What changed in this filing

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Item 1. Business

2024-02-22 compared with 2023-02-24 · 110 added, 85 removed, 257 unchanged (43% of the section changed)

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These systems are also often inflexible, complex, and require significant duplication of effort and integration across multiple sites.

In addition, commencing during the COVID-19 pandemic, agents have increasingly worked remotely, which presents a challenge to premise-based systems that, by design, are focused on a particular physical location.

In addition, commencing during the COVID-19 pandemic, agents increasingly work remotely, which presents a challenge to on-premise based systems that, by design, are focused on a particular physical location.

This creates substantial challenges for clients with on-premise contact center systems.

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Cloud contact center software solutions provide organizations with the agility to adapt to a rapidly evolving environment and innovative functionalities to reimagine the way they engage with customers.

Third is cloud-based technology advancements in areas such as artificial intelligence, or AI, which are enabling improved customer experience, significant operational efficiencies and business insights.

For example, real-time, accurate and increasingly cost-effective automatic speech recognition and natural language processing are increasingly allowing mundane contact center tasks to be handled efficiently and effectively by virtual agents, allowing live agents to focus on more complex issues.

Our solution, comprised of our VCC cloud platform with native AI and automation capabilities, including Interactive Virtual Agent, or IVA, Agent Assist, Workflow Automation, or WFA, and Workforce Optimization, or WFO, allows simultaneous management and optimization of customer interactions across voice, chat, email, web, social media and mobile channels, either directly or through our application programming interfaces, or APIs.

Third is advancements in artificial intelligence, or AI, which enable improved customer experience, significant operational efficiencies and business insights.

The recent advances in Generative AI, including Large Language Models, or LLMs, enable new capabilities in contact centers that were not possible in prior generations.

Our AI Summaries feature uses Generative AI to automatically summarize a call at the end, reducing after-call work time.

Natural language voice and chat bots, using Generative AI, speech recognition, intent detection, and text-to-speech technologies quickly and effectively handle mundane contact center tasks, allowing agents to focus on more complex issues.

Generative AI technologies are also used in our AI Insights product, which gives customers an understanding of reasons for customer calls, customer sentiment, and call resolution status, with little up-front configuration.

AI technologies generally require cloud deployment and, therefore, provide additional incentives for customers to move off their legacy on-premise solutions.

Our solution, comprised of our VCC cloud platform with native AI and automation capabilities, including Interactive Virtual Agent, or IVA, Agent Assist, Workflow Automation, or WFA, Workforce Engagement Management, or WEM, AI Insights and AI Summaries, allows simultaneous management and optimization of customer interactions across voice, chat, email, web, social media and mobile channels, either directly or through our application programming interfaces, or APIs.

Our VCC cloud platform matches each customer interaction with an appropriate agent resource and delivers relevant customer data to the agent in real-time through integrations with adjacent enterprise applications, such as CRM software, to optimize the customer experience and improve agent productivity.

Our solution ensures our clients always have the latest version of our software.

Delivered on-demand, our solution enables our clients to quickly deploy agent seats in any geographic location with only a computer, headset and broadband internet connection, and rapidly adjust the number of contact center agent seats in response to changing business requirements.

Delivered on-demand, our solution enables our clients to quickly deploy agent seats in any geographic location with only a computer,

headset and broadband internet connection, and rapidly adjust the number of contact center agent seats in response to changing business requirements.

Unlike legacy on-premise contact center systems, our solution requires limited up-front investment, can be rapidly deployed and is maintained by us in the cloud.

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We have developed a proven, high velocity, metrics-driven sales and marketing strategy, designed to effectively identify, qualify and close sales opportunities.

To complement this go-to-market strategy, we have developed a large ecosystem of technology and system integrator partners, which also provide sales leads, and independent software vendors to help increase awareness of our solution in the market and drive additional sales opportunities with new and existing clients.

We have also established, and are continuing to increase, our network of technology solution brokers who provide sales leads and resellers that integrate our solution into their service offerings to new clients.

Our partner ecosystem has helped us access new routes to market and gain market share both in domestic and international markets.

