What changed in this filing

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Item 1A. Risk Factors

2021-11-17 compared with 2020-11-16 · 69 added, 70 removed, 406 unchanged (26% of the section changed)

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REVENUE GENERATION

COVID-19 has had and will continue to have an adverse impact on our operations and financial performance .

To date, the pandemic, which has affected nearly all regions around the world, and preventative measures taken to contain or mitigate the pandemic, are causing business slowdown or shutdown in affected areas and significant disruption in the financial markets.

We cannot predict with any certainty the degree to, or the time period over, which our revenues and operations will be affected by this pandemic and related preventative measures.

The spread of COVID-19 impacts several of our partners and has resulted in disruption of the supply chain of consumer products and delays in shipments, product development and product launches.

In addition, consumer demand for products that include our technologies has been, and we expect to continue to be, negatively impacted due to economic uncertainty from COVID-19 and a decline in discretionary spending by consumers.

These factors have resulted in decreased revenue pertaining to customer-shipment royalties.

COVID-19, including the spread of the newer Delta variant, has had and will continue to have an adverse impact on our operations and financial performance .

COVID-19 continues to impact several of our partners and has resulted in disruption of the supply chain of consumer products and delays in shipments, product development and product launches.

In addition, consumer demand for certain products that include our technologies has been, and we expect to continue to be, negatively impacted due to economic uncertainty from COVID-19 and a decline in discretionary spending by consumers.

These factors have impacted revenue pertaining to customer-shipment royalties.

Further, these factors have and may continue to result in delays in the release of new products or services that contain our technologies by partners and licensees.

These factors may also result in delays in royalty reporting by partners and licensees, and in cases where a partner or licensee’s financial condition has significantly worsened, we may have difficulty collecting or be unable to collect amounts owed to us.

In addition, we have experienced heightened demand for certain consumer products that feature our technologies, including TVs and PCs, during the pandemic.

It is unclear how demand for these products may change relative to demand levels during the pandemic.

The overall cinema market has been, and we expect to continue to be, adversely impacted by COVID-19 social distancing recommendations.

Our exhibition partners and customers have had to either partially or fully discontinue operations.

At various times, our exhibition partners and customers have had to either partially or fully discontinue operations.

This has resulted, and we expect will continue to result, in a significant reduction in box office receipts at Dolby Cinema sites and lower demand for our cinema products and services.

Though select cinema locations have been permitted to resume operations, many such locations are operating significantly below capacity.

It remains uncertain when the cinemas will be able to operate at full capacity.

M ost cinema locations have been permitted to resume operations, but many such locations are operating under restricted capacity.

Further, the spread of Delta or other variants may result in renewed social distancing mandates or shutdowns.

The situation is continuing to evolve, and we cannot predict how or to what extent the cinema market, or other markets we target, may be impacted.

The spread of COVID-19 has caused us to modify our business practices (including temporary office closures, restricting employee travel, enabling and encouraging remote work, and cancellation of physical participation in meetings, events and conferences), and we may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, licensees, partners, and community.

These actions may adversely impact our productivity and cause delays on new and existing projects.

Such delays may negatively impact our revenues.

Such delays may negatively impact our revenue.

Further, there is no certainty that the measures we have taken or will take will be sufficient to mitigate the risks posed by the virus to the well-being and productivity of our workforce.

The degree to which COVID-19 impacts our results will depend on future developments, which are highly uncertain and cannot be predicted with any certainty, including, but not limited to, the duration and extent of the pandemic, its severity, the actions to contain the virus or its impact, and how quickly and to what extent normal economic and operating conditions can resume.

The degree to which COVID-19 impacts our results will depend on future developments, which are highly uncertain and cannot be predicted with any certainty, including, but not limited to, the duration and extent of the pandemic, its severity, the rate and extent of vaccine distributions to the general population and other actions to contain the virus or its impact, additional subsequent outbreaks and variant strains, and how quickly and to what extent normal economic and operating conditions can resume.

