What changed in this filing

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Item 1A. Risk Factors

2024-11-06 compared with 2023-11-08 · 111 added, 100 removed, 316 unchanged (40% of the section changed)

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If this business strategy is not successful, we may not be able to grow our Software segment’s business, growth may occur more slowly than we anticipate, or revenues and profits may decline.

If we are unable to develop successful new products or new versions of products, or if we experience defects, failures or delays associated with the introduction of new products or of new versions of products, our business could suffer serious harm.

We derive a substantial portion of our revenues from a small number of products and services, and if the market does not continue to accept these products and services, our revenues will decline.

We expect that revenues derived from our scoring solutions, fraud solutions, customer communication services, customer management solutions and decision management software will continue to account for a substantial portion of our total revenues for the foreseeable future.

Our revenues will decline if the market does not continue to accept these products and services.

Factors that might affect the market acceptance of these products and services include the following:

• changes in the business analytics industry;

• changes in technology;

• our inability to obtain or use key data for our products;

• saturation or contraction of market demand;

• loss of key customers;

• industry consolidation;

• failure to successfully adopt cloud-based technologies;

• our inability to obtain regulatory approvals for our products and services, including credit score models;

• the increasing availability of free or relatively inexpensive consumer credit, credit score and other information from public or commercial sources;

• failure to execute our selling approach;

• inability to successfully sell our products in new vertical markets.

If we are unable to successfully develop new products or new versions of products, or if we experience defects, failures or delays associated with the introduction of new products or of new versions of products, our business could suffer serious harm.

Our growth and the success of our business strategy depend upon our ability to develop and sell new products and new versions of products, including the development and sale of our cloud-based product offerings and our scoring solutions.

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In addition, the U.S.

and other key international economies are experiencing, and have experienced in the past, downturns in which economic activity is impacted by falling demand for a variety of goods and services, increased volatility of interest rates, fluctuating rates of inflation, restricted credit, poor liquidity, reduced corporate profitability, volatility in credit, equity and foreign exchange markets, bankruptcies and overall uncertainty with respect to the economy.

and other key international economies have periodically experienced downturns in which economic activity is impacted by falling demand for a variety of goods and services, increased volatility of interest rates, fluctuating rates of inflation, restricted credit, poor liquidity, reduced corporate profitability, volatility in credit, equity and foreign exchange markets, bankruptcies and overall uncertainty with respect to the economy.

The potential for economic disruption presents considerable risks to our business, including potential bankruptcies or credit deterioration of financial institutions with which we have substantial relationships.

Economic disruption could result in a decline in the sales of new products to our customers and the volume of transactions that we execute for existing customers.

In addition, the volume of our Scores sales depends heavily on macroeconomic conditions, including, for example, the volume of transactions in the U.S.

mortgage and credit card markets, which account for a significant portion of the revenues in our Scores segment.

Economic disruption could result in a decline in the sales of new products to our customers and the volume of transactions that we execute for existing customers.

We also derive a substantial portion of our Scores segment revenues and operating income from our contracts with the three major consumer reporting agencies in the U.S., Experian, TransUnion and Equifax, and other parties that distribute our products to certain markets.

The loss of or a significant change in a relationship with one of the three consumer reporting agencies with respect to their distribution of our products or with respect to our myFICO ® offerings, the loss of or a significant change in a relationship with a major customer, the loss of or a significant change in a relationship with a significant third-party distributor (including payment card processors), or the loss of or delay of significant revenues from these sources, could have a material adverse effect on our revenues and results of operations.

We derive a substantial portion of our revenues from a small number of products and services, and if the market does not continue to accept these products and services, our revenues will decline.

Our revenues will decline if the market does not continue to accept these products and services.

Factors that might affect the market acceptance of these products and services include the following:

• changes in the business analytics industry;

• changes in technology;

• our inability to obtain or use key data for our products;

• saturation or contraction of market demand;

• loss of key customers;

• industry consolidation;

• failure to successfully adopt cloud-based technologies;

• our inability to obtain regulatory approvals for our products and services, including credit score models;

• the increasing availability of free or relatively inexpensive consumer credit, credit score and other information from public or commercial sources;

• failure to execute our selling approach;

• inability to successfully sell our products in new vertical markets.

If we fail to keep up with rapidly changing technologies, our products could become less competitive or obsolete.