To complement this go-to-market strategy, we have developed a strategically-built ecosystem of technology alliances, solution providers and system integrator partners, which also provide sales leads, and independent software vendors to help increase awareness of our solution in the market and drive additional sales opportunities with new and existing clients.

We have also established, and are continuing to increase, our network of technology solution distributors who provide sales leads and resellers that integrate our solution into their service offerings to new clients.

Our partner ecosystem has helped us access new routes to market and increase our penetration in domestic and international markets.

We provide our solution through a software-as-a-service, or SaaS, business model with recurring revenue made up of subscription revenue, based primarily on the number of agent seats, and usage, based on minutes, as well as the specific functionalities and applications our clients deploy such as virtual agents.

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Our solution is designed to enable our customers to increase and improve the efficiency of their operations, increase revenue opportunities and business agility, and provide insights into the behaviors of their workforce and customers as it relates to customer experience.

The platform facilitates this through key capabilities such as interaction routing and prioritization across channels, automation and integration of back and front end systems and the ability to leverage the power of AI through IVA and more.

Our solution also empowers agents and supervisors through WFO.

Our platform facilitates this through key capabilities such as interaction routing and prioritization across channels, automation and integration of back and front end systems and the ability to leverage the power of AI through IVA and more.

Our solution also empowers agents and supervisors through WEM.

Organizations of a broad variety of sizes use our solution to improve customer service and create customer loyalty.

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We provide high quality inbound and outbound voice services leveraging our global network infrastructure, key strategic carrier partnerships, complex real time call routing, and wide range of customer connectivity options for secure, resilient interconnectivity to our network.

Our complete end-to-end capabilities include Computer-Telephony Integration, or CTI, IVA, Interactive Voice Response, or IVR, WFA, Agent Assist, Automatic Call/Contact Distribution, or ACD, with skills-based routing, reporting, dashboards, agent and supervisor desktops, outbound dialer, pre-built third-party integrations, quality management, speech and desktop analytics, customer surveys and workforce management.

Our complete end-to-end capabilities include Computer-Telephony Integration, or CTI, IVA, Interactive Voice Response, or IVR, WFA, Agent Assist, AI Insights, AI Summaries, Automatic Call/Contact Distribution, or ACD, with skills-based routing, reporting, dashboards, agent and supervisor desktops, outbound dialer, pre-built third-party integrations, quality management, speech and desktop analytics, customer surveys and workforce management.

Our solution provides the following advantages:

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The pre-built integrations with leading CRM and other enterprise applications reduce the complexity and burden of integrating with the client’s business applications.

Our solution is designed to be seamlessly updated so that clients are

always operating on the latest version of the software, while maintaining their existing configurations, ensuring minimal disruption to the client’s contact center operations.

Our solution is designed to be seamlessly updated so that clients are always operating on the latest version of the software, while maintaining their existing configurations, ensuring minimal disruption to the client’s contact center operations.

• Highly flexible platform.

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• Improved customer experience.

Our intelligent contact routing and self-service IVA and IVR capabilities, pre-built CRM integrations, and multichannel engagement ensure that customers receive an omnichannel experience.

Our intelligent contact routing and self-service IVA and IVR capabilities, pre-built CRM and other integrations, and multichannel engagement ensure that customers receive an omnichannel experience.

Each new contact is quickly routed to an appropriate agent resource.

Using the rich contact history and additional context through integrations with CRM applications, agents have immediate access to the most current, relevant and accurate information about the customer, resulting in increased first contact resolutions and a more satisfying experience for the customer.

Using the rich contact history and additional context through integrations with CRM and other applications, agents have immediate access to the most current, relevant and accurate information about the customer, resulting in increased first contact resolutions and a more satisfying experience for the customer.

• Higher agent productivity.

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Our solution gives agents the ability to switch between media channels through an easy-to-use, unified interface that provides agents with all of the relevant content and tools needed to complete the task at hand.

Furthermore, our AI enabled automation features are designed to enable agent efficiency and cost reductions, including through the utilization of natural language processing, or NLP.

