 2022, we had an accumulated deficit of $964.9 million.
−Removed: While we have experienced significant growth in revenue in recent periods, we cannot assure you when or whether we will reach or maintain profitability.
+Added: While we have experienced
+Added: significant growth in revenue in recent periods, we cannot assure you when or whether we will reach or maintain profitability.
We also expect our operating expenses to increase in the future as we continue to invest for our future growth, which will negatively affect our results of operations if our total revenue does not increase.
We cannot assure you that these investments will result in substantial increases in our total revenue or improvements in our results of operations.
−Removed: In addition to the anticipated costs to grow our business, we have incurred and expect to continue to incur significant additional legal, accounting, and other expenses as a newly public company.
+Added: We also have incurred and expect to continue to incur significant additional legal, accounting, and other expenses as a public company.
Any failure to increase our revenue as we invest in our business or to manage our costs could prevent us from achieving or maintaining profitability or positive cash flow.
−Removed: Our limited operating history makes it difficult to evaluate our current business and future prospects, and may increase the risk of your investment.
−Removed: We were founded in November 2011 and launched our first endpoint security solution in 2013.
−Removed: Our limited operating history makes it difficult to evaluate our current business, future prospects, and other trends, including our ability to plan for and model future growth.
−Removed: We have encountered and will continue to encounter risks, uncertainties, and difficulties frequently experienced by rapidly growing companies in evolving industries, including our ability to achieve broad market acceptance of cloud-based, SaaS-delivered endpoint security solutions and our Falcon platform, attract additional customers, grow partnerships, compete effectively, build and maintain effective compliance programs, and manage increasing expenses as we continue to invest in our business.
−Removed: If we do not address these risks, uncertainties, and difficulties successfully, our business, and results of operations will be harmed.
−Removed: Further, we have limited historical financial data, and we operate in a rapidly evolving market.
−Removed: As a result, any predictions about our future revenue and expenses may not be as accurate as they would be if we had a longer operating history or operated in a more predictable market.
The COVID-19 pandemic could adversely affect our business, operating results and future revenue.
−Removed: In March 2020, the World Health Organization declared COVID-19 a global pandemic.
−Removed: This contagious disease outbreak has spread across the globe and is impacting worldwide economic activity and financial markets.
+Added: The COVID-19 pandemic continues to impact worldwide economic activity and financial markets.
In light of the uncertain and rapidly evolving situation relating to the spread of COVID-19, we have taken precautionary measures intended to mitigate the spread of the virus and minimize the risk to our employees, customers, partners, and the communities in which we operate.
−Removed: These measures include transitioning our employee population to work remotely from home until at least April 30, 2021, imposing travel restrictions for our employees, shifting customer, partner and investor events to virtual-only formats, and limiting capacity at any of our offices which have reopened or may reopen during the pandemic’s duration.
−Removed: These precautionary measures could negatively affect our customer success efforts, delay and lengthen our sales cycles, impact our sales and marketing efforts, reduce employee efficiency and productivity, slow our international expansion efforts, increase cybersecurity risks, and create operational or other challenges, any of which could harm our business and results of operations.
+Added: These precautionary measures could negatively affect our customer success efforts, delay and lengthen our sales cycles, impact our sales and marketing efforts, reduce employee efficiency and productivity, increase employee attrition, slow our international expansion efforts, increase cybersecurity risks, and create operational or other challenges, any of which could harm our business and results of operations.
+Added: As we monitor the situation, taking into account uncertainties with respect to vaccination progress, disease variants and the efficacy of vaccines and treatments relating to such variants, infection rates and evolving public health guidance at local, state and country levels, planning and risk management relating to our work policies and office operations will require time from management and other employees, which may reduce the amount of time available for other initiatives.
Moreover, due to our subscription-based business model, the effect of the COVID-19 pandemic may not be fully reflected in our results of operations until future periods, if at all.
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You should consider our business and prospects in light of the risks and difficulties we encounter in this new and evolving market.
+Added: If we are unable to successfully enhance our existing products and services and introduce new products and services in response to rapid technological changes and market developments as well as evolving security threats, our competitive position and prospects will be harmed.
+Added: Our ability to increase revenue from existing customers and attract new customers will depend in significant part on our ability to anticipate and respond effectively to rapid technological changes and market developments as well as evolving security threats.
+Added: The success of our Falcon platform depends on our ability to take such changes into account and invest effectively in our research and development organization to increase the reliability, availability and scalability of our existing solutions and introduce new solutions.
+Added: If we fail to effectively anticipate, identify or respond to such changes in a timely manner, or at all, our business could be harmed.
+Added: Even if we adequately fund our research and development efforts there is no guarantee that we will realize a return on such efforts.
+Added: Success in delivering enhancements and new solutions depends on several factors, including the timely completion, introduction and market acceptance of the enhancement or new solution, the risk that such enhancement or new solution may have quality or other defects or deficiencies, especially in the early stages of introduction, as well as our ability to seamlessly integrate all of our product and service offerings and develop adequate sales capabilities in new markets.
+Added: Failure in this regard may erode our competitive position, significantly impair our revenue growth, and negatively impact our operating results.
If we are unable to attract new customers, our future results of operations could be harmed.
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Even if we are successful in convincing prospective customers that a cloud native platform like ours is critical to protect against cyberattacks, they may not decide to purchase our Falcon platform for a variety of reasons, some of which are out of our control.
−Removed: For example, any deterioration in general economic conditions, including a downturn due to the outbreak of diseases such as COVID-19, may cause our current and prospective customers to
−Removed: cut their overall security and IT operations spending, and such cuts may fall disproportionately on cloud-based security solutions like ours.
+Added: For example, any deterioration in general economic conditions, including a downturn due to the outbreak of diseases such as COVID-19, may cause our current and prospective customers to cut their overall security and IT operations spending, and such cuts may fall disproportionately on cloud-based security solutions like ours.
Economic weakness, customer financial difficulties, and constrained spending on security and IT operations may result in decreased revenue, reduced sales, lengthened sales cycles, increased churn, lower demand for our products, and adversely affect our results of operations and financial conditions.
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We face intense competition and could lose market share to our competitors, which could adversely affect our business, financial condition, and results of operations.
−Removed: The market for security and IT operations solutions is intensely competitive, fragmented, and characterized by rapid changes in technology, customer requirements, industry standards, increasingly sophisticated attackers, and by frequent introductions of new or improved products to combat security threats.
+Added: The market for security and IT operations solutions is intensely competitive, fragmented, and characterized by rapid changes in technology, customer requirements, industry standards, increasingly sophisticated attackers, and by frequent
+Added: introductions of new or improved products to combat security threats.
We expect to continue to face intense competition from current competitors, as well as from new entrants into the market.
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Our competitors include the following by general category:
−Removed: • legacy antivirus product providers, such as McAfee, LLC, Broadcom Inc.’s Symantec Enterprise division, and Microsoft Corporation, who offer a broad range of approaches and solutions including traditional antivirus and signature-based protection;
−Removed: • alternative endpoint security providers, such as Blackberry Cylance, VMware Carbon Black and SentinelOne, who offer point products based on malware-only or application whitelisting techniques;
−Removed: • network security vendors, such as Palo Alto Networks, Inc.
−Removed: and FireEye, Inc., who are supplementing their core perimeter-based offerings with endpoint security solutions.
−Removed: Many of these competitors have greater financial, technical, marketing, sales, and other resources, greater name recognition, longer operating histories, and a larger base of customers than we do.
+Added: • legacy antivirus product providers, such as Trellix (formerly McAfee Enterprise), Broadcom Inc.’s Symantec Enterprise division, and Microsoft Corporation, who offer a broad range of approaches and solutions including traditional signature-based anti-virus protection;
+Added: • alternative endpoint security providers, such as Blackberry Cylance, VMware Carbon Black and SentinelOne, who generally offer a mix of on-premise and cloud-hosted products that rely heavily on malware-only or application whitelisting techniques;
+Added: • network security vendors, such as Palo Alto Networks, Inc., who are supplementing their core perimeter-based offerings with endpoint security solutions;
+Added: • professional service providers, such as Mandiant and Microsoft Corporation, who offer cybersecurity response services.
+Added: Many of our competitors have greater financial, technical, marketing, sales, and other resources, greater name recognition, longer operating histories, and a larger base of customers than we do.
They may be able to devote greater resources to the development, promotion, and sale of services than we can, and they may offer lower pricing than we do.
−Removed: Further, they may have greater resources for research and development of new technologies, the provision of customer support, and the pursuit of acquisitions, or they may have other financial, technical, or other resource advantages.
+Added: Further, they may have greater resources for research and development of new technologies, the provision of customer support, and the pursuit of acquisitions.
Our larger competitors have substantially broader and more diverse product and services offerings as well as routes to market, which allows them to leverage their relationships based on other products or incorporate functionality into existing products to gain business in a manner that discourages users from purchasing our platform, including our cloud modules.
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These competitive pressures in our market or our failure to compete effectively may result in price reductions, fewer orders, reduced revenue and gross margins, increased net losses and loss of market share.
−Removed: Further, many competitors that specialize in providing protection from a single type of security threat may be able to deliver these targeted security products to the market quicker than we can or convince organizations that these limited products meet their needs.
+Added: Further, competitors that specialize in providing protection from a single type of security threat may be able to deliver these targeted security products to the market quicker than we can or convince organizations that these limited products meet their needs.
Even if there is significant demand for cloud-based security solutions like ours, if our competitors include functionality that is, or is perceived to be, equivalent to or better than ours in legacy products that are already generally accepted as necessary components of an organization’s IT security architecture, we may have difficulty increasing the market penetration of our platform.
−Removed: Furthermore, even if the functionality offered by other security and IT operations providers is different and more limited than the functionality of our platform, organizations may elect to accept such limited functionality in lieu of adding products from additional vendors like us.
+Added: Furthermore, even if the functionality offered by other security and IT operations providers is more limited than the functionality of our platform, organizations may elect to accept such limited functionality in lieu of adding products from additional vendors like us.
If we are unable to compete successfully, or if competing successfully requires us to take aggressive pricing or other actions, our business, financial condition, and results of operations would be adversely affected.
2 unchanged sentences
The subscription prices for our Falcon platform, cloud modules, and professional services may decline for a variety of reasons, including competitive pricing pressures, discounts, anticipation of the introduction of new solutions by our competitors, or promotional programs offered by us or our competitors.
−Removed: Competition continues to increase in the market segments in which we operate, and we expect competition to further increase in the future.
−Removed: Larger competitors with more diverse product and service offerings may reduce the price of products or subscriptions that compete with ours or may bundle them with other products and subscriptions.
+Added: The cybersecurity market remains very competitive, and competition may further increase in the future.
+Added: Competitors may reduce the price of products or subscriptions that compete with ours or may bundle them with other products and subscriptions.
If our solutions fail or are perceived to fail to detect or prevent incidents or have or are perceived to have defects, errors, or vulnerabilities, our brand and reputation would be harmed, which would adversely affect our business and results of operations.
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We cannot assure you that our products will detect all cyberattacks, especially in light of the rapidly changing security threat landscape that our solution seeks to address.
