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our failure to effectively develop, manage, and maintain this network could materially harm our revenues.
+Added: • The markets in which we participate involve a high number of competitors that is continuing to increase, and if we do not compete effectively, our operating results could be harmed.
• Adverse economic conditions may harm our business.
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• Security breaches and improper access to or disclosure of our data or our clients’ data, or other cyber attacks on our systems, could result in litigation and regulatory risk, harm our reputation and our business.
−Removed: • We may acquire other companies, or technologies or be the target of strategic transactions, or be impacted by transactions by other companies, which could divert our management’s attention, result in additional dilution to our stockholders and otherwise disrupt our operations and harm our operating results.
−Removed: • The markets in which we participate involve numerous competitors and are highly competitive, and if we do not compete effectively, our operating results could be harmed.
+Added: • We may acquire other companies, or technologies or be the target of strategic transactions, or be impacted by transactions by other companies, which could divert our management’s attention, result in additional dilution to our stockholders or use a significant amount of our cash resources and otherwise disrupt our operations and harm our operating results.
• If our existing clients terminate their subscriptions or reduce their subscriptions and related usage, our revenues and gross margins will be harmed and we will be required to spend more money to grow our client base.
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• We have a history of losses and we may be unable to achieve or sustain profitability.
−Removed: • The contact center software solutions market is subject to rapid technological change, and we must develop and sell incremental and new products in order to maintain and grow our business.
+Added: • The contact center software solutions market is subject to rapid technological change, and we must develop and sell incremental and new solutions in order to maintain and grow our business.
• We may not be able to secure additional financing on favorable terms, or at all, to meet our future capital needs.
−Removed: • Failure to comply with laws and regulations could harm our business and our reputation.
+Added: • Failure to comply with laws and regulations, including those related to import and export controls, could harm our business and our reputation.
• We may not have sufficient cash to service our convertible senior notes and repay such notes, if required.
−Removed: Risks Related to COVID-19
−Removed: The effects of the COVID-19 pandemic have materially affected how we, our clients and business partners are operating, and the duration and extent to which this will impact our future results of operations and overall financial performance remains uncertain.
−Removed: In December 2019, a novel coronavirus disease known as COVID-19 was reported and on March 11, 2020, the World Health Organization, or WHO, characterized COVID-19 as a pandemic.
−Removed: This pandemic has resulted in a widespread health crisis that has continued to significantly harm the U.S.
−Removed: and global economies and has caused significant fluctuation in financial markets, including those on which our common stock and other securities trade, and may impact demand for our solution.
−Removed: In accordance with the various social distancing and other office closure orders and recommendations of applicable government agencies, all of our employees have transitioned to work-from-home operations and we have canceled all business travel by our employees except where necessary and properly authorized, which has changed how we operate our business.
−Removed: Our clients and business partners are also subject to various and changing social distancing and office closure orders and recommendations and travel restrictions or prohibitions, which have changed the way we interact with our clients and business partners.
−Removed: Moreover, the conditions caused by the COVID-19 pandemic, the extent of which depends upon its prolonged impact, has or may:
−Removed: • harm our ability to renew and maintain our relationships with our existing clients;
−Removed: • cause our existing clients to reduce the number of seats to which they subscribe, seek price concessions, or go out of business, which would harm our revenue;
−Removed: • result in some of our clients failing to comply with the terms of their agreements, including payment terms, due to economic uncertainty, financial hardship, and even failure of these businesses, which could result in us being required to take action to collect payments, terminate their subscriptions for our solution, increase accounts receivable, and reduce collections, any which would increase our expenses and harm our revenues and results of operations;
−Removed: • make it more difficult for us to sell increased services or functionality to our existing clients;
−Removed: • reduce the rate of spending on enterprise software solutions or cloud-based enterprise contact center systems generally;
−Removed: • delay prospective clients’ decisions to subscribe to our solution, increase the length of sales cycles, or slow the typical growth in the use of our solution once clients have initially deployed our solution;
−Removed: • harm our ability to effectively market and sell our solution, particularly during social distancing and office closure orders;
−Removed: • change the mix and sizes or types of organizations that purchase our solution;
−Removed: • delay the introduction of enhancements to our solution and market acceptance of any new features and products;
−Removed: • harm our ability to grow our international sales and operations;
−Removed: • harm our ability to recruit, onboard and successfully integrate new employees, including members of our direct sales force, both domestically and internationally, as a result of not being able to interface in person;
−Removed: • harm our ability to maintain our corporate culture with an employee base temporarily working remotely and facing unique personal and professional challenges;
−Removed: • increase the burden on our technical operations infrastructure, which could harm the capacity, stability, security and performance of our operations infrastructure and potentially leave us more vulnerable to security breaches;
−Removed: • increase the risk that we may experience cybersecurity-related events such as COVID-19 themed phishing attacks, exploitation of any cybersecurity flaws that may exist, an increase in the number of cybersecurity threats or attacks, and other security challenges as a result of our employees and service providers continuing to work remotely from non-corporate managed networks during the COVID-19 pandemic, and potentially beyond as remote work and resource access expand;
−Removed: • limit our ability to efficiently provide professional services to our larger clients, as those services have typically been performed onsite, which could delay implementation of our solution at new clients;
−Removed: • harm our ability to manage, maintain or increase our network of master agents and resellers to sell our solution, and make it more difficult for them to effectively assist us with their sales efforts;
−Removed: • impact the health and safety of our employees, including our senior management team, and their ability to perform services;
−Removed: • cause our management team to continue to commit significant time, attention and resources to monitor the COVID-19 pandemic and seek to mitigate its effect on our business and workforce;
−Removed: • lead to the adoption of additional new laws and regulations that we are required to comply with and that could harm our results of operations, and we may be subject to COVID-19 related litigation;
−Removed: • cause the price per share of our common stock or the trading price of our convertible senior notes to continue to experience substantial volatility, and potentially decline, based on developments and announcements related to COVID-19 and its impact on the global and U.S.
−Removed: economy in general or our industry in particular, our failure to meet our guidance or analyst expectations or withdrawal or modification by us of previously issued guidance.
−Removed: Any of the foregoing factors could significantly harm our future sales, operating results, gross margins and overall financial performance, which could cause us to experience a decreased level of growth of our business and make our future financial results and prospects difficult to predict.
−Removed: The COVID-19 pandemic and its impact on us and the U.S.
−Removed: and global economies could limit our ability to forecast our future operating results, including our ability to predict revenue and expense levels, and plan for and model future results of operations.
−Removed: Moreover, because a significant portion of our revenue is derived from existing clients, downturns in new sales will not immediately be reflected in our operating results and may be difficult to discern until future periods.
−Removed: Our competitors could experience different impacts as a result of COVID-19, which could result in changes to our competitive landscape.
−Removed: The duration and extent of the impact from the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the ongoing severity and transmission rate of the virus, the extent and effectiveness of vaccine programs and other containment actions, the duration of social distancing, office closure and other restrictions on businesses and society at large, and the specific impact of these and other factors on our business, employees, clients and partners.
−Removed: If we are not able to respond to and manage the impact of such events effectively, our business will be harmed.
−Removed: There are no comparable recent events that provide guidance as to the effect the COVID-19 pandemic may have and, as a result, the ultimate impact of the outbreak on our business and operations is highly uncertain and subject to change.
−Removed: The effects of the COVID-19 pandemic could have a material impact on our results of operations and increase many of the other risks described herein.
Risks Related to Our Financial Results
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• our ability to obtain additional financing on acceptable terms if and when needed;
+Added: • the timing of expenses related to any future acquisition transactions;
• advances and trends in new technologies and industry standards.
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Our strategy is to sell our solution to both smaller and larger organizations.
−Removed: Our gross margins can vary depending on numerous factors related to the implementation and use of our solution, including the features and number of agent seats purchased by our clients and the level of usage and professional services and support required by our clients.
+Added: Our gross margins can vary depending on numerous factors related to the implementation and use of our solution, including the features and number of agent seats purchased by our clients, the increasing reliance on public cloud providers, and the level of usage and professional services and support required by our clients.
For example, our larger clients typically require more professional services, and because our professional services offerings typically have lower margins, any increase in sales of professional services could harm our gross margins and operating results.
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In addition, as a public company, we incur significant legal, accounting and other expenses.
−Removed: Our historical or recent growth in
−Removed: revenues is not necessarily indicative of our future performance.
+Added: Our historical or recent growth in revenues is not necessarily indicative of our future performance.
Accordingly, there is no assurance that we will achieve profitability in the future or that, if we do become profitable, we will sustain profitability.
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• further develop our partner ecosystem;
−Removed: • strengthen and improve our solution through significant investments in research and development and the introduction of new and enhanced features and functionality;
+Added: • strengthen and improve our solution through significant investments in research and development and the introduction of new and enhanced features and functionality, such as our AI enabled automation features;
• introduce our solution to new markets outside of the United States and increase global awareness of our brand;
• selectively pursue acquisitions that enhance our solution offerings;
+Added: • address the challenges of recent widespread increases in employee resignations as a result of the COVID-19 pandemic;
• respond to general macro economic factors and industry and market conditions, including the effects of the COVID-19 pandemic.
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Moreover, we continue to expand our headcount and operations.
−Removed: We grew from 983 employees as of December 31, 2018 to 1,210 employees as of December 31, 2019, and to 1,549 employees as of December 31, 2020.
+Added: We grew from 983 employees as of December 31, 2018 to 1,210 employees as of December 31, 2019, to 1,549 employees as of December 31, 2020, and to 2,138 employees as of December 31, 2021.
We anticipate that we will continue to expand our operations and headcount in the near term and beyond.
This growth has placed, and future growth will place, a significant strain on our management, administrative, operational and financial resources, company culture and infrastructure.
−Removed: For example, in the fourth quarter of 2020, we acquired Inference Solutions Inc., or Inference, which will increase the complexity of our operations, administration and infrastructure.
+Added: For example, we have continued to expand our international operations, including the formation of new legal entities, which will increase the complexity of our operations, administration and infrastructure.
Our success will depend in part on our ability to manage this growth effectively while retaining personnel.
To manage the expected growth of our operations and personnel, we will need to continue to improve our operational, financial and management controls and our reporting systems and procedures.
−Removed: Failure to effectively manage growth could result in difficulty or delays in adding new clients, declines in quality or client satisfaction, increases in costs, system failures, difficulties in introducing new features or solutions, the need for more capital than we anticipate or other operational difficulties, and any of these difficulties could harm our business performance and results of operations.
−Removed: The expected addition of new employees and the capital investments that we anticipate will be necessary to help us grow and to manage that growth will make it more difficult for us to generate earnings or offset any future revenue shortfalls by reducing costs and expenses in the short term.
+Added: Failure to effectively manage growth could result in difficulty or delays in adding new clients, declines in quality or client satisfaction, increases in costs, system failures, difficulties
+Added: in introducing new features or solutions, the need for more capital than we anticipate or other operational difficulties, and any of these difficulties could harm our business performance and results of operations.
+Added: The expected addition of new employees, particularly outside the United States, and the capital investments that we anticipate will be necessary to help us grow and to manage that growth will make it more difficult for us to generate earnings or offset any future revenue shortfalls by reducing costs and expenses in the short term.
If we fail to manage our anticipated growth, we will be unable to execute our business plan successfully.
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Our competitors may be more successful than we are in establishing or expanding relationships with third parties or may provide incentives to third parties to favor their products over our solution.
−Removed: Our competitors may also have deeper or broader relationships with third parties, including products that we do not offer or that are outside our core markets, that could give these competitors an advantage in establishing and maintaining relationships with these third parties.
