What changed in this filing

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Item 1A. Risk Factors

2022-09-13 compared with 2021-09-10 · 21 added, 39 removed, 417 unchanged (13% of the section changed)

16 unchanged sentences

The COVID-19 pandemic has created significant worldwide uncertainty, volatility and economic disruption.

The ultimate impact of the COVID-19 pandemic on our business, results of operations, financial condition and cash flows is dependent on future developments, including the duration of the pandemic, the severity of the disease and outbreak, the impact of new strains of the virus, effectiveness and availability of a vaccine, future and ongoing actions that may be taken by governmental authorities, the impact on the businesses of our customers and partners, and the length of its impact on the global economy, which are uncertain and are difficult to predict at this time.

The ultimate impact of the COVID-19 pandemic on our business, results of operations, financial condition and cash flows is dependent on future developments, including the duration of the pandemic, the severity of the disease and outbreak, the impact of new strains of the virus, effectiveness and availability of a vaccine, future and ongoing actions that may be taken by governmental authorities, the lockdown orders in China that began in April 2022, the impact on the businesses of our customers and partners, and the length of its impact on the global economy, which are uncertain and are difficult to predict at this time.

The potential effects of the COVID-19 pandemic, each of which could adversely affect our business, results of operations, financial condition and cash flows, include:

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Further, the impact of the COVID-19 pandemic could delay prospective customers’ purchasing decisions and cause them to become less inclined to trade-up from existing solutions, impact customers’ pricing expectations for our offerings, lengthen payment terms, reduce the value or duration of their subscription contracts, or adversely impact renewal rates;

● we could experience disruptions in our operations as a result of continued office closures, risks associated with our employees working remotely, a significant portion of our workforce suffering illness and travel restrictions.

● we could experience disruptions in our operations as a result of office closures, risks associated with our employees returning to work remotely, a significant portion of our workforce suffering illness and travel restrictions.

Starting in early 2020, we temporarily closed our offices, instituted a global remote work mandate and instituted significant travel restrictions.

While we have begun to re-open some of our offices, the vast majority of our employees continue to work remotely and for our offices that have begun to re-open, we have implemented significant new safety protocols, which may limit the effectiveness and productivity of our employees;

While we have begun to re-open our offices, the vast majority of our

employees are on a hybrid work model.

We have implemented significant new safety protocols, which may limit the effectiveness and productivity of our employees;

● we may be unable to collect amounts due on billed and unbilled revenue if our customers or partners delay payment or fail to pay us under the terms of our agreements as a result of the impact of the COVID-19 pandemic on their businesses, including their seeking bankruptcy protection or other similar relief.

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However, the effects could have a material impact on our results of operations, and we will continue to monitor the situation closely.

To the extent the COVID-19 pandemic adversely affects our business, results of operations, financial condition and cash flows, it may also heighten many of the other risks described in this “Risk Factor” section.

Our revenue and operating results have fluctuated in the past and are likely to fluctuate in the future, and because we recognize revenue from subscriptions over a period of time, downturns in revenue may not be immediately reflected in our operating results.

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Other than product innovation and existing customer relationships, there are no substantial barriers to entry in this market, and established or new entities may enter this market in the future.

While software internally developed by enterprises represents indirect competition, we also compete directly with packaged application software vendors, including Genesys Telecommunications, LivePerson, Inc., and NICE Ltd., and Verint Systems Inc.

While software internally developed by enterprises represents indirect competition, we also compete directly with packaged application software vendors, including Genesys Telecommunications Laboratories, Inc., LivePerson, Inc., NICE Ltd., and Verint Systems Inc.

In addition, we face actual or potential competition from larger software companies such as Microsoft Corporation, Oracle Corporation, salesforce.com Inc., and ServiceNow, Inc., and similar companies that may attempt to sell customer engagement software to their installed base.

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These risks in turn could cause our operating results and financial condition to suffer.

We derived 31% and 38% our revenue from international sales during the fiscal years ended June 30, 2021 and 2020, respectively.