Even after COVID-19 has subsided, we may continue to experience an adverse impact to our business as a result of its global economic impact, including any recession that has occurred or may occur.

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Our license agreements generally do not have minimum purchase commitments, are typically non-exclusive, and frequently do not require incorporation or use of our technologies.

Our revenue will decline if our licensees choose not to incorporate our technologies into their products or if they sell fewer products incorporating our technologies.

revenue will decline if our licensees choose not to incorporate our technologies into their products or if they sell fewer products incorporating our technologies.

Trends in Media Content Distribution .

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However, the rapid advancement of online and mobile content delivery has resulted in a trend toward downloading and streaming services, resulting in decreased royalty revenue in certain of our end device markets.

We expect the shift away from optical disc media to continue to result in a decline in revenue from the sale of devices that include DVD and Blu-ray Disc players.

The shift away from optical disc media to has resulted in a decline in revenue from the sale of devices that include DVD and Blu-ray Disc players.

For example, the number of PCs that include optical disc drives has decreased significantly in recent years.

Because PC OEMs are required to pay us a higher per-unit royalty for Windows PCs that include optical disc playback functionality than Windows PCs that do not include such functionality, the continued decreasing inclusion of optical disc drives in PCs will result in lower per-unit royalties.

Because PC OEMs are required to pay us a higher per-unit royalty for Windows PCs that include optical disc playback functionality than Windows PCs that do not include such functionality, further decreases in inclusion of optical disc drives in PCs will result in lower per-unit royalties.

Further, consumers in certain markets are shifting away from subscription-based cable and satellite television providers toward streaming services, commonly referred to as “cord-cutting.” While cable and satellite television often require a STB, today consumers can also access streaming media through smart TVs or DMA devices.

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Although we have invested a substantial amount of time and resources developing Dolby Cinema, and expect to continue to invest and build partnerships in connection with the launch of Dolby Cinema locations, we may not continue to recognize a meaningful amount of revenue from these efforts in the near future.

Additionally, we have collaborations with multiple exhibitors in foreign markets, including

Asia, Europe, and the Middle East, and we may face a number of risks in expanding Dolby Cinema in these and other new international markets.

Additionally, we have collaborations with multiple exhibitors in foreign markets, including Asia, Europe, and the Middle East, and we may face a number of risks in expanding Dolby Cinema in these and other new international markets.

The revenue we receive from Dolby Cinema exhibitors are based on a portion of box-office receipts from the installed theaters, and the timing of such theater installations is dependent upon a number of factors beyond our control.

In addition, the success of our Dolby Cinema offering will be tied to the pipeline and success of motion pictures available at Dolby Cinema locations generally.

The success of Dolby Cinema depends in large part on our ability to differentiate our offering, deploy new sites in accordance with plans, provide a compelling experience, and attract and retain a viewing audience.

The success of Dolby Cinema depends in large part on

our ability to differentiate our offering, deploy new sites in accordance with plans, provide a compelling experience, and attract and retain a viewing audience.

A decrease in our ability to develop and introduce new cinema products and services successfully could affect licensing of our consumer technologies, because the strength of our brand and our ability to use professional product developments to introduce new consumer technologies would be negatively impacted.

These factors are subject to increased risk due to COVID-19 and related government actions, including the shutdown of cinemas and other non-essential businesses, social distancing restrictions, delays in cinematic releases, temporary suspensions of production of future releases, delay in royalty and other payments and solvency of our exhibitor partners.

Further, though select cinema locations have been permitted to resume operations, many such locations are operating significantly below capacity.

It remains uncertain when the cinemas will be able to operate at full capacity or how quickly moviegoers will return to theaters, which may depend on continued concerns over safety and continued social distancing and/or depressed consumer sentiment due to adverse economic conditions.

Our revenue and associated demand from cinema product sales is dependent upon industry and economic cycles, which are subject to risks including delays in cinematic releases and closure of cinema locations related to COVID-19, along with our ability to develop and introduce new technologies, further our relationships with content creators, and promote new cinematic audio and imaging experiences.