−Removed: Due to a variety of both internal and external factors, including, without limitation, defects or misconfigurations of our solutions, our solutions could become vulnerable to security incidents (both from intentional attacks and accidental causes) that cause them to fail to secure endpoints and detect and block attacks.
+Added: Due to a variety of both internal and external factors, including, without limitation, defects or misconfigurations of our solutions, our solutions could be or become vulnerable to security incidents (both from intentional attacks and accidental causes) that cause them to fail to secure endpoints and detect and block attacks.
In addition, because the techniques used by computer hackers to access or sabotage networks and endpoints change frequently and generally are not recognized until launched against a target, there is a risk that an advanced attack could emerge that our cloud native security platform is unable to detect or prevent until after some of our customers are affected.
Additionally, our Falcon platform may falsely indicate a cyberattack or threat that does not actually exist, which may lessen customers’ trust in our solutions.
−Removed: Moreover, as our cloud native security platform is adopted by an increasing number of enterprises and governments, it is possible that the individuals and organizations behind advanced cyberattacks will begin to focus on finding ways to defeat our security platform.
+Added: Moreover, as our cloud native security platform is adopted by an increasing number of enterprises and governments, individuals and organizations behind advanced cyberattacks may intensify their efforts to defeat our security platform.
If this happens, our systems and subscription customers could be specifically targeted by attackers and could result in vulnerabilities in our platform or undermine the market acceptance of our Falcon platform and could adversely affect our reputation as a provider of security solutions.
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In particular, because we have been involved in the identification of organized cybercriminals and nation-state actors, we have been the subject of intense efforts by sophisticated cyber adversaries who seek to compromise our systems.
+Added: Such efforts may also intensify if geopolitical tensions increase.
We are also susceptible to inadvertent compromises of our systems and data, including those arising from process, coding, or human errors.
+Added: We also utilize third-party service providers to host, transmit, or otherwise process electronic data in connection with our business activities, including our supply chain, operations, and communications.
+Added: Our third-party service providers and other vendors have faced and may continue to face cyberattacks, compromises, interruptions in service, or other security incidents from a variety of sources.
A successful attack or other incident that compromises our or our customers’ data or results in an interruption of service could have a significant negative effect on our operations, reputation, financial resources, and the value of our intellectual property.
We cannot assure you that any of our efforts to manage this risk, including adoption of a comprehensive incident response plan and process for detecting, mitigating, and investigating security incidents that we regularly test through table-top exercises, testing of our security protocols through additional techniques, such as penetration testing, debriefing after security incidents, to improve our security and responses, and regular briefing of our directors and officers on our cybersecurity risks, preparedness, and management, will be effective in protecting us from such attacks.
−Removed: It is virtually impossible for us to entirely eliminate the risk of such compromises, interruptions in service, or other security incidents affecting our internal systems or data, or that of our third-party service providers and vendors.
+Added: It is virtually impossible for us to entirely eliminate the risk of such attacks, compromises, interruptions in service, or other security incidents affecting our internal systems or data, or that of our third-party service providers and vendors.
Organizations are subject to a wide variety of attacks on their supply chain, networks, systems, and endpoints, and techniques used to sabotage or to obtain unauthorized access to networks in which data is stored or through which data is transmitted change frequently.
Furthermore, employee error or malicious activity could compromise our systems.
−Removed: As a result, we may be unable to anticipate these techniques or implement adequate measures to prevent an intrusion into our networks, which could result in unauthorized access to customer data, intellectual property including access to our source code, and information about vulnerabilities in our product, which in turn, could reduce the effectiveness of our solutions, or lead to cyberattacks or other intrusions of our customers’ networks, litigation, governmental audits and investigations and significant legal fees, and or all of which could damage our relationships with our existing customers and could have a negative effect on our ability to attract and retain new customers.
−Removed: We have expended, and anticipate continuing to expend, significant amounts and resources in an effort to prevent security breaches and other security incidents impacting our systems and data.
−Removed: Since our business is focused on providing reliable security services to our customers, we believe that an actual or perceived security incident affecting, our internal
−Removed: systems or data or data of our customers would be especially detrimental to our reputation, customer confidence in our solution, and our business.
+Added: As a result, we may be unable to anticipate these techniques or implement adequate measures to prevent an intrusion into our networks, which could result in unauthorized access to customer data, intellectual property including access to our source code, and information about vulnerabilities in our product, which in turn, could reduce the effectiveness of our solutions, or lead to cyberattacks or other intrusions of our customers’ networks, litigation, governmental audits and investigations and significant legal fees, any or all of which could damage our relationships with our existing customers and could have a negative effect on our ability to attract and retain new customers.
+Added: We have expended, and anticipate continuing to expend, significant resources in an effort to prevent security breaches and other security incidents impacting our systems and data.
+Added: Since our business is focused on providing reliable security services to our customers, we believe that an actual or perceived security incident affecting our internal systems or data or data of our customers would be especially detrimental to our reputation, customer confidence in our solution, and our business.
In addition, while we maintain insurance policies that may cover certain liabilities in connection with a cybersecurity incident, we cannot be certain that our insurance coverage will be adequate for liabilities actually incurred, that insurance will continue to be available to us on commercially reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim.
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Additionally, interruptions or failures in our service could cause customers to terminate their subscriptions with us, adversely affect our renewal rates, and harm our ability to attract new customers.
−Removed: Our business would also be harmed if our customers believe that a cloud-based SaaS-delivered endpoint
−Removed: security solution is unreliable.
+Added: Our business would also be harmed if our customers believe that a cloud-based SaaS-delivered endpoint security solution is unreliable.
While we do not consider them to have been material, we have experienced, and may in the future experience, service interruptions and other performance problems due to a variety of factors.
The occurrence of any of these factors, or if we are unable to rapidly and cost-effectively fix such errors or other problems that may be identified, could damage our reputation, negatively affect our relationship with our customers or otherwise harm our business, results of operations and financial condition.
+Added: We rely on our key technical, sales and management personnel to grow our business, and the loss of one or more key employees could harm our business.
+Added: Our future success is substantially dependent on our ability to attract, retain, and motivate the members of our management team and other key employees throughout our organization.
+Added: In particular, we are highly dependent on the services of George Kurtz, our President and Chief Executive Officer, who is critical to our future vision and strategic direction.
+Added: We rely on our leadership team in the areas of operations, security, research and development, marketing, sales, support and general and administrative functions.
+Added: Although we have entered into employment agreements with our key personnel, our employees, including our executive officers, work for us on an “at-will” basis, which means they may terminate their employment with us at any time.
+Added: Leadership transitions can be inherently difficult to manage.
+Added: In particular, they can cause operational and administrative inefficiencies, and could impact relationships with key customers and vendors.
+Added: Kurtz, or one or more of our key employees, or members of our management team resigns or otherwise ceases to provide us with their service, our business could be harmed.
+Added: If we are unable to attract and retain qualified personnel, our business could be harmed.
+Added: There is also significant competition for personnel with the skills and technical knowledge that we require across our technology, cyber, sales, professional services, and administrative support functions.
+Added: Competition for these personnel is intense, especially for experienced sales professionals and for engineers experienced in designing and developing cloud applications and security software.
+Added: We have from time to time experienced, and we expect to continue to experience, difficulty in hiring and retaining employees with appropriate qualifications.
+Added: For example, in recent years, recruiting, hiring and retaining employees
+Added: with expertise in the cybersecurity industry has become increasingly difficult as the demand for cybersecurity professionals has increased as a result of the recent cybersecurity attacks on global corporations and governments.
+Added: Additionally, our incident response and proactive services team is small and comprised of personnel with highly technical skills and experience, who are in high demand, and who would be difficult to replace.
+Added: More generally, the technology industry is subject to substantial and continuous competition for engineers with high levels of experience in designing, developing and managing software and Internet-related services.
+Added: Many of the companies with which we compete for experienced personnel have greater resources than we have.
+Added: Our competitors also may be successful in recruiting and hiring members of our management team or other key employees, and it may be difficult for us to find suitable replacements on a timely basis, on competitive terms, or at all.
+Added: We have in the past, and may in the future, be subject to allegations that employees we hire have been improperly solicited, or that they have divulged proprietary or other confidential information or that their former employers own such employees’ inventions or other work product, or that they have been hired in violation of non-compete provisions or non-solicitation provisions.
+Added: In addition, job candidates and existing employees often consider the value of the equity awards they receive in connection with their employment.
+Added: Volatility or lack of performance in our stock price may also affect our ability to attract and retain our key employees.
+Added: Also, many of our employees have become, or will soon become, vested in a substantial amount of equity awards, which may give them a substantial amount of personal wealth.
+Added: This may make it more difficult for us to retain and motivate these employees, and this wealth could affect their decision about whether or not they continue to work for us.
+Added: Any failure to successfully attract, integrate or retain qualified personnel to fulfill our current or future needs could adversely affect our business, results of operations and financial condition.
If we do not effectively expand and train our direct sales force, we may be unable to add new customers or increase sales to our existing customers, and our business will be adversely affected.
18 unchanged sentences
Our results of operations may vary significantly from period to period, which could adversely affect our business, financial condition and results of operations.
−Removed: Our results of operations have varied significantly from period to period, and we expect that our results of operations will continue to vary as a result of a number of factors, many of which are outside of our control and may be difficult to predict, including:
+Added: Our results of operations have varied significantly from period to period, and we expect that
+Added: our results of operations will continue to vary as a result of a number of factors, many of which are outside of our control and may be difficult to predict, including:
• the impact of the COVID-19 pandemic on our operations, financial results, and liquidity and capital resources, including on customers, sales, expenses, and employees;
34 unchanged sentences
The failure of our efforts to secure sales after investing resources in a lengthy sales process could adversely affect our business and results of operations.
−Removed: We rely on our key technical, sales and management personnel to grow our business, and the loss of one or more key employees could harm our business.
−Removed: Our future success is substantially dependent on our ability to attract, retain, and motivate the members of our management team and other key employees throughout our organization.
−Removed: In particular, we are highly dependent on the services of George Kurtz, our President and Chief Executive Officer, who is critical to our future vision and strategic direction.
−Removed: We rely on our leadership team in the areas of operations, security, research and development, marketing, sales, support and general and administrative functions.
−Removed: Although we have entered into employment agreements with our key personnel, our employees, including our executive officers, work for us on an “at-will” basis, which means they may terminate their employment with us at any time.
−Removed: Kurtz, or one or more of our key employees, or members of our management team resigns or otherwise ceases to provide us with their service, our business could be harmed.
−Removed: If we are unable to attract and retain qualified personnel, our business could be harmed.
−Removed: There is also significant competition for personnel with the skills and technical knowledge that we require across our technology, cyber, sales, professional services, and administrative support functions.
−Removed: Competition for these personnel in the San Francisco Bay Area, where our headquarters are located, and in other locations where we maintain offices, is intense, especially for experienced sales professionals and for engineers experienced in designing and developing cloud applications and security software.
−Removed: We have from time to time experienced, and we expect to continue to experience, difficulty in hiring and retaining employees with appropriate qualifications.