In addition to those discussed elsewhere in this section, our international sales operations are subject to a number of specific risks, such as:

We derived 27% and 31% of our revenue from Europe, Middle East, and Africa sales during the fiscal years ended June 30, 2022 and 2021, respectively.

In addition to those discussed elsewhere in this section, our Europe, Middle East, and Africa sales operations are subject to a number of specific risks, such as:

● general economic conditions in each country or region in which we do or plan to do business;

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● various trade restrictions and tax consequences;

● hostilities in various parts of the world;

● the fragmentation of longstanding regulatory frameworks caused by Brexit;

● hostilities in various parts of the world, including the war in Ukraine;

● reduced intellectual property protections in some countries.

18 unchanged sentences

Our success largely depends on the efficient and uninterrupted operation of our computer and communications hardware and network systems.

We currently serve our customers from third-party data center facilities operated by third parties in the United Stataes and other international locations.

We currently serve our customers from third-party data center facilities operated by third parties in the United States and other international locations.

Any damage to, or failure of, our systems generally could interrupt service or impair the use or functionality of our cloud operations .

2 unchanged sentences

Customer data that we store in third party data centers may also be vulnerable to damage or interruption from floods, fires, earthquake, power loss, telecommunications failures and similar events.

Any damage to, or failure of, our

systems, or those of our third-party data centers, could result in impairment of or interruptions in our service.

Impairment or interruptions in our service may reduce our revenue, cause us to issue credits or pay penalties, cause customers to terminate their subscriptions and adversely affect our renewal rate and our ability to attract new customers.

Any damage to, or failure of, our systems, or those of our third-party data centers, could result in impairment of or interruptions in our service.

Impairment or interruptions in our service may reduce our revenue, cause us to issue credits or pay penalties, cause customers to

terminate their subscriptions and adversely affect our renewal rate and our ability to attract new customers.

Our business will also be harmed if our customers and potential customers believe our cloud operations are unreliable.

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The UK is also currently consulting on its own updated version of the standard contractual clauses and the result of this may be that different standard contractual clauses are needed depending on the origin of the PII.

On May 25, 2018, the EU’s GDPR became enforceable, imposing new obligations directly on us as both a data controller and a data processor, as well as on many of our customers.

Following the UK's exit from the EU (Brexit) the UK adopted a UK version of the GDPR.

While the UK GDPR is currently aligned with the EU GDPR, Brexit has created the opportunity for the UK to develop its own data protection regime which may diverge from the European standard (as is the case with the standard contractual clauses, discussed above).

It is possible that these new legal developments may evolve in a manner that is adverse to us, unforeseen, or otherwise inconsistent with our practices or that we may not adequately adapt our internal policies and/or procedures to evolving regulations, any of which could result in litigation, regulatory investigations and potential legal liability (including potential liability exposure through higher potential penalties for non-compliance), require us to make changes to our services to enable us and/or our customers to meet the new legal requirements, in case we have to change locations of data centers to meet privacy laws, increased requirements for customers to buy add-ons to meet additional requirements imposed by new laws, require us to change our practices in a manner adverse to our business or limit access to our products and services in certain countries.

Compliance with existing, proposed and recently enacted laws and regulations can be costly, particularly if we are subject to differing or conflicting requirements in the different countries in which we operate;

any failure to comply with these regulatory standards could subject us to legal and reputational risks.

While we have sought to implement appropriate transfer mechanisms following the invalidation of the Safe Harbor and Privacy Shield frameworks, owing to the significant changes that are ongoing in this area, we may be unsuccessful in establishing legitimate means of transferring data from the EEA or UK to the U.S.

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These statutes may increase our compliance costs and potential liability.

observers have noted that the CCPA and the SHIELD Act could mark the beginning of a trend toward more stringent privacy legislation in the U.S., which could increase our potential liability and adversely affect our business.

Some observers have noted that the CCPA and the SHIELD Act could mark the beginning of a trend toward more stringent privacy legislation in the U.S., which could increase our potential liability and adversely affect our business.

Furthermore, India has recently proposed enacting its own data protection legislation although the specifics of this are yet to be decided.

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Furthermore, concerns regarding data privacy may cause our customers’ customers to resist providing the data necessary to allow our customers to use our service effectively.

