What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2023-02-14 compared with 2022-11-14 · 45 added, 43 removed, 414 unchanged (18% of the section changed)

14 unchanged sentences

A general weakening of, and related declining corporate confidence in, the global economy or the curtailment in government or corporate spending could cause current or potential customers to reduce their technology budgets or be unable to fund software or services purchases, which could cause customers to delay, decrease or cancel purchases of our products and services or cause customers to not pay us or to delay paying us for previously purchased products and services.

We face risks related to health epidemics, including the COVID-19 pandemic, which could have a material adverse effect on our business, financial condition and results of operations .

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 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:

● the rate of IT spending and the ability of our customers to purchase our offerings could be adversely impacted.

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 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 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.

As a result, our cash flows could be adversely impacted, which could affect our ability to fund future product development and acquisitions or return capital to shareholders;

● we may experience disruptions or delays to our supply chain or fulfillment and delivery operations as a result of the COVID-19 pandemic;

● our marketing effectiveness and demand generation efforts may be impacted due to the cancelling of customer events or shifting events to virtual-only experiences.

We may need to postpone or cancel other customer, employee or industry events or other marketing initiatives in the future;

● our business is dependent on attracting and retaining highly skilled employees, and our ability to attract and retain such employees may be adversely impacted by intensified restrictions on travel, immigration, or the availability of work visas during the COVID-19 pandemic;

● increased cyber incidents during the COVID-19 pandemic and our increased reliance on a remote workforce could increase our exposure to potential cybersecurity breaches and attacks;

● our results of operations are subject to fluctuations in foreign currency exchange rates, which risks may be heightened due to increased volatility of foreign currency exchange rates as a result of COVID-19.

Further, our forecasted revenue, operating results and cash flows could vary materially from those we provide as guidance or from those anticipated by investors and analysts if the assumptions on which we base our financial projections are inaccurate as a result of the unpredictability of the impact that the COVID-19 pandemic will have on our businesses, our customers’ and partners’ businesses and the global markets and economy or we make changes to our licensing programs or payment terms in connection with COVID-19.

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

There are no comparable recent events which may provide guidance as to the effect of the spread of COVID-19 and a pandemic, and, as a result, the ultimate impact of COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to change.

We do not yet know the full extent of COVID-19’s impact on our business, our operations, or the global economy as a whole.

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 Factors” 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.

Because we recognize revenue when we have satisfied performance obligations to customers in connection with our sales contracts, most of our revenue each quarter results from recognition of deferred revenue related to agreements entered into during previous quarters.

Consequently, declines in new or renewed subscription agreements and maintenance agreements that occur in one quarter will largely be felt in future quarters, both because we may be unable to generate sufficient new revenue to offset the decline and because we may be unable to adjust our operating costs and capital expenditures to align with the changes in revenue.

with the changes in revenue.

In addition, our subscription model makes it more difficult for us to increase our revenue rapidly in any period, because revenue from new customers must be recognized over the applicable subscription term.

20 unchanged sentences

In addition, our customers may choose to renew for fewer subscriptions (in quantity or products) or renew for shorter contract lengths.

We cannot accurately predict renewal rates given our varied customer base of enterprise and small and medium size business

customers and the number of multiyear subscription contracts.

We cannot accurately predict renewal rates given our varied customer base of enterprise and small and medium size business customers and the number of multiyear subscription contracts.

Our renewal rates may decline or fluctuate as a result of a number of factors, including customer dissatisfaction with our service, decreases in customers’ spending levels, decreases in the number of users at our customers, pricing changes and general economic conditions.

60 unchanged sentences

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

We derived 23% and 29% of our revenue from Europe, Middle East, and Africa sales during three months ended September 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:

We derived 23% and 27% of our revenue from combined Europe, Middle East, and Africa sales during three months ended December 31, 2022 and 2021, respectively.

We derived 23% and 28% of our revenue from combined Europe, Middle East,

and Africa sales during the six months ended December 31, 2022 and 2021, respectively.

In addition to those discussed elsewhere in this section, our combined 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;

8 unchanged sentences

Any of the above risks could adversely affect our international operations, reduce our revenue from customers outside of the United States or increase our operating costs, each of which could adversely affect our business, results of operations, financial condition, and growth prospects.