+Added: Our competitors may also have deeper or broader relationships with third parties, including a broader suite of products that are outside our core markets, that could give these competitors an advantage in establishing and maintaining relationships with these third parties.
These strategic partners may cease to recommend our solution to prospective clients due to actual or perceived lack of features, technological or security issues or failures, reputational concerns, economic incentives, or other factors, which would harm our business, financial condition and operations.
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If we are unable to attract new clients or sell additional seats, functionality and services to our existing clients, our revenue and revenue growth will be harmed.
−Removed: To increase our revenue, we must add new clients, add additional agent seats and sell additional seats, functionality and services to existing clients, and encourage existing clients to renew their subscriptions on terms favorable to us.
−Removed: As our industry matures, as our clients experience seasonal trends in their business, or as
−Removed: competitors introduce lower cost or differentiated products or services that are perceived to compete favorably with ours, our ability to add new clients and renew, maintain or sell additional services to existing clients based on pricing, cost of ownership, technology and functionality could be harmed.
+Added: To increase our revenue, we must add new clients, add additional agent seats and sell additional seats, functionality and services to existing clients, and successfully get existing clients to renew their subscriptions on terms favorable to us.
+Added: As our industry matures, as our clients experience seasonal trends in their business, or as competitors introduce lower cost or differentiated products or services that are perceived to compete favorably with ours, our ability to add new clients and renew, maintain or sell additional services to existing clients based on pricing, cost of ownership, technology and functionality could be harmed.
As a result, our existing clients may not renew our agreements or may decrease their number of agent seats, and we may be unable to attract new clients or grow or maintain our business with existing clients, which could harm our revenue and growth.
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• our clients or potential clients experience financial difficulties, including as a result of the COVID-19 pandemic.
−Removed: If our existing clients’ subscriptions and related usage decrease or are terminated, we will need to spend more money to acquire new clients and still may not be able to maintain our existing level of revenues.
+Added: If our existing clients’ subscriptions and related usage decrease or are terminated, we will need to spend more money to acquire new clients and still may not be able to maintain, or increase, our existing level of revenues.
We incur significant costs and expenses, including sales and marketing expenses, to acquire new clients, and those costs and expenses are an important factor in determining our profitability.
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Professional services and technical support may be performed by our own staff or, in a select subset of cases, by third parties.
−Removed: Our professional services offerings typically have lower margins.
+Added: Our professional services offerings have lower or negative margins.
Accordingly, any increase in sales of professional services could harm our gross margins and operating results.
−Removed: We will need to continue to expand and optimize our professional services and technical support in order to keep up with new client installations and ongoing service, which takes time and expense to implement.
+Added: We will need to continue to considerably expand our professional services and technical support in order to implement and support new and larger global client installations.
Identifying and recruiting qualified service personnel and training them in our solution is difficult and competitive and requires significant time, expense and attention.
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We plan to continue to expand our direct sales force, both domestically and internationally.
−Removed: Identifying and recruiting qualified personnel and training them in the use and sale of our solution requires significant time, expense and attention.
+Added: Identifying and recruiting qualified personnel and training them in the use and sale of our solution requires significant time, expense and attention, all of which are exacerbated as a result of remote working in connection with the COVID-19 pandemic.
It can take several months before our sales representatives are fully trained and productive.
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These master agents and resellers sell, or may in the future decide to sell, solutions for our competitors.
−Removed: Our competitors may be able to cause our current or potential master agents or resellers to favor their services over ours, either through financial incentives, technological innovation, solution features or performance, by offering a broader array of services to these service providers or otherwise, which could reduce the effectiveness of our use of these third parties.
+Added: Our competitors may be able to cause our current or potential master agents or resellers to favor their services over ours, either through financial incentives, technological innovation, solution features or performance, by offering a broader array of services to these service
+Added: providers or otherwise, which could reduce the effectiveness of our use of these third parties.
If we fail to maintain relationships with current master agents and resellers, fail to develop relationships with new master agents and resellers in new and existing markets, if we fail to manage, train, or provide appropriate incentives to our existing master agents and resellers, or if our master agents and resellers are not successful in their sales efforts, sales of our subscriptions may decrease or not grow at an appropriate rate and our operating results could be harmed.
Additionally, in order to effectively utilize our resellers, we must enhance our systems, develop specialized marketing materials and invest in educating resellers regarding our systems, product offerings and services.
−Removed: Our failure to accomplish these objectives could limit our success in marketing and selling our products.
+Added: Our failure to accomplish these objectives could limit our success in marketing and selling our solution.
In addition, identifying new resellers, and negotiating and documenting relationships with them, requires significant time and resources.
−Removed: As the complexity of our solution and our reseller relationships increases, the
−Removed: management of those relationships and the negotiation of contractual terms sufficient to protect our rights and limit our potential liabilities will become more complicated.
+Added: As the complexity of our solution and our reseller relationships increases, the management of those relationships and the negotiation of contractual terms sufficient to protect our rights and limit our potential liabilities will become more complicated.
Our inability to successfully manage these complex relationships or negotiate sufficient contractual terms could harm our business.
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In addition, many of our clients that are larger organizations initially deploy our solution to support only a portion of their contact center agents.
−Removed: Our success depends on our ability to increase the number of agent seats and the number of applications utilized by these larger organizations over time and additional sales and marketing expenses we incur in these efforts.
+Added: Our success depends on our ability to increase the number of agent seats and the number of applications utilized by these larger organizations over time and requires the expenditure of additional sales and marketing expenses in these efforts.
There is no guarantee that these clients will increase their subscriptions for our solution.
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If prospective clients require customized features or functions that we do not offer, and that would be difficult for them to deploy themselves, they will need to use our services or third-party service providers or we may lose sales opportunities with larger organizations and our business could suffer.
−Removed: The markets in which we participate involve numerous competitors and are highly competitive, and if we do not compete effectively, our operating results could be harmed.
+Added: The markets in which we participate involve a high number of competitors that is continuing to increase, and if we do not compete effectively, our operating results could be harmed.
The market for contact center solutions is highly competitive.
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These legacy technology and software companies are increasingly supplementing their traditional on-premise contact center systems with competing cloud offerings, through a combination of acquisitions, partnerships and in-house development.
−Removed: Additionally, we compete with vendors that historically provided other contact center services and technologies and expanded to offer cloud contact center software such as NICE and Genesys.
−Removed: We also face competition from many smaller contact center service providers such as Talkdesk and Seranova, as well as vendors offering unified communications and contact center solutions.
−Removed: In addition, Amazon and Twilio have introduced solutions aimed at companies who wish to build their own contact centers with in-house developers.
+Added: Additionally, we compete with vendors that historically provided other contact center services and technologies and expanded to offer cloud contact center software such as Genesys and NICE.
+Added: We also face competition from many smaller contact center service providers such as Content Guru and Talkdesk, as well as vendors offering unified communications and contact center solutions such as Zoom.
+Added: In addition, Amazon, Twilio and, most recently, Microsoft, have introduced solutions aimed at companies who wish to build their own contact centers and/or contact center components with developers.
In addition, CRM vendors are increasingly offering features and functionality that were traditionally provided by contact center providers.
−Removed: CRM vendors also continue to partner with contact center service providers to provide integrated solutions and may, in the future, acquire competitive contact center service providers.
+Added: vendors also continue to partner with contact center service providers to provide integrated solutions and may, in the future, acquire competitive contact center service providers.
These factors could cause CRM vendors to reduce or terminate their partnerships with us, and could result in increased competition.
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Current or potential competitors may also be acquired by third parties with significantly greater resources.
−Removed: Many of our competitors have stronger name recognition, longer operating histories, larger marketing budgets, greater financial or technical resources, better established relationships with clients, more comprehensive
−Removed: product offerings, larger installed bases and major distribution agreements with consultants, system integrators and resellers.
+Added: Many of our competitors have stronger name recognition, longer operating histories, larger marketing budgets, greater financial or technical resources, better established relationships with clients, more comprehensive product offerings, larger installed bases and major distribution agreements with consultants, system integrators and resellers.
Our competitors may also establish cooperative relationships among themselves or with third parties that may further enhance their product offerings or resources and ability to compete.
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We plan to continue to dedicate significant resources to our marketing programs, including internet advertising, digital marketing campaigns, social media, trade shows, industry events, co-marketing with strategic partners, telemarketing and out of home campaigns.
−Removed: In addition, we have shifted certain events, such as our user group meetings, from in-person to virtual in response to the COVID-19 pandemic.
+Added: In addition, we have shifted certain events, such as our user group meetings, from in-person to virtual and various trade shows from in-person to fully virtual or hybrid attendance in response to the COVID-19 pandemic.
The effectiveness of our internet advertising has varied over time and may vary in the future due to competition for key search terms, changes in search engine use and changes in the search algorithms used by major search engines.
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If we fail to manage our technical operations infrastructure, our existing clients may experience service outages, our new clients may delay or decide against deployment of our solution, existing clients may decide to move to another vendor, and we could be subject to, among other things, claims for credits or damage.
−Removed: Our success depends in large part upon the capacity, stability, security and performance of our technical operations infrastructure, which currently primarily relies upon external data centers and, increasingly, public cloud providers.
+Added: Our success depends in large part upon the capacity, stability, security and performance of our technical operations infrastructure, which currently relies upon a mix of external data centers and, increasingly, public cloud providers.
From time-to-time, we have experienced interruptions in service, and may experience such interruptions in the future.
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In some instances, we may not be able to identify the cause or causes of these performance problems, and remediate them within an acceptable period of time.
−Removed: Our failure to achieve or maintain expected performance levels, stability and security, particularly as we increase the number of users of our service and the product applications that run on our system, could harm our relationships with our clients, result in claims for credits or damages, damage our reputation, significantly reduce client demand for our solution, cause us to incur significant expense and personnel time replacing and upgrading our infrastructure, cause customer attrition, and harm our business.
+Added: Our failure to achieve or maintain expected
+Added: performance levels, stability and security, particularly as we increase the number of users of our service and the product applications that run on our system, could harm our relationships with our clients, result in claims for credits or damages, damage our reputation, significantly reduce client demand for our solution, cause us to incur significant expense and personnel time replacing and upgrading our infrastructure, cause customer attrition, and harm our business.
We have experienced significant growth in the number of agent seats and interactions that our infrastructure supports.
−Removed: As the number of agent seats within our client base grows and our clients’ use of our service increases, we need to continue to make additional investments in our capacity to maintain adequate and reliable stability and performance, the availability of which may be limited or the cost of which may be prohibitive, and any failure may cause interruptions in service that may harm our business.
−Removed: In addition, we need to properly manage our operations infrastructure in order to support version control, changes in hardware and software parameters and the evolution of
−Removed: our solution.
+Added: As the number of agent seats within our client base grows and our clients’ use of our service increases, we need to continue to make additional investments in our capacity to maintain adequate and reliable availability and stability and performance, the availability of which may be limited or the cost of which may be prohibitive, and any failure may cause interruptions in service that may harm our business.
+Added: In addition, we need to properly manage our operations infrastructure in order to support version control, changes in hardware and software parameters and the evolution of our solution.
If we do not accurately predict our infrastructure requirements or efficiently improve our infrastructure, our business could be harmed.
−Removed: We host our solution at geographically redundant data centers in the United States, the United Kingdom, Europe and Australia and from a public cloud location in Canada.
+Added: We host our solution at geographically redundant data centers in the United States, the United Kingdom, Europe and Australia and from public cloud locations in Canada, the United Kingdom and Europe.
Any failure or downtime in one of our data center facilities could affect a significant percentage of our clients.