−Removed: For example, in recent years, recruiting, hiring and retaining employees with expertise in the cybersecurity industry has become increasingly difficult as the demand for cybersecurity professionals has increased as a result of the recent cybersecurity attacks on global corporations and governments.
−Removed: Additionally, our incident response and proactive services team is small and comprised of personnel with highly technical skills and experience, who are in high demand, and who would be difficult to replace.
−Removed: Many of the companies with which we compete for experienced personnel have greater resources than we have.
−Removed: Our competitors also may be successful in recruiting and hiring members of our management team or other key employees, and it may be difficult for us to find suitable replacements on a timely basis, on competitive terms, or at all.
−Removed: We have in the past, and may in the future, be subject to allegations that employees we hire have been improperly solicited, or that they have divulged proprietary or other confidential information or that their former employers own such employees’ inventions or other work product, or that they have been hired in violation of non-compete provisions or non-solicitation provisions.
−Removed: In addition, job candidates and existing employees often consider the value of the equity awards they receive in connection with their employment.
−Removed: Volatility or lack of performance in our stock price may also affect our ability to attract and retain our key employees.
−Removed: Also, many of our employees have become, or will soon become, vested in a substantial amount of equity awards, which may give them a substantial amount of personal wealth.
−Removed: This may make it more difficult for us to retain and motivate these employees, and this wealth could affect their decision about whether or not they continue to work for us.
−Removed: Any failure to successfully attract, integrate or retain qualified personnel to fulfill our current or future needs could adversely affect our business, results of operations and financial condition.
If we are not able to maintain and enhance our CrowdStrike and Falcon brand and our reputation as a provider of high-efficacy security solutions, our business and results of operations may be adversely affected.
5 unchanged sentences
Our solutions may fail to detect or prevent threats in any particular test for a number of reasons that may or may not be related to the efficacy of our solutions in real world environments.
−Removed: To the extent potential customers, industry analysts or testing firms believe that the occurrence of a failure to detect or prevent any
−Removed: particular threat is a flaw or indicates that our solutions or services do not provide significant value, we may lose customers, and our reputation, financial condition and business would be harmed.
+Added: To the extent potential customers, industry analysts or testing firms believe that the occurrence of a failure to detect or prevent any particular threat is a flaw or indicates that our solutions or services do not provide significant value, we may lose customers, and our reputation, financial condition and business would be harmed.
Additionally, the performance of our channel partners and technology alliance partners may affect our brand and reputation if customers do not have a positive experience with these partners.
−Removed: In addition, we have in the past worked, and continue to work, with high profile customers as well as assist in analyzing and remediating high profile cyberattacks.
+Added: In addition, we have in the past worked, and continue to work, with high profile private and public customers as well as assist in analyzing and remediating high profile cyberattacks, which sometimes involve nation-state actors.
Our work with such customers has exposed us to publicity and media coverage.
+Added: Changing political environments in the United States and abroad may amplify the media and political scrutiny we face.
Negative publicity about us, including about our management, the efficacy and reliability of our Falcon platform, our products offerings, our professional services, and the customers we work with, even if inaccurate, could adversely affect our reputation and brand.
6 unchanged sentences
If we fail to effectively manage our existing sales channels, or if our channel partners are unsuccessful in fulfilling the orders for our solutions, or if we are unable to enter into arrangements with, and retain a sufficient number of, high quality channel partners in each of the regions in which we sell solutions and keep them motivated to sell our products, our ability to sell our products and results of operations will be harmed.
+Added: Our international operations and plans for future international expansion expose us to significant risks, and failure to manage those risks could adversely impact our business.
+Added: We derived approximately 28%, 28%, and 26% of our total revenue from our international customers for fiscal 2022, fiscal 2021, fiscal 2020, respectively.
+Added: We are continuing to adapt to and develop strategies to address international markets and our growth strategy includes expansion into target geographies, but there is no guarantee that such efforts will be successful.
+Added: We expect that our international activities will continue to grow in the future, as we continue to pursue opportunities in international markets.
+Added: These international operations will require significant management attention and financial resources and are subject to substantial risks, including:
+Added: • greater difficulty in negotiating contracts with standard terms, enforcing contracts and managing collections, and longer collection periods;
+Added: • higher costs of doing business internationally, including costs incurred in establishing and maintaining office space and equipment for our international operations;
+Added: • management communication and integration problems resulting from cultural and geographic dispersion;
+Added: • risks associated with trade restrictions and foreign legal requirements, including any importation, certification, and localization of our Falcon platform that may be required in foreign countries;
+Added: • greater risk of unexpected changes in regulatory practices, tariffs, and tax laws and treaties;
+Added: • compliance with anti-bribery laws, including, without limitation, compliance with the U.S.
+Added: Foreign Corrupt Practices Act of 1977, as amended, or FCPA, the U.S.
+Added: Travel Act and the UK Bribery Act 2010, or Bribery Act, violations of which could lead to significant fines, penalties, and collateral consequences for our company;
+Added: • heightened risk of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, or irregularities in, financial statements;
+Added: • the uncertainty of protection for intellectual property rights in some countries;
+Added: • general economic and political conditions in these foreign markets;
+Added: • foreign exchange controls or tax regulations that might prevent us from repatriating cash earned outside the United States;
+Added: • political and economic instability in some countries;
+Added: • double taxation of our international earnings and potentially adverse tax consequences due to changes in the tax laws of the United States or the foreign jurisdictions in which we operate;
+Added: • unexpected costs for the localization of our services, including translation into foreign languages and adaptation for local practices and regulatory requirements;
+Added: • requirements to comply with foreign privacy, data protection, and information security laws and regulations and the risks and costs of noncompliance;
+Added: • greater difficulty in identifying, attracting and retaining local qualified personnel, and the costs and expenses associated with such activities;
+Added: • greater difficulty identifying qualified channel partners and maintaining successful relationships with such partners;
+Added: • differing employment practices and labor relations issues;
+Added: • difficulties in managing and staffing international offices and increased travel, infrastructure, and legal compliance costs associated with multiple international locations.
+Added: Additionally, nearly all of our sales contracts are currently denominated in U.S.
+Added: However, a strengthening of the U.S.
+Added: dollar could increase the cost of our solutions to our international customers, which could adversely affect our business and results of operations.
+Added: In addition, an increasing portion of our operating expenses is incurred outside the United States, is denominated in foreign currencies, such as the Australian Dollar, British Pound, Canadian Dollar, Euro, and Indian Rupee, is subject to fluctuations due to changes in foreign currency exchange rates.
+Added: If we become more exposed to currency fluctuations and are not able to successfully hedge against the risks associated with currency fluctuations, our results of operations could be adversely affected.
+Added: As we continue to develop and grow our business globally, our success will depend in large part on our ability to anticipate and effectively manage these risks.
+Added: The expansion of our existing international operations and entry into additional international markets will require significant management attention and financial resources.
+Added: Our failure to successfully manage our international operations and the associated risks could limit the future growth of our business.
Our business depends, in part, on sales to government organizations, and significant changes in the contracting or fiscal policies of such government organizations could have an adverse effect on our business and results of operations.
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We have made significant investment to address the government sector, but we cannot assure you that these investments will be successful, or that we will be able to maintain or grow our revenue from the government sector.
−Removed: Although we anticipate that they may increase in the future, sales to U.S.
−Removed: federal, state, and local governmental agencies have not accounted for, and may never account for, a significant portion of our revenue.
−Removed: federal, state and local government sales are subject to a number of challenges and risks that may adversely impact our business.
−Removed: Sales to such government entities include the following risks:
+Added: federal, state and local government sales as well as foreign government sales are subject to a number of challenges and risks that may adversely impact our business.
+Added: Sales to such government entities include, but are not limited to, the following risks:
• selling to governmental agencies can be highly competitive, expensive and time consuming, often requiring significant upfront time and expense without any assurance that such efforts will generate a sale;
−Removed: • government certification requirements applicable to our products may change and, in doing so, restrict our ability to sell into the U.S.
−Removed: federal government sector until we have attained the revised certification.
−Removed: For example, although we are currently certified under the Federal Risk and Authorization Management Program, or FedRAMP, such certification is costly to maintain and if we lost our certification in the future it would restrict our ability to sell to government customers;
−Removed: • government demand and payment for our Falcon platform may be impacted by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our Falcon platform;
+Added: • we may be required to obtain personnel security clearances and facility clearances to perform on classified contracts for government agencies, and there is no guarantee that we will be able to obtain or maintain such clearances;
+Added: • government certification, software supply chain, or source code transparency requirements applicable to us or our products are constantly evolving and, in doing so, restrict our ability to sell to certain government customers until we have attained the new or revised certification or meet other applicable requirements, which we are not guaranteed to do.
+Added: For example, although we are currently certified under the U.S.
+Added: Federal Risk and Authorization Management Program, or FedRAMP, such certification is costly to maintain and if we lose our certification it would restrict our ability to sell to government customers;
+Added: • government product requirements are often technically complex and assessors may require us to make costly changes to our products to meet such requirements without any assurance that such changes will generate a sale;
+Added: • government demand and payment for our Falcon platform may be impacted by public sector budgetary cycles and funding authorizations, with funding reductions or delays in the government appropriations or procurement processes adversely affecting public sector demand for our Falcon platform, including as a result of abrupt events such as war, incidents of terrorism, natural disasters, and public health concerns or epidemics;
+Added: • government attitudes towards us as a company, our platform or the capabilities that we offer as a viable software solution may change, and reduce interest in our products and services as acceptable solutions;
+Added: • changes in the political environment, including before or after a change to the leadership within the government administration, can create uncertainty or changes in policy or priorities and reduce available funding for our products and services;
+Added: • third parties may compete intensely with us on pending, new or existing contracts with government products, which can also lead to appeals, disputes, or litigation relating to government procurement, including but not limited to bid protests by unsuccessful bidders on potential or actual awards of contracts to us or our partners by the government;
+Added: • even if we are awarded a sale, the terms of such contracts may be unusually burdensome;
• governments routinely investigate and audit government contractors’ administrative processes, and any unfavorable audit could result in the government refusing to continue buying our Falcon platform, which would adversely impact our revenue and results of operations, or institute fines or civil or criminal liability if the audit were to uncover improper or illegal activities;
• governments may require certain products to be manufactured, hosted, or accessed solely in their country or in other relatively high-cost manufacturing locations, and we may not manufacture all products in locations that meet these requirements, affecting our ability to sell these products to governmental agencies.
−Removed: The occurrence of any of the foregoing could cause governments and governmental agencies to delay or refrain from purchasing our solutions in the future or otherwise have an adverse effect on our business and results of operations.
+Added: The occurrence of any of the foregoing risks could cause governments and governmental agencies to delay or refrain from purchasing our solutions in the future or otherwise have an adverse effect on our business and results of operations.
We may not timely and cost-effectively scale and adapt our existing technology to meet our customers’ performance and other requirements.
11 unchanged sentences
Ongoing improvements to cloud infrastructure may be more expensive than we anticipate, and may not yield the expected savings in operating costs or the expected performance benefits.