As of September 30, 2022 approximately 43% of our workforce was employed in India.

As of December 31, 2022 approximately 43% of our workforce was employed in India.

Of our employees in India, 51% are allocated to research and development.

16 unchanged sentences

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 .

Any damage to, or failure of, our systems generally could interrupt

service or impair the use or functionality of our cloud operations .

In addition, as we continue to increase the number of customers and users on our cloud operations , we will need to increase the capacity of our data center infrastructure.

44 unchanged sentences

Changes in customer and Internet user requirements and preferences, frequent new product and service introductions embodying new technologies and the emergence of new industry standards and practices such as but not limited to security standards could render our services and our proprietary technology and systems obsolete.

The rapid evolution of these products and services will require that

we continually improve the performance, features and reliability of our services.

The rapid evolution of these products and services will require that we continually improve the performance, features and reliability of our services.

Our success will depend, in part, on our ability to:

81 unchanged sentences

Certain questions regarding the safe harbor under the DMCA and the CDA have yet to be litigated, and we cannot guarantee that we will meet the safe harbor requirements of the DMCA or of the CDA.

not covered by a safe harbor, for any reason, we could be exposed to claims, which could be costly and time-consuming to defend.

If we are not covered by a safe harbor, for any reason, we could be exposed to claims, which could be costly and time-consuming to defend.

If our cybersecurity systems or the systems of our vendors, partners and suppliers are breached and unauthorized access is obtained to a customer’s data or our data or IT systems, our service may be perceived as not being secure, customers may curtail or stop using our service and we may incur significant legal and financial exposure and liabilities.

2 unchanged sentences

The techniques used to effect unauthorized penetration of computer systems are constantly evolving and have been increasing in sophistication.

While we have security measures in place that are designed to protect customer information and prevent data loss and other security breaches, these security measures may be breached as a result of third-party action, including intentional misconduct by computer hackers (which may involve nation states and individuals sponsored by them), employee error, malfeasance or otherwise and result in someone obtaining unauthorized access to our customers’ data or our data, including our intellectual property and other confidential business information, or our IT systems.

While we have security measures in

place that are designed to protect customer information and prevent data loss and other security breaches, these security measures may be breached as a result of third-party action, including intentional misconduct by computer hackers (which may involve nation states and individuals sponsored by them), employee error, malfeasance or otherwise and result in someone obtaining unauthorized access to our customers’ data or our data, including our intellectual property and other confidential business information, or our IT systems.

Additionally, third parties may attempt to fraudulently induce employees or customers into disclosing sensitive information such as user names, passwords or other information in order to gain access to our customers’ data or our data or IT systems.

25 unchanged sentences

However, as a result of the October 6, 2015 EU Court of Justice (ECJ), opinion in Case C-362/14 (Schrems v.

Data Protection Commissioner) regarding the adequacy of the U.S.-EU Safe Harbor Framework, and the July 16, 2020 ECJ judgment in Case C-311/18 (Data Protection Commissioner v Facebook Ireland Limited and Maximillian Schrems) regarding the adequacy of the Privacy Shield Framework, both frameworks are no longer deemed to constitute a valid method of compliance with restrictions set forth in European law regarding the transfer of data outside of the EEA.

Data Protection Commissioner) regarding the adequacy of the U.S.-EU Safe Harbor Framework, and the July 16, 2020 ECJ judgment in Case C-311/18

(Data Protection Commissioner v Facebook Ireland Limited and Maximillian Schrems) regarding the adequacy of the Privacy Shield Framework, both frameworks are no longer deemed to constitute a valid method of compliance with restrictions set forth in European law regarding the transfer of data outside of the EEA.

We are therefore required to rely on alternative mechanisms permitted under European law, such as consent and approved standard contractual clauses.

18 unchanged sentences

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.

27 unchanged sentences

Any failure or perceived failure by us to comply with such requirements could have an adverse impact on our business.

We face risks related to health epidemics, including the COVID-19 pandemic, which could have a material adverse effect on our business, financial condition and results of operations .

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 ended 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.