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We also host some of our voice services on the public cloud in Europe, Asia, South America and Australia.
−Removed: We are also in the process of establishing new public cloud deployments of our platform in certain additional international markets.
−Removed: We have partnered with a third-party to develop, test and deploy our technology to offer a full stack of services on the public cloud in certain international markets.
−Removed: If we are successful in deployment of our technology to the public cloud, we will likely introduce our public cloud deployments in the U.S.
−Removed: and in additional international markets.
+Added: We are also establishing new public cloud deployments of our platform in certain additional international markets.
+Added: We develop, test and deploy our technology to offer a full stack of services on the public cloud in certain international markets.
Our public cloud-based platform offering is critical to developing and providing our solution to our clients, scaling our business for future growth, accurately maintaining data and otherwise operating our business.
−Removed: Even once we implement public cloud-based data centers, we may discover deficiencies in the design, implementation or maintenance of the system that could materially harm our business.
We have little or no control over public cloud providers.
−Removed: Any disruption of the public cloud, migration from one public cloud provider to another, or any failure of the public cloud providers to effectively design and implement sufficient security systems or plan for increases in capacity could, in turn, cause delays or disruptions in our services.
+Added: Any disruption of the public cloud, deficiencies in the design, implementation, maintenance, or migration from one public cloud provider to another, or any failure of our public cloud providers to effectively design and implement sufficient security systems or plan for increases in capacity could, in turn, cause delays or disruptions in our services.
In addition, using the public cloud presents a variety of additional risks, including risks related to sharing the same computing resources with others, reliance on public cloud providers’ authentication, security, authorization and access control mechanisms, a lack of control over the public cloud’s redundancy and security systems and fault tolerances, and a reduced ability to control data security and privacy.
1 unchanged sentence
We plan to continue to increase and provide our customers with AI-powered applications, including conversational virtual agents, agent assistance and business insights.
−Removed: In the fourth quarter of 2020, we enhanced our AI-powered applications with the acquisition of Inference, and now offer an integrated IVA platform with AI-enabled omni-channel service solutions.
+Added: In the fourth quarter of 2020, we enhanced our AI-powered applications with the acquisition of Inference Solutions Inc., or Inference, and now offer an integrated IVA platform with AI-enabled omni-channel service solutions.
While we aim for our AI-powered applications to make agents more efficient and improve customer experience, our AI models may not achieve sufficient levels of accuracy.
−Removed: In addition, we may not be able to acquire sufficient training data or our training data may contain biased or otherwise inaccurate information.
+Added: In addition, we may not be able to acquire sufficient training data or our training data may contain biased
+Added: or otherwise inaccurate information.
Furthermore, the costs of AI technologies, such as speech recognition and natural language processing, may currently be too high for broad market adoption.
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Our solution may contain undetected errors or defects that may result in failures or otherwise cause our solution to fail to perform in accordance with client expectations and contractual obligations.
−Removed: Moreover, our clients could incorrectly implement or inadvertently misuse our products, which could result in client dissatisfaction and harm the perceived utility of our products and our brand.
+Added: Moreover, our clients could incorrectly implement or inadvertently misuse our solution, which could result in client dissatisfaction and harm the perceived utility of our solution and our brand.
Because our clients use our solution for mission-critical aspects of their business, any real or perceived errors or defects in, or other performance problems with, our solution may damage our clients’ businesses and could significantly harm our reputation.
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Any contract or product liability claims successfully brought against us would harm our business.
−Removed: The contact center software solutions market is subject to rapid technological change, and we must develop and sell incremental and new features and products in order to maintain and grow our business.
+Added: The contact center software solutions market is subject to rapid technological change, and we must develop and sell incremental and new features and components of our solution in order to maintain and grow our business.
The contact center software solutions market is characterized by rapid changes in client requirements, frequent introductions of new and enhanced products and features and continuing and rapid technological advancement.
−Removed: To compete successfully, we must continue to devote significant resources to design, develop, deploy and sell new and enhanced contact center products, applications and features that provide increasingly higher capabilities, performance and stability at lower cost.
+Added: To compete successfully, we must continue to devote significant resources to design, develop, deploy and sell new and enhanced contact center solutions, applications and features that provide increasingly higher capabilities, performance and stability at lower cost.
If we are unable to develop or acquire new features for our existing solution or new applications that achieve market acceptance or that keep pace with technological developments, our business would be harmed.
For example, we are focused on enhancing the reliability, features and functionality of our contact center solution to enhance its utility to our clients, particularly larger clients, with complex, dynamic and global operations.
−Removed: The success of these enhancements depends on many factors, including timely development, introduction and market acceptance, as well as our ability to transition our existing clients to these new products, applications and features.
+Added: Cloud-based technology advancements in areas such as AI are designed to enable improved customer experience, significant operational efficiencies and business insights.
+Added: For example, real-time, accurate and increasingly economical automatic speech recognition and natural language processing increasingly allow mundane contact center tasks to be handled more economically and efficiently by virtual agents and make live agents more efficient.
+Added: The success of these enhancements depends on many factors, including timely development, introduction and market acceptance, as well as our ability to transition our existing clients to these new solutions, applications and features.
To the extent that these enhancements are made as a result of acquisitions, our success also depends on our ability to integrate the acquired technology with our existing solution.
1 unchanged sentence
In addition, because our solution is designed to operate on a variety of systems, we need to continuously modify and enhance our solution to keep pace with changes in hardware, operating systems, the increasing trend toward multi-channel communications and other changes to software technologies.
−Removed: We may not be successful in developing or acquiring these modifications and enhancements or bringing them to market in a timely fashion.
−Removed: Furthermore, uncertainties about the timing and nature of new network platforms or technologies, or modifications to existing platforms or technologies, could delay introduction of changes and updates to our solution and increase our research and development expenses.
+Added: We may not be successful in developing, acquiring or integrating these modifications and enhancements or bringing them to market in a timely fashion.
+Added: Furthermore, uncertainties about the timing and nature of new network platforms or
+Added: technologies, or modifications to existing platforms or technologies, could delay introduction of changes and updates to our solution and increase our research and development expenses.
Any failure of our solution to operate effectively, including with future network platforms and technologies, could reduce the demand for our solution, result in client dissatisfaction and harm our business.
1 unchanged sentence
If we are not able to adequately fund our research and development efforts, we may not be able to compete effectively and our business and operating results may be harmed.
−Removed: In order to remain competitive, we must devote significant and increasing resources to develop new solution offerings, features and enhancements to our existing cloud contact center software, which will increase our research
−Removed: and development and operating expenses.
+Added: In order to remain competitive, we must devote significant and increasing resources to develop new solution offerings, features and enhancements to our existing cloud contact center software, which will increase our research and development and operating expenses.
Our research and development expenses totaled $106.9 million, $68.7 million and $45.2 million for the years ended December 31, 2021, 2020 and 2019, respectively.
Maintaining adequate research and development personnel and resources to meet the demands of the market is essential.
−Removed: If we are unable to develop products, applications or features internally due to constraints, such as high employee turnover, insufficient cash, inability to hire sufficient research and development personnel or a lack of other research and development resources, we may miss market opportunities.
+Added: If we are unable to develop products, applications or features internally due to constraints, such as high employee turnover, insufficient cash, other cash needs of our business, inability to hire sufficient research and development personnel or a lack of other research and development resources, we may miss market opportunities.
Furthermore, many of our competitors have greater financial resources and expend considerably greater amounts on their research and development programs than we do, and those that do not may be acquired by larger companies that would allocate greater resources to our competitors’ research and development programs.
Our failure to devote adequate research and development resources or compete effectively with the research and development programs of our competitors could harm our business.
−Removed: If we are unable to maintain the compatibility of our software with other products and technologies, our business would be harmed.
+Added: If we are unable to maintain the compatibility of our software with other solutions and technologies, our business could be harmed.
Our clients often integrate our solution with their business applications, particularly third-party CRM solutions.
−Removed: These third-party providers or their partners could alter their products so that our solution no longer integrate well with them, or they could delay or deny our access to technology releases that allow us to adapt our solution to integrate with their products in a timely fashion.
+Added: These third-party providers or their partners could alter their products so that our solution no longer integrates well with them, or they could delay or deny our access to technology releases that allow us to adapt our solution to integrate with their products in a timely fashion.
Such third-party providers could also favor integration of our competitors’ products over our solution, making our solution less attractive to our clients.
10 unchanged sentences
If a significant accident or event occurs that is not fully insured, if we fail to recover all anticipated insurance proceeds for significant accidents or events for which we are insured, or if we or our data center providers fail to reopen facilities damaged by such accidents or events, our operations and financial condition could be harmed.
−Removed: In addition to being denied coverage under existing insurance policies, we may not be able to maintain or obtain insurance of the type and amount we desire at reasonable rates.
+Added: We may also incur significant expense in enforcing our rights against our insurance providers, whether or not successful.
+Added: In addition to being denied
+Added: coverage under existing insurance policies, we may not be able to maintain or obtain insurance of the type and amount we desire at reasonable rates.
Risks Related to Third-Party Technology Providers
1 unchanged sentence
We rely on third-party telecommunication service providers to provide our clients and their customers with telecommunication services.
−Removed: These telephony services include the public switched telephone network, or PSTN,
−Removed: telephone numbers, call termination and origination services, and local number portability for our clients.
+Added: These telephony services include the public switched telephone network, or PSTN, telephone numbers, call termination and origination services, and local number portability for our clients.
In addition, we depend on our internet bandwidth suppliers to provide uninterrupted and error-free service through their telecommunications networks.
3 unchanged sentences
If any of these service providers fail to provide reliable services, suffer outages, degrade, disrupt, increase the cost of or terminate the services that we and our clients depend on, we may be required to switch to another service provider.
−Removed: Delays caused by switching our technology to another service provider, if available, and qualifying this new service provider could materially harm our client relationships, business, financial condition and operating results.
+Added: Delays caused by switching our technology to another service provider, if available, and qualifying this new service provider could materially increase our costs, as well as harm our client relationships, business, financial condition and operating results.
Further, any failure on the part of third party service providers to achieve or maintain expected performance levels, stability and security could harm our relationships with our clients, cause us to lose clients, result in claims for credits or damages, increase our costs or the costs incurred by our customers, damage our reputation, significantly reduce client demand for our solution and seriously harm our financial condition and operating results.
12 unchanged sentences
We continue to expand our international operations, which exposes us to significant risks.
−Removed: To date, we have not generated significant revenues outside of the U.S., Canada, the U.K.
−Removed: and Latin America.
+Added: To date, we have not generated significant revenues outside of the U.S., Canada, the U.K., Latin America and Australia.
However, we already have significant operations outside these countries and regions, and we expect to grow our international presence in the future.
−Removed: Our international employees are primarily located in the Philippines, where technical support, training and other professional services are performed, Russia, where portions of engineering and operations are performed, and Australia, after our acquisition of Inference, where portions of engineering and operations are now performed.
+Added: Our international employees are primarily located in the Philippines, where technical support, training and other professional services are performed, Russia, where portions of engineering and operations are currently performed, but where production access is being reduced in 2022, and Australia, after our acquisition of Inference, where additional portions of engineering and operations are now
The future success of our business will depend, in part, on our ability to expand our operations and customer base to other countries.
2 unchanged sentences
Due to our limited experience with international operations and developing and managing sales and distribution channels in international markets, our international expansion efforts may not be successful.
−Removed: In addition, if the relationship between Russia and the United States significantly worsens, or if either Russia or the United States imposes or implements new or augmented economic sanctions, supply chain restrictions, or other restrictions on doing business, and we are restricted or precluded from continuing our software development operations in Russia, our costs could increase, and our product development efforts, business and results of operations could be significantly harmed.