In our markets, technology changes rapidly, and there are continuous improvements in computer hardware, network operating systems, programming tools, programming languages, operating systems, database technologies, cloud-based technologies and the use of the Internet.

For example, artificial intelligence technologies and their use are currently undergoing rapid change.

If we fail to enhance our current products and develop new products in response to changes in technology or industry standards, or if we fail to bring product enhancements or new product developments to market quickly enough, our products could rapidly become less competitive or obsolete.

Our future success will depend, in part, upon our ability to:

• innovate by internally developing new and competitive technologies;

• use leading third-party technologies effectively;

• continue to develop our technical expertise;

• anticipate and effectively respond to changing customer needs;

• initiate new product introductions in a way that minimizes the impact of customers delaying purchases of existing products in anticipation of new product releases;

• influence and respond to emerging industry standards and other technological changes.

Our revenues depend, to a great extent, upon conditions in the banking (including consumer credit) industry.

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Periods of global economic uncertainty experienced in the past have produced substantial stress, volatility, illiquidity and disruption of global credit and other financial markets, resulting in the bankruptcy or acquisition of, or government assistance to, several major domestic and international financial institutions.

The potential for future stress and disruptions, including in connection with geopolitical tensions, military conflicts, the level of inflation and rising interest rates, presents considerable risks to our businesses and operations.

The potential for future stress and disruptions, including in connection with geopolitical tensions, military conflicts, the level of inflation and the volatility of interest rates, presents considerable risks to our businesses and operations.

These risks include potential bankruptcies or credit deterioration of financial institutions, many of which are our customers.

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In addition, if consumer demand for financial services and products and the number of credit applications decrease, the demand for our products and services could also be materially reduced.

These types of disruptions could lead to a decline in the volumes of services we provide our customers and could negatively impact our revenue and results of operations.

These types of disruptions could lead to a decline in the volumes of products and services we provide our customers and could negatively impact our revenue and results of operations.

While the rate of account growth in the U.S.

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While we expand our sales into international markets, the risks are greater as these markets are also experiencing substantial disruption and we are less well-known in them.

If we are unable to access new markets or develop new sales and distribution channels, our business and growth prospects could suffer.

We expect our future growth to depend, in part, on the sale of products and service solutions in industries and markets we do not currently serve.

We also expect to grow our business by delivering our solutions through additional sales and distribution channels.

If we fail to penetrate these industries and markets to the degree we anticipate, or if we fail to develop additional sales and distribution channels, we may not be able to grow our business, growth may occur more slowly than we anticipate, or our revenues and profits may decline.

If use of the FICO ® Score by Fannie Mae and Freddie Mac were to cease or decline, it could have a material adverse effect on our revenues, results of operations and stock price.

A significant portion of our revenues in our Scores segment is attributable to the U.S.

mortgage market, which includes, for mortgages eligible for purchase by The Federal National Mortgage Association (“Fannie Mae”) and The Federal Home Loan Mortgage Corporation (“Freddie Mac”), a requirement by those enterprises that U.S.

lenders provide FICO ® Scores for each mortgage delivered to them.

However, their continued use of the FICO Score is subject to ongoing validation and approval by those enterprises and the Federal Housing Finance Agency (“FHFA”).

If other credit score models are approved for use with mortgages delivered to Fannie Mae and Freddie Mac, or the FICO Score is not approved for continued use with those mortgages, it could have a material adverse effect on our revenues, results of operations and stock price.

Other changes implemented by FHFA, Fannie Mae or Freddie Mac could also affect the demand for FICO Scores and thus could have similar adverse effects on our business, including, for example, a change permitting mortgage originators to underwrite loans using credit scores from only two of the three national consumer reporting agencies (a “bi-merge report”) rather than from all three (a “tri-merge report”).

We are subject to significant competition in the markets in which we operate, and our products and pricing strategies, and those of our competitors, could decrease our product sales and market share.

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Many of these companies have extensive customer relationships, including relationships with many of our current and potential customers.

For example, Experian, TransUnion and Equifax have formed an alliance that is selling a credit scoring product competitive with our products.

For example, Experian, TransUnion and Equifax have formed a joint venture that is selling a credit scoring product competitive with our products.

Furthermore, new competitors or alliances among competitors may emerge and rapidly gain significant market share.

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Competition from distributors or other sales and marketing partners could significantly harm sales of our products and services.