−Removed: In addition, we may be required to re-invest any cost savings achieved from prior cloud infrastructure improvements in future infrastructure projects to maintain the levels of service required by our customers.
+Added: In addition, we may be required to re-invest any cost savings achieved from prior cloud infrastructure improvements in future infrastructure
+Added: projects to maintain the levels of service required by our customers.
We may not be able to maintain or achieve cost savings from our investments, which could harm our financial results.
10 unchanged sentences
If we raise additional equity financing, our stockholders may experience significant dilution of their ownership interests and the market price of our Class A common stock could decline.
−Removed: If we engage in additional debt financing, the holders of such debt would have priority over the holders of our Class A common
−Removed: stock, and we may be required to accept terms that further restrict our operations or our ability to incur additional indebtedness or to take other actions that would otherwise be in the interests of the debt holders.
+Added: If we engage in additional debt financing, the holders of such debt would have priority over the holders of our Class A common stock, and we may be required to accept terms that further restrict our operations or our ability to incur additional indebtedness or to take other actions that would otherwise be in the interests of the debt holders.
Any of the above could harm our business, results of operations, and financial condition.
5 unchanged sentences
If we experience any of these effects in connection with future growth, it could impair our ability to attract new customers, retain existing customers and expand their use of our Falcon platform, all of which would adversely affect our business, financial condition and results of operations.
−Removed: Our international operations and plans for future international expansion expose us to significant risks, and failure to manage those risks could adversely impact our business.
−Removed: We derived approximately 23%, 26%, and 28% of our total revenue from our international customers for fiscal 2019, fiscal 2020, fiscal 2021, respectively.
−Removed: We are continuing to adapt to and develop strategies to address international markets and our growth strategy includes expansion into target geographies, but there is no guarantee that such efforts will be successful.
−Removed: We expect that our international activities will continue to grow in the future, as we continue to pursue opportunities in international markets.
−Removed: These international operations will require significant management attention and financial resources and are subject to substantial risks, including:
−Removed: • greater difficulty in negotiating contracts with standard terms, enforcing contracts and managing collections, and longer collection periods;
−Removed: • higher costs of doing business internationally, including costs incurred in establishing and maintaining office space and equipment for our international operations;
−Removed: • management communication and integration problems resulting from cultural and geographic dispersion;
−Removed: • risks associated with trade restrictions and foreign legal requirements, including any importation, certification, and localization of our Falcon platform that may be required in foreign countries;
−Removed: • greater risk of unexpected changes in regulatory practices, tariffs, and tax laws and treaties;
−Removed: • compliance with anti-bribery laws, including, without limitation, compliance with the U.S.
−Removed: Foreign Corrupt Practices Act of 1977, as amended, or FCPA the U.S.
−Removed: Travel Act and the UK Bribery Act 2010, or Bribery Act, violations of which could lead to significant fines, penalties, and collateral consequences for our company;
−Removed: • heightened risk of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, or irregularities in, financial statements;
−Removed: • the uncertainty of protection for intellectual property rights in some countries;
−Removed: • general economic and political conditions in these foreign markets;
−Removed: • foreign exchange controls or tax regulations that might prevent us from repatriating cash earned outside the United States;
−Removed: • political and economic instability in some countries;
−Removed: • double taxation of our international earnings and potentially adverse tax consequences due to changes in the tax laws of the United States or the foreign jurisdictions in which we operate;
−Removed: • unexpected costs for the localization of our services, including translation into foreign languages and adaptation for local practices and regulatory requirements;
−Removed: • requirements to comply with foreign privacy, data protection, and information security laws and regulations and the risks and costs of noncompliance;
−Removed: • greater difficulty in identifying, attracting and retaining local qualified personnel, and the costs and expenses associated with such activities;
−Removed: • greater difficulty identifying qualified channel partners and maintaining successful relationships with such partners;
−Removed: • differing employment practices and labor relations issues;
−Removed: • difficulties in managing and staffing international offices and increased travel, infrastructure, and legal compliance costs associated with multiple international locations.
−Removed: Additionally, nearly all of our sales contracts are currently denominated in U.S.
−Removed: However, a strengthening of the U.S.
−Removed: dollar could increase the cost of our solutions to our international customers, which could adversely affect our business and results of operations.
−Removed: In addition, an increasing portion of our operating expenses is incurred outside the United States, is denominated in foreign currencies, such as the British Pound, Indian Rupee, Euro, Australian Dollar, and Canadian Dollar, and is subject to fluctuations due to changes in foreign currency exchange rates.
−Removed: If we become more exposed to currency fluctuations and are not able to successfully hedge against the risks associated with currency fluctuations, our results of operations could be adversely affected.
−Removed: As we continue to develop and grow our business globally, our success will depend in large part on our ability to anticipate and effectively manage these risks.
−Removed: The expansion of our existing international operations and entry into additional international markets will require significant management attention and financial resources.
−Removed: Our failure to successfully manage our international operations and the associated risks could limit the future growth of our business.
−Removed: CrowdStrike is a highly-visible public company whose management, products, business, results of operations, statements and actions are scrutinized by third-parties whose influence could negatively impact the perception of our brand and the market value of our Class A common stock.
−Removed: CrowdStrike is a highly-visible public company whose management, products, business, results of operations, statements and actions are publicized.
−Removed: Such attention sometimes includes criticism of us by a range of third-parties.
−Removed: Our continued success depends on our ability to focus on executing on our mission and business plan while maintaining the trust of our current and potential customers, employees, stockholders and business partners.
−Removed: Any criticism, whether or not accurate, could influence the perception of our brand or our management by our customers, suppliers or investors, which could adversely impact our business prospects, operating results and the market value of our Class A common stock.
−Removed: Our business is subject to the risks of earthquakes, fire, floods, outbreak of diseases and other natural catastrophic events, and to interruption by man-made problems such as power disruptions, computer viruses, data security breaches or terrorism.
−Removed: Our corporate headquarters are located in the San Francisco Bay Area, a region known for seismic activity.
−Removed: A significant natural disaster, such as an earthquake, a fire, a flood, or significant power outage and other catastrophic events, including the occurrence of a contagious disease or illness, such as COVID-19, could have a material adverse impact on our business, results of operations, and financial condition.
−Removed: The outbreak of a contagious disease like COVID-19 has, among other things, prompted responses such as government-imposed travel restrictions, the grounding of flights, and the shutdown of workplaces.
−Removed: It is not possible at this time to estimate the impact that the COVID-19 pandemic could have on our business, as the impact will depend on future developments, which are highly uncertain and cannot be predicted.
−Removed: Natural disasters and other catastrophic events such as COVID-19, could affect our personnel, recovery of our assets, data centers, supply chain, manufacturing vendors, or logistics providers’ ability to provide materials and perform services such as manufacturing products or assisting with shipments on a timely basis.
−Removed: In addition, climate change could result in an increase in the frequency or severity of natural disasters.
−Removed: In the event that our or our service providers’ information technology systems or manufacturing or logistics abilities are hindered by any of the events discussed above, shipments could be delayed, resulting in missed financial targets, such as revenue and shipment targets, for a particular quarter.
−Removed: In addition, computer malware, viruses and computer hacking, fraudulent use attempts, and phishing attacks have become more prevalent in our industry, and our internal systems may be victimized by
−Removed: such attacks.
−Removed: Although we maintain incident management and disaster response plans, in the event of a major disruption caused by a natural disaster or man-made problem, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in our development activities, lengthy interruptions in service, breaches of data security and loss of critical data, and our insurance may not cover such events or may be insufficient to compensate us for the potentially significant losses we may incur.
−Removed: Acts of terrorism and other geopolitical unrest could also cause disruptions in our business or the business of our supply chain, manufacturers, logistics providers, partners, or customers or the economy as a whole.
−Removed: Any disruption in the business of our supply chain, manufacturers, logistics providers, partners or end-customers that impacts sales at the end of a fiscal quarter could have a significant adverse impact on our financial results.
−Removed: All of the aforementioned risks may be further increased if the disaster recovery plans for us and our suppliers prove to be inadequate.
−Removed: To the extent that any of the above should result in delays or cancellations of customer orders, or the delay in the manufacture, deployment or shipment of our products, our business, financial condition and results of operations would be adversely affected.
−Removed: Our corporate structure and intercompany arrangements are subject to the tax laws of various jurisdictions, and we could be obligated to pay additional taxes, which would harm our results of operations.
−Removed: We are expanding our international operations and staff to support our business in international markets.
−Removed: We generally conduct our international operations through wholly-owned subsidiaries and are or may be required to report our taxable income in various jurisdictions worldwide based upon our business operations in those jurisdictions.
−Removed: Our intercompany relationships are subject to complex transfer pricing regulations administered by taxing authorities in various jurisdictions.
−Removed: The amount of taxes we pay in different jurisdictions may depend on the application of the tax laws of the various jurisdictions, including the United States, to our international business activities, changes in tax rates, new or revised tax laws or interpretations of existing tax laws and policies, and our ability to operate our business in a manner consistent with our corporate structure and intercompany arrangements.
−Removed: The relevant taxing authorities may disagree with our determinations as to the income and expenses attributable to specific jurisdictions.
−Removed: If such a disagreement were to occur, and our position was not sustained, we could be required to pay additional taxes, interest and penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows and lower overall profitability of our operations.
−Removed: We are subject to federal, state, and local income, sales, and other taxes in the United States and income, withholding, transaction, and other taxes in numerous foreign jurisdictions.
−Removed: Significant judgment is required in evaluating our tax positions and our worldwide provision for taxes.
−Removed: During the ordinary course of business, there are many activities and transactions for which the ultimate tax determination may be uncertain.
−Removed: In addition, our tax obligations and effective tax rates could be adversely affected by changes in the relevant tax, accounting and other laws, regulations, principles and interpretations, including those relating to income tax nexus, by recognizing tax losses or lower than anticipated earnings in jurisdictions where we have lower statutory rates and higher than anticipated earnings in jurisdictions where we have higher statutory rates, by changes in foreign currency exchange rates, or by changes in the valuation of our deferred tax assets and liabilities.
−Removed: We may be audited in various jurisdictions, and such jurisdictions may assess additional taxes, sales taxes and value added taxes against us.
−Removed: Although we believe our tax estimates are reasonable, the final determination of any tax audits or litigation could be materially different from our historical tax provisions and accruals, which could have an adverse effect on our results of operations or cash flows in the period or periods for which a determination is made.
+Added: We rely on a limited number of suppliers for certain components of the equipment we use to operate our cloud platform.
+Added: Supply chain disruptions could delay our ability to expand or increase the capacity of our global data center network, replace defective equipment in our existing data centers and impact our operating costs.
+Added: We rely on a limited number of suppliers for several components of the equipment we use to operate our cloud platform and provide services to our customers.
+Added: We generally purchase these components on a purchase order basis, and do not have long-term contracts guaranteeing supply.
+Added: Our reliance on these suppliers exposes us to risks, including reduced control over production costs and constraints based on the then current availability, terms and pricing of these components.
+Added: If we experience disruption or delay from our suppliers, we may not be able to obtain supplies or components from alternative suppliers on a timely basis or on terms that are favorable to us, if at all.