Furthermore, our AI enabled automation features are designed to enable agent efficiency and cost reductions, including through the utilization of LLMs and natural language processing, or NLP.

• Enhanced end-to-end visibility.

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Clients can also extract reporting data from our solution for further analysis using a spreadsheet application or using the sophistication of an enterprise business intelligence application.

Our advanced reporting solution enables us to connect to external data sources such as ACDs, WEM platforms, CRM solutions, and many more pre-built integrations.

This insight provides an organization-wide view of customer engagement performance and allows clients to quickly address changing circumstances.

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We deliver a cloud-based enterprise-grade platform and applications suite with multi-channel capabilities that allows our clients to manage their entire contact center operation.

Our highly scalable, secure and multi-tenant architecture enables us to serve large multi-national enterprises with complex contact center requirements, regional or national enterprises in countries around the world, as well as smaller organizations, all from our platform comprised of physical data centers around the world and globally distributed public cloud regions, all interconnected with a robust, redundant, private WAN and diverse regionalized Internet connectivity.

Our highly scalable, secure and multi-tenant architecture enables us to serve large multi-national enterprises with complex contact center requirements, as well as smaller organizations, all from our platform comprised of globally distributed physical data centers and public cloud deployments, all interconnected with a robust, redundant, private WAN and diverse regionalized Internet connectivity.

We have also commenced investments in a dedicated U.S.-based data center deployment to support Federal Risk and Authorization Management Program, or FedRAMP, customers.

• Rapid deployment and support of our comprehensive solution.

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Once operational, we offer a high touch premium support service where we assign a technical account manager who has intimate knowledge of the customers’ operations so we can quickly resolve issues and fine tune the solution.

As a result, our clients’ contact centers become fully operational faster and they recognize time to value more quickly than with legacy on-premise contact center systems.

In addition, we assign customer success representatives to every customer.

These customer success representatives build deep relationships with our customers to help maximize the value of our platform.

As a result, our clients’ contact centers become fully operational faster and they recognize time to value quicker than with legacy on-premise contact center systems.

• Reliable, secure, compliant and scalable platform.

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We have a large, diverse client base of over 3,000 organizations across multiple industries.

We believe our clients view us as a key strategic solutions provider.

We believe our clients view us as a key strategic solution provider.

The performance, reliability, ease-of-use and comprehensive nature of our solution has resulted in high client retention.

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We have cultivated a robust ecosystem of partners including a variety of leading CRM software vendors such as Microsoft, Oracle, Salesforce, ServiceNow and Zendesk;

WFO vendors such as Calabrio, Inc., or Calabrio, and Verint Systems Inc., or Verint;

WEM vendors such as Calabrio, Inc., or Calabrio, and Verint Systems Inc., or Verint;

unified communications vendors such as Microsoft Teams, Nextiva, RingCentral and Zoom;

system integrators such as Accenture PLC, Deloitte Consulting LLP, IBM, PwC LLP and Slalom Consulting, LLC;

technology solution brokers, value-added resellers such as AT&T Inc.

and CDW Corporation;

system integrators such as Accenture PLC, Deloitte Consulting LLP, IBM, Kyndryl, Inc., PwC LLP and Slalom Consulting, LLC;

technology solution distributors such as Avant, LLC, Intelysis and Telarus, value-added resellers such as British Telecom, CDW Corporation, NWN Carousel, Presidio Networked Solutions Group, LLC, and Worldwide Technologies;

independent software vendors;

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Contact centers are a rich source of the data that powers AI, from call detail records to full recordings of calls and customer interactions.

With recent advances in automatic speech recognition, voice recordings are becoming a source for training machine-learning models.

We believe that AI is having, and is likely to have, an increasingly profound impact in how businesses deliver service to their customers.

Recent advances in Generative AI enable us to deliver even more innovation by integrating it deep into our VCC platform.

We believe that AI, and Generative AI in particular, will profoundly impact how businesses deliver services to their customers.

We have a large, diverse and global client base comprised of more than 3,000 organizations as of December 31, 2023, with no single client representing more than 10% of our revenues in 2023, 2022 or 2021.