Our revenues, results of operations and overall financial performance may be negatively impacted by health epidemics or other disease outbreaks, such as the COVID-19 pandemic.

Our customers, and therefore our business and revenues, are sensitive to negative changes in general economic conditions and lending activities.

Health epidemics or disease outbreaks, such as the COVID-19 pandemic, could impact the rate of spending on our solutions and could adversely affect our customers’ ability or willingness to purchase our products and services, cause prospective customers to change product selections or term commitments, delay or cancel their purchasing decisions, extend sales cycles, and potentially increase payment defaults, all of which could adversely affect our future revenues, results of operations and overall financial performance.

If use of the FICO ® Score by Fannie Mae and Freddie Mac were to cease or decline, it could have a material adverse effect on our revenues, results of operations and stock price.

A significant portion of our revenues in our Scores segment is attributable to the U.S.

lenders provide FICO® Scores for each mortgage delivered to them.

However, their continued use of the FICO Score is subject to ongoing validation and approval by those enterprises and the Federal Housing Finance Agency.

We will continue to rely upon proprietary technology rights, and if we are unable to protect them, our business could be harmed.

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government, the results of research may be made public by the government, limiting our competitive advantage with respect to future products based on our research.

If we are unable to access new markets or develop new sales and distribution channels, our business and growth prospects could suffer.

We expect our future growth to depend, in part, on the sale of products and service solutions in industries and markets we do not currently serve.

We also expect to grow our business by delivering our solutions through additional sales and distribution channels.

If we fail to keep up with rapidly changing technologies, our products could become less competitive or obsolete.

For example, artificial intelligence technologies, including generative artificial intelligence, and their use are currently undergoing rapid change.

Our future success will depend, in part, upon our ability to:

• innovate by internally developing new and competitive technologies;

• use leading third-party technologies effectively;

• continue to develop our technical expertise;

• anticipate and effectively respond to changing customer needs;

• initiate new product introductions in a way that minimizes the impact of customers delaying purchases of existing products in anticipation of new product releases;

• influence and respond to emerging industry standards and other technological changes.

Our reengineering efforts may cause our growth prospects and profitability to suffer.

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will increase our exposure to the risks of conducting operations in international markets.

Our revenues, results of operations and overall financial performance may be negatively impacted by health epidemics or other disease outbreaks.

Our customers, and therefore our business and revenues, are sensitive to negative changes in general economic conditions and lending activities.

Health epidemics or disease outbreaks could impact the rate of spending on our solutions and could adversely affect our customers’ ability or willingness to purchase our products and services, cause prospective customers to change product selections or term commitments, delay or cancel their purchasing decisions, extend sales cycles, and potentially increase payment defaults, all of which could adversely affect our future revenues, results of operations and overall financial performance.

Operational Risks

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We may be exposed to additional cybersecurity threats as we migrate our software solutions and data from our legacy systems to cloud-based solutions.

We operate in an environment of significant risk of cybersecurity incidents resulting from unintentional events or deliberate attacks by third parties or insiders, which may involve exploiting highly obscure security vulnerabilities or sophisticated attack methods.

These threats include phishing attacks on our email systems and other cyber-attacks, including state-sponsored cyber-attacks, industrial espionage, insider threats, denial-of-service attacks, computer viruses, ransomware and other malware, payment fraud or other cyber incidents.

We operate in an environment of significant risk of cybersecurity incidents resulting from unintentional events or deliberate attacks by third parties or insiders, which may involve exploiting security vulnerabilities or sophisticated attack methods.

These threats include social engineering attacks, phishing attacks and other cyber-attacks, including state-sponsored cyber-attacks, industrial espionage, insider threats, denial-of-service attacks, computer viruses, ransomware and other malware, payment fraud or other cyber incidents.

As a software and technology vendor, we may incorporate or distribute software or other materials from third parties.

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Cybersecurity breaches could expose us to a risk of loss, the unauthorized disclosure of consumer or customer information, significant litigation, regulatory fines, penalties, loss of customers or reputational damage, indemnity obligations and other liability.

There is no assurance that the programs, technologies and processes that we have put in place in an effort to maintain the security and protection of our non-public information and that of our customers will be fully implemented, complied with or effective.

If our cybersecurity measures are breached as a result of third-party action, employee error, malfeasance or otherwise, and as a result, someone obtains unauthorized access to our systems or to consumer or customer information, sensitive data may be accessed, stolen, disclosed or lost, our reputation may be damaged, our business may suffer and we could incur significant liability.