+Added: The technology industry has recently experienced widespread component shortages and delivery delays, including as a result of the COVID-19 pandemic and natural disasters.
+Added: While we have taken steps to mitigate our supply chain risk, supply chain disruptions and delays could nevertheless adversely impact our operations by, among other things, causing us to delay opening new data centers, delay increasing capacity or replacing defective equipment at existing data centers, and experience increased operating costs.
Risks Related to Intellectual Property, Legal, and Regulatory Matters
8 unchanged sentences
In addition, many countries limit the enforceability of patents against certain third parties, including government agencies or government contractors.
−Removed: countries, patents may provide limited or no benefit.
+Added: In these countries, patents may provide limited or no benefit.
Moreover, we may need to expend additional resources to defend our intellectual property rights in these countries, and our inability to do so could impair our business or adversely affect our international expansion.
20 unchanged sentences
We cannot assure you that we will be successful in these rebranding efforts.
−Removed: Third parties may in the future also assert claims against our customers or channel partners, whom our standard license and other agreements obligate us to indemnify against claims that our solutions infringe the intellectual property rights of third parties.
+Added: Third parties may in the future also assert claims against our customers or channel partners, whom our standard license and other agreements obligate us to indemnify against claims that our solutions infringe the intellectual property rights of third
As the number of products and competitors in the security and IT operations market increases and overlaps occur, claims of infringement, misappropriation, and other violations of intellectual property rights may increase.
6 unchanged sentences
or we may be required to obtain a license, which may not be available on reasonable terms, or at all, to use the relevant technology.
−Removed: If we are prevented from using certain technology or intellectual property, we may be required to develop alternative, non-infringing technology, which could require significant
−Removed: time, during which we could be unable to continue to offer our affected services or features, effort and expense and may ultimately not be successful.
+Added: If we are prevented from using certain technology or intellectual property, we may be required to develop alternative, non-infringing technology, which could require significant time, during which we could be unable to continue to offer our affected services or features, effort and expense and may ultimately not be successful.
Although third parties may offer a license to their technology or other intellectual property, the terms of any offered license may not be acceptable, and the failure to obtain a license or the costs associated with any license could cause our business, financial condition and results of operations to be adversely affected.
12 unchanged sentences
As a result, our margins, market share, and results of operations could be significantly harmed.
−Removed: If we are not able to satisfy data protection, security, privacy, and other government- and industry-specific requirements or regulations, our business, results of operations, and financial condition could be harmed.
−Removed: Personal privacy, data protection, information security, telecommunications regulations, and other laws applicable to specific categories of information are significant issues in the United States, Europe and in other jurisdictions where we offer our solutions.
−Removed: The data that we collect, analyze, and store is subject to a variety of laws and regulations, including regulation by various government agencies.
−Removed: federal government, and various state and foreign governments, have adopted or proposed limitations on the collection, distribution, use, and storage of certain categories of information, such as personally identifiable information of individuals, health information, and other sector-specific types of data, including the Federal Trade Commission, the Electronic Communication Privacy Act, Computer Fraud and Abuse Act, the Health Insurance Portability and Accountability Act, and the Gramm Leach Bliley Act.
−Removed: Laws and regulations outside the United States, and particularly in Europe, often are more restrictive than those in the United States.
−Removed: Such laws and regulations may require companies to implement privacy and security policies, permit customers to access, correct, and delete personal information stored or maintained by such companies, inform individuals of security breaches that affect their personal information, and, in some cases, obtain individuals’ consent to use personally identifiable information for certain purposes.
−Removed: In addition, some foreign governments require that any information of certain categories, such as financial or personally identifiable information collected in a country not be disseminated outside of that country.
−Removed: We also may find it necessary or desirable to join industry or other self-regulatory bodies or other information security or data protection-related organizations that require compliance with their rules pertaining to information security and data protection.
−Removed: We also may be bound by additional, more stringent contractual obligations relating to our collection, use and disclosure of personal, financial, and other data.
−Removed: We also expect that there will continue to be new proposed laws, regulations, and industry standards concerning privacy, data protection, information security, specific categories of data, electronic, and telecommunications services in the United States, the European Union and other jurisdictions in which we operate or may operate, and we cannot yet determine the impact such future laws, regulations, standards, or perception of their requirements may have on our business.
−Removed: For example, the European Commission adopted the European General Data Protection Regulation, or GDPR, that became fully effective in May
−Removed: 2018, and applies to the processing (which includes the collection and use) of certain personal data.
−Removed: As compared to previously-effective data protection law in the European Union, the GDPR imposes additional obligations and risk upon our business and increases substantially the penalties to which we could be subject in the event of any non-compliance.
−Removed: Administrative fines under the GDPR can amount up to 20 million Euros or four percent of our worldwide annual revenue for the prior fiscal year, whichever is higher.
−Removed: We have incurred substantial expense in complying with the obligations imposed by the GDPR and we may be required to do so in the future, potentially making significant changes in our business operations, which may adversely affect our revenue and our business overall.
−Removed: Additionally, because there have been very few GDPR actions enforced against companies, we are unable to predict how they will be applied to us or our customers.
−Removed: Despite our efforts to attempt to comply with the GDPR, a regulator may determine that we have not done so and subject us to fines and public censure, which could harm our company.
−Removed: Among other requirements, the GDPR regulates transfers of personal data subject to the GDPR to third countries that have not been found to provide adequate protection to such personal data, including the United States.
−Removed: We have undertaken certain efforts to conform transfers of personal data from the European Economic Area, or EEA, to the United States and other jurisdictions based on our understanding of current regulatory obligations and the guidance of data protection authorities.
−Removed: Despite this, we may be unsuccessful in establishing or maintaining conforming means of transferring such data from the EEA, in particular as a result of continued legal and legislative activity within the European Union that has challenged or called into question the legal basis for existing means of data transfers to countries that have not been found to provide adequate protection for personal data.
−Removed: The implementation of the GDPR has led other jurisdictions to either amend, or propose legislation to amend their existing data privacy and cybersecurity laws to resemble all or a portion of the requirements of the GDPR (e.g., for purposes of having an adequate level of data protection to facilitate data transfers from the EU) or enact new laws to do the same.
−Removed: Accordingly, the challenges we face in the EU will likely also apply to other jurisdictions outside the EU that adopt laws similar in construction to the GDPR or regulatory frameworks of equivalent complexity.
−Removed: For example, on June 28, 2018, California adopted the California Consumer Privacy Act of 2018, or CCPA, which went into effect on January 1, 2020, with enforcement commencing on July 1, 2020.
−Removed: The CCPA has been characterized as the first “GDPR-like” privacy statute to be enacted in the United States because it contains a number of provisions similar to certain provisions of the GDPR.
−Removed: In addition, the California Privacy Rights Act of 2020, or the CPRA was passed by California voters in November 2020.
−Removed: The CPRA amends the CCPA by creating additional privacy rights for California consumers and additional obligations on businesses, which could subject us to additional compliance costs as well as potential fines, individual claims and commercial liabilities.
−Removed: The majority of the CPRA provisions will take effect on January 1, 2023.
−Removed: The CCPA and CPRA could mark the beginning of a trend toward more stringent privacy legislation in the United States, as other states or the federal government may follow California’s lead and increase protections for U.S.
−Removed: For example, on March 2, 2021, the Virginia Consumer Data Protection Act, which will take effect on January 1, 2023, was signed into law.
−Removed: The CCPA has already prompted a number of proposals for new federal and state privacy legislation that, if passed, could increase our potential liability, add layers of complexity to compliance in the U.S.
−Removed: market, increase our compliance costs and adversely affect our business.
−Removed: Evolving and changing definitions of personal data and personal information within the European Union, the United States, and elsewhere, especially relating to classification of IP addresses, machine identification, location data and other information, may limit or inhibit our ability to operate or expand our business, including limiting technology alliance partnerships that may involve the sharing of data.
−Removed: Even the perception of privacy concerns, whether or not valid, may harm our reputation, inhibit adoption of our products by current and future customers, or adversely impact our ability to attract and retain workforce talent.
−Removed: In addition, changes in laws or regulations that adversely affect the use of the internet, including laws impacting net neutrality, could impact our business.
−Removed: We expect that existing laws, regulations and standards may be interpreted in new manners in the future.
−Removed: Future laws, regulations, standards and other obligations, and changes in the interpretation of existing laws, regulations, standards and other obligations could require us to modify our solutions, restrict our business operations, increase our costs and impair our ability to maintain and grow our customer base and increase our revenue.
−Removed: Beyond broader data processing regulations affecting our business, the cybersecurity industry may face direct regulation.
−Removed: In 2018, Singapore introduced what is believed to be the world’s first cybersecurity licensing requirement, mandating that providers of specific types of incident response services receive a government license before providing such services.
−Removed: License requirements such as these may impose upon CrowdStrike significant organizational costs and high barriers of entry into new markets.
−Removed: Although we work to comply with applicable laws and regulations, certain applicable industry standards with which we represent compliance, and our contractual obligations and other legal obligations, those laws, regulations, standards and obligations are evolving and may be modified, interpreted and applied in an inconsistent manner from one jurisdiction to
−Removed: another, and may conflict with one another.
−Removed: In addition, they may conflict with other requirements or legal obligations that apply to our business or the security features and services that our customers expect from our solutions.
−Removed: As such, we cannot assure ongoing compliance with all such laws, regulations, standards and obligations.
−Removed: Any failure or perceived failure by us or our employees, representatives, contractors, channel partners, agents, intermediaries, or other third parties to comply with applicable laws and regulations, or applicable industry standards that we represent compliance with or that may be asserted to apply to us, or to comply with employee, customer, partner, and other data privacy and data security requirements pursuant to contract and our stated notices or policies, could result in enforcement actions against us, including fines, imprisonment of company officials and public censure, claims for damages by customers and other affected individuals, damage to our reputation and loss of goodwill (both in relation to existing customers and prospective customers), any of which could have a material adverse effect on our operations, financial performance and business.
−Removed: Any inability of us or our employees, representatives, contractors, channel partners, agents, intermediaries, or other third parties to adequately address privacy and security concerns, even if unfounded, or comply with applicable laws, regulations, standards and obligations, could result in additional cost and liability to us, damage our reputation, inhibit sales, and adversely affect our business and results of operations.
+Added: We are required to comply with stringent, complex and evolving laws, rules, regulations and standards in many jurisdictions, as well as contractual obligations, relating to data privacy and security.
+Added: Any actual or perceived failure to comply with these requirements could have a material adverse effect on our business.
+Added: We are required to comply with stringent, complex and evolving laws, rules, regulations and standards in many jurisdictions, as well as contractual obligations, relating to data privacy and security.
+Added: Ensuring that our collection, use, transfer, storage and other processing of personal information complies with such requirements can increase operating costs, impact the development of new products or services, and reduce operational efficiency.
+Added: In the United States, there are numerous federal, state and local data privacy and security laws, rules, and regulations governing the collection, sharing, use, retention, disclosure, security, transfer, storage and other processing of personal
+Added: information, including federal and state data privacy laws, data breach notification laws, and data disposal laws.