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Sales and Marketing

To build client awareness and adoption of our solution, our lead generation activities consist of a mix of organic activities such as social, digital presence and search engine optimization, and paid for activations such as search engine marketing, internet advertising, digital marketing campaigns, trade shows, industry events, co-marketing with strategic partners, account-based marketing, client referrals and out-of-home campaigns.

We have adapted to various COVID-19 restrictions by converting our user group meeting from in-person to virtual and switching from in-person to fully virtual or hybrid attendance at various trade shows.

In 2022, we returned to an almost fully in-person mode for our annual CX Summit and saw attendance increase by approximately 30% from the last fully in-person event in 2019.

To build client awareness and adoption of our solution, our lead generation activities consist of a mix of organic activities such as social, digital presence and search engine optimization, and paid for activations such as search engine marketing, internet advertising, digital marketing campaigns, content syndication, trade shows, industry events, co-marketing with strategic partners, account-based marketing, client referrals and other promotional campaigns.

In addition, our industry analyst, press and media outreach programs, and web site marketing initiatives are designed to build brand awareness and preference for our solution.

We offer online self-service demos to allow prospective clients to learn about the features and functionality of our cloud platform in more detail.

We also offer proof of concept service packages, which include return-on-investment analyses conducted by third parties, to allow prospects to experience the quality and ease-of-use of our cloud solution and quantify the potential benefits of our deployment.

We offer online self-service demos and instructional videos to help prospective clients learn about the features and functionality of our cloud platform.

We also offer proof of concept service packages and trial opportunities, which include return-on-investment analyses conducted by third parties, to allow prospects to experience the quality and ease-of-use of our cloud solution and quantify the potential benefits of our deployment model.

Direct Sales.

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Indirect Sales.

We have cultivated strong partner relationships with technology solution brokers, system integrators and resellers to drive sales of our solution.

We have established, and continue to increase, our network of technology solution brokers, which provide sales leads, system integrators, which also provide sales leads and help integrate our solution with our client systems, and resellers, which sell our solution to new clients.

This network has helped us attract additional clients.

We have cultivated strong partner relationships with technology solution distributors, global system integrators and resellers to drive sales of our solution.

We have established, and continue to increase, our network of technology solution distributors, which provide sales leads, global system integrators, which also provide sales leads and help integrate our solution with our client systems, and resellers, which sell our solution to new clients.

This network has helped us attract additional clients, and we continue to empower these partnerships to participate in the delivery of our solution and extend the total customer value gained from unique integrated value propositions.

Professional Services

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Our professional services include application configuration, system integration, and education and training.

Our clients may use our professional services team for implementing our solution or, in limited cases, they may also choose to perform these services themselves or engage third-party service providers to perform these services.

Our clients may use our professional services team for implementing our solution or, in many cases, they may choose to perform these services themselves or engage with one of our certified implementation partners to perform these services.

Our cloud solution allows us to eliminate the need for lengthy and complex technology integrations, such as deploying equipment or maintaining hardware infrastructure for individual clients.

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Our core research and development center is based in our San Ramon, California headquarters, with additional engineers located in Australia and Portugal, which allows us to benefit from relatively low-cost and highly skilled software developers.

In January 2023, we announced the opening of our new European Research and Development Hub in Porto, Portugal, which will serve as our European engineering headquarters.

In January 2023, we opened our new European Research and Development Hub in Porto, Portugal, which serves as

our European engineering headquarters.

Our engineering team has deep software and telecommunications skills, and works closely with our sales team to identify our clients’ product requirements.

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We also host some of our voice services on the public cloud in Europe, Asia, South America and Australia as well as additional core services in Europe.

Our infrastructure, including our third-party co-location

facilities, is designed to support real-time critical telecommunications, applications and operational support systems.

Our infrastructure, including our third-party co-location facilities, is designed to support real-time critical telecommunications, applications and operational support systems.

Our infrastructure is built with redundant, fault-tolerant components divided into distinct security zones forming protective layers for our applications and customer data.

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The market for contact center software is fragmented, highly competitive and evolving rapidly in response to shifting consumer behavior, especially the transition to mobile devices and use of different channels of engagement, such as social media.