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Malicious third parties may also conduct attacks designed to temporarily deny customers, distributors and vendors access to our systems and services.

Cybersecurity breaches experienced by our vendors, by our distributors, by our customers, by companies that we acquire, or by us may trigger governmental notice requirements and public disclosures, which may lead to widespread negative publicity, statutory damages, and lawsuits filed by individuals impacted by cybersecurity breaches under privacy and cybersecurity statutes that create rights of action.

We may also be affected by cybersecurity breaches experienced by customers who use our products on-premises, and those breaches may occur due to factors not under our control, including a customer’s failure to timely install updates and fixes to our products, vulnerabilities in a customer’s own cybersecurity measures, and other factors.

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Our systems and data centers, and those of our external service providers, could be exposed to damage or interruption.

These interruptions can include software or hardware malfunctions, communication failures, outages or other failures of third-party environments or service providers, fires, floods, earthquakes, pandemics, war, terrorist acts or civil unrest, power losses, equipment failures, supply chain disruptions, computer viruses, denial-of-service or other cybersecurity attacks, employee or insider malfeasance, human error and other events beyond our control.

These interruptions can include software or hardware malfunctions, communication failures, outages or other failures of third-party environments or service providers, or be due to defective updates, fires, floods, earthquakes, pandemics, war, terrorist acts or civil unrest, power losses, equipment failures, supply chain disruptions, computer viruses, denial-of-service or other cybersecurity attacks, employee or insider malfeasance, human error and other events beyond our control.

Any steps that we or our external service providers have taken to prevent or reduce disruption may not be sufficient to prevent an interruption of services and disaster recovery planning may not account for all eventualities.

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Any one or more of the foregoing occurrences could have a material adverse effect on our reputation, business, financial condition, cash flows and results of operations.

The failure to recruit and retain qualified personnel could hinder our ability to successfully manage our business.

Our business strategy and our future success will depend in large part on our ability to attract and retain experienced sales, consulting, research and development, marketing, technical support and management personnel.

The labor market for these individuals, particularly in the complex technical disciplines of software engineering, data science, and cyber security, is very competitive due to the limited number of people available with the necessary technical skills and understanding to support our complex products and it may become more competitive with general market and economic improvement.

We cannot be certain that our compensation strategies will be perceived as competitive by current or prospective employees.

This and other competitive factors could impair our ability to recruit and retain personnel.

We have experienced past difficulty in recruiting and retaining qualified personnel, especially in these intensely competitive technical skill areas, and we may experience future difficulty in recruiting and retaining such personnel, at a time when we may need additional staff to support expanded research and development efforts, new customers and/or increased customer needs.

We may also recruit skilled technical professionals from other countries to work in the U.S., and from the U.S.

and other countries to work abroad.

Limitations imposed by immigration laws in the U.S.

and abroad and the availability of visas in the countries where we do business could hinder our ability to attract necessary qualified personnel and harm our business and future operating results.

There is a risk that even if we invest significant resources in attempting to attract, train and retain qualified personnel, we will not succeed in our efforts, and our business could be harmed.

The failure of the value of our stock to appreciate may adversely affect our ability to use equity and equity-based incentive plans to attract and retain personnel, and may require us to use alternative forms of compensation for this purpose.

The working arrangements for our employees differ from the arrangements before the pandemic.

For example, we have implemented a Remote Work Policy and a Hybrid Work Location Policy, which are applicable depending on the location and position of the employee.

Should productivity decline or our employees’ ability to collaborate fall as a result of our Remote Work Policy, or if employees are unsatisfied with our Hybrid Work Location Policy and leave our company, our business could suffer.

The failure to obtain certain forms of model construction data from our customers or others could harm our business.

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Any interruption of our supply of data could seriously harm our business, financial condition or results of operations.

The failure to recruit and retain qualified personnel could hinder our ability to successfully manage our business.

We cannot be certain that our compensation strategies will be perceived as competitive by current or prospective employees.

This and other competitive factors could impair our ability to recruit and retain personnel.

We may also recruit skilled technical professionals from other countries to work in the U.S., and from the U.S.

and other countries to work abroad.

Limitations imposed by immigration laws in the U.S.

and abroad and the availability of visas in the countries where we do business could hinder our ability to attract necessary qualified personnel and harm our business and future operating results.