+Added: In addition, our operations in Russia are subject to additional regulatory and political risk and additional compliance costs in connection with sanctions and other trade controls imposed by the United States and other governments in response to Russia’s military operations in Ukraine.
+Added: These government measures include export controls restricting certain exports, re-exports, transfers or releases of commodities, software, and technology to Russia, and sanctions targeting certain Russian individuals and entities, including certain large Russian banks.
+Added: Relevant governments continue to express an interest in pursuing a diplomatic solution to these issues and in holding negotiations regarding a cessation of military operations in Ukraine, but we cannot be certain that these negotiations will occur, continue, or succeed in forestalling additional hostilities or additional trade controls.
+Added: Although we have taken steps designed to ensure that the company complies with applicable regulations and that these events will not affect the services that we offer customers, these steps involve additional compliance costs and operational costs.
+Added: If the relationship between Russia and the United States significantly worsens, or if Russia, the United States, or other countries impose additional economic sanctions, supply chain restrictions, or other restrictions on doing business, and we are restricted or precluded from continuing our software development operations in Russia, our costs could increase, and our product development efforts, business and results of operations could be harmed.
In addition, compliance with laws and regulations applicable to our international operations increases our cost of doing business outside the United States.
1 unchanged sentence
Failure to comply with these regulations could harm our business.
−Removed: In many countries outside the United States, it is common for others to engage in business practices that are prohibited by our internal policies and procedures or United States or international regulations applicable to us.
+Added: In many countries outside the United States, it is common for others to engage in business practices that are prohibited by our internal policies and procedures or United States or international laws and regulations applicable to us.
Although we have implemented policies and procedures designed to ensure compliance with these laws and policies, there can be no assurance that all of our employees, contractors, strategic partners and agents will comply with these laws and policies.
9 unchanged sentences
Operating in international markets requires significant resources and management attention and subjects us to intellectual property, regulatory, economic and political risks that are different from those in the United States.
−Removed: As we increase our international sales efforts and continue our other international operations, we will face risks in doing business internationally that could harm our business, including:
+Added: As we increase our international sales efforts and continue and increase our other international operations, we will face increased risks in doing business internationally that could harm our business, including:
• the need to establish and protect our brand in international markets;
15 unchanged sentences
• compliance with laws and regulations applicable to foreign operations and cross border transactions, including the Foreign Corrupt Practices Act, the U.K.
−Removed: Bribery Act and other anti-corruption laws, supply chain restrictions, import and export control laws, tariffs, trade barriers, economic sanctions and other
−Removed: regulatory or contractual limitations on our ability to sell our solution in certain foreign markets, and the risks and costs of non-compliance;
+Added: Bribery Act and other anti-corruption laws, supply chain restrictions, import and export control laws, tariffs, trade barriers, economic sanctions and other regulatory or contractual limitations on our ability to sell our solution in certain foreign markets, and the risks and costs of non-compliance;
• increased financial accounting and reporting burdens and complexities;
4 unchanged sentences
The results of the U.K.’s withdrawal from the European Union may have a negative effect on global economic conditions, financial markets and our business.
−Removed: In June 2016, a majority of voters in the U.K.
−Removed: elected to withdraw from the European Union in a national referendum, referred to as Brexit.
−Removed: withdrew from the European Union on January 31, 2020.
−Removed: Brexit has created significant uncertainty about the future relationship between the U.K.
−Removed: and the European Union, including with respect to the laws and regulations that will apply or continue to apply in the U.K.
−Removed: following Brexit as the U.K.
−Removed: and the European Union determine which European Union laws and regulations to replace, replicate, or amend after the effectiveness of Brexit.
−Removed: Brexit has harmed and may continue to harm global economic conditions, as well as the stability of global financial markets.
−Removed: For example, Brexit introduced significant volatility in global stock markets and currency exchange rate fluctuations that resulted in the strengthening of the U.S.
−Removed: dollar against foreign currencies in which we conduct business.
−Removed: As part of Brexit, the U.K.
−Removed: and the European Union entered into a withdrawal agreement that includes, among other things, an implementation and transition period lasting from January 31, 2020 until December 31, 2020, which is referred to herein as the Transition Period.
−Removed: During the Transition Period, the U.K.
−Removed: and the European Union negotiated post-withdrawal terms, including trading agreements and security cooperation, and an agreement was reached on December 24, 2020, which is referred to herein as the U.K.-E.U.
−Removed: Trade Agreement, and has since been ratified by the British Parliament and European Union governments.
−Removed: The U.K.-E.U.
−Removed: Trade Agreement provisionally came into effect on January 1, 2021 pending ratification by certain organs of the European Union.
−Removed: Brexit continues to create significant political, social and macroeconomic uncertainty.
−Removed: We continue to evaluate the risks associated with Brexit.
+Added: formally left the European Union on January 31, 2020, or Brexit, and a transition period followed which ended on December 31, 2020.
+Added: Brexit has resulted in significant economic and political uncertainty in both Europe and the U.K.
+Added: entered into a trade and cooperation agreement, or the U.K.-E.U.
+Added: Trade Agreement, with the European Union which came into effect on January 1, 2021.
Even though the U.K.-E.U.
−Removed: Trade Agreement has provisionally come into effect, there may be increased costs on regulatory compliance between the U.K.
+Added: Trade Agreement has come into effect, there may be increased costs on regulatory compliance between the U.K.
and other countries, including those in the European Union, as the U.K.-E.U.
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In addition, the U.K.
−Removed: will also need to negotiate new trade and tax treaties with other countries, and such negotiations may not begin or complete for a number of years.
−Removed: In addition, the potential strengthening of the U.S.
−Removed: dollar relative to other currencies (including the British pound) would make our solution more expensive to international clients and may harm our international sales.
+Added: will also need to negotiate new trade and tax treaties with other countries, and such negotiations may not complete for a number of years.
+Added: The U.K.-E.U.
+Added: Trade Agreement creates legal uncertainty and the possibility of divergent national laws and regulations in the U.K., Europe and globally.
+Added: These factors could contribute to instability in global financial and foreign exchange markets, including weakening in the value of the British pound relative to the U.S.
+Added: dollar, making our solution more expensive to U.K.
+Added: and international clients.
Brexit could also cause disruptions to, and create uncertainty surrounding, the global economy, which could harm our ability to sell our solution and may harm our results of operation, financial condition and cash flows.
Brexit could also affect our relationships with our existing and future clients, owners of our data center facilities in the U.K.
−Removed: and the Netherlands and our data center partners’ ability to retain and hire qualified employees, which could harm our business, business opportunities, results of operations, financial condition and cash flows.
+Added: and the Netherlands and our data center partners’ ability to retain and hire qualified employees, which could harm our business, results of operations, financial condition and cash flows.
+Added: Changing immigration laws due to Brexit could result in our or the owners of our data center facilities in the U.K.
+Added: and the Netherlands finding it difficult to retain and hire qualified employees, which could harm our business, results of operations, financial condition and cash flows.
+Added: Risks Related to COVID-19
+Added: The effects of the COVID-19 pandemic have materially affected how we, our clients and business partners are operating, and the duration and extent to which this will impact our future results of operations and overall financial performance remains uncertain.
+Added: In December 2019, a novel coronavirus disease known as COVID-19 was reported and on March 11, 2020, the World Health Organization, or WHO, characterized COVID-19 as a pandemic.
+Added: This pandemic has resulted in a widespread health crisis that has continued to significantly harm the U.S.
+Added: and global economies and has caused significant fluctuation in financial markets, including those on which our common stock and other securities trade, and may impact demand for our solution.
+Added: In accordance with the various social distancing and other office closure orders and recommendations of applicable government agencies, all of our employees transitioned to work-from-home operations and we canceled all business travel by our employees except where necessary and properly authorized, which changed how we operate our business.
+Added: Our clients and business partners are also subject to various and changing social distancing and office closure orders and recommendations and travel restrictions or prohibitions, which have changed the way we interact with our clients and business partners.
+Added: Recently, we have re-opened our U.S.
+Added: offices for employees to voluntarily return, subject to capacity restrictions and applicable government regulations.
+Added: Appropriate measures are being taken to protect the health of employees who return to the office.
+Added: We have also reinstated business travel on a voluntary basis and subject to prior approval.
+Added: Our efforts to re-open our offices and reinstate business travel safely may not be successful;
+Added: could expose our employees, customers and clients to health risks and us to associated liability;
+Added: and will involve additional financial burdens.
+Added: Moreover, the conditions caused by the COVID-19 pandemic, the extent of which depends upon its prolonged impact, has or may:
+Added: • harm our ability to renew and maintain our relationships with our existing clients;
+Added: • cause our existing clients to reduce the number of seats to which they subscribe, seek price concessions, or go out of business, which would harm our revenue;
+Added: • result in some of our clients failing to comply with the terms of their agreements, including payment terms, due to economic uncertainty, financial hardship, and even failure of these businesses, which could result in us being required to take action to collect payments, terminate their subscriptions for our solution, increase accounts receivable, and reduce collections, any which would increase our expenses and harm our revenues and results of operations;
+Added: • make it more difficult for us to sell increased services or functionality to our existing clients;
+Added: • reduce the rate of spending on enterprise software solutions or cloud-based enterprise contact center systems generally;
+Added: • delay prospective clients’ decisions to subscribe to our solution, increase the length of sales cycles, or slow the typical growth in the use of our solution once clients have initially deployed our solution;
+Added: • harm our ability to effectively market and sell our solution, particularly to the extent that our clients remain subject to office closure orders;
+Added: • change the mix and sizes or types of organizations that purchase our solution;
+Added: • delay the introduction of enhancements to our solution and market acceptance of any new features and components;
+Added: • harm our ability to grow our international sales and operations;
+Added: • harm our ability to recruit, onboard and successfully integrate new employees, including members of our direct sales force, both domestically and internationally, as a result of not being able to interface in person while we continue to transition to fully re-opened facilities that are not subject to capacity restrictions;
+Added: • harm our ability to maintain our corporate culture with a portion of our employee base temporarily working remotely while we remain subject to capacity restrictions on re-opening our offices and facing unique personal and professional challenges;
+Added: • increase costs in returning to work as our offices continue to re-open, including changes to the workplace, such as space planning, food service, and amenities, and the design, implementation and enforcement of new workplace safety protocols;
+Added: • increase the burden on our technical operations infrastructure, which could harm the capacity, stability, security and performance of our operations infrastructure and potentially leave us more vulnerable to security breaches;
+Added: • increase the risk that we may experience cybersecurity-related events such as COVID-19 themed phishing attacks, exploitation of any cybersecurity flaws that may exist, an increase in the number of cybersecurity threats or attacks, and other security challenges as a result of our employees and service providers continuing to work remotely from non-corporate managed networks during the COVID-19 pandemic, and potentially beyond as remote work and resource access expand;
+Added: • limit our ability to efficiently provide professional services to our larger clients to the extent that they remain subject to office closures, as those services have typically been performed onsite, which could delay implementation of our solution at new clients;
+Added: • harm our ability to manage, maintain or increase our network of master agents and resellers to sell our solution, and make it more difficult for them to effectively assist us with their sales efforts;
+Added: • impact the health and safety of our employees, including our senior management team, and their ability to perform services;
+Added: • cause our management team to continue to commit significant time, attention and resources to monitor the COVID-19 pandemic and seek to mitigate its effect on our business and workforce;
+Added: • lead to the adoption of additional new laws and regulations that we are required to comply with and that could harm our results of operations, and we may be subject to COVID-19 related litigation;
+Added: • cause the price per share of our common stock or the trading price of our convertible senior notes to continue to experience substantial volatility, and potentially decline, based on developments and announcements related to COVID-19 and its impact on the global and U.S.