These factors are subject to increased risk due to COVID-19, including related social distancing restrictions, delays in cinematic releases, shortened theatrical release windows, temporary suspensions of production of future releases, delay in royalty and other payments and solvency of our exhibitor partners.

Further, it remains uncertain when cinemas will return to full capacity and how quickly moviegoers will return to theaters.

Our revenue and associated demand from cinema product sales is dependent upon industry and economic cycles, which are subject to risks including delays in cinematic releases and reduced operating capacity related to COVID-19, along with our ability to develop and introduce new technologies, further our relationships with content creators, and promote new cinematic audio and imaging experiences.

A significant portion of our growth opportunity lies in the China market, which is subject to economic risks as well as geo-political risks.

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As a result of our increased presence across consumer electronic device markets where our technologies are not mandated and are subject to significant competition, the risk that a large licensee may reduce or eliminate its use of our technologies has increased.

Reliance on Semiconductor Manufacturers .

Reliance on Semiconductor Manufacturers and Availability of Semiconductor Components .

Our licensing revenue from system licensees depends in large part upon the availability of ICs that implement our technologies.

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We do not control the IC manufacturers’ decisions on whether or not to incorporate our technologies into their ICs, and we do not control their product development or commercialization efforts.

Further, demand levels related to COVID-19 have resulted in shortages of semiconductor components and other key materials that may adversely impact the ability of our implementation and system licensees and customers to meet product demand in a timely fashion.

Consumer Spending Weakness .

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Our distributors could retain product channel inventory levels that exceed future anticipated sales, which could affect our future sales to those distributors.

In addition, failure of our distributors to adhere to our policies designed to promote compliance with global

anticorruption laws, export controls, and local laws, could subject us to criminal or civil penalties and stockholder litigation.

In addition, failure of our distributors to adhere to our policies designed to promote compliance with global anticorruption laws, export controls, and local laws, could subject us to criminal or civil penalties and stockholder litigation.

Marketing and Branding

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The market for broadcast technologies has traditionally been heavily based on industry standards, often mandated by governments choosing from among alternative standards, and we expect this to continue to be the case in the future.

The continued advancement of OTT media delivery and consumption may alter the landscape for broadcast standards and impact the importance of inclusion in certain broadcast standards in the future, and we cannot predict if and to what extent this may impact our revenues.

Difficulty Becoming Incorporated in an Industry Standard .

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Our operating results depend upon participants in that market choosing to adopt our technologies instead of competitive technologies that also may be acceptable under such standard.

For example, the continued growth of our revenue from the broadcast market will depend upon both the continued global adoption of digital television generally, including in emerging markets, and the choice to use our technologies where it is one of several accepted industry standards.

For example, the continued growth of our revenue from the broadcast market will depend upon both the continued global adoption of DTV generally, including in emerging markets, and the choice to use our technologies where it is one of several accepted industry standards.

Being Part of a Standard May Limit Our Licensing Practices .

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Further, as COVID-19 continues to impact our licensees, it may result in delays in royalty reporting or payment by some of our licensees.

Estimation of Sales-Based Royalties .

We recognize a material portion of our licensing revenue based on our estimate of shipments to which we expect our licensees to submit royalty statements.

Upon receipt of actual reporting of sales-based royalties that we estimated previously, we record a favorable or unfavorable adjustment based on the difference, if any, between estimated and actual sales.

This may cause volatility in our quarterly figures because of the estimation process and the corresponding true-up adjustments, which we disclose.

Royalties We Owe Others .

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A successful challenge by a third party could result in the termination of a license agreement or an increase in the amount of royalties we have to pay to the third party.

Estimation of sales-based royalties .

Under Accounting Standards Update 2014-09, Revenue from Contracts with Customers, or ASC 606, we recognize a material portion of our licensing revenue based on our estimate of shipments to which we expect our licensees to submit royalty statements.