There is a risk that even if we invest significant resources in attempting to attract, train and retain qualified personnel, we will not succeed in our efforts, and our business could be harmed.

Legal, Regulatory and Compliance Risks

Increased regulatory focus on U.S.

residential mortgage closing costs may affect our ability to implement price changes for FICO ® Scores used in mortgage originations and thus limit the revenues and profitability of the FICO Score.

If new laws, regulations or other governmental action affecting the FICO Score or our other products and services are implemented or carried out, it could adversely affect our business and results of operations.

There has been increased focus in the U.S.

by federal regulators such as the CFPB and the FTC, as well as the current presidential administration and some states, related to the transparency and fairness of certain fees charged to consumers and the impacts on the costs of consumer goods and services.

For example, in May 2024, the CFPB launched a public inquiry to obtain information on fees charged by providers of mortgages and related settlement services in the U.S.

residential mortgage market, including fees for credit reports and credit scores.

The CFPB indicated that it is looking into why closing costs are increasing, who is benefiting, and how costs for borrowers and lenders could be lowered.

If new laws, regulations or other governmental action result from this inquiry, or otherwise, that limit the fees that can be charged for credit scores by us, consumer reporting agencies, or end users of our FICO ® Scores, or that place other restrictions on the sale or distribution of credit scores, our ability in the future to increase pricing for FICO Scores used in mortgage originations may be impacted and thus the revenues and profitability of the FICO Score may be adversely affected and the growth of our Scores business may be constrained.

There has also been increased focus more broadly on laws and regulations in the U.S.

related to our business and the business of consumer reporting agencies, including by U.S.

state and federal regulators such as the CFPB, relating to policy concerns with regard to the operation of consumer reporting agencies, the sale and distribution of credit scores and credit reports, the use and accuracy of credit and alternative data, the use of credit scores and fair lending, and the use, transparency, and fairness of algorithms, artificial intelligence, and machine learning in business processes.

For example, the CFPB has indicated that it intends to issue rules under the FCRA that would extend the FCRA to certain business practices not currently subject to that statute.

The costs and other burdens of compliance with such laws and regulations, and with new or revised laws and regulations that may be implemented addressing these topics, could negatively impact the use and adoption of our solutions, reduce overall demand for them, and harm our business, financial condition or results of operations.

Laws and regulations in the U.S.

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New legislation or regulations, or changes to existing laws and regulations, may also negatively impact our business and increase our costs of doing business.

Laws and governmental regulation affect how our business is conducted and, in some cases, subject us to the possibility of government supervision and future lawsuits arising from our products and services.

Laws and governmental regulation affect how our business is conducted and, in some cases, subject us to the possibility of government supervision or enforcement and future lawsuits arising from our products and services.

Laws and governmental regulations also influence our current and prospective customers’ activities, as well as their expectations and needs in relation to our products and services.

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• Laws and regulations related to extension of credit to consumers through the Electronic Fund Transfers Act and Regulation E, as well as non‑governmental VISA and MasterCard electronic payment standards;

• Laws and regulations applicable to secondary market participants (e.g., Fannie Mae and Freddie Mac) that could have an impact on our scoring products and revenues, including 12 CFR Part 1254 (Validation and Approval of Credit Score Models) issued by the Federal Housing Finance Agency in accordance with Section 310 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (Public Law 115-174), and any regulations, standards or criteria established pursuant to such laws or regulations, including the ongoing validation and approval of the use of the FICO Score by Fannie Mae, Freddie Mac, and the Federal Housing Finance Agency;

• Laws and regulations applicable to secondary market participants (e.g., Fannie Mae and Freddie Mac) that could have an impact on our scoring products and revenues, including 12 CFR Part 1254 (Validation and Approval of Credit Score Models) issued by the FHFA in accordance with Section 310 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (Public Law 115-174), and any regulations, standards or criteria established pursuant to such laws or regulations, including the ongoing validation and approval of the use of the FICO ® Score by Fannie Mae, Freddie Mac, and the FHFA;

• Laws and regulations applicable to our customer communication clients and their use of our products and services (e.g., the Telemarketing Sales Rule, Telephone Consumer Protection Act, the CAN-SPAM Act, the Fair Debt Collection Practices Act, and regulations promulgated thereunder, and similar state laws and similar laws in other countries);

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• Laws and regulations that apply to outsourcing of services by our clients, and that set forth requirements for managing third parties (e.g., vendors, contractors, suppliers and distributors);

• Laws and regulations relating to the environmental, social and governance, or sustainability, practices of companies, including enhanced climate-related disclosure requirements from regulators, such as California and the SEC, and the E.U.’s Corporate Sustainability Reporting Directive.

and foreign jurisdictions have passed, or are currently contemplating, a variety of consumer protection, data privacy, and cyber and data security laws and regulations that may relate to our business or the business of our customers or affect the demand for our products and services.