The proliferation of each is driving change in contact center technology, as customers expect companies to give them the option of seamless communication across all channels without losing the overall context of customer interactions according to their preference and needs.

Combined with the disruptive nature of the cloud in the contact center, this has resulted in competitors who come from different market and product heritages, and who vary in size, breadth and scope of the products and services offered.

We currently compete with large legacy vendors that offer on-premise contact center systems, such as Avaya Inc., or Avaya, and Cisco Systems, Inc., or Cisco.

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As of December 31, 2023, our intellectual property portfolio included three registered U.S.

trademarks, 15 issued U.S.

trademarks, two pending U.S.

trademark applications, 16 issued U.S.

patents, one pending U.S.

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As of December 31, 2023, outside the U.S.

we also had 10 trademark registrations, five issued patents and two pending international Patent Cooperation Treaty, or PCT, patent applications.

we also had 10 trademark registrations, five issued patents and three pending international Patent Cooperation Treaty, or PCT, patent applications.

The expiration dates of our issued patents range from 2030 to 2041.

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Our employee turnover for the last three years has averaged 8.8%.

The key human capital measures and objectives that we focus on in managing our business are maintaining our company values, increasing our diversity and inclusion, our compensation philosophy, our talent development, and our employees’ safety and wellness.

The key human capital measures and objectives that we focus on in managing our business are maintaining our company values, promoting our diversity and inclusion, our total rewards philosophy, our talent development, and our employees’ safety and wellness.

Five9 Values - Bringing Passion and Purpose

At Five9 we are focused on delivering success for our customers, partners and employees.

Living our values everyday results in a unique and powerful culture that we call “winning culture” in which every member on our team is passionately committed to achieve this collective success.

This powerful team-first culture enables us to overcome any adversity or obstacle and win year after year while enjoying the journey together.

Living our values everyday results in a unique and powerful culture that we call “winning culture” in which every member on our team is passionately committed to achieve collective success.

This powerful team-first culture enables us to overcome obstacles and win year after year, while enjoying the journey together.

Our values are woven throughout the entire employee lifecycle and used in the interview process to ensure we hire candidates that have personal values that align with ours.

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We introduce new employees to our values during new hire orientation and our values are visible in the offer package as well as company employee resource pages.

Our CEO also weaves these values into quarterly company meetings and regular smaller meetings, such as “Thursdays in the Cloud” where one of the values may be highlighted through a story and employee example.

Our CEO also weaves these values into quarterly company meetings and regular smaller meetings, where one of the values may be highlighted through a story and employee example.

We regularly collect feedback to better understand and improve the employee experience and identify opportunities to continually strengthen our culture.

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Employees’ highest rated areas were the following:

work & life blend (92%), management (91%) and inclusion (91%).

employee productivity (91%) and engagement (90%).

Diversity & Inclusion at Five9

We value diversity and hold ourselves accountable to create a culture where our employees represent the communities in which we operate.

We embrace authenticity and trust and lead with transparency, empowering our employees to have a voice that's heard.

We are committed to learning, empowering, advocating, allying and supporting each other within our company and in our communities.

At Five9, we celebrate diversity and foster an inclusive environment by creating a culture where our employees can be their authentic selves.

We integrate our core values of honesty and respect and lead with transparency and inclusivity.

We are committed to building belonging in our workplace and society at large.

Our goal is to empower our employees to have a voice that’s heard and foster a community where they feel they belong.

Our recruiting programs support and encourage diversity.

We recruit from various diversity organizations, including historically black colleges and universities, the Career Cast Diversity Network of Women, Black, Hispanic, Asian, LGBTQIA, the Career Cast Disability Network, and the Career Cast Veteran Network.

We recruit from various diversity organizations, including historically black colleges and universities, the Professional Diversity Network, Military 2 Career, Ability Careers, Asian Career Network, Women’s Career Channel, Black Career Network, LGBTQ+ Career Network, and Ihispano.

In addition, we have several Employee Resource Groups, or ERGs, that are committed to diversity and creating and fostering a culture of inclusion.