Even the perception that the privacy of personal information is not satisfactorily protected or does not meet regulatory requirements could inhibit sales of our products or services, and could limit adoption of our subscription solution.

Even the perception that the privacy of personal information is not satisfactorily protected or does not meet regulatory requirements could inhibit sales of our products or services, and could

limit adoption of our subscription solution.

Moreover, as our customers face increased scrutiny for data privacy breaches, they may elect to transfer the risk to us through contractual provisions which may subject us to increasing levels of contractual liability for data privacy breaches.

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Changes in these or other rules, or scrutiny of our current accounting practices, or a determination that our judgments or assumptions in the application of these accounting principles were incorrect, could have a significant adverse effect on our reported operating results or the way in which we conduct our business.

Continued uncertainty surrounding the implementation and effect of Brexit may cause increased economic volatility, affecting our operations and business.

In March 2017, the UK served notice to the European Council under Article 50 of the Treaty of Lisbon to withdraw membership from the EU.

Brexit could cause disruptions to, and create uncertainty surrounding, our business in the UK and EU, including affecting our relationships with our existing and future customers, suppliers, and employees.

As a result, Brexit could have an adverse effect on our future business, financial results, and operations.

The UK formally left the EU on January 31, 2020, although it was subject to a transition period through December 31, 2020.

While the transition period has now ended, and a deal was reached between the EU and the UK (avoiding a so called "hard Brexit"), the long-term nature of the UK’s relationship with the EU is still relatively unclear.

The political and economic instability created by Brexit has caused and may continue to cause significant volatility in global financial markets.

Brexit has also had the effect of disrupting the free movement of goods, services, and people between the UK, the EU, and elsewhere.

Brexit could lead to legal uncertainty and potentially divergent national laws and regulations as the UK determines which EU laws to repeal or replace.

Further, uncertainty around these and related issues could lead to adverse effects on the economy of the UK and the other economies in which we operate.

There can be no assurance that any or all of these events will not have a material adverse effect on our business operations, results of operations and financial condition.

Further, Brexit has created uncertainty with regard to the future regulation of data protection in the United Kingdom.

We may experience reluctance or refusal by current or prospective customers in Europe, including the United Kingdom, to use our products, and we may find it necessary or desirable to make further changes to our handling of personal data of European residents.

The regulatory environment applicable to the handling of European residents’ personal data, and our actions taken in response, may cause us to assume additional liabilities or incur additional costs, and could result in our business, operating results, and financial condition being harmed.

Risks Related to Intellectual Property

3 unchanged sentences

The software and Internet industries are characterized by the existence of a large number of patents, trademarks and copyrights and by frequent litigation based on allegations of infringement or other violations of intellectual property rights.

We have received and may receive in the future communications from third parties claiming that we or our customers have

infringed the intellectual property rights of others.

We have received and may receive in the future communications from third parties claiming that we or our customers have infringed the intellectual property rights of others.

In addition, we have been, and may in the future be, sued by third parties for alleged infringement of their claimed proprietary rights.

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We might be required to spend significant resources to monitor and protect our intellectual property rights.

We may initiate claims or litigation against third parties for infringement of our proprietary rights or to establish the validity of our proprietary rights.

We may initiate claims or litigation against third parties for infringement of our proprietary rights or to establish the validity of our

proprietary rights.

Any litigation, whether or not it is resolved in our favor, could result in significant expense to us and divert the efforts of our technical and management personnel.

1 unchanged sentence

We may be subject to legal proceedings and claims from time to time in the ordinary course of our business, including claims of alleged infringement of the patents and other intellectual property rights of third parties.

Our products may infringe issued patents that may relate to our products because patent applications in the United States are not publicly disclosed until the patent is issued, and hence applications may have been filed which relate to our software products.

Our products may infringe on issued patents that may relate to our products because patent applications in the United States are not publicly disclosed until the patent is issued, and hence applications may have been filed which relate to our software products.

Intellectual property litigation is expensive, time consuming, and could divert management’s attention away from running our business.

18 unchanged sentences

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