+Added: economy in general or our industry in particular, our failure to meet our guidance or analyst expectations or withdrawal or modification by us of previously issued guidance.
+Added: Any of the foregoing factors could significantly harm our future sales, operating results, gross margins and overall financial performance, which could cause us to experience a decreased level of growth of our business and make our future financial results and prospects difficult to predict.
+Added: The COVID-19 pandemic and its impact on us and the U.S.
+Added: and global economies could limit our ability to forecast our future operating results, including our ability to predict revenue and expense levels, and plan for and model future results of operations.
+Added: Moreover, because a significant portion of our revenue is derived from existing clients, downturns in new sales will not immediately be reflected in our operating results and may be difficult to discern until future periods.
+Added: Our competitors could experience different impacts as a result of COVID-19, which could result in changes to our competitive landscape.
+Added: The duration and extent of the impact from the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the ongoing severity and transmission rate of the virus and variants of the virus, the extent and effectiveness of vaccine programs and other containment actions, the duration of social distancing, office closures, office capacity restrictions and other restrictions on businesses and society at large, and the specific impact of these and other factors on our business, employees, clients and partners.
+Added: If we are not able to respond to and manage the impact of such events effectively, our business will be harmed.
+Added: There are no comparable recent events that provide guidance as to the effect the COVID-19 pandemic may have and, as a result, the ultimate impact of the pandemic on our business and operations is highly uncertain and subject to change.
+Added: The effects of the COVID-19 pandemic could have a material impact on our results of operations and increase many of the other risks described herein.
Other Operational Risks
1 unchanged sentence
Our business depends on the overall demand for cloud contact center software solutions and on the economic health of our current and prospective clients.
−Removed: In addition to the United States, Canada, Europe and Latin America, we plan to market and sell our solution in Asia and other international markets.
+Added: In addition to the United States, Canada, Europe, Latin America and Australia, we plan in the future to market and sell our solution in Asia and other international markets.
If economic conditions, including currency exchange rates, in these areas and other key potential markets for our solution remain uncertain or deteriorate, including as a result of the effects of the COVID-19 pandemic, clients may delay or reduce their contact center and overall information technology spending.
4 unchanged sentences
Such incidents could also cause interruptions to the solutions we provide, degrade the user experience, or cause clients to lose confidence in our solution.
−Removed: While we have security measures in place to protect client information and minimize the probability of security breaches and other cyber attacks, if these measures fail as a result of a cyber-attack, other third-party action, employee error, malfeasance or otherwise, and someone obtains unauthorized access to our clients’ information, our reputation could be damaged, our business may suffer and we could incur significant liability.
+Added: We are required to comply with laws and regulations that require us to maintain the security of personal data and we may have contractual and other legal obligations to notify customers or other relevant stakeholders of security breaches.
+Added: While we have implemented security measures to protect client information and minimize the risk of security breaches and other cyber attacks, if these measures fail as a result of a cyber-attack, other third-party action, employee error, malfeasance or otherwise, and someone unlawfully or without authorization obtains access to our clients’ information, including personal data, our reputation could be damaged, our business may suffer and we could incur significant liability.
Because the techniques used to obtain unauthorized access or sabotage systems change frequently and generally are not identified until they are launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures.
In addition, third parties may attempt to fraudulently induce employees or users to disclose information in order to gain access to our data or our users’ data.
+Added: Such disclosures could lead to negative publicity, may cause our customers to lose confidence in the effectiveness of our security measures and require us to and other resources to respond to and/or mitigate the security breach.
+Added: Accordingly, if our cybersecurity measures fail to protect against unauthorized access, attacks, compromise or the mishandling of data by our employees, then our reputation, business, results of operations and financial condition could be adversely affected.
Moreover, any failure on the part of third parties, including our clients, to maintain appropriate security measures for their own systems could harm our relationships with our clients, result in claims against us for credits or damages, damage our reputation and significantly reduce client demand for our solution.
8 unchanged sentences
Competition for these personnel is intense, especially for senior executives, engineers highly experienced in designing and developing cloud software and for senior sales personnel.
−Removed: We have, from time to time, experienced, and we expect to continue to experience, difficulty in hiring and retaining employees with appropriate qualifications.
+Added: We have, from time to time, experienced, and we expect to continue to experience, difficulty
+Added: in hiring and retaining employees with appropriate qualifications, and this risk may be exacerbated by factors related to, among other things, the termination of our proposed merger with Zoom, the much publicized “Great Resignation,” and increased recruiting efforts by other companies.
We invest significant time and expense in training our employees, which increases their value to competitors who may seek to recruit them and increases our costs.
1 unchanged sentence
As we grow, we will need to continually enhance our efforts to maintain our corporate culture, which is more difficult due to our work from home policies during the COVID-19 pandemic.
−Removed: If we fail to attract new personnel or fail to retain and
−Removed: motivate our current personnel, particularly our executive officers and senior management team, our business and future growth prospects would be harmed.
−Removed: Many of the companies with which we compete for experienced personnel have greater resources than we have.
+Added: We may experience increased attrition of employees to other opportunities, particularly as we reopen our offices, as certain employees may seek more flexible work alternatives than we offer, may seek positions with companies outside of the geographic area in which they live that offer remote work opportunities, or may decide to scale back their work life for personal reasons.
+Added: If we fail to attract new personnel or fail to retain and motivate our current personnel, particularly our executive officers and senior management team, our business and future growth prospects would be harmed.
+Added: Many of the companies with which we compete for experienced personnel have greater resources than we have and may offer more flexible work alternatives such as permanent remote work or work from home.
If we hire employees from competitors or other companies, their former employers may attempt to assert that these employees or we have breached legal obligations, resulting in a diversion of our time and resources and, potentially, damages.
−Removed: Volatility or lack of performance in the trading price of our common stock may also affect our ability to attract and retain qualified personnel because job candidates and existing employees often emphasize the value of stock awards when considering whether to accept or continue employment.
+Added: Volatility or lack of performance in the trading price of our common stock, including the recent volatility in our trading price during the pendency, and after termination, of the Merger, may also affect our ability to attract and retain qualified personnel because job candidates and existing employees often emphasize the value of stock awards when considering whether to accept or continue employment.
If the perceived value of our stock awards is low or declines, it may harm our ability to recruit and retain highly skilled employees.
−Removed: We may acquire other companies, or technologies or be the target of strategic transactions, or be impacted by transactions by other companies, which could divert our management’s attention, result in additional dilution to our stockholders and otherwise disrupt our operations and harm our operating results.
+Added: We may acquire other companies, or technologies or be the target of strategic transactions, or be impacted by transactions by other companies, which could divert our management’s attention, result in additional dilution to our stockholders or use a significant amount of our cash resources, and otherwise disrupt our operations and harm our operating results.
We may acquire or invest in businesses, applications or technologies that we believe could complement or expand our solution, enhance our technical capabilities or otherwise offer growth opportunities.
7 unchanged sentences
• inability to integrate or benefit from acquisitions in a profitable manner;
−Removed: • unanticipated costs or liabilities associated with the acquisition, including legal claims arising from the activities of the companies or businesses we acquire;
+Added: • unanticipated costs or liabilities associated with the acquisition, including legal claims to enforce our rights under the acquisition agreements or arising from the activities of the companies or businesses we acquire;
• acquisition-related costs;
10 unchanged sentences
Acquisitions could also result in dilutive issuances of equity securities, the use of our available cash, or the incurrence of additional debt to fund such acquisitions, which could harm our operating results.
+Added: To the extent that we determine to issue stock in any acquisitions, volatility in our stock price could make it more difficult or dilutive to make these acquisitions.
If an acquired business fails to meet our expectations, our operating results, business and financial condition could suffer.
7 unchanged sentences
We have a substantial amount of debt.
−Removed: As of December 31, 2020, we had approximately $806.4 million in principal amount outstanding under our convertible senior notes issued in May 2018 and in May and June 2020.
+Added: As of December 31, 2021, we had approximately $781.7 million in principal outstanding under our convertible senior notes issued in May 2018 and in May and June 2020.
See Note 6 to the consolidated financial statements.
1 unchanged sentence
If we raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution in their percentage ownership of our company, and any new equity securities we issue could have rights, preferences and privileges senior to those of holders of our common stock.
−Removed: If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to grow and support our business and to respond to business challenges could be significantly limited.
+Added: If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to grow and support our business and to respond to business challenges could be significantly harmed.
If we are unable to maintain and further develop effective internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock may decrease.
5 unchanged sentences
If we have material weaknesses in our internal control over financial reporting, we may not detect errors on a timely basis and our financial statements may be materially misstated.
−Removed: If we identify material weaknesses in our internal control over financial reporting, if we are unable to comply with the requirements of Section 404 in a timely manner, if we are unable to assert that our internal control over financial reporting is effective or if our independent registered public accounting firm is unable to attest that our internal control over financial reporting is effective, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could decrease.
+Added: If we identify material weaknesses in our internal control over financial reporting, if we are unable to comply with the requirements of Section 404 in a timely manner, if we are unable to assert that our internal control over financial reporting is effective or if our independent
+Added: registered public accounting firm is unable to attest that our internal control over financial reporting is effective, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could decrease.
We could also become subject to stockholder or other third-party litigation as well as investigations by the stock exchange on which our securities are listed, the SEC or other regulatory authorities, which could require additional financial and management resources and could result in fines, penalties, trading suspensions or other remedies.
4 unchanged sentences
Changes to existing rules or the questioning of current practices may harm our reported financial results or the way we account for or conduct our business.
−Removed: For example, i n May 2014, the FASB issued new revenue recognition rules under Accounting Standard Codification 606 - Revenue from Contracts with Customers (“ASC 606”), which included a single set of rules and criteria for revenue recognition to be used across all industries.
−Removed: We adopted this new standard in January 2018 using a modified retrospective method.
−Removed: With the adoption of this standard, the timing of our commission expense recognition changed, which caused fluctuations in our operating results.
−Removed: Further, in February 2016, the FASB issued new rules for leases under the Accounting Standard Codification 842 - Leases (“ASC 842”), which requires a lessee to recognize assets and liabilities for both finance, previously known as capital, and operating leases with lease terms of more than 12 months.
−Removed: We adopted this new standard in January 2019 using a modified retrospective method.
−Removed: With the adoption of this standard, we recognized right-of-use, or ROU, assets and lease liabilities for operating leases.
−Removed: See Note 1 and 13 to consolidated financial statements for more information.
+Added: For example, in August 2020, the FASB issued Accounting Standards Update, or ASU, No.
+Added: 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40):
+Added: Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity ("ASU 2020-06"), which simplified the accounting for convertible instruments by removing the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature.
+Added: We elected to early adopt ASU 2020-06 as of January 1, 2021 using a modified retrospective transition method.
+Added: Applying the transition guidance, we were required to apply the guidance to all impacted financial instruments that were outstanding as of January 1, 2021 with the cumulative effect recognized as an adjustment to the opening balance of accumulated deficit.
+Added: See Notes 1 and 6 to consolidated financial statements for more information.
The application of any new accounting guidance is, and will be, based on all information available to us as of the date of adoption and up through subsequent interim reporting, including transition guidance published by the standard setters.
13 unchanged sentences
trademarks, 14 issued U.S.
−Removed: patents, four pending U.S.
−Removed: patent applications, and one registered U.S.
−Removed: As of December 31, 2020, we also had five issued patents and nine trademark registrations outside the U.S.