Our ERGs include Women In Tech, Blatinx, Veterans, Five9 Faith and Pride @ Five9.

We are currently working with Black Girls Code to offer an online educational session for underserved girls enlisted in their program and our female employees are facilitating the class.

We have also created a mentorship program with a specific eye towards diversity.

Executive sponsors of the program reach out to employees from underrepresented groups to promote the program and encourage employees to participate.

Our human resources team pairs mentors with mentees to enable employees to receive opportunities for growth and development.

Women represent 30% of our worldwide employees and racial and ethnic minorities represent 32% of our U.S.

Our ERGs include Women In Tech, Blatinx, Veterans, Five9 Faith, APIDA and Pride @ Five9.

We have implemented an annual ERG leadership summit where our ERG leader’s share ideas and the HR People team shares current Diversity and Inclusion initiatives for feedback and to foster partnership.

Women represented 31% of our worldwide employees and racial and ethnic minorities represented 31% of our U.S.

employees as of December 31, 2023.

Women and ethnic minorities each represent 22% and 11%, respectively, of our executive leadership team and 33% and 22%, respectively, of our Board of Directors as of December 31, 2022.

Compensation Philosophy

We strive to attract and retain the best employees by providing a total rewards package that is at or above market rates to enable us to attract and retain employee talent needed to accomplish our goals and objectives.

Our competitive rewards packages include cash, bonus programs dependent upon the position, equity awards and benefits aligned to prevailing market practices, and in cases where business demands are unique, we may lead the competitive market.

Full-time employees and their family members enjoy comprehensive benefits programs and perquisites.

In an effort to attract and retain the best talent, we strive to offer benefit programs that will enable our employees to thrive

both at work and at home.

We cover 100% of the employee portion of our healthcare benefits and share a high portion of the dependent costs.

Our competitive global benefits include a Parental Leave Policy, flexible schedules, financial and physical wellness programs, fertility benefits and Section 401(k) plan employer matching contributions.

Women and ethnic minorities each represented 27% and 9%, respectively, of our executive leadership team and 22% and 11%, respectively, of our Board of Directors, or Board, as of December 31, 2023.

Total Rewards Philosophy

Our total rewards philosophy is a comprehensive approach designed to attract, engage, and retain the best talent in our industry by providing a total rewards package that is at or above market rates and, in cases where business demands are unique, we may lead the competitive market.

This philosophy is rooted in our understanding that our employees are the cornerstone of our success and that their well-being and satisfaction are paramount to our sustained growth and market leadership.

Central to our philosophy is the principle of equity and inclusivity.

We strive to ensure that our rewards system is fair and transparent.

This approach fosters a sense of belonging and commitment among our workforce, driving engagement and productivity.

Our total rewards philosophy reflects our commitment to creating a supportive and empowering environment for our employees, where they can thrive professionally and personally.

By investing in our people in this way, we not only enhance individual well-being but also drive organizational performance and stakeholder value, securing our position as a leader in our industry.

Our total rewards system encompasses not just competitive cash compensation, but a holistic package that addresses the diverse needs of our workforce.

This includes healthcare benefits, mental health benefits to employees and their dependents, financial and physical well-being programs, parental leave, fertility reimbursement, retirement plans, performance bonuses, equity awards, and work-life balance initiatives.

Our total rewards strategy is dynamic and responsive to the changing marketplace and workforce demographics.

We regularly benchmark our offerings against prevailing industry practices to ensure we remain competitive and appealing as an employer.

Additionally, we embrace a culture of continuous feedback, allowing us to adapt and refine our rewards in alignment with employee needs and business objectives.

Talent Development

Employee development is a key focus in the attraction, retention and management of our talent.

Semi-annually, we facilitate employee self-reflection cycles where employees have development conversations with their manager.

The purpose of these conversations is to foster the employee’s development plans and career goals.

Managers and employees discuss growth and development opportunities in these sessions and conversations and development plans are tracked via the employee performance platform.

We also host a quarterly development series for all employees to enhance their career development.

The development series topics have included mentorship, communicating for shared success, the art of influence and a career workshop.