+Added: For example, at the federal level, we are subject to, among other laws and regulations, the rules and regulations promulgated under the authority of the Federal Trade Commission (which has the authority to regulate and enforce against unfair or deceptive acts or practices in or affecting commerce, including acts and practices with respect to data privacy and security), as well as the Electronic Communication Privacy Act, the Computer Fraud and Abuse Act, the Health Insurance Portability and Accountability Act, and the Gramm Leach Bliley Act.
+Added: The United States Congress also has considered, and may in the future consider, various proposals from time to time for comprehensive federal data privacy legislation to which we may become subject if passed.
+Added: If we are found to have violated applicable laws or regulations, we may also be subject to penalties, fines, damages, injunctions or other outcomes that may adversely affect our operations and financial results.
+Added: At the state level, we are subject to laws and regulations such as the California Consumer Privacy Act (“CCPA”), which became effective on January 1, 2020.
+Added: The CCPA broadly defines personal information and gives California residents expanded privacy rights and protections, such as affording them the right to access and request deletion of their information and to opt out of certain sharing and sales of personal information.
+Added: The CCPA also prohibits covered businesses from discriminating against California residents for exercising any of their CCPA rights.
+Added: The CCPA provides for severe civil penalties and statutory damages for violations and a private right of action for certain data breaches that result in the loss of unencrypted personal information.
+Added: This private right of action is expected to increase the likelihood of, and risks associated with, data breach litigation.
+Added: Additionally, in November 2020, California voters passed the California Privacy Rights Act of 2020 (“CPRA”).
+Added: Effective in most material respects starting on January 1, 2023, the CPRA imposes additional obligations on companies covered by the legislation and will significantly modify the CCPA, including by expanding the CCPA with additional data privacy compliance requirements that may impact our business.
+Added: The CPRA also establishes a regulatory agency dedicated to enforcing the CCPA and the CPRA.
+Added: Numerous other states, including Virginia and Colorado, have also enacted or are in the process of enacting or considering comprehensive state-level data privacy and security laws, rules and regulations.
+Added: Moreover, laws in all 50 U.S.
+Added: states require businesses to provide notice under certain circumstances to consumers whose personal information has been disclosed as a result of a data breach.
+Added: These state statutes, and other similar state or federal laws that may be enacted in the future, may require us to modify our data processing practices and policies, incur substantial compliance-related costs and expenses, and otherwise suffer adverse impacts on our business.
+Added: Internationally, virtually every jurisdiction in which we operate has established its own data privacy and security legal framework with which we must comply.
+Added: For example, we are required to comply with the European Union (“EU”) General Data Protection Regulation (“GDPR”), which became effective on May 25, 2018 and imposes stringent obligations regarding the collection, control, use, sharing, disclosure and other processing of personal data.
+Added: Additionally, following the United Kingdom’s withdrawal from the EU, we also are subject to the U.K.
+Added: General Data Protection Regulation (“U.K.
+Added: GDPR”), a version of the GDPR as implemented into the laws of the United Kingdom (“U.K.”).
+Added: Failure to comply with the GDPR or the U.K.
+Added: GDPR can result in significant fines and other liability, including, under the GDPR, fines of up to EUR 20 million (or GBP 17.5 million under the U.K.
+Added: GDPR) or four percent (4%) of global revenue, whichever is greater.
+Added: The cost of compliance, and the potential for fines and penalties for non-compliance, with GDPR and U.K.
+Added: GDPR may have a significant adverse effect on our business and operations.
+Added: Recent legal developments in the European Economic Area (“EEA”), including recent rulings from the Court of Justice of the European Union and from various EU member state data protection authorities, have created complexity and uncertainty regarding transfers of personal data from the EEA to the United States and other so-called third countries outside the EEA.
+Added: Similar complexities and uncertainties also apply to transfers from the U.K.
+Added: to third countries.
+Added: While we have taken steps to mitigate the impact on us, such as implementing the European Commission’s standard contractual clauses (“SCCs”), the efficacy and longevity of these mechanisms remains uncertain.
+Added: Moreover, on June 4, 2021, the European Commission adopted new SCCs, which impose on companies additional obligations relating to personal data transfers out of the EEA, including the obligation to update internal privacy practices, conduct transfer impact assessments and, as required, to implement additional security measures.
+Added: The new SCCs may increase the legal risks and liabilities under EU laws associated with cross-border data transfers, and result in material increased compliance and operational costs.
+Added: If we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our services, the geographical location or segregation of our relevant systems and operations, and could adversely affect our financial results.
+Added: While we have implemented new controls and procedures to comply with the requirements of the GDPR, U.K.
+Added: GDPR and the data privacy and security laws of other jurisdictions in which we operate, such procedures and controls may not be effective in ensuring compliance or preventing unauthorized transfers of personal data.
+Added: Moreover, while we strive to publish and prominently display privacy policies that are accurate, comprehensive, and compliant with applicable laws, rules regulations and industry standards, we cannot ensure that our privacy policies and other statements regarding our practices will be sufficient to protect us from claims, proceedings, liability or adverse publicity relating to data privacy and security.
+Added: Although we endeavor to comply with our privacy policies, we may at times fail to do so or be alleged to have failed to do so.
+Added: If our public statements about our use, collection, disclosure and other processing of personal information, whether made through our privacy policies, information provided on our website, press statements or otherwise, are alleged to be deceptive, unfair or misrepresentative of our actual practices, we may be subject to potential government or legal investigation or action, including by the Federal Trade Commission or applicable state attorneys general.
+Added: Our compliance efforts are further complicated by the fact that data privacy and security laws, rules, regulations and standards around the world are rapidly evolving, may be subject to uncertain or inconsistent interpretations and enforcement, and may conflict among various jurisdictions.
+Added: Any failure or perceived failure by us to comply with our privacy policies, or applicable data privacy and security laws, rules, regulations, standards or contractual obligations, or any compromise of security that results in unauthorized access to, or unauthorized loss, destruction, use, modification, acquisition, disclosure, release or transfer of personal information, may result in requirements to modify or cease certain operations or practices, the expenditure of substantial costs, time and other resources, proceedings or actions against us, legal liability, governmental investigations, enforcement actions, claims, fines, judgments, awards, penalties, sanctions and costly litigation (including class actions).
+Added: Any of the foregoing could harm our reputation, distract our management and technical personnel, increase our costs of doing business, adversely affect the demand for our products and services, and ultimately result in the imposition of liability, any of which could have a material adverse effect on our business, financial condition and results of operations.
Failure to comply with laws and regulations applicable to our business could subject us to fines and penalties and could also cause us to lose customers or negatively impact our ability to contract with customers, including those in the public sector.
−Removed: Our business is subject to regulation by various federal, state, local and foreign governmental agencies, including agencies responsible for monitoring and enforcing privacy and data protection laws and regulations, employment and labor laws, workplace safety, product safety, environmental laws, consumer protection laws, anti-bribery laws, import and export controls, federal securities laws and tax laws and regulations.
+Added: Our business is subject to regulation by various federal, state, local and foreign governmental agencies, including agencies responsible for monitoring and enforcing data protection, data privacy and data security laws and regulations, employment and labor laws, workplace safety, product safety, environmental laws, consumer protection laws, anti-bribery laws, import and export controls, federal securities laws and tax laws and regulations.
In certain jurisdictions, these regulatory requirements may be more stringent than in the United States.
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These laws and regulations impose added costs on our business, and failure by us, our employees, representatives, contractors, channel partners, agents, intermediaries, or other third parties to comply with these or other applicable regulations and requirements could lead to claims for damages, penalties, termination of contracts, loss of exclusive rights in our intellectual property and temporary suspension or permanent debarment from government contracting.
−Removed: Any such damages, penalties, disruptions or limitations in our ability to do business with customers, including those in the public sector, and could
−Removed: result in reduced sales of our products, substantial product inventory write-offs, reputational damage, penalties, and other sanctions, any of which could harm our business, reputation, and results of operations.
+Added: Any such damages, penalties, disruptions or limitations in our ability to do business with customers, including those in the public sector, and could result in reduced sales of our products, substantial product inventory write-offs, reputational damage, penalties, and other sanctions, any of which could harm our business, reputation, and results of operations.
We are subject to laws and regulations, including governmental export and import controls, sanctions, and anti-corruption laws, that could impair our ability to compete in our markets and subject us to liability if we are not in full compliance with applicable laws.
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and abroad, to sell subscriptions to our Falcon platform and to collect information about cyber threats.
−Removed: We and these third-parties may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities and we may be held liable for the corrupt or other illegal activities of these third-party business partners and intermediaries, our employees, representatives, contractors, channel partners, agents, intermediaries, and other third parties, even if we do not explicitly authorize such activities.
−Removed: While we have policies and procedures to address compliance with the FCPA, the Bribery Act and other anti-corruption, sanctions, anti-bribery, anti-money laundering and similar laws, we cannot assure you that they will be effective, or that all of our employees, representatives, contractors, channel partners, agents, intermediaries, or other third parties have taken, or will not take actions, in violation of
−Removed: our policies and applicable law, for which we may be ultimately held responsible.
+Added: We and these third-parties may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities and we may be held liable for the corrupt or other illegal activities of
+Added: these third-party business partners and intermediaries, our employees, representatives, contractors, channel partners, agents, intermediaries, and other third parties, even if we do not explicitly authorize such activities.
+Added: While we have policies and procedures to address compliance with the FCPA, the Bribery Act and other anti-corruption, sanctions, anti-bribery, anti-money laundering and similar laws, we cannot assure you that they will be effective, or that all of our employees, representatives, contractors, channel partners, agents, intermediaries, or other third parties have taken, or will not take actions, in violation of our policies and applicable law, for which we may be ultimately held responsible.
As we increase our international sales and business, our risks under these laws may increase.
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Our products and subscriptions contain third-party open source software components, and failure to comply with the terms of the underlying open source software licenses could restrict our ability to sell our products and subscriptions.
−Removed: The use and distribution of open source software may entail greater risks than the use of third-party commercial software, as open source licensors generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the code.
+Added: The use and distribution of open source software may entail greater risks than the use of third-party commercial software, as open source licensors generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the code and they can change the license terms on which they offer the open source software.
Many of the risks associated with use of open source software cannot be eliminated and could negatively affect our business.
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We may become involved in litigation that may adversely affect us.
−Removed: We are regularly subject to claims, suits, and government investigations and other proceedings including patent, product liability, class action, whistleblower, personal injury, property damage, labor and employment (including all allegations of wage and hour violations), commercial disputes, compliance with laws and regulatory requirements and other matters, and we may become subject to additional types of claims, suits, investigations and proceedings as our business develops.
+Added: We are regularly subject to claims, suits, and government investigations and other proceedings including patent, product liability, class action, whistleblower, personal injury, property damage, labor and employment (including allegations of wage and hour violations), commercial disputes, compliance with laws and regulatory requirements and other matters, and we may become subject to additional types of claims, suits, investigations and proceedings as our business develops.