+Added: patents, two pending U.S.
+Added: patent applications, two pending international PCT patent applications and one registered U.S.
+Added: As of December 31, 2021, we also had five issued patents and 10 trademark registrations outside the U.S.
The expiration dates of our issued patents range from 2030 to 2041.
1 unchanged sentence
However, the steps we take to secure, protect and enforce our intellectual property rights may be inadequate.
−Removed: We may not be able to obtain any further patents or trademarks, our current patents could be invalidated or our competitors could design their products around our patented technology, and our pending applications may not result in the issuance of patents or trademarks.
+Added: We may not be able to obtain any further patents or
+Added: trademarks, our current patents could be invalidated or our competitors could design their products around our patented technology, and our pending applications may not result in the issuance of patents or trademarks.
We have pending patent applications and trademark registrations outside the U.S., and we may have to expend significant additional resources to obtain additional protection and maintain current registrations as we expand our international operations.
−Removed: Furthermore, legal standards relating to the validity, enforceability and scope of protection of intellectual property rights in other countries, including Russia, where we have significant research and development operations, and the Philippines, where we have significant technical support, training and other professional services operations, are uncertain and may afford little or no effective protection of our proprietary technology, and the risk of intellectual property misappropriation may be higher in these countries.
+Added: Furthermore, legal standards relating to the validity, enforceability and scope of protection of intellectual property rights in other countries are uncertain and may afford little or no effective protection of our proprietary technology, and the risk of intellectual property misappropriation may be higher in these countries.
+Added: As we expand into additional countries, these risks will be further enhanced.
Consequently, we may be unable to prevent our proprietary technology from being infringed or exploited abroad, which could affect our ability to expand into international markets or require costly efforts to protect our technology.
In order to protect our intellectual property rights, we may be required to spend significant resources to monitor and protect these rights.
−Removed: Litigation brought to protect and enforce our intellectual property rights could be
−Removed: costly, time consuming and distracting to our management and could result in the impairment or loss of our intellectual property.
−Removed: Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of our intellectual property rights.
+Added: Litigation brought to protect and enforce our intellectual property rights will be costly, time consuming and distracting to our management and could result in the impairment or loss of our intellectual property.
+Added: Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of our intellectual property rights, which could weaken our intellectual property protection.
Accordingly, we may not be able to prevent third parties from infringing upon or misappropriating our intellectual property.
19 unchanged sentences
Although we typically contractually limit our liability with respect to such obligations, we may still incur substantial liability related to them.
−Removed: Any dispute with a client with respect to such obligations could be expensive, even if we ultimately prevail, and could harm on our relationship with that client and other current and prospective clients, reduce demand for our solution and harm our business, results of operations and financial condition.
+Added: Any dispute with a client with respect to such obligations could be expensive, even if we ultimately
+Added: prevail, and could harm our relationship with that client and other current and prospective clients, reduce demand for our solution and harm our business, results of operations and financial condition.
We employ third-party licensed software for use in or with our solution, and the inability to maintain these licenses or errors in the software we license could result in increased costs, or reduced service levels, which could harm our business.
Our solution incorporates certain third-party software obtained under licenses from other companies.
−Removed: We anticipate that we will continue to rely on such software from third parties in the future.
−Removed: Although we believe that there are commercially reasonable alternatives to the third-party software we currently license, this may not be the case, or it may be difficult or costly to transition to other providers.
+Added: We anticipate that we will continue to rely on current and new software from third parties in the future.
+Added: Although we believe that there are commercially reasonable alternatives to the third-party software we currently license, this may not be the case, or may not be the case for new software that we license, or it may be difficult or costly to transition to other providers.
In addition, integration of the software used in our solution with new third-party software may require significant work and require substantial investment of our time and resources.
−Removed: To the extent that our solution depends upon the successful operation of third-party software in
−Removed: conjunction with our software, any undetected errors or defects in this third-party software could prevent the deployment or impair the functionality of our solution, delay new product or solution introductions, result in increased costs, or a failure of our solution and injure our reputation.
+Added: To the extent that our solution depends upon the successful operation of third-party software in conjunction with our software, any undetected errors or defects in this third-party software could prevent the deployment or impair the functionality of our solution, delay new product or solution introductions, result in increased costs, or a failure of our solution and injure our reputation.
Our use of additional or alternative third-party software would require us to enter into license agreements with third parties and to integrate such software to our solution.
13 unchanged sentences
Failure to comply with laws and regulations could harm our business and our reputation.
−Removed: Our business is subject to regulation by various federal, state, local and foreign governmental agencies, including agencies responsible for monitoring and enforcing employment and labor laws, workplace safety, environmental laws, privacy or data security laws, consumer protection laws, anti-bribery laws, import/export controls, federal securities laws and tax laws and regulations.
+Added: Our business is subject to regulation by various federal, state, local and foreign governmental agencies, including agencies responsible for monitoring and enforcing laws and regulations related to employment and labor laws, workplace safety, environmental protection, privacy or data security, consumer protection, telecommunications services, anti-bribery, import/export controls, federal securities and taxes.
In certain jurisdictions, these regulatory requirements may be more stringent than those in the United States and in other circumstances these requirements may be more stringent in the United States.
Noncompliance with applicable regulations or requirements could subject us to investigations, sanctions, mandatory recalls, notification obligations, enforcement actions, disgorgement of profits, fines, damages, civil and criminal penalties or injunctions.
−Removed: If any governmental sanctions, fines or penalties are imposed, or if we do not prevail in any civil or criminal litigation, our business, operating results, financial condition and reputation could be harmed.
+Added: governmental sanctions, fines or penalties are imposed, or if we do not prevail in any civil or criminal litigation, our business, operating results, financial condition and reputation could be harmed.
In addition, responding to any action will likely result in a significant diversion of management’s attention and resources and an increase in professional fees.
2 unchanged sentences
The legal and contractual environment surrounding calling consumers and wireless phone numbers is constantly evolving.
−Removed: In the United States, two federal agencies, the Federal Trade Commission, or FTC, and the FCC, and various states have laws including, at the federal level, the TCPA that restrict the placing of certain
−Removed: telephone calls and texts to residential and wireless telephone subscribers by means of automatic telephone dialing systems, prerecorded or artificial voice messages and fax machines.
+Added: In the United States, two federal agencies, the Federal Trade Commission, or the FTC, and the FCC, and various states have laws including, at the federal level, the TCPA that restrict the placing of certain telephone calls and texts to residential and wireless telephone subscribers by means of automatic telephone dialing systems, prerecorded or artificial voice messages and fax machines.
These laws require companies to institute processes and safeguards to comply with these restrictions.
−Removed: The legal interpretation of certain of the requirements of these laws has been in dispute before the courts and federal agencies and the FCC is expected to conduct further rulemaking proceedings that may further alter its interpretation of the legal requirements involved.
+Added: The legal interpretation of certain of the requirements of these laws continue to be in dispute before the courts and federal agencies, and it is possible that legal decisions and agency actions may further alter the legal requirements involved.
Some of these laws, where a violation is established, can be enforced by the FTC, FCC, State Attorneys General, or private party litigants.
19 unchanged sentences
Prior to our making such determination, we neither collected nor remitted these taxes, fees or surcharges to applicable local, municipal or state jurisdictions.
−Removed: We continue to analyze our activities to determine if we are subject to these taxes in additional jurisdictions and based on our ongoing assessment of our U.S.
+Added: We continue to analyze our activities to determine if we are subject to these taxes in additional jurisdictions and based
+Added: on our ongoing assessment of our U.S.
state and local tax collection and remittance obligations, we register for tax and regulatory purposes in such jurisdictions and commence collecting and remitting applicable state and local taxes and surcharges to these jurisdictions.
4 unchanged sentences
While we have accrued for these potential liabilities in each period, such accruals are based on analyses of our business activities, the operation of our solution, applicable statutes, regulations and rules in each state and locality and estimates of sales subject to sales tax or other charges.
−Removed: State and local taxing and regulatory authorities may challenge our position and may decide to audit our business and operations with respect to state or local sales, use,
−Removed: gross receipts, excise and utility user taxes, fees or surcharges, which could result in our being liable for taxes, fees, or surcharges, as well as related penalties and interest, above our recorded accrued liability or additional liability for taxes, fees, or surcharges, as well as penalties and interest for our clients, which could harm our results of operations and our relationships with our clients.
+Added: State and local taxing and regulatory authorities may challenge our position and may decide to audit our business and operations with respect to state or local sales, use, gross receipts, excise and utility user taxes, fees or surcharges, which could result in our being liable for taxes, fees, or surcharges, as well as related penalties and interest, above our recorded accrued liability or additional liability for taxes, fees, or surcharges, as well as penalties and interest for our clients, which could harm our results of operations and our relationships with our clients.
In addition, if our international sales grow, additional foreign countries may seek to impose sales or other tax collection obligations on us, which would increase our exposure to liability.
5 unchanged sentences
We have incurred, and will continue to incur, substantial ongoing costs associated with complying with state or local tax, fee or surcharge requirements in the numerous markets in which we conduct or will conduct business.
+Added: Our ability to maintain compliance with complex rules and technological requirements intended to prevent robocalls and caller ID spoofing poses a significant business risk due to possible blocking of client voice traffic.
+Added: The FCC has adopted rules based on federal statute that require all providers of voice communications services, with limited exceptions, to implement the STIR/SHAKEN caller identification authentication framework designed to reduce fraudulent robocalls and illegal phone number identification, or ID, spoofing.
+Added: STIR stands for Secure Telephony Identity Revisited.
+Added: SHAKEN stands for Secure Handling of Asserted information using toKENs.
+Added: We have completed our implementation of STIR/SHAKEN technology, but the implementation process was complex and involved compliance with a number of related regulatory regimes.
+Added: STIR/SHAKEN is a series of protocols and a governance framework in which the originating voice service provider attests to the calling party’s identity and is intended to ensure the caller’s ID has not been spoofed in order to reduce the number of illegal robocalls.
+Added: The STIR/SHAKEN regulatory framework creates a significant business risk for companies such as ours that include clients that originate large volumes of telephone calls to consumers because, if an intermediate or terminating carrier is unable to verify the authenticity of an incoming call from one of our clients, they may block the call, preventing it from reaching the intended party, which would damage our relationship with our clients, and make our solution less attractive to our clients and potential clients.
+Added: In addition, the FCC is requiring voice service providers to implement other robocall prevention measures, including registering with the FCC’s Robocall Mitigation Database and maintaining a robocall mitigation plan that includes conducting due diligence on customers to ensure they do not engage, or appear to engage, in robocalling or caller ID spoofing.
+Added: Third party complaints and unusual calling patterns on end user bills must be investigated and the services of non-compliant clients terminated.
+Added: Voice service providers must also participate in an Industry Traceback Group program to further demonstrate their commitment to preventing robocalls and caller ID spoofing.
+Added: We have implemented these remedial measures to ensure that other carriers do not misidentify or block voice traffic originated by our clients.
+Added: Although we believe we have achieved full compliance, the regulatory measures to prevent robocalling and caller ID spoofing are relatively new and complex and therefore pose a risk to all voice service providers with respect to the possible misidentification and blocking of voice calls originated by their clients.
+Added: These new compliance measures have and will increase our regulatory compliance and other costs, could make our
+Added: solution less attractive to our clients, and any non-compliance could subject us to fines, damages and penalties, or injunctions precluding the use of our solutions or certain features thereof.
Our ability to offer services outside the United States is subject to different regulatory and taxation requirements, which may be complicated and uncertain.
12 unchanged sentences
We are still in dispute with the FCC regarding whether we are liable for USF contributions related to the period from 2003 through 2007.