This development series aims to provide educational opportunities for leadership and growth for our employees.

We also have a succession planning program that focuses on identifying employees that are high potential and high performing and plans for developing them into future leadership roles by creating action plans and a path for the employee’s progression.

Talent development is a pivotal element of our organizational strategy and is essential for maintaining our competitive advantage in a dynamic global market.

We are deeply committed to the growth of our employees, as evidenced by our multifaceted talent development programs.

Our Leadership Principles guide the cultivation of a forward-thinking and agile leadership pipeline at all levels within our organization.

Leadership Principles inform our Talent Acquisition, Learning and Development and Performance Management practices to ensure we identify, grow and develop the right leadership skills for the future.

Our talent review process focuses on identifying employees that are high potential and high performing.

We believe learning happens at every part of an employee’s tenure at our company.

We continuously strengthen our onboarding practices to ensure employees have the skillset to be successful in their jobs.

To support ongoing in-role development, we have semi-annual development conversations between employees and managers to ensure employees have individualized career discussions that align both with organizational goals and the employee’s professional development.

We also make learning pathways available through a platform where all employees can take courses to grow their skillsets.

By investing in our Leadership Principles, employee onboarding, ongoing development, and talent reviews, we create a dynamic and resilient workforce, poised to drive innovation and growth.

Workplace Practices and Policies

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To reduce waste, we use source compostable/recyclable kitchen products, centralized waste collection with an emphasis on recycling, established an E-waste program, implemented software tools to minimize printing waste and reduce equipment and toner purchases, and expanded our battery recycling program to include work-related and personal battery recycling.

We are also committed to complying with California’s climate legislation, SB-253 and SB-261.

This commitment involves the reporting to Scope 1, 2, and 3 emissions within the mandated reporting period.

The following summarizes important, but not all, federal, state and foreign regulations that could impact our operations.

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We are classified as a telecommunications service provider for federal regulatory purposes.

Since our business is regulated by the FCC, we are subject to existing or potential FCC regulations relating to privacy, disability access, Enhanced 911 access, porting of numbers, automatic number dialing, contributions to the federal Universal Service Fund and related funds, or USF, and other requirements.

Since our business is regulated by the FCC, we are subject to existing or potential FCC regulations relating to privacy, disability access, Enhanced 911 access, access to and porting of numbers, automatic number dialing, contributions to the federal Universal Service Fund and related funds, or USF, and other requirements.

If we do not comply with FCC rules and regulations, we could be subject to FCC enforcement actions, fines and possibly restrictions on our ability to operate or offer certain of our services.

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• Telephone Consumer Protection Act of 1991, or TCPA, which regulates the use of automatic dialing equipment and pre-recorded messages to contact consumers, and the Telemarketing Sales Rule, which has similar obligations as to telemarketing activities;

• The TRACED Act and corresponding regulations from the FCC, which require carriers to authenticate incoming calls using the STIR/SHAKEN caller ID framework and correspondingly compels providers of telecommunications services to implement capabilities to certify as authentic the traffic they provide to those carriers;

• the TRACED Act and corresponding regulations from the FCC, which require carriers to authenticate incoming calls using the STIR/SHAKEN caller ID framework and correspondingly compels providers of telecommunications services to implement capabilities to certify as authentic the traffic they provide to those carriers and to block transmission of certain calls;

• CALEA, which requires telecommunications service providers to assist law enforcement in undertaking electronic surveillance;

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• FCC rules regarding Customer Proprietary Network Information, or CPNI, which require that we limit disclosure of certain information received from customers as a result of a service provider/customer relationship without customer approval, subject to certain exceptions;

• Federal Trade Commission Act and rules promulgated thereunder, which generally relate to avoiding unfair and deceptive trade practices, our advertising, and privacy practices;

• State privacy laws require compliance with privacy frameworks and include disclosure obligations to consumers for whom we hold or process personal data including:

◦ The California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act of 2020, or the CCPA, which took effect on January 1, 2023;

• Federal Trade Commission Act and rules promulgated thereunder, which generally relate to avoiding unfair and deceptive trade practices, our advertising, use and deployment of certain AI-based services, and privacy practices;