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data protection authorities.

Brazil, India, South Africa, Japan, China, Israel, Canada, and numerous other countries have introduced and, in some cases, enacted, similar data privacy and cyber and data security laws.

Numerous other countries have introduced and, in some cases, enacted, similar data privacy and cyber and data security laws.

The California Consumer Privacy Act of 2018 (“CCPA”) gives California residents certain privacy rights in the collection and disclosure of their personal information and requires businesses to make certain disclosures and take certain other acts in furtherance of those rights.

Additionally, effective January 1, 2023, the California Privacy Rights Act (the “CPRA”) revised and significantly expanded the scope of the CCPA.

The CPRA also created a new agency, the California Privacy Protection Agency, authorized to implement and enforce the CCPA and the CPRA, which could result in increased privacy and information security regulatory actions.

states have considered and/or enacted similar privacy laws.

For example, Virginia, Utah, Connecticut, and Colorado have passed consumer privacy laws with effective dates in 2023, and Indiana, Iowa, Montana, Oregon, Tennessee, and Texas have passed consumer privacy laws that will become effective in 2024, 2025, or 2026.

In addition, there has been an increased focus on laws and regulations related to our business and the business of our customers, including by the current U.S.

presidential administration, the U.S.

Congress, and U.S.

regulators, including the CFPB, relating to policy concerns with regard to the operation of consumer reporting agencies, the use and accuracy of credit and alternative data, the use of credit scores and fair lending, and the use, transparency, and fairness of algorithms, artificial intelligence, and machine learning in business processes.

The European Commission has also released draft proposed regulations (i.e., the EU AI Act) that would establish requirements for the provision and use of products that leverage artificial intelligence, machine learning, and similar analytic and statistical modeling technologies, including credit scoring.

The final version of EU AI Act is expected to be published by the end of 2023 and is expected to become effective in 2026.

The costs and other burdens of compliance with such laws and regulations could negatively impact the use and adoption of our solutions and reduce overall demand for them.

The CPRA also created a new agency, the California Privacy Protection Agency, authorized to implement and enforce the CCPA and the CPRA.

Numerous other U.S.

states have considered similar privacy laws, with many of those states having passed such laws with respective effective dates ranging from 2023 through 2026.

The European Commission has finalized the EU AI Act, which establishes requirements for the provision and use of products that leverage artificial intelligence systems, including in credit scoring.

The EU AI Act entered into force on August 1, 2024, and its provisions take effect between six and 36 months after that date, with most of those provisions becoming effective in 2026.

Other countries, as well as the executive branch of the U.S.

government and a number of U.S.

states, are considering or have implemented regulations or standards applicable to the provision and use of artificial intelligence technologies.

The costs and other burdens of compliance with such laws and regulations, along with the potential for increased regulatory actions, could negatively impact the use and adoption of our solutions and reduce overall demand for them.

Additionally, concerns regarding data privacy and cyber and data security may cause our customers, or their customers and potential customers, to resist providing the data necessary to allow us to deliver our solutions 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 solutions and any failure to comply with such laws and regulations could lead to significant fines, penalties or other liabilities.

Even the perception that the privacy or security of personal information is not satisfactorily protected or does not meet regulatory requirements could inhibit sales of our solutions and any failure to comply with such laws and regulations could lead to significant fines, penalties or other liabilities.

Any such decrease in demand or incurred fines, penalties or other liabilities could have a material adverse effect on our business, results of operations, and financial condition.

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Global Operational Risks

Material adverse developments in global economic conditions, or the occurrence of certain other world events, could affect demand for our products and services and harm our business.

Purchases of technology products and services and decisioning solutions are subject to adverse economic conditions.

When an economy is struggling, companies in many industries delay or reduce technology purchases, and we experience softened demand for our decisioning solutions and other products and services.

Global economic uncertainty has produced, and continues to produce, substantial stress, volatility, illiquidity and disruption of global credit and other financial markets.