Such claims, suits, and government investigations and proceedings are inherently uncertain and their results cannot be predicted with certainty.
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We may also have to seek a license for the technology.
−Removed: Such license may not
−Removed: be available on reasonable terms, if at all, and may significantly increase our operating expenses or may require us to restrict our business activities and limit our ability to deliver certain solutions or features.
+Added: Such license may not be available on reasonable terms, if at all, and may significantly increase our operating expenses or may require us to restrict our business activities and limit our ability to deliver certain solutions or features.
We may also be required to develop alternative non-infringing technology, which could require significant effort and expense and/or cause us to alter our products and services, which could harm our business.
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In addition, even claims that ultimately are unsuccessful could result in our expenditure of funds in litigation, divert management’s time and other resources, and harm our business and reputation.
−Removed: We offer our Falcon Complete customers a limited warranty, subject to certain conditions, and our potential liability under this warranty is provided by our insurance carrier to us.
−Removed: Any failure or refusal of our insurance providers to provide the expected insurance benefits to us after we have paid the warranty claims would cause us to incur significant expense or cause us to cease offering this warranty which could damage our reputation, cause us to lose customers, expose us to liability claims by our customers, negatively impact our sales and marketing efforts, and have an adverse effect on our business, financial condition and results of operations.
−Removed: We maintain insurance to protect against certain claims associated with the use of our products, but our insurance coverage may not adequately cover any claim asserted against us.
−Removed: In addition, even claims that ultimately are unsuccessful could result in our expenditure of funds in litigation, divert management’s time and other resources, and harm our business and reputation.
−Removed: We offer our customers a limited warranty, subject to certain conditions, with our Falcon Complete cloud module and our potential liability under this warranty is provided by our insurance carrier to us.
+Added: We offer our Falcon Complete customers a limited warranty, subject to certain conditions.
+Added: While we maintain insurance relating to our warranty, we cannot be certain that our insurance coverage will be adequate to cover such claims, that such insurance will continue to be available to us on commercially reasonable terms, or at all, or that any insurer will not deny coverage as to any claim.
Any failure or refusal of our insurance providers to provide the expected insurance benefits to us after we have paid the warranty claims would cause us to incur significant expense or cause us to cease offering this warranty which could damage our reputation, cause us to lose customers, expose us to liability claims by our customers, negatively impact our sales and marketing efforts, and have an adverse effect on our business, financial condition and results of operations.
Risks Related to Ownership of Our Class A Common Stock
−Removed: The market price of our Class A common stock may be volatile, and you could lose all or part of your investment.
+Added: The market price of our Class A common stock may be volatile regardless of our operating performance, and you could lose all or part of your investment.
We cannot predict the prices at which our Class A common stock will trade.
The market price of our Class A common stock depends on a number of factors, including those described in this “Risk Factors” section, many of which are beyond our control and may not be related to our operating performance.
−Removed: In addition, the limited public float of our Class A common stock tends to increase the volatility of the trading price of our Class A common stock.
These fluctuations could cause you to lose all or part of your investment in our Class A common stock.
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As of February 28, 2022, we had 210,058,133 shares of Class A common stock outstanding and 20,709,727 shares of Class B common stock outstanding.
−Removed: All of the shares of Class A common stock sold in our initial public offering are freely tradable without restrictions or further registration under the Securities Act of 1933, except for any shares held by our affiliates as defined in Rule 144 under the Securities Act.
In addition, certain holders of our Class B common stock are entitled to rights with respect to registration of these shares under the Securities Act pursuant to our amended and restated registration rights agreement.
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We do not control these analysts or the content and opinions included in their reports.
−Removed: As a new public company, the analysts who publish information about our Class A common stock have had relatively little experience with our company, which could affect their ability to accurately forecast our results and make it more likely that we fail to meet their estimates.
If any of the analysts who cover us issues an inaccurate or unfavorable opinion regarding our stock price, our stock price would likely decline.
−Removed: In addition, the stock prices of many companies in the technology industry have declined significantly after those companies have failed to meet, or significantly exceed, the financial guidance publicly announced by the companies or the expectations of analysts.
+Added: In addition, the stock prices of many companies in the technology industry have declined significantly after those
+Added: companies have failed to meet, or significantly exceed, the financial guidance publicly announced by the companies or the expectations of analysts.
If our financial results fail to meet, or significantly exceed, our announced guidance or the expectations of analysts or public investors, analysts could downgrade our Class A common stock or publish unfavorable research about us.
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As of January 31, 2022, our executive officers, directors, one of our current stockholders and its respective affiliates held, in aggregate, 49% of the voting power of our outstanding capital stock.
−Removed: Furthermore, one of our current stockholders and its respective affiliates held, in aggregate, 24% of the voting power of our outstanding capital stock.
As a result, these stockholders, acting together, have control over most matters that require approval by our stockholders, including the election of directors and approval of significant corporate transactions.
They may also have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests.
−Removed: Corporate action might be taken even if other stockholders, including those who purchased shares in our initial public offering, oppose them.
This concentration of ownership may have the effect of delaying, preventing or deterring a change of control or other liquidity event of our company, could deprive our stockholders of an opportunity to receive a premium for their shares of common stock as part of a sale or other liquidity event and might ultimately affect the market price of our common stock.
Further, our amended and restated certificate of incorporation provides that, to the fullest extent permitted by law, the doctrine of “corporate opportunity” does not apply to Accel, or its respective affiliates, in a manner that would prohibit them from investing in competing businesses or doing business with our partners or customers.
−Removed: Shares of our common stock are subordinate to our debts and other liabilities, resulting in a greater risk of loss for stockholders.
−Removed: Shares of our common stock are subordinate in right of payment to all of our current and future debt.
−Removed: We cannot assure that there would be any remaining funds after the payment of all of our debts for any distribution to our common stockholders.
We do not intend to pay dividends in the foreseeable future.
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Accordingly, investors must rely on sales of their Class A common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments.
−Removed: The issuance of additional stock in connection with financings, acquisitions, investments, our stock incentive plans, or otherwise will dilute all other stockholders.
−Removed: Our amended and restated certificate of incorporation authorizes us to issue up to 2,000,000,000 shares of Class A common stock, up to 300,000,000 shares of Class B common stock, and up to 100,000,000 shares of preferred stock with such rights and preferences as may be determined by our board of directors.
−Removed: Subject to compliance with applicable rules and regulations, we may issue shares of Class A common stock or securities convertible into shares of our Class A common stock from time to time in connection with a financing, acquisition, investment, our stock incentive plans or otherwise.
−Removed: Any such issuance could result in substantial dilution to our existing stockholders and cause the market price of our Class A common stock to decline.
Certain provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove members of our board of directors or current management, and may adversely affect the market price of our Class A common stock.
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and increasing our cost of borrowing.
−Removed: In addition, our revolving facility and the indenture that governs our Senior Notes contain restrictive covenants that limit our ability to engage in activities that may be in our long-term best interest.
−Removed: Our failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of substantially all of our indebtedness.
We may not be able to generate sufficient cash to service all of our indebtedness, including the notes, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.
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These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations.
−Removed: Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms or at all, would materially and adversely affect our financial position and results of operations.
If we cannot make scheduled payments on our indebtedness, we will be in default and holders of our Senior Notes could declare all outstanding principal and interest to be due and payable, the lenders under our revolving facility could terminate their commitments to loan money, our secured lenders could foreclose against the assets securing their borrowings and we could be forced into bankruptcy or liquidation.
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Our failure to comply with the restrictive covenants described above and/or the terms of any future indebtedness from time to time could result in an event of default, which, if not cured or waived, could result in our being required to repay these borrowings before their due date.
−Removed: If we are forced to refinance these borrowings on less favorable terms or cannot refinance these borrowings, our results of operations and financial condition could be adversely affected.
+Added: If we are forced to refinance these borrowings on less favorable terms or cannot refinance these borrowings, our business, financial condition and results of operations could be adversely affected.
Our revolving facility and the indenture that governs our Senior Notes contain cross-default provisions that could result in the acceleration of all of our indebtedness.
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Additionally, we may not be able to borrow money from other lenders to enable us to refinance our indebtedness.
−Removed: The phase-out, replacement or unavailability of LIBOR could adversely affect our cost of capital or our financial condition.
−Removed: The head of the United Kingdom Financial Conduct Authority has announced the desire to phase out the use of LIBOR by the end of 2021.
−Removed: Our revolving facility provides that LIBOR may be substituted in certain circumstances with an alternative benchmark interest rate, subject to notice to all lenders and the absence of objection by the lenders.
−Removed: Any such substitution could have an adverse impact on our cost of capital.
−Removed: Currently, there is no definitive information regarding which alternative benchmark interest rate that will replace LIBOR, how such alternative benchmark interest rate may differ from LIBOR, and when such substitution may occur.
−Removed: As such, we cannot determine the potential effect of such transition on our financial condition.
General Risk Factors
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Additionally, to the extent we acquire other businesses, the acquired company may not have a sufficiently robust system of internal controls and we may uncover new deficiencies.
−Removed: W eaknesses in our internal controls may be discovered in the future.
+Added: Weaknesses in our internal controls may be discovered in the future.
Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could harm our results of operations, may result in a restatement of our financial statements for prior periods, cause us to fail to meet our reporting obligations, and could result in an adverse opinion regarding our internal control over financial reporting from our independent registered public accounting firm, and lead to investigations or sanctions by regulatory authorities.
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Any failure to maintain effective disclosure controls and internal control over financial reporting could have a material and adverse effect on our business and results of operations and could cause a decline in the price of our stock.
−Removed: Future acquisitions, strategic investments, partnerships, or alliances could be difficult to identify and integrate, divert the attention of key management personnel, disrupt our business, dilute stockholder value and adversely affect our results of operations and financial condition.
+Added: Future acquisitions, strategic investments, partnerships, or alliances could be difficult to identify and integrate, divert the attention of key management personnel, disrupt our business, dilute stockholder value and adversely affect our business, financial condition, and results of operations.
As part of our business strategy, we have in the past and expect to continue to make investments in and/or acquire complementary companies, services or technologies.
−Removed: Our ability as an organization to acquire and integrate other companies, services or technologies in a successful manner in the future is not guaranteed.
+Added: Our ability as an organization to acquire and integrate other companies,
+Added: services or technologies in a successful manner in the future is not guaranteed.
We may not be able to find suitable acquisition candidates, and we may not be able to complete such acquisitions on favorable terms, if at all.
−Removed: If we do complete acquisitions,
−Removed: we may not ultimately strengthen our competitive position or ability to achieve our business objectives, and any acquisitions we complete could be viewed negatively by our end-customers or investors.
+Added: If we do complete acquisitions, we may not ultimately strengthen our competitive position or ability to achieve our business objectives, and any acquisitions we complete could be viewed negatively by our end-customers or investors.
In addition, our due diligence may fail to identify all of the problems, liabilities or other shortcomings or challenges of an acquired business, product or technology, including issues related to intellectual property, product quality or product architecture, regulatory compliance practices, revenue recognition or other accounting practices or issues with employees or customers.
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Any integration process may require significant time and resources, and we may not be able to manage the process successfully.