• state privacy laws require compliance with privacy frameworks and include disclosure obligations to consumers for whom we hold or process personal data including, but not limited to:

◦ California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act of 2020, or the CCPA, which took effect on January 1, 2023;

◦ Virginia Consumer Data Protection Act, or the VCDPA, which took effect on January 1, 2023;

◦ Colorado Privacy Act, or the CPA, which will take effect on July 1, 2023;

◦ Connecticut Data Privacy Act, or CDPA, which will take effect on July 1, 2023;

◦ Utah Consumer Privacy Act, or the UCPA, which will take effect on December 31, 2023.

◦ Colorado Privacy Act, or the CPA, which took effect on July 1, 2023;

◦ Connecticut Data Privacy Act, or CDPA, which took effect on July 1, 2023;

◦ Utah Consumer Privacy Act, or the UCPA, which took effect on December 31, 2023.

In addition, we must make contributions and other payments on our usage-based fees to state and local governmental entities.

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Non-compliance with the GDPR can trigger steep fines of up to €20 million or 4% of total worldwide annual turnover, whichever is higher.

In addition, among other comprehensive privacy laws, we are subject to the UK’s Data Protection Act, Canada’s Personal Information Protection and Electronic Documents Act, or PIPEDA, and analogous provincial laws, emerging U.S.

In addition, among other comprehensive privacy laws around the world, we are subject to the UK’s Data Protection Act, Canada’s Personal Information Protection and Electronic Documents Act, or PIPEDA, and analogous provincial laws, and emerging U.S.

state privacy laws, which collectively impose similar data privacy and security obligations on our processing of personal data.

The legislative and regulatory scheme for telecommunications service providers and other solutions we provide will continue to evolve and can be expected to change the competitive environment for these services.

Our regulatory obligations in foreign jurisdictions could impact the use or cost of our solution in international locations as data protection and privacy laws and regulations around the world continue to evolve, and which may also address the use of certain types of AI-based systems and solutions within their scope.

Furthermore, we have defined and implemented a layered information governance program comprising a defined framework of policies, operational processes and controls.

Our framework was developed using international, sector or "data type" specific standards including, but not limited to:

• International Organization for Standardization - ISO 27001:2013 Information Security Management Systems Standard;

• Payment Card Industry Data Security Standard.

• AICPA - System and Organization Controls SOC 2, Type 2 Security and Availability criteria;

• Health Insurance Portability and Accountability Act (HIPAA) that is designed to protect the privacy and security of protected health information (PHI);

• ISO 27017 - Information technology – Security techniques – Code of practice for information security controls based on ISO/IEC 27002 for cloud services;

• ISO 27018 - Information technology — Security techniques — Code of practice for protection of personally identifiable information (PII) in public clouds acting as PII processors;

• NIST 800-53 Rev 5 - Security and Privacy Controls for Information Systems and Organizations.

A key component of our framework is that it evolves based on the changing needs of our business, customer and regulatory framework requirements.

Additionally, our framework is subject to annual independent verification audits performed by qualified and experienced external third parties who issue to us SOC 2 Type 2, PCI AOC, and HIPAA HiTech attestation reports, and who certify us to the ISO 27001:2013 Information Security Management System standard.

The legislative and regulatory scheme, as well as the information governance programs, relevant to telecommunications service providers and other solutions we provide will continue to evolve and can be expected to change the competitive environment for these services.

It is not possible to predict how such evolution and changes will affect our business or our industry.

If we do not comply with current or future rules or regulations that apply to our business, we could be subject to substantial fines and penalties, we may have to restructure our service offerings, exit certain markets, accept lower margins or raise the price of our services, any of which could harm our business and results of operations.

If we do not comply with current or future rules or regulations that apply to our business, we could be subject to substantial fines and penalties, we may have to restructure our service offerings,

exit certain markets, accept lower margins or raise the price of our services, any of which could harm our business and results of operations.

See “Risk Factors — Risks Related to Regulatory Matters” under ITEM 1A of this Form 10-K for more information.

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What changed 10-K

Item 1. Business