This may cause volatility in our quarterly figures because of the estimation process and the corresponding true-up adjustments, which we disclose.

Our reporting practices under ASC 606 could significantly affect our results of operations to the extent that actual revenues differ significantly from estimated revenues, or that we are required to accelerate recognition of revenue under certain arrangements, potentially causing the amount of revenue we recognize to vary materially from quarter to quarter.

While our reporting practices do not change the cash flows or total revenues we receive from our contracts with customers, it could result in changes to the timing of our reported revenue and income, which in turn could cause volatility in the price of our Class A common stock.

Our results of operations could be significantly affected to the extent that actual revenue differ significantly from estimated revenue, or that we are required to accelerate recognition of revenue under certain arrangements, potentially causing the amount of revenue we recognize to vary materially from quarter to quarter.

While our reporting practices do not change the cash flows or total revenue we receive from our contracts with customers, it could result in changes to the timing of our reported revenue and income, which in turn could cause volatility in the price of our Class A common stock.

TECHNOLOGY TRENDS AND DEVELOPMENTS

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• Technology and product obsolescence.

Our future success depends on our ability to enhance our technologies and products and to develop new

technologies and products that address the market needs in a timely manner.

Technology development is a complex, uncertain process requiring high levels of innovation, highly-skilled engineering and development personnel, and the accurate anticipation of technological and market trends.

Our future success depends on our ability to enhance our technologies and products and to develop new technologies and products that address the market needs in a timely manner.

Technology development is a complex,

uncertain process requiring high levels of innovation, highly-skilled engineering and development personnel, and the accurate anticipation of technological and market trends.

We may not be able to identify, develop, acquire, market, or support new or enhanced technologies or products on a timely basis, if at all.

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Our future growth will depend, in part, upon our continued expansion into areas beyond our audio licensing business.

Over the past few years, we have introduced Dolby Cinema, our branded-theater experience, Dolby Vision for the home and cinema markets, and Dolby Voice technology for the communications market.

Over the past few years, we have introduced Dolby Cinema, our branded-theater experience, Dolby Vision for the home and cinema markets, Dolby Voice technology for the communications market, and more recently, Dolby.io, our developer platform.

In connection with entering into these new markets, we face new sources of competition, new business models, and new customer relationships.

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Our limited experience to date in one or more of these markets could limit our ability to successfully execute on our growth strategy.

Incorporation of Dolby Formats into New Products & Availability of Content in Dolby Formats .

Incorporation of Dolby Formats into New Products and Availability of Content in Dolby Formats .

The success of many of our newer initiatives, such as Dolby Atmos, Dolby Vision, and Dolby Cinema, is dependent upon the availability and success of (i) products that incorporate Dolby formats and (ii) content produced in Dolby formats.

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As of September 24, 2021, we had approximately 15,500 issued patents in addition to approximately 4,000 pending patent applications in more than 100 jurisdictions throughout the world.

Our currently issued patents expire at various times through May 2045.

If we are unable to expand on our patent portfolio or refresh our technology with new patented inventions, our revenues could decline.

Our currently issued patents expire at various times through September 2045.

If we are unable to expand on our patent portfolio or refresh our technology with new patented inventions, our revenue could decline.

We seek to mitigate this risk in a variety of ways.

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Our customers use our DD implementation for quality, reliability, and performance, even in locations where we have not had applicable patent coverage.

While in the past, we derived a significant portion of our licensing revenue from our DD technologies, this is no longer the case as revenues attributed to DD technologies have declined and are expected to continue to decline.

While in the past, we derived a significant portion of our licensing revenue from our DD technologies, this is no longer the case as revenue attributed to DD technologies have declined and are expected to continue to decline.

Many of our partners have adopted newer generations of our offerings such as DD+, and the range of products incorporating DD solutions is now limited to DVD players (but not Blu-ray players) and some TVs, STBs and soundbars.