Various factors contribute to the uncertain economic environment, including geopolitical tensions, military conflicts, the level and volatility of interest rates, the level of inflation, the continuing effects of the COVID-19 pandemic, an actual recession or fears of a recession, trade policies and tariffs, and political and governmental instability.

Economic uncertainty has and could continue to negatively affect the businesses and purchasing decisions of companies in the industries we serve.

Such disruptions present considerable risks to our businesses and operations.

As global economic conditions experience stress and negative volatility, or if there is an escalation in regional or global conflicts, or terrorism, we will likely experience reductions in the number of available customers and in capital expenditures by our remaining customers, longer sales cycles, deferral or delay of purchase commitments for our products and increased price competition, which may adversely affect our business, results of operations and liquidity.

As a result of these conditions, risks and uncertainties, we may need to modify our strategies, businesses or operations, and we may incur additional costs in order to compete in a changed business environment.

Given the volatile nature of the global economic environment and the uncertainties underlying efforts to stabilize it, we may not timely anticipate or manage existing, new or additional risks, as well as contingencies or developments, which may include regulatory developments and trends in new products and services.

Our failure to do so could materially and adversely affect our business, financial condition, results of operations and prospects.

In operations outside the U.S., we are subject to additional risks that may harm our business, financial condition or results of operations.

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• geopolitical tensions, instability, terrorism, and military conflicts;

• natural disasters and pandemics, including the COVID-19 pandemic, and individual countries’ reactions to them;

• natural disasters and pandemics, including individual countries’ reactions to them;

• difficulties and delays in translating products and related documentation into foreign languages.

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If such risks materialize, our business could be damaged.

Material adverse developments in global economic conditions, or the occurrence of certain other world events, could affect demand for our products and services and harm our business.

Purchases of technology products and services and decisioning solutions are subject to adverse economic conditions.

When an economy is struggling, companies in many industries delay or reduce technology purchases, and we experience softened demand for our decisioning solutions and other products and services.

Global economic uncertainty has produced, and continues to produce, substantial stress, volatility, illiquidity and disruption of global credit and other financial markets.

Various factors contribute to the uncertain economic environment, including geopolitical tensions, military conflicts, the level and volatility of interest rates, the level of inflation, an actual recession or fears of a recession, trade policies and tariffs, and political and governmental instability.

Economic uncertainty has and could continue to negatively affect the businesses and purchasing decisions of companies in the industries we serve.

Such disruptions present considerable risks to our businesses and operations.

Our failure to do so could materially and adversely affect our business, financial condition, results of operations and prospects.

Financial Risks

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General Risk Factors

If we experience changes in tax laws or adverse outcomes resulting from examination of our income tax returns, it could adversely affect our results of operations.

We are subject to federal and state income taxes in the U.S.

and in certain foreign jurisdictions.

Significant judgment is required in determining our worldwide provision for income taxes.

Our future effective tax rates could be adversely affected by changes in tax laws, by our ability to generate taxable income in foreign jurisdictions in order to utilize foreign tax losses, and by the valuation of our deferred tax assets.

In addition, we are subject to the examination of our income tax returns by the Internal Revenue Service and other tax authorities.

We regularly assess the likelihood of adverse outcomes resulting from such examinations to determine the adequacy of our provision for income taxes.

There can be no assurance that the outcomes from such examinations will not have an adverse effect on our operating results and financial condition.

Our stock price has been subject to fluctuations, and will likely continue to be subject to fluctuations, or may decline, regardless of our operating performance.

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These factors and certain provisions of the Delaware General Corporation Law may have the effect of deterring hostile takeovers or otherwise delaying or preventing changes in control or changes in our management, including transactions in which our stockholders might otherwise receive a premium over the fair market value of our common stock.

If we experience changes in tax laws or adverse outcomes resulting from examination of our income tax returns, it could adversely affect our results of operations.

We are subject to federal and state income taxes in the U.S.

and in certain foreign jurisdictions.

Significant judgment is required in determining our worldwide provision for income taxes.

In addition, we are subject to the examination of our income tax returns by the Internal Revenue Service and other tax authorities.

We regularly assess the likelihood of adverse outcomes resulting from such examinations to determine the adequacy of our provision for income taxes.

There can be no assurance that the outcomes from such examinations will not have an adverse effect on our operating results and financial condition.

Unresolved Staff Comments

Not applicable.

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