−Removed: We may not successfully evaluate or utilize the acquired technology or personnel, or accurately forecast the financial impact of an acquisition transaction, including accounting charges.
+Added: We may not successfully evaluate or utilize the acquired technology or personnel, or accurately forecast the financial impact of an acquisition transaction, causing unanticipated write-offs or accounting charges.
We may have to pay cash, incur debt or issue equity securities to pay for any such acquisition, each of which could adversely affect our financial condition and the market price of our Class A common stock.
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• coordination of research and development and sales and marketing functions;
−Removed: • integration of product and service offerings;
+Added: • integration of administrative systems, employee, product and service offerings;
• retention of key employees from the acquired company;
• changes in relationships with strategic partners as a result of product acquisitions or strategic positioning resulting from the acquisition;
−Removed: • cultural challenges associated with integrating employees from the acquired company into our organization;
−Removed: • integration of the acquired company’s accounting, management information, human resources and other administrative systems;
• the need to implement or improve controls, procedures, and policies at a business that prior to the acquisition may have lacked sufficiently effective controls, procedures and policies;
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• liability for activities of the acquired company before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities;
−Removed: • unanticipated write-offs or charges;
• litigation or other claims in connection with the acquired company, including claims from terminated employees, customers, former stockholders or other third parties.
Our failure to address these risks or other problems encountered in connection with acquisitions and investments could cause us to fail to realize the anticipated benefits of these acquisitions or investments, cause us to incur unanticipated liabilities, and harm our business generally.
+Added: Our corporate structure and intercompany arrangements are subject to the tax laws of various jurisdictions, and we could be obligated to pay additional taxes, which would harm our results of operations.
+Added: We are expanding our international operations and staff to support our business in international markets.
+Added: We generally conduct our international operations through wholly-owned subsidiaries and are or may be required to report our taxable income in various jurisdictions worldwide based upon our business operations in those jurisdictions.
+Added: Our intercompany relationships are subject to complex transfer pricing regulations administered by taxing authorities in various jurisdictions.
+Added: The amount of taxes we pay in different jurisdictions may depend on the application of the tax laws of the various jurisdictions, including the United States, to our international business activities, changes in tax rates, new or revised tax laws or
+Added: interpretations of existing tax laws and policies, and our ability to operate our business in a manner consistent with our corporate structure and intercompany arrangements.
+Added: The relevant taxing authorities may disagree with our determinations as to the income and expenses attributable to specific jurisdictions.
+Added: If such a disagreement were to occur, and our position was not sustained, we could be required to pay additional taxes, interest and penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows and lower overall profitability of our operations.
+Added: We are subject to federal, state, and local income, sales, and other taxes in the United States and income, withholding, transaction, and other taxes in numerous foreign jurisdictions.
+Added: Significant judgment is required in evaluating our tax positions and our worldwide provision for taxes.
+Added: During the ordinary course of business, there are many activities and transactions for which the ultimate tax determination may be uncertain.
+Added: In addition, our tax obligations and effective tax rates could be adversely affected, among other things, by (i) changes in the relevant tax, accounting and other laws, regulations, principles and interpretations, including increases in corporate tax rates and greater taxation of international income and changes relating to income tax nexus, (ii) recognizing tax losses or lower than anticipated earnings in jurisdictions where we have lower statutory rates and higher than anticipated earnings in jurisdictions where we have higher statutory rates, (iii) changes in foreign currency exchange rates, or (iv) changes in the valuation of our deferred tax assets and liabilities.
+Added: We may be audited in various jurisdictions, and such jurisdictions may assess additional taxes, sales taxes and value added taxes against us.
+Added: Although we believe our tax estimates are reasonable, the final determination of any tax audits or litigation could be materially different from our historical tax provisions and accruals, which could have an adverse effect on our results of operations or cash flows in the period or periods for which a determination is made.
+Added: In addition, the Organization for Economic Cooperation and Development (“OECD”) has published proposals covering a number of issues, including country-by-country reporting, permanent establishment rules, transfer pricing rules, tax treaties and taxation of the digital economy.
+Added: A significant majority of countries in the OECD’s Inclusive Framework have agreed in principle to a proposed solution to address the tax challenges arising from the digitalization of the economy.
+Added: Most recently, 137 jurisdictions joined a two-pillar plan to reform international taxation rules and ensure that multinational enterprises pay a fair share of tax wherever they operate.
+Added: The first pillar is focused on the allocation of taxing rights between countries for in-scope multinational enterprises that sell goods and services into countries with little or no local physical presence and is intended to apply to multinational enterprises with global turnover above 20 billion euros.
+Added: The second pillar is focused on developing a global minimum tax rate of at least 15 percent applicable to in-scope multinational enterprises and is intended to apply to multinational enterprises with annual consolidated group revenue in excess of 750 million euro.
+Added: While substantial work remains to be completed by the OECD and national governments on the implementation of these proposals, future tax reform resulting from these developments may result in changes to long-standing tax principles, which could adversely affect our effective tax rate or result in higher cash tax liabilities.
+Added: The OECD’s proposed solution envisages new international tax rules and the removal of all Digital Services Taxes (“DST”).
+Added: Notwithstanding this, some countries, in the European Union and beyond, continue to operate a DST regime to capture tax revenue on digital services more immediately.
+Added: Such laws may increase our tax obligations in those countries or change the manner in which we operate our business.
Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
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federal and California net operating loss carryforwards of $1.6 billion and $168.9 million, respectively, which may be available to offset future taxable income for income tax purposes.
−Removed: If not utilized, the federal and California net operating loss carryforwards will begin to expire in 2031.
−Removed: As of January 31, 2021, we had net
−Removed: operating loss carryforwards for other states of $660.7 million that will begin to expire in 2024.
+Added: If not utilized, the federal and California net operating loss carryforwards will begin to expire in fiscal 2031.
+Added: As of January 31, 2022, we had net operating loss carryforwards for other states of $868.0 million that will begin to expire in fiscal 2023.
As of January 31, 2022, we had federal and California research and development credit carryforwards of $65.6 million and $13.7 million, respectively.
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We may experience ownership changes in the future as a result of shifts in our stock ownership.
−Removed: As a result, if we earn net taxable income, our ability to use our pre-change net operating loss carryforwards to offset U.S.
+Added: As a result, if we earn net taxable income, our ability to use
+Added: our pre-change net operating loss carryforwards to offset U.S.
federal taxable income may be subject to limitations, which could potentially result in increased future tax liability to us.
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Significant assumptions and estimates used in preparing our consolidated financial statements include those related to revenue recognition;
−Removed: allowance for doubtful accounts;
+Added: allowance for credit losses;
valuation of common stock and redeemable convertible preferred stock warrants;
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Such changes to existing standards or changes in their interpretation may have an adverse effect on our reputation, business, financial position and profit, or cause an adverse deviation from our revenue and operating profit target, which may negatively impact our financial results.
+Added: We are subject to risks associated with our equity investments, including partial or complete loss of invested capital, and significant changes in the fair value of this portfolio could adversely impact our financial results.
+Added: Through our Falcon Funds, we invest in early to late stage private companies, and we may not realize a return on our equity investments.
+Added: Many such companies generate net losses and the market for their products, services, or technologies may be slow to develop or never materialize.
+Added: These companies are often dependent on the availability of later rounds of financing from banks or investors on favorable terms to continue their operations.
+Added: The financial success of our investment in any company is typically dependent on a liquidity event, such as a public offering, acquisition, or other favorable market event reflecting appreciation to the cost of our initial investment.
+Added: The capital markets for public offerings and acquisitions are dynamic and the likelihood of liquidity events for the companies in which we have invested could deteriorate, which could result in a loss of all or a substantial part of our investment in these companies.
+Added: In addition, our ability to realize gains on investments may be impacted by our contractual obligations to hold securities for a set period of time.
+Added: For example, to the extent a company we have invested in undergoes an initial public offering, we may be subject to a lock-up agreement that restricts our ability to sell our securities for a period of time after the public offering or otherwise impedes our ability to mitigate market volatility in such securities.
+Added: Further, valuations of non-marketable equity investments are inherently complex due to the lack of readily available market data.
+Added: In addition, we may experience additional volatility to our statements of operations due to changes in market prices of our
+Added: marketable equity investments, the valuation and timing of observable price changes or impairments of our non-marketable equity investments, and changes in the proportionate share of earnings and losses or impairment of our equity investments accounted for under the equity method.
+Added: This volatility could be material to our results in any given quarter and may cause our stock price to decline.
+Added: Our business is subject to the risks of earthquakes, fire, floods, outbreak of diseases and other natural catastrophic events, and to interruption by man-made problems such as power disruptions, computer viruses, data security breaches or terrorism.
+Added: Our principal executive offices are located in Austin, Texas, and we also maintain other office locations around the world, including in California and India, that are prone to natural disasters including severe weather and seismic activity.
+Added: A significant natural disaster, such as an earthquake, a fire, a flood, or significant power outage and other catastrophic events, including the occurrence of a contagious disease or illness, such as COVID-19, could have a material adverse impact on our business, results of operations, and financial condition.
+Added: The outbreak of a contagious disease like COVID-19 has, among other things, prompted responses such as government-imposed travel restrictions, the grounding of flights, and the shutdown of workplaces.
+Added: It is not possible at this time to estimate the impact that the COVID-19 pandemic could have on our business, as the impact will depend on future developments, which are highly uncertain and cannot be predicted.
+Added: Natural disasters and other catastrophic events such as COVID-19, could affect our personnel, recovery of our assets, data centers, supply chain, manufacturing vendors, or logistics providers’ ability to provide materials and perform services such as manufacturing products or assisting with shipments on a timely basis.
+Added: In addition, climate change could result in an increase in the frequency or severity of natural disasters.
+Added: In the event that our or our service providers’ information technology systems or manufacturing or logistics abilities are hindered by any of the events discussed above, shipments could be delayed, resulting in missed financial targets, such as revenue and shipment targets, for a particular quarter.
+Added: In addition, computer malware, viruses and computer hacking, fraudulent use attempts, and phishing attacks have become more prevalent in our industry, and our internal systems may be victimized by such attacks.
+Added: Although we maintain incident management and disaster response plans, in the event of a major disruption caused by a natural disaster or man-made problem, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in our development activities, lengthy interruptions in service, breaches of data security and loss of critical data, and our insurance may not cover such events or may be insufficient to compensate us for the potentially significant losses we may incur.
+Added: Acts of terrorism and other geopolitical unrest could also cause disruptions in our business or the business of our supply chain, manufacturers, logistics providers, partners, or customers or the economy as a whole.
+Added: Any disruption in the business of our supply chain, manufacturers, logistics providers, partners or end-customers could have a significant adverse impact on our financial results.
+Added: All of the aforementioned risks may be further increased if the disaster recovery plans for us and our suppliers prove to be inadequate.
+Added: To the extent that any of the above should result in delays or cancellations of customer orders, or the delay in the manufacture, deployment or shipment of our products, our business, financial condition and results of operations would be adversely affected.
UNRESOLVED STAFF COMMENTS
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