−Removed: As of December 31, 2020, we had accrued $0.9 million in respect of the remaining disputed assessments, including interest and penalties, for the period of 2003 through 2007.
+Added: As of December 31, 2021, we had accrued $0.1 million in interest related to the disputed assessments for the period of 2003 through 2007.
See Note 10 to the consolidated financial statements.
23 unchanged sentences
Currently our USF contributions are borne by our clients, which could result in our solution becoming less competitive as compared to products provided by our competitors.
−Removed: We may not be able to utilize a significant portion of our net operating loss or research tax credit carryforwards, and under recently enacted lower federal corporate tax rates such tax benefits will be of less value, which could harm our profitability and financial condition.
+Added: We may not be able to utilize a significant portion of our net operating loss or research tax credit carryforwards, which could harm our profitability and financial condition.
As of December 31, 2021, we had federal, state and foreign net operating loss carryforwards due to prior period losses of $495.3 million, $306.8 million and $18.8 million, respectively, available to reduce future income subject to income taxes.
4 unchanged sentences
If we are unable to generate sufficient taxable income to utilize our net operating loss and research tax credit carryforwards, these carryforwards could expire unused and be unavailable to offset future income tax liabilities, which could harm our profitability and financial condition in future periods.
+Added: Beginning in 2022, the Tax Cuts and Jobs Act of 2017 (“TCJA”) eliminates the option to deduct research and development expenditures currently and requires taxpayers to capitalize and amortize them over five years pursuant to the Internal Revenue Code of 1986 Section 174.
+Added: Although Congress is considering legislation that would defer the amortization requirement to later years, it is not certain that the provision will be repealed or otherwise modified.
+Added: the requirement is not modified, it will reduce our net operating losses beginning in 2022.
+Added: Given our carryover attributes, this is not expected to have a material impact on our consolidated financial statements.
In addition, under Section 382 of the Internal Revenue Code of 1986, as amended, or IRC Section 382, our ability to utilize net operating loss carryforwards or other tax attributes, such as research tax credits, in any taxable year may be limited if we experience an “ownership change.” An IRC Section 382 “ownership change” generally occurs if one or more stockholders or groups of stockholders who own at least 5% of our stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period.
1 unchanged sentence
We experienced an ownership change prior to 2014 and the disclosed amounts of our net operating losses and research credit carryforwards have been reduced for the resulting effect of the IRC Section 382 limitations.
−Removed: Subsequent or future issuances or sales of our stock (including certain transactions involving our stock that are outside of our control) could cause an “ownership change” again, which would impose an annual limit on the amount of pre-ownership change net operating loss carryforwards and other tax attributes we can use to reduce our taxable income, potentially causing those tax attributes to expire unused or to be reduced, and increasing and accelerating our liability for income taxes.
+Added: Subsequent or future issuances or sales of our stock (including certain transactions involving our stock that are outside of our control) could cause an “ownership change” again, which would impose an annual limit on the amount of pre-ownership change net operating loss carryforwards and other tax attributes we can use to reduce our taxable income.
+Added: This could potentially cause those tax attributes to expire unused or to be reduced, which would increase and accelerate our liability for income taxes.
It is possible that such an ownership change could materially reduce our ability to use our net operating loss carryforwards or other tax attributes to offset taxable income, which could require us to pay more income taxes than if we were able to fully utilize our net operating loss carryforwards and harm our profitability.
−Removed: In December 2017, the Tax Cuts and Jobs Act was enacted.
−Removed: The effect of the new tax law, and its regulations and interpretations, as well as any additional tax reform legislation in the United States or elsewhere, could harm our business and financial condition by, among other things, decreasing the value of our net operating loss carryforwards.
−Removed: If we are required to reduce the value of our net operating loss carryforwards, we may be required to record a corresponding charge to current earnings, which could harm our financial condition and results of operations in the period in which it is recorded.
Privacy concerns and domestic or foreign laws and regulations may reduce the demand for our solution, increase our costs and harm our business.
4 unchanged sentences
Domestic and international government authorities are considering adopting, or may adopt, laws and regulations in the future, regarding the Processing of personal data obtained from consumers and individuals.
−Removed: Moreover, laws and regulations outside the United States, and particularly in the European Union, or EU, often are more restrictive than those in the United States.
+Added: In the U.S., there are numerous federal and state laws governing the privacy and security of personal information.
+Added: For instance, we may be subject to FTC enforcement actions if the FTC has reason to believe we have engaged in unfair or deceptive privacy or data security practices in violation of the FTC Act.
+Added: There are also new state privacy laws, including the California Consumer Privacy Act, or CCPA, the California Privacy Rights Act, or CPRA, the Colorado Privacy Act, or CPA, and the Virginia Consumer Data Protection Act, or VCDPA, that set forth comprehensive privacy obligations regarding the Processing of personal data.
+Added: It is possible that other states may pass their own versions of data privacy laws.
+Added: Moreover, data protection laws and regulations outside the United States, including Brazil, Canada, China, Japan, Russia, the United Kingdom and particularly in the EU, often are more restrictive than those in the United States.
Such laws and regulations may have more stringent compliance obligations in regards to data protection.
−Removed: By way of example, under the EU General Data Protection Regulation, or GDPR, data subjects have the right to access, correct, and request deletion of personal data stored or maintained by companies subject to GDPR, such companies may have shorter timeframes and broader requirements for informing data protection authorities and individuals of security breaches that affect their personal data, and, in some cases, may be required to obtain individuals’ consent to process personal data for certain purposes.
−Removed: may be bound by additional, more stringent contractual obligations relating to our collection, use, and disclosure of personal, financial, and other data.
+Added: While some aspects of these laws are similar to the new U.S.
+Added: state privacy laws in terms of providing for data subject privacy rights of access, deletion, correction, and portability, the EU laws often require affirmative consent for some types of data processing, and broader requirements for informing data protection authorities and individuals of security breaches that affect their personal data.
+Added: We also may be bound by additional, more stringent contractual obligations relating to our collection, use, disclosure and data transfers of personal, financial, and other data outside the EU.
It is possible that a governmental authority may implement a new law or interpret an existing law in a manner that limits our customers’ ability to use our solution or that requires us to make costly or detrimental changes in our solution and services, whether on a one-time basis or as an ongoing increase in our operating costs and expenses.
1 unchanged sentence
The costs of compliance with, and other burdens imposed by, such laws and regulations that are applicable to us and the businesses of our clients may limit the use and adoption of our solution and reduce overall demand for our solution.
−Removed: Also, failure to comply with such laws may lead to significant fines, penalties or other regulatory liabilities, such as orders or consent decrees forcing us or our clients to modify business practices, and reputational damage or third-party lawsuits for any noncompliance with such laws.
+Added: Also, failure to comply with such laws may lead to significant fines, penalties or other regulatory
+Added: liabilities, such as orders or consent decrees forcing us or our clients to modify business practices, and reputational damage or third-party lawsuits for any noncompliance with such laws.
Our business could be harmed if legislation or regulations are adopted, interpreted or implemented in a manner that is inconsistent from country to country and inconsistent with our current policies and practices, or those of our clients.
2 unchanged sentences
The European Union’s GDPR may continue to increase our costs and the costs of our clients to operate, limit the use of our solution or change the way we operate, exposes us to substantial fines and penalties if we fail to comply, and has led to similar laws being enacted in other jurisdictions.
−Removed: On May 25, 2018, the EU adopted the GDPR.
The GDPR replaced the EU Data Protection Directive, also known as Directive 95/46/EC, and is intended to harmonize data protection laws throughout the EU by applying a single data protection law that is binding throughout each member state.
7 unchanged sentences
Among the compliance obligations the GDPR raises for us and our customers are requirements regarding the transfer of personal data from the EU to other jurisdictions, including the United States.
−Removed: In order to comply with the data transfer obligations imposed by the GDPR, we rely on the use of standard contractual clauses issued by the European Commission.
−Removed: Where applicable, we also enter into data processing agreements including standard contractual clauses approved by the Article 29 Working Party (now the Data Protection Board) to authorize the transfer of personal data from the EU and in support of our data processing activities on behalf of our customers.
−Removed: Litigation challenging the adequacy of the standard contractual clauses could negatively impact the operation of our business.
−Removed: The invalidation of the standard contractual clauses may require us to adopt costly or burdensome alternatives.
−Removed: It may be necessary to establish additional systems and business operations in the EU to avoid the transfer of personal data out of the EU.
+Added: We continue to rely on Standard Contractual Clauses, or SCCs, and have updated our use of use of SCCs to the EU’s latest versions, as well as separate U.K.
+Added: versions of the SCCs.
+Added: Even still, there continue to be EU legal decisions and certain regulatory guidance that cast doubt on the legality of EU-U.S.
+Added: data flows in general.
+Added: Any inability to transfer personal data from the EU to the U.S.
+Added: in compliance with data protection laws may impede our ability to attract and retain customers and adversely affect our business and financial position.
+Added: As a result, it may be necessary to establish additional systems and business operations in the EU to avoid the transfer of personal data out of the EU.
Should a change in the conduct of our business be required, it may involve substantial expense and the diversion of resources from other aspects of our business, all of which may harm our business and results of operations.
−Removed: Given the complexity of operationalizing the GDPR, the maturity level of proposed compliance frameworks and the relative lack of guidance in the interpretation of its numerous requirements, we and our customers are at risk
−Removed: of enforcement actions taken by EU data protection authorities or litigation from consumer advocacy groups acting on behalf of data subjects.
−Removed: This risk will likely remain until there is more guidance on the GDPR, including as to implementing legislation enacted by the member states and enforcement actions taken by various data protection authorities.
−Removed: The implementation of the GDPR has led other jurisdictions to amend, or propose legislation to amend, their existing data protection laws to align with the requirements of the GDPR with the aim of obtaining an adequate level of data protection to facilitate the transfer of personal data from the EU.
−Removed: Accordingly, the challenges we face in the EU will likely also apply to other jurisdictions outside the EU that adopt laws similar in construction to the GDPR or regulatory frameworks of equivalent complexity.
+Added: Jurisdictions outside of the EU are also considering and/or enacting comprehensive data protection legislation.
+Added: For example, on July 8, 2019, Brazil enacted the General Data Protection Law, or the LGPD, and on June 5, 2020, Japan passed amendments to its Act on the Protection of Personal Information, or the APPI.
+Added: Both laws broadly regulate the processing of personal information in a manner comparable to the GDPR, and violators of the LGPD and APPI face substantial penalties.
+Added: We also continue to see jurisdictions, such as Russia, imposing data localization laws, which under Russian laws require personal information of Russian citizens to be, among other data processing operations, initially collected, stored, and modified in Russia.
+Added: Similarly, on November 1, 2021, China’s Personal Information Protection law came into effect, which places restrictions on the transfer of personal information to third parties within China or overseas.
+Added: These regulations may deter customers from using services such as ours, and may inhibit our ability to expand into those markets or prohibit us from continuing to offer services in those markets without significant financial burden.
+Added: The GDPR and other laws or regulations associated with the enhanced protection of certain types of personal data, could greatly increase our cost of providing our solutions and services, require significant changes to our operations or even prevent us from offering certain services in jurisdictions in which we operate.
+Added: Failure to comply with data protection regulations may result in data protection authorities and other privacy regimes imposing additional obligations to obtain consent from data subjects by or on behalf of our customers.
+Added: Additionally, the
+Added: inability to guarantee compliance or otherwise provide acceptable privacy assurances may inhibit the sale and use of our software in the EU and certain other markets, which could, were it to occur, harm our business and operating results.