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Production difficulties or inefficiencies can interrupt production, resulting in our inability to deliver products on time or in a cost effective manner, which could harm our competitive position.

While we have three production facilities, we increasingly use contract manufacturers for a significant portion of our production capacity.

While we have one production facility, we increasingly use contract manufacturers for a significant portion of our production capacity.

Our reliance on contract manufacturers for the manufacture of our products involves risks, including limited control over timely delivery and quality of such products.

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A shortage of manufacturing capacity for our products could negatively impact our operating results and damage our customer relationships.

We may be unable to quickly adapt our manufacturing capacity to rapidly changing market conditions and a contract manufacturer may encounter similar difficulties.

Likewise, we may be unable to quickly respond to fluctuations in customer demand or contract

manufacturer interruptions.

We may be unable to quickly adapt our manufacturing capacity to rapidly changing market conditions and a contract manufacturer may encounter

similar difficulties.

Likewise, we may be unable to quickly respond to fluctuations in customer demand or contract manufacturer interruptions.

At times we underutilize our manufacturing facilities as a result of reduced demand for some of our products.

Further, delays in production caused by business slowdown or shutdowns related to COVID-19 could harm our production capacity and the conduct of our business.

Supply chain disruptions and extended lead times for semiconductor and electrical components may limit the availability of products and result in difficulty meeting demand.

Data Security .

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Any data security breach or other incident, whether external or internal in origin, could compromise our networks and systems, creating system disruptions or slowdowns and exploiting security vulnerabilities of our products.

Any such breach or other incident can result in the information stored on our networks and systems being improperly accessed or acquired, publicly disclosed, lost, or stolen, which could subject us to liability to our customers, suppliers, business partners and others.

Any such breach or other incident can result in the information stored on our networks and systems, or our vendors' networks and systems, being improperly accessed or acquired, publicly disclosed, lost, or stolen, which could subject us to liability to our customers, suppliers, business partners and others.

We seek to detect and investigate such attempts and incidents and to prevent their recurrence where practicable through changes to our internal processes and tools, but in some cases preventive and remedial action might not be successful.

In addition, despite the implementation of network security measures, our networks also may be vulnerable to computer viruses, malware, ransomware, cyber extortion, social engineering, denial of service, and other similar disruptions.

In addition, despite the implementation of network security measures, our networks, or our vendors' networks, also may be vulnerable to computer viruses, malware, ransomware, cyber extortion, social engineering, denial of service, and other similar disruptions.

Disruptions to our information technology systems, due to outages, security breaches or other causes, could also have severe consequences to our business, including financial loss and reputational damage.

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These laws and regulations are evolving and may result in ever-increasing regulatory and public scrutiny and escalating levels of enforcement and sanctions.

For example, the California Consumer Privacy Act of 2018, or CCPA, which went into effect on January 1, 2020, required us (among other obligations) to modify certain of our information practices, provide new disclosures to California consumers, and afford such consumers various privacy rights.

In the short period of time since its original enactment, the CCPA has been the subject of several subsequent amendments, modifications and administrative rulemakings.

Our actual or perceived failure to adequately comply with applicable laws and regulations relating to privacy and data protection (including regimes such as the CCPA that are rapidly evolving) could result in regulatory fines, investigations and enforcement actions, penalties and other liabilities, claims for damages by affected individuals, and damage to our reputation, any of which could have a material adverse effect on our operations, financial performance and business.

For example, the California Privacy Rights Act of 2020, or CPRA, which was approved by California voters in November 2020, amends and expands the California Consumer Privacy Act of 2018, or CCPA (which had required us to modify certain of our information practices and provide new disclosures to California consumers), by creating additional privacy rights for California consumers, establishing the California Privacy Protection Agency to enforce the new law, and imposing additional obligations on businesses.

These new obligations, which will take effect on January 1, 2023 (with certain provisions having retroactive effect to January 1, 2022), may require us to further modify certain of our information practices and could subject us to additional compliance costs and expenses.