+Added: Because the interpretation and application of many privacy and data protection laws (including the GDPR), commercial frameworks, and standards are uncertain, it is possible that these laws, frameworks, and standards may be interpreted and applied in a manner that is inconsistent with our existing data protection practices.
+Added: If so, we and our customers are at risk of enforcement actions taken by EU data protection authorities or litigation from consumer advocacy groups acting on behalf of data subjects.
+Added: In addition to the possibility of fines, lawsuits, breach of contract claims, and other claims and penalties, we could be required to fundamentally change our business activities and practices or modify our solutions, which could have an adverse effect on our business.
+Added: Any inability to adequately address privacy and security concerns, even if unfounded, or comply with applicable privacy and security or data security laws, regulations, and policies, could result in additional cost and liability to us, damage our reputation, inhibit sales, and adversely affect our business.
The CCPA and the CPRA could increase our costs and the costs of our clients to operate, limit the use of our solution or change the way we operate, and expose us to substantial fines and class action risk if we fail to comply, and lead to similar laws being enacted in other states.
−Removed: In 2018, the State of California adopted the CCPA.
The CCPA applies to certain for-profit entities doing businesses in California.
1 unchanged sentence
The CCPA established a new privacy framework for covered businesses by creating an expanded definition of personal information and creating new data privacy rights for consumers in the State of California.
−Removed: As required by the statute, entities doing business in California have disclosure obligations to consumers for whom they hold or process personal data.
+Added: As required by the statute, covered entities doing business in California have disclosure obligations to consumers for whom they collect or process personal data.
Businesses must also provide consumers with the right to dictate how their personal information is used and shared.
1 unchanged sentence
The CCPA created a new and potentially severe statutory damages framework for violations of its provisions.
−Removed: The California Attorney General can enforce the CCPA by seeking statutory penalties for failure to comply with the act.
−Removed: For businesses that fail to implement reasonable security procedures, the CCPA also creates a private right of action for consumers whose personal data is subject to a data breach.
+Added: The CCPA also creates a private right of action for consumers whose personal data is subject to a data breach.
This private right of action has the potential to create significant class action liability for businesses, like ours, that operate in California.
1 unchanged sentence
The CCPA has been amended on multiple occasions, and is the subject of the regulations of the California Attorney General, which could be subject to additional modifications.
−Removed: Additional CCPA amendments have been proposed.
−Removed: It is unclear how, if at all, it may be modified, or how it will be interpreted by the California Attorney General.
+Added: The CCPA was most recently modified by the final regulations, which took effect in August 2020.
In addition, voters in California approved the ballot initiative known as the California Privacy Rights Act of 2020, or CPRA.
−Removed: Pursuant to the CPRA, the CCPA will be amended by creating additional privacy rights for California consumers and additional obligations on businesses, which could subject us to additional compliance costs as well as potential fines, individual claims and commercial liabilities.
−Removed: The CPRA is expected to take effect on January 1, 2023.
−Removed: Additional modifications to the CCPA could create additional liability and require costly expenditures to ensure continued compliance.
+Added: The CPRA creates certain obligations relating to consumer data beginning on January 1, 2022, with implementing regulations expected on or before July 1, 2022, and enforcement beginning July 1, 2023.
+Added: The CPRA significantly amends the CCPA by creating additional privacy rights for California consumers and additional obligations on businesses, which could subject us to additional compliance costs as well as potential fines, individual claims and commercial liabilities.
+Added: Further, the CPRA establishes the California Privacy Protection Agency which has the power to implement and enforce the CCPA and CPRA through administrative actions, including administrative fines.
+Added: The effects of the CCPA and the CPRA are potentially significant and may require us to modify our data collection or processing practices and policies and to incur substantial costs and expenses in an effort to comply and increase our potential exposure to regulatory enforcement and/or litigation.
+Added: Certain other state laws, including Colorado and Virginia’s data privacy laws, impose similar privacy obligations and will take effect beginning in 2023.
+Added: We anticipate that more states may enact legislation similar to the CCPA, by providing consumers with new privacy rights and increases the privacy and security obligations of entities handling certain personal information of such consumers.
+Added: The CCPA has prompted a number of proposals for new federal and state-level privacy legislation.
+Added: Such proposed legislation, if enacted, may add additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment of resources in compliance programs, impact strategies and the availability of previously useful data and could result in increased compliance costs and/or changes in business practices and policies.
Risks Related to Ownership of Our Convertible Senior Notes
2 unchanged sentences
In May 2018, we issued $258.8 million in aggregate principal amount of the 2023 convertible senior notes in a private offering.
−Removed: In May 2020, we repurchased or exchanged $181.0 in aggregate principal amount of the 2023 convertible senior notes through individually negotiated private transactions in the 2023 Note Repurchase Transactions.
+Added: In May 2020, we repurchased or exchanged $181.0 million in aggregate principal amount of the 2023 convertible senior notes through individually negotiated private transactions in the 2023 Note Repurchase Transactions.
As of December 31, 2021, after giving effect to the 2023 Note Repurchase Transactions and other settlements, we had approximately $34.2 million in aggregate principal amount of the 2023 convertible senior notes outstanding.
1 unchanged sentence
In May and June 2020, we issued $747.5 million in aggregate principal amount of the 2025 convertible senior notes in a private offering, all of which were outstanding as of December 31, 2021.
−Removed: The 2025 convertible senior
−Removed: notes mature on June 1, 2025, and the interest rate of the 2025 convertible senior notes is fixed at 0.500% per annum, payable semiannually in arrears on June 1 and December 1 of each year, beginning on December 1, 2020.
+Added: The 2025 convertible senior notes mature on June 1, 2025, and the interest rate of the 2025 convertible senior notes is fixed at 0.500% per annum, payable semiannually in arrears on June 1 and December 1 of each year, beginning on December 1, 2020.
Our ability to make scheduled payments of principal and interest, or to refinance our indebtedness, including the convertible senior notes, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control.
12 unchanged sentences
During the three months ended December 31, 2021, one of the conversion features of the 2023 convertible senior notes was triggered, entitling the holders thereof to convert such convertible senior notes from January 1, 2022 to March 31, 2022.
−Removed: Whether the 2023 convertible senior notes will be convertible after March 31, 2021 will depend on the continued satisfaction of this condition or other conversion conditions.
+Added: Whether the 2023 convertible senior notes will be
+Added: convertible after March 31, 2022 will depend on the continued satisfaction of this condition or other conversion conditions.
To the extent that the respective conditional conversion features of either or both series of convertible senior notes are triggered in the future, holders of such convertible senior notes, as applicable, will be entitled to convert their convertible senior notes at any time during the specified periods at their option.
3 unchanged sentences
The conversion of some or all of either series of convertible senior notes would dilute the ownership interests of our existing stockholders to the extent we satisfy our conversion obligation by delivering shares of our common stock.
−Removed: In this regard, if holders of the convertible senior notes elect to convert their notes during one of the specified conversion periods referred to above, we may settle our conversion obligations by delivering to them cash,
−Removed: shares of our common stock or a combination thereof.
+Added: In this regard, if holders of the convertible senior notes elect to convert their notes during one of the specified conversion periods referred to above, we may settle our conversion obligations by delivering to them cash, shares of our common stock or a combination thereof.
In addition, we may issue shares of our common stock in connection with repurchases, exchanges or other transactions involving the convertible senior notes, such as the 2023 Note Repurchase Transactions, which involved the issuance of 2,723,581 shares of our common stock to certain holders of the 2023 convertible senior notes.
8 unchanged sentences
These activities could negatively affect the market price of our common stock.
−Removed: The accounting method for convertible debt securities that may be settled in cash, such as both series of convertible senior notes, could have a material effect on our reported financial results.
−Removed: Under Financial Accounting Standards Board Accounting Standards Codification 470-20, Debt with Conversion and Other Options (“ASC 470-20”), an entity must separately account for the liability and equity components of convertible debt instruments (such as both series of convertible senior notes) that may be settled entirely or partially in cash upon conversion in a manner that reflects the issuer’s economic interest cost.
−Removed: ASC 470-20 requires the value of the conversion option of the applicable series of convertible senior notes, representing the equity component, to be recorded as additional paid-in capital within stockholders’ equity in our consolidated balance sheet and as a discount to the applicable series convertible senior notes, which reduces their initial carrying value.
−Removed: The carrying value of the applicable series of convertible senior notes, net of the discount recorded, will be accreted up to the principal amount of such series of convertible senior notes from the issuance date until the applicable maturity date, which will result in non-cash charges to interest expense in our consolidated statement of operations.
−Removed: Accordingly, we will report lower net income or higher net loss in our financial results because ASC 470-20 requires interest to include both the current period’s accretion of the debt discount and the instrument’s coupon interest, which could adversely affect our reported or future financial results, the trading price of our common stock and the trading price of either or both series of convertible senior notes.
General Risk Factors
1 unchanged sentence
The market price of our common stock has been volatile in the past and may fluctuate significantly in the future in response to numerous factors, many of which are beyond our control.
+Added: On September 30, 2021, at a special meeting of our stockholders, stockholders voted against a proposal to approve our proposed merger, or the Merger, with Zoom Video Communications, Inc., or Zoom.
+Added: Immediately following the special meeting, on September 30, 2021, we and Zoom mutually agreed to terminate the Merger, effective immediately.
+Added: During the pendency of the Merger, the trading price of our Common Stock was volatile, has continued to be volatile since the termination of the Merger, and may fluctuate significantly in the future in response to numerous factors, many of which are outside our control.
During the twelve months ended December 31, 2021, the sale price per share of our common stock ranged from a low of $122.33 to a high of $211.68.
1 unchanged sentence
• actual or anticipated fluctuations in our operating results;
+Added: • now that the Merger has terminated, certain investors who acquired our common stock during the pendency of the Merger may sell their shares of common stock, and other investors may buy shares of our common stock;
• the impacts of the COVID-19 pandemic and related matters on the equity capital markets and economy in general, or on us or our industry in particular;
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• loss of key personnel;
−Removed: • new entrants into the contact center market, including the transition by providers of legacy on-premise contact center systems to cloud solutions;
+Added: • new entrants into and consolidations of the contact center market, including the transition by providers of legacy on-premise contact center systems to cloud solutions;
• acquisitions by us or our competitors, and our ability to effectively integrate and achieve the desired benefits from acquisitions by us;
3 unchanged sentences
• other events or factors, including those resulting from war, incidents of terrorism or responses to these events, which would be unrelated to our business and industry, and outside of our control.
−Removed: In addition, stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many technology companies, particularly in connection with the COVID-19 pandemic.
+Added: In addition, stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many technology companies, particularly in connection with the COVID-19 pandemic and economic trends.
Stock prices of many technology companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies.
These and other factors may disproportionately impact the trading price of our common stock.
−Removed: In the past, stockholders have instituted securities class action litigation following periods of market volatility.
−Removed: If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business and harm our business, results of operations, financial condition, reputation and cash flows.
+Added: In the past, stockholders have instituted securities class action litigation following periods of volatility.
+Added: If we were to become involved in such securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business and harm our business, results of operations, financial condition, reputation and cash flows.
If securities or industry analysts discontinue publishing research or reports about our business, or publish negative reports about our business, our share price and trading volume could decline.
13 unchanged sentences
• provide that our board of directors is classified into three classes of directors;
−Removed: • provide that stockholders may remove directors only for cause and only with the approval of holders of at least 66 2 ⁄ 3 % of our then outstanding capital stock;
+Added: • provide that stockholders may remove directors only for cause;
• provide that the authorized number of directors may be changed only by resolution of the board of directors;
25 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.