Our actual or perceived failure to adequately comply with applicable laws and regulations relating to privacy and data protection (including regimes such as the CCPA and CPRA that are rapidly evolving) could result in regulatory fines, investigations and enforcement actions, penalties and other liabilities, claims for damages by affected individuals, and damage to our reputation, any of which could have a material adverse effect on our operations, financial performance and business.

Our commercial and cybersecurity insurance policies may be insufficient to insure us against these risks, and future escalations in premiums and deductibles under these policies may render them uneconomical.

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For example, sales of our products and services are particularly dependent upon our relationships with major film studios and broadcasters, and licensing of our technologies is particularly dependent upon our relationships with system licensees and IC manufacturers.

If we fail to maintain and strengthen these relationships, these entertainment industry participants may be less likely to purchase and use our technologies, products, and services, or create content incorporating our technologies.

If we fail to maintain and strengthen these relationships, these entertainment industry participants may be less likely to purchase and use our technologies,

products, and services, or create content incorporating our technologies.

Industry relationships also play an important role in other markets we serve;

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• Potential adverse changes in the political and/or economic stability of the regions in which we operate or in diplomatic relations between governments;

• Difficulty in establishing, staffing, and managing foreign operations, including but not limited to restrictions on the ability to obtain or retain licenses required for operation, relationships with local labor unions and works councils, investment restrictions and/or requirements, and restrictions on foreign ownership of

subsidiaries;

• Adverse fluctuations in foreign currency exchange rates and interest rates, including risks related to any interest rate swap or other hedging activities we undertake;

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From time to time, we are the subject of requests for information, market conduct examinations, inquiries or investigations by industry groups and/or regulatory agencies in these jurisdictions.

For instance, the Korean Fair Trade Commission has requested information relating to our business practices in South Korea on various occasions, and we have cooperated and are continuing to cooperate with such requests.

For instance, the Korean Fair Trade Commission has requested information relating to our business practices in South Korea on various occasions, and has made findings regarding the audit of a single customer.

We do not believe the outcome of this matter will have a material impact on our business or results of operations.

In the event that we are involved in significant disputes or are the subject of a formal action by a regulatory agency, our results could be negatively impacted and we could be exposed to costly and time-consuming legal proceedings.

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This requirement could affect the sourcing, availability and pricing of materials used in our products as well as the companies we use to manufacture our products.

In circumstances where sources of conflict minerals from the Democratic Republic of the Congo or surrounding countries are not validated as conflict free, we may take actions to change materials, designs or manufacturers to reduce the possibility that our contracts to manufacture products that contain conflict minerals finance or benefit local armed groups in the region.

In circumstances where sources of conflict minerals from the Democratic Republic of the Congo or surrounding countries are not validated as conflict free, we may take actions to

change materials, designs or manufacturers to reduce the possibility that our contracts to manufacture products that contain conflict minerals finance or benefit local armed groups in the region.

The SEC disclosure requirements could adversely affect the sourcing, supply and pricing of materials used in our products.

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• Changes in tax laws and regulations in the countries in which we operate, including an increase in tax rates, or an adverse change in the treatment of an item of income or expense.

tax law changes enacted through the Tax Cuts and Jobs Act ("Tax Act") require us to exercise significant judgment in interpreting its provisions.

As we evaluate the full impact of current and future guidance that is introduced, our results may materially differ from previous estimates, and those differences may materially affect our financial position.

The application of the Tax Act and any changes that we make to our corporate trading structure could adversely affect our tax rate and cash flow in future years.

The Organization of Economic Cooperation and Development (“OECD”), an international association of many countries including the United States, has made changes to many long-standing transfer pricing and cross-border taxation rules.

In addition, the European Union and its European Commission are proposing model legislation and investigating companies that might be in violation of European Union competition rules against unjustified state aid.

Further, the OECD, European Union, European Commission, and individual countries have made and could make additional competing jurisdictional claims over the taxes owed on earnings of multinational companies in their respective countries or regions.

To the extent these actions take place in the countries that we operate, it is possible that in the future, these efforts may increase uncertainty and have an adverse impact on our effective tax rates or operations.

tax law changes enacted through the Tax Cuts and Jobs Act ("Tax Act") include provisions that affect our business.

These provisions, their interpretations, and proposed changes to this law introduced by the Biden administration and a Democratic-controlled Congress could further impact our corporate trading structure and adversely affect our tax rate and cash flow in future years.

In addition, the Organization of Economic Cooperation and Development (“OECD”), an international association of many countries including the U.S., has made changes to many long-standing transfer pricing and cross-border taxation rules.

Further, the OECD, European Commission, EU Member States and other individual countries have made and could make additional competing jurisdictional claims over the taxes owed on earnings of multinational companies in their respective countries or regions.

To the extent these actions take place in the countries that we operate, such as the Netherlands, it is possible that in the future, these efforts may increase uncertainty and have an adverse impact on our effective tax rates or operations.

We are subject to the periodic examination of our income tax returns by tax authorities.

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As a result of this dual class structure, the Dolby family and their affiliates will, for the foreseeable future, have significant influence over our management and affairs, and will be able to control virtually all matters requiring stockholder approval, including the election of directors and significant corporate transactions such as mergers or other sales of our company or assets, even if they come to own considerably less than 50% of the total number of outstanding shares of our Class A and Class B common stock.

Absent a transfer of Class B common stock that would trigger an automatic conversion as described above, there is no threshold or time deadline at which the shares of

Class B common stock will automatically convert into shares of Class A common stock.

Absent a transfer of Class B common stock that would trigger an automatic conversion as described above, there is no threshold or time deadline at which the shares of Class B common stock will automatically convert into shares of Class A common stock.

Moreover, the Dolby family and their affiliates may take actions in their own interests that our other stockholders do not view as beneficial.

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Such purchases may be limited, suspended, or terminated at any time without prior notice.

There can be no assurance that we will buy additional shares of our Class A common stock under our stock repurchase program or that any future repurchases will have a positive impact on our stock price or earnings per share.

Important factors that could cause us to discontinue or decrease our share repurchases include, among others, unfavorable market conditions, the market price of our Class A common stock, the nature of other investment or strategic opportunities presented to us, the rate of dilution of our equity compensation programs, our ability to make appropriate, timely, and beneficial decisions as to when, how, and whether to purchase shares under the stock repurchase program, and the availability of funds necessary to continue purchasing stock.

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Fluctuations in Foreign Currency Exchange Rates .

We earn revenues, pay expenses, own assets and incur liabilities in foreign countries using several currencies other than the U.S.

We earn revenue, pay expenses, own assets and incur liabilities in foreign countries using several currencies other than the U.S.

As a result, we face exposure to adverse movements in currency exchange rates as the financial results of our international operations are translated from local currency into U.S.

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Further, outbreaks of pandemic diseases, or the fear of such events, could provoke (and in the case of COVID-19 has provoked) responses, including government-imposed travel restrictions and limits on access to entertainment venues.

These responses could negatively affect consumer demand and our business, particularly in international markets.

These responses could negatively affect consumer demand and our business,

particularly in international markets.

Additionally, several of our offices, including our corporate headquarters in San Francisco, are located in seismically active regions.

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Competition for Employees .

In order to be successful, we must attract, develop, and retain employees, including

employees to work on our growth initiatives where our current employees may lack experience with the business models and markets we are pursuing.

In order to be successful, we must attract, develop, and retain employees, including employees to work on our growth initiatives where our current employees may lack experience with the business models and markets we are pursuing.

Competition for experienced employees in our markets can be intense.

In order to attract and retain employees, we must provide a competitive compensation package, including cash and equity compensation.

Our equity awards include stock options and restricted stock units.

Our equity awards include stock options and RSUs.

The future value of these awards is uncertain, and depends on our stock price performance over time.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors