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The following is a summary of the principal risks that could adversely affect our business, financial condition, results of operations, and future prospects.
−Removed: • Adverse economic conditions, including the impact of macroeconomic challenges, including continued inflation, uncertainty regarding consumer spending, high interest rates, fluctuations in currency rates, the impact of the Russia-Ukraine conflict, the impact of conflicts in the Middle East, and other factors, may continue to harm our business.
+Added: • Adverse economic conditions, including the impact of macroeconomic challenges, global tariff increases and potential future increases and announcements regarding same, continued inflation, uncertainty regarding consumer spending, high interest rates, fluctuations in currency rates, the impact of current and potential global conflicts, and other factors, may continue to harm our business.
• If we are unable to attract new customers or sell additional services and functionality to our existing customers, our revenue and revenue growth will be harmed.
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• Because a significant percentage of our revenue is derived from existing customers, downturns or upturns in new sales will not be immediately reflected in our operating results and may be difficult to discern.
−Removed: • If we fail to manage our technical operations infrastructure, our existing customers may experience service outages, our new customers may experience delays in the deployment of our solution and we could be subject to, among other things, claims for credits or damages.
+Added: • If we fail to manage our technical operations infrastructure, our existing customers may experience service outages, our new customers may experience delays in the deployment of our solution and we could be subject to claims for credits or damages, among other things.
+Added: • If we are unable to attract and retain highly skilled leaders and other employees, our business and results of operations may be harmed.
• As AI solutions will likely perform an increasing proportion of contact center interactions, if we are unable to replace decreases in subscription revenue from licenses with revenue from the sale of additional AI solutions, our revenue, results of operations and business will be harmed.
• Further development of our AI solutions may not be successful and may result in reputational harm and our future operating results could be materially harmed.
+Added: • The AI technology and features incorporated into our solution include new and evolving technologies that may present both legal and business risks.
• We have established, and are continuing to increase, our network of technology solution distributors and resellers to sell our solution;
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• Our quarterly and annual results may fluctuate significantly, including as a result of the timing and success of new product and feature introductions by us, may not fully reflect the underlying performance of our business and may result in decreases in the price of our common stock.
−Removed: • If we are unable to attract and retain highly skilled leaders and other employees, our business and results of operations may be adversely affected.
• Our historical growth may not be indicative of our future growth, and even if we continue to grow rapidly, we may fail to manage our growth effectively.
• Failure to adequately retain and expand our sales force will impede our growth.
−Removed: • The AI technology and features incorporated into our solution include new and evolving technologies that may present both legal and business risks.
• The use of AI by our workforce may present risks to our business.
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• We rely on third-party telecommunications and internet service providers to provide our customers and their customers with telecommunication services and connectivity to our cloud contact center software and any failure by these service providers to provide reliable services could cause us to lose customers and subject us to claims for credits or damages, among other things.
−Removed: • We have a history of losses and we may be unable to achieve or sustain profitability.
+Added: • Prior to 2025, we had a history of losses and we may be unable to sustain profitability.
• Our stock price has been volatile, may continue to be volatile and may decline, including due to factors beyond our control.
• We may not be able to secure additional financing on favorable terms, or at all, to meet our future capital needs.
+Added: • We may not achieve the anticipated benefits of share repurchase activity.
• Failure to comply with laws and regulations could harm our business and our reputation.
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• our ability to capitalize on the transition by our customers to AI solutions;
−Removed: • our ability to successfully integrate companies, businesses and technology that we acquire and achieve a positive return on our investment;
−Removed: • adverse economic conditions, including the impact of macroeconomic challenges, including continued inflation, uncertainty regarding consumer spending, high interest rates, fluctuations in currency rates, the impact of the Russia-Ukraine conflict, the impact of conflicts in the Middle East, or other factors;
+Added: • our ability to successfully integrate companies, businesses and technologies that we acquire and achieve a positive return on our investment;
+Added: • adverse economic conditions, including the impact of macroeconomic challenges, global tariff increases and potential future increases and announcements regarding same, continued inflation, uncertainty regarding consumer spending, high interest rates, fluctuations in currency rates, the impact of current and potential global conflicts, or other factors;
• network outages or security incidents, which may result in additional expenses or losses, legal or regulatory actions, the loss of customers, the provision of customer credits, and harm to our reputation;
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• our ability to obtain additional financing on acceptable terms if and when needed;
+Added: • the effects of our share repurchase program;
• the timing of expenses related to any future acquisition transactions;
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In addition, our subscription model makes it difficult for us to rapidly increase our revenue through additional sales in any period, as revenue from new customers will be recognized over time as services are delivered.
−Removed: Moreover, many of our customers initially deploy our solution to support only a portion of their contact center agents and, therefore, we may not generate significant revenue from these new customers at the outset of our relationship, if at all.
+Added: Moreover, many of our customers initially deploy our solution to support only a portion of their contact center needs and, therefore, we may not generate significant revenue from these new customers at the outset of our relationship, if at all.
Any increase to our revenue and the value of these existing customer relationships will only be reflected in our results of operations as subscription revenue is recognized, and if and when these customers increase the number of licenses and the level of consumption or capacity of our solution.
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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 licenses purchased by our customers, the increasing reliance on public cloud providers, and the level of usage and professional services and support required by our customers.
−Removed: For example, our larger customers 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.
+Added: Our gross margins vary depending on numerous factors related to the implementation and use of our solution, including the features and number of licenses purchased by our customers, the increasing reliance on public cloud providers, and the level of usage and professional services and support required by our customers.
+Added: For example, our larger customers typically require more professional services, and because our professional services offerings typically have negative margins, any increase in sales of professional services could harm our gross margins and operating results.
We also have lower margins on our usage revenues.
Sales to larger organizations may also entail longer sales cycles and more significant selling efforts and expense.
−Removed: Selling to smaller customers may involve smaller contract sizes, fewer opportunities to sell additional services, a higher likelihood of contract terminations, lower returns on sales and marketing expense, fewer potential agents and greater credit risk and uncertainty.
+Added: Selling to smaller customers may involve smaller contract sizes, fewer opportunities to sell additional services, a higher likelihood of contract terminations, lower returns on sales and marketing expense,
+Added: fewer potential agents and greater credit risk and uncertainty.
If the mix of organizations that purchase our solution changes, our revenues and gross margins could decrease, and our operating results could be harmed.
−Removed: We have a history of losses and we may be unable to achieve or sustain profitability.
−Removed: We have incurred losses in each annual period since our inception in 2001.
−Removed: We incurred net losses of $12.8 million, $81.8 million and $94.7 million for the years ended December 31, 2024, 2023 and 2022, respectively.
+Added: Prior to 2025, we had a history of losses, and we may be unable to sustain profitability.
+Added: Prior to 2025, we incurred losses in each annual period since our inception in 2001.
+Added: We incurred net income (losses) of $39.4 million, $(12.8) million and $(81.8) million for the years ended December 31, 2025, 2024 and 2023, respectively.
As of December 31, 2025, we had an accumulated deficit of $378.2 million.
−Removed: These losses and our accumulated deficit reflect the substantial investments we have made, and continue to make, to develop our solution and acquire new customers, among other expenses.
+Added: The historical losses and our accumulated deficit reflect the substantial investments we made, and continue to make, to develop our solution and acquire new customers, among other expenses.
We expect the dollar amount of our costs and expenses to increase in the future as revenue increases, although at a slower rate than the expected growth in revenue.
−Removed: We expect our annual losses to continue for the foreseeable future as we continue to expand our business.
+Added: We expect to continue to make further investments for the foreseeable future as we continue to expand our business, which may cause us to experience losses in the future.
In addition, as a public company, we incur significant legal, accounting and other expenses.
−Removed: Our historical or recent growth in revenues is not necessarily indicative of our future performance.
−Removed: Accordingly, there is no assurance that we will achieve profitability in the future or that, if we do become profitable, we will sustain profitability.
+Added: Our historical or recent growth in revenues and our current positive net income position is not necessarily indicative of our future performance.
+Added: Accordingly, there is no assurance that we will sustain our current profitability.
Risks Related to Our Growth
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• increase our existing customers’ use of our solution, including additional and new features of our solution;
+Added: • offset any losses or lower growth in license revenue with subscriptions for our AI solutions;
• increase the functionality of our solution through the implementation and enhancement of AI capabilities;
• maintain our existing customers and their level of subscriptions and related usage, and grow subscriptions within our existing customer base;
−Removed: • respond to adverse economic conditions, including the impact of macroeconomic challenges, including continued inflation, uncertainty regarding consumer spending, high interest rates, fluctuations in currency rates, the impact of the Russia-Ukraine conflict, the impact of conflicts in the Middle East, or other factors;
+Added: • respond to adverse economic conditions, including the impact of macroeconomic challenges, global tariff increases and potential future increases and announcements regarding same, continued inflation, uncertainty regarding consumer spending, high interest rates, fluctuations in currency rates, the impact of current and potential global conflicts, or other factors;
• respond to general macroeconomic factors and industry and market conditions;
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(such as our acquisition of Acqueon in 2024) and formation of new legal entities, which will increase the complexity of our operations, administration and infrastructure.
−Removed: Our success will depend in part on our ability to manage this growth effectively.
−Removed: To manage the expected growth of our
−Removed: operations over the longer term, we will need to continue to improve our operational, financial and management controls and our reporting systems and procedures.
+Added: Our success will depend in part on our ability to manage this growth effectively and achieve the intended return on our investments.
+Added: To manage the expected growth of our operations over the longer term, we will need to continue to improve our operational, financial and management controls and our reporting systems and procedures.
Failure to effectively manage growth could result in difficulties or delays in adding new customers, declines in quality or customer 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.
The expansion of our operations over the longer term will make it more difficult for us to generate earnings or offset any future revenue shortfalls by quickly reducing costs and expenses.
−Removed: If we fail to manage growth, we will be unable to execute our business plan successfully.
+Added: If we fail to manage growth, we will be unable to execute our business plan successfully and our stock price may decline.
Our growth depends in part on the success of our strategic relationships with third parties and our failure to successfully maintain, grow and manage these relationships could harm our business.
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Furthermore, there has and continues to be a significant amount of consolidation in our industry and adjacent industries, and if our partners are acquired, fail to work effectively with us or go out of business, they may no longer support or promote our solution, or may be less effective in doing so, which could harm our business, financial condition and operations.
−Removed: If we are unsuccessful in establishing or maintaining our strategic relationships with third parties, or these partners fail to recommend our solution, our ability to compete in the marketplace or to grow our revenues could be impaired and our operating results may suffer.
+Added: If we are unsuccessful in establishing or maintaining our strategic relationships with third parties, or these partners fail to recommend, sell or incorporate our solution, our ability to compete in the marketplace or grow our revenues could be impaired and our operating results may suffer.
Even if we are successful, we cannot assure you that these relationships will result in increased customer usage of our solution or increased revenue.
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Our ability to forecast our future operating results is limited and subject to a number of uncertainties, including our ability to predict revenue and expense levels, and plan for and model future growth.
−Removed: These uncertainties are exacerbated by the effects of recent adverse economic conditions, including macroeconomic challenges, including continued inflation, uncertainty regarding consumer spending, high interest rates, fluctuations in currency rates, the Russia-Ukraine conflict, the impact of conflicts in the Middle East, or other factors.
+Added: These uncertainties are exacerbated by the effects of recent adverse economic conditions, including macroeconomic challenges, global tariff increases and potential future increases and announcements regarding same, continued inflation, uncertainty regarding consumer spending, high interest rates, fluctuations in currency rates, the impact of current and potential global conflicts, or other factors.
We have encountered and will continue to encounter risks and uncertainties frequently experienced by growing companies in rapidly changing industries, such as the risks and uncertainties described in this annual report.
−Removed: If our assumptions regarding these risks and uncertainties, which we use to plan our business, are incorrect or change due to
−Removed: adjustments in our markets or our competitors and their product offerings, or if we do not address these risks successfully, our operating and financial results could differ materially from our expectations and our business could suffer.
+Added: If our assumptions regarding these risks and uncertainties, which we use to plan our business, are incorrect or change due to adjustments in our markets or our competitors and their product offerings, or if we do not address these risks successfully, our operating and financial results could differ materially from our expectations and our business could suffer.
Risks Related to Our Customers
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As a result, our existing customers may not renew our agreements or may decrease their number of licenses or their consumption of our AI solutions, and we may be unable to attract new customers or grow or maintain our business with existing customers, which could harm our revenue and growth.
−Removed: For example, our installed base business, which contributes a significant portion of our annual revenue growth, continues to experience macroeonomic challenges.
+Added: For example, our installed base business, which contributes a significant portion of our annual revenue growth, continues to experience macroeconomic challenges.
To grow our business in the longer term, we plan to add new customers that are government entities.
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government customers require that we be authorized under the FedRAMP to help satisfy their own legal and regulatory compliance requirements, which requires us to undertake additional actions and expense to ensure compliance.
−Removed: We are currently undergoing processes and procedures to obtain FedRAMP authorization, which processes and procedures are costly and time consuming.
+Added: In preparation for potentially obtaining FedRAMP, we are currently undergoing processes and procedures to obtain FedRAMP authorization, which processes and procedures are costly and time consuming.
There are no assurances that we will be able to obtain such authorizations or that if obtained, this authorization will result in increased revenue or a sufficient return on our investment.
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Subscriptions and related usage by our existing customers may decrease if:
−Removed: • our customers’ business or demand for our services slows or declines due to industry cycles, seasonality, business difficulties or other reasons, including the impact of macroeconomic challenges, including continued inflation, uncertainty regarding consumer spending, high interest rates, fluctuations in currency rates, the Russia-Ukraine conflict, the impact of conflicts in the Middle East, or other factors;
+Added: • our customers’ business or demand for our services slows or declines due to industry cycles, seasonality, business difficulties or other reasons, including the impact of macroeconomic challenges, global tariff increases and potential future increases and announcements regarding same, continued inflation, uncertainty regarding consumer spending, high interest rates, fluctuations in currency rates, the impact of current and potential global conflicts, or other factors;
+Added: • we are unable to offset any losses or lower growth in license revenue with subscriptions for our AI solutions;
• our customers are not satisfied with our services, prices or the functionality of our solution;
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If customers fail to pay us under the terms of our agreements or fail to comply with the terms of our agreements, including compliance with regulatory requirements and intellectual property terms, we may terminate customers, lose revenue, be unable to collect amounts due to us, be subject to legal or regulatory action and incur costs in enforcing the terms of our contracts, including litigation.
−Removed: Some of our customers may seek bankruptcy protection or other similar relief and fail to pay amounts due to us, seek reimbursement for amounts already paid, or pay those amounts more slowly, all of which risks may be exacerbated by the effects of macroeconomic challenges, including continued inflation, uncertainty regarding consumer spending, high interest rates, fluctuations in currency rates, the Russia-Ukraine conflict, the impact of conflicts in the Middle East, or other factors, any of which could harm our operating results, financial position and cash flow.
+Added: Some of our customers may seek bankruptcy protection or other similar relief and fail to pay amounts due to us, seek reimbursement for amounts already paid, or pay those amounts more slowly, all of which risks may be exacerbated by the effects of macroeconomic challenges, global tariff increases and potential future increases and announcements regarding same, continued inflation, uncertainty regarding consumer spending, high interest rates, fluctuations in currency rates, the impact of current and potential global conflicts, or other factors, any of which could harm our operating results, financial position and cash flow.
Our business could be harmed if our customers are not satisfied with the professional services and technical support provided by us or our partners.
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To the extent we experience increased customer demand for these services, and are unable to increase corresponding revenue, our costs would increase and our operating results could be harmed.
−Removed: If a customer is not satisfied with the deployment and ongoing services performed by us or a third party, we could lose customers, miss opportunities to expand our business with these customers, incur additional costs, or suffer reduced (including negative) margins on our service revenue, any of which could damage our ability to grow our business.
+Added: If a customer is not satisfied with the deployment and ongoing services performed by us or
+Added: a third party, we could lose customers, miss opportunities to expand our business with these customers, incur additional costs, or suffer reduced (including negative) margins on our service revenue, any of which could damage our ability to grow our business.
In addition, negative publicity related to our professional services and technical support, regardless of its accuracy, may damage our business by affecting our ability to compete for new business with current and prospective customers.
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Key to our future success is the continuity and growth of our direct sales force.
−Removed: We need to continue to retain key members of our direct sales force while expanding and optimizing our sales infrastructure and headcount in
−Removed: order to grow our customer base and business.
+Added: We need to continue to retain key members of our direct sales force while expanding and optimizing our sales infrastructure and headcount in order to grow our customer base and business.
We plan to continue to expand our direct sales force, both domestically and internationally over time.
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As we continue to target our sales efforts at larger organizations, we face greater costs, longer sales and implementation cycles and less predictability in closing sales.
−Removed: These larger organizations typically require more configuration and integration services, which increases our upfront investment in sales and deployment efforts, with no guarantee that these customers will subscribe to our solution or increase the scope of their subscription.
+Added: Larger organizations typically require more configuration and integration services, which increases our upfront investment in sales and deployment efforts, with no guarantee that these customers will subscribe to our solution or increase the scope of their subscription.
Furthermore, with larger organizations, we must provide greater levels of education regarding the use and benefits of our solution to a broader group of people in order to generate a sale.
−Removed: As a result of these factors, we must devote a significant amount of sales support and professional services resources to individual customers and prospective customers, thereby increasing the cost and time required to complete sales.
+Added: As a result of these factors, we must devote a
+Added: significant amount of sales support and professional services resources to individual customers and prospective customers, thereby increasing the cost and time required to complete sales, and we may not be successful.
Our typical sales cycle for larger organizations is four to six months, but can be significantly longer, and we expect that our average sales cycle may increase as sales to larger organizations continue to grow as a percentage of our business.
Longer sales cycles could cause our operating and financial results to be less predictable and to fluctuate from period to period.
−Removed: In addition, many of our customers that are larger organizations initially deploy our solution to support only a portion of their contact center agents.
+Added: In addition, many of our customers that are larger organizations initially deploy our solution to support only a portion of their contact center needs.
Our success depends on our ability to increase the number of licenses and the level of consumption or capacity utilized by these larger organizations over time and requires the expenditure of additional sales and marketing expenses in these efforts.
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This could harm our gross profit and results of operations.
−Removed: Our recent, and any future, acquisitions will subject us to new competitors and cause us to face additional and different competition in the markets served by these businesses.
+Added: Our recent acquisitions, and any future acquisitions will, subject us to new competitors and cause us to face additional and different competition in the markets served by these businesses.
If our competitors’ products, services or technologies become more accepted than our solution, if they are successful in bringing their products or services to market earlier than ours, or if their products or services are less expensive or more technologically capable than ours, our revenues could be harmed.
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Our ability to increase our customer base and achieve broader market acceptance of our cloud contact center software solution will depend to a significant extent on our ability to expand our marketing operations.
−Removed: continue to dedicate significant resources to our marketing programs, including internet advertising, digital marketing campaigns, social media, presence at trade shows and industry events, co-marketing with strategic partners, telemarketing and out of home campaigns.
+Added: We plan to continue to dedicate significant resources to our marketing programs, including internet advertising, digital marketing campaigns, social media, presence at trade shows and industry events, co-marketing with strategic partners, and telemarketing.
The effectiveness of our internet advertising and the overall cost of internet advertising has varied over time and may vary in the future due to competition for key search terms, changes in search engine use, changes in the manner in which the leading internet advertising companies approach internet advertising, including through their policies, and changes in the search algorithms used by major search engines, any of which could result in an increase in the time spent and other financial expenditures associated with our internet advertising and a decrease in the effectiveness of our internet advertising.
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In addition, we believe that developing and maintaining widespread awareness of our brand in a cost-effective manner, both in the United States and internationally, is critical to achieving widespread acceptance of our solution, expanding our business with existing customers and attracting new customers.
−Removed: Brand promotion activities may not generate customer awareness or increase revenues, and even if they do, any increase in revenues typically occurs after the expense has been incurred, and may not offset the costs and expenses of building our brand.
+Added: Brand promotion activities may not generate customer awareness or increase revenues, and even if they do, any increase in revenues typically occurs after the expense has been incurred, and may not offset the costs and expenses of these activities.
If we fail to successfully promote, maintain and protect our brand, or incur substantial costs and expenses, we may fail to attract or retain customers necessary to realize a sufficient return on our brand-building efforts, or to achieve the widespread brand awareness that is critical to increasing customer adoption of our solution.
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In some instances, we may not be able to identify the cause or causes of these performance problems, or 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 our number of larger customers and attract increasingly larger customers than in the past, the number of users of our service and the product applications that run on our system, could harm our relationships with our customers, result in claims for credits or damages or other actions, damage our reputation, significantly reduce customer 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 performance levels, stability and security, particularly as we increase our number of larger customers and attract increasingly larger customers than in the past, and increase the number of users of our service and the product applications that run on our system, could harm our relationships with our customers, result in claims for credits or damages or other actions, damage our reputation, significantly reduce customer 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 our larger customers, as well as the number of licenses and interactions that our infrastructure supports.
As the number of licenses within our customer base grows and our customers’ use of our service increases, we need to continue to make additional investments in our capacity to maintain adequate and reliable availability, 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 our solution.
+Added: In addition, we need to properly manage our operations infrastructure in order to support version control, changes in
+Added: 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.
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While our data centers have redundant power, cooling and infrastructure, they are subject to various points of failure.
−Removed: Problems with cooling equipment, generators, uninterruptible power supply, routers, switches, or other equipment, most of
−Removed: which is under the control of our data center operators, could result in service interruptions for our customers as well as equipment damage.
+Added: Problems with cooling equipment, generators, uninterruptible power supply, routers, switches, or other equipment, most of which is under the control of our data center operators, could result in service interruptions for our customers as well as equipment damage.
Our data centers are subject to disasters such as earthquakes, floods, fires, hurricanes, cyber-attacks, acts of terrorism, sabotage, break-ins, acts of vandalism and other events, which could cause service interruptions or the operators of these data centers to close their facilities for an extended period of time or permanently.
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Further development of our AI solutions may not be successful and may result in reputational harm and our future operating results could be materially harmed.
−Removed: We plan to continue to further develop and enhance our AI-powered features, including integration of Generative AI technologies.
+Added: We plan to continue to further develop and enhance our AI-powered features, including continued further integration of Generative AI technologies.
While we aim for our AI-powered features to make agents more efficient and improve customer experience, our AI features may not achieve sufficient levels of accuracy or may not otherwise meet the needs of our customers.
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We have incorporated a number of AI-powered features into our solution, and are making investments in expanding our AI capabilities with generative AI.
−Removed: Generative AI technologies are complex and rapidly evolving, and we face significant competition from other companies as well as an evolving legal and regulatory landscape.
−Removed: The incorporation of Generative AI-powered features into our solution may subject us to new or enhanced governmental or regulatory scrutiny, litigation, confidentiality or security risks, ethical concerns, or other complications that could harm our business, reputation, financial condition or results of operations.
−Removed: Intellectual property ownership and license rights, including copyright, surrounding AI and Generative AI technologies has not been fully addressed by federal or state laws or by U.S.
−Removed: courts, and the manner in which we configure and use these technologies may expose us to claims of copyright infringement or other intellectual property misappropriation.
−Removed: New laws have been adopted in the EU, and it is possible that new laws and regulations will be adopted in the United States and in other countries, or that existing laws and regulations will be interpreted in ways that would affect the operation of our solution and the way in which we use AI.
−Removed: Further, the cost to comply with such laws or regulations could be significant and would increase our operating expenses, which could harm our business, reputation, financial condition and results of operations.
−Removed: Uncertainty around and rapid evolution of Generative AI technologies may require additional investment, including research and development of new approaches and processes, which will be costly and increase our expenses.
−Removed: AI can generate written content which contains bias, factual errors, misrepresentations, offensive language, or inappropriate statements.
−Removed: While we seek to use Generative AI in a way that is designed to minimize these risks, there are still risks of such events occurring.
−Removed: Our failure to address these risks could harm our business, reputation, financial condition and results of operations.
−Removed: In addition, the use of AI, including Generative AI,
−Removed: involves significant technical complexity and requires specialized expertise, and competition for specialized personnel in the AI industry is intense.
+Added: AI technologies are complex and rapidly evolving, and we face significant competition from other companies as well as an evolving legal and regulatory landscape.
+Added: The incorporation of AI-powered features into our solution may subject us to new or enhanced governmental or regulatory scrutiny, litigation, confidentiality or security risks, ethical concerns, claims brought by private parties and other complications that could harm our business, reputation, financial condition or results of operations.
+Added: For example, our business, reputation, financial condition or results of operations may be adversely affected if outputs generated by our AI-powered solutions are or are alleged to be inaccurate, biased or infringing.
+Added: Our failure to
+Added: address these risks could harm our business, reputation, financial condition and results of operations.
+Added: While we seek to use AI in our solutions in a way that is designed to minimize these risks, there are still risks of such events occurring.
+Added: The regulatory environment around AI is evolving rapidly, with new laws and bills being regularly introduced, amended and repealed on the federal and state level, in addition to outside of the U.S., including the EU.
+Added: These new and changing laws and regulations could affect the operation of our solutions and the way in which we use AI in our products.
+Added: Further, the cost to comply with such new and changing laws or regulations could be significant and would increase our operating expenses, which could harm our business, reputation, financial condition and results of operations.
+Added: Rapid evolution of AI technologies may require additional investment, including research and development of new approaches and processes, which may be costly and increase our expenses.
+Added: In addition, the use and deployment of AI involves significant technical complexity and requires specialized expertise, and competition for specialized personnel in the AI industry is intense.
Any disruption or failure in our AI systems or infrastructure could result in delays or errors in our operations, which could harm our business, reputation, financial condition and results of operations.
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We have guidelines specifically directed at the use of AI tools in the workplace, including our code of conduct, confidentiality obligations, IT internal use policies and other corporate policies.
−Removed: Nevertheless, our workforce may use these authorized or unauthorized tools, which poses potential risks relating to the protection of data, including cybersecurity risk, exposure of our proprietary confidential information to unauthorized recipients and the misuse of our or third-party intellectual property.
−Removed: Use of AI technology by our workforce even when used consistent with our guidelines, may result in allegations or claims against us related to violation of third-party intellectual property rights, unauthorized access to or use of proprietary information and failure to comply with open source software requirements.
+Added: Nevertheless, our workforce may use these authorized or unauthorized tools, which poses potential risks relating to intellectual property and data protection, including cybersecurity risk, exposure of our proprietary confidential information to unauthorized recipients, which can result in the loss of intellectual property protection of such information, the misuse of our or third-party intellectual property and the inability to claim intellectual property ownership of outputs from AI tools.
+Added: Use of AI technology by our workforce even when used consistent with our guidelines, may result in allegations or claims against us related to violation of third-party intellectual property rights, unauthorized access to or use of proprietary information and failure to comply with open source software licenses.
AI technology may also produce inaccurate responses that could lead to errors in our decision-making, solution development, operations or other business activities, which could have a negative impact on our business, operating results and financial condition.
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Also, our insurers may disclaim coverage.
−Removed: Our liability insurance also may not continue to be available to us on reasonable terms, in sufficient amounts, or at all.
+Added: Our liability insurance also may not continue to be available to us on reasonable
+Added: terms, in sufficient amounts, or at all.
Any contract or product liability claims successfully brought against us would harm our business.
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In addition, we have, and will continue to, make significant investments in AI-based capabilities to enhance our solution.
−Removed: If we are unable to develop or acquire new features for
−Removed: our existing solution or new applications that achieve market acceptance or that keep pace with technological developments, our business would be harmed.
+Added: These efforts depend on scarce specialized talent in a competitive market with higher compensation costs, and they also require substantial ongoing spend for compute, data, governance, and continuous model maintenance.
+Added: 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.
We are focused on enhancing the reliability, features and functionality of our contact center solution to enhance its utility to our customers, particularly larger customers, with complex, dynamic and global operations.
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Our customers 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 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.
+Added: These third-party providers or their partners could alter their products so that our solution no longer integrates well, or at all, with them, or they could delay or deny our access to technology releases that allow us to
+Added: adapt our solution to integrate with their products in a timely fashion.
In addition, to the extent that third-party providers are adversely impacted by macroeconomic challenges, their development of software that is integrated with our solution may be delayed, which could have an adverse impact on the implementation of, or demand for, our solution by our customers.
−Removed: Such third-party providers could also develop competing solutions, including AI solutions, or favor integration of our competitors’ products over our solution, making our solution less attractive to our customers.
+Added: Such third-party providers could also develop competing solutions, including AI solutions, or favor integration of our competitors’ products over our solution, and terminate or make more difficult our ability to integrate with their solutions, making our solution less attractive to our customers.
If we cannot adapt our solution to changes in complementary technology deployed by our customers, it may significantly impair our ability to compete effectively.
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For example, in the event of a major earthquake, fire or flooding on the West Coast of the United States (where our corporate headquarters and one of our data centers are located), hurricane, tropical storm, flooding or severe weather in the southeastern United States (where our other U.S.
−Removed: data center is located) or catastrophic events such as fire, power loss, telecommunications failure, cyber-attack, global pandemic, war or terrorist attack, we may be unable to continue our operations and may endure system and service interruptions, reputational harm, delays in product development, breaches of data security and loss of critical data, any of which could harm our business and operating results.
+Added: data center is located) or catastrophic events such as fire, power loss, telecommunications failure, cyber-attack, global pandemic, war or terrorist attack, we may be unable to continue our operations and may experience system and service interruptions, reputational harm, delays in product development, breaches of data security and loss of critical data, any of which could harm our business and operating results.
We are not insured against all claims, events or accidents that might occur.
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In addition, we depend on our internet bandwidth suppliers to provide uninterrupted and error-free service through their telecommunications networks.
−Removed: Some of our services may require that users of our service obtain their own internet bandwidth.
+Added: Some of our services require that users of our service obtain their own internet bandwidth.
We exercise little control over these third-party providers, which increases our vulnerability to problems with the services they provide.
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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 customers 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 increase our costs, as well as harm our customer relationships, business, financial condition and operating results.
+Added: Delays caused by switching our technology to another service provider, if available, and qualifying
+Added: this new service provider could materially increase our costs, as well as harm our customer 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 customers, cause us to lose customers, result in claims for credits or damages, increase our costs or the costs incurred by our customers, damage our reputation, significantly reduce customer demand for our solution and seriously harm our financial condition and operating results.
Our customers and their customers rely on internet service providers to provide them with access and connectivity to our cloud contact center software and changes in how internet service providers handle and charge for access to the internet could materially harm our customer relationships, business, financial condition and operations results.
−Removed: In 2015, the FCC released an order, commonly referred to as network neutrality, that, among other things, prohibited (i) the impairment or degradation of lawful internet traffic on the basis of content, application or service and (ii) the practice of favoring some internet traffic over other internet traffic based on the payment of higher fees.
−Removed: In June 2018, the FCC repealed the network neutrality regulations imposed by the 2015 order.
−Removed: In April 2024, the FCC adopted its Safeguarding and Securing the Open Internet Order (“SSOIO”) restoring the 2015 Net Neutrality obligations and standards.
−Removed: However, a federal court has stayed the FCC’s SSOIO and rules adopted therein.
−Removed: If the FCC’s April 2024 SSOIO and rules do not become effective, Internet service providers in the U.S.
−Removed: may be able to impair or degrade the use of, or increase the cost of using, our solution.
−Removed: Notwithstanding, states and other countries may adopt their own forms of customer service standards for Internet access.
+Added: The FCC is currently imposing minimal regulatory requirements on Internet service providers and, as a result Internet service providers in the U.S.
+Added: may be able to prioritize their own affiliated Internet traffic over the traffic of third parties, which could impair or degrade the use of, or increase the cost of using, our solution.
+Added: Other countries have adopted their own forms of customer service standards for Internet access.
As a result, network neutrality regulations vary widely among both the domestic and international jurisdictions in which we operate.
−Removed: While certain jurisdictions have strong protections for services such as ours, others either lack a network neutrality framework or otherwise do not enforce network neutrality regulations.
+Added: While certain jurisdictions have strong protections for services such as ours, others, including the U.S., either lack a network neutrality framework or otherwise do not enforce network neutrality regulations.
The impairment, degradation or prioritization of lawful internet traffic by internet service providers could materially harm the performance of our solution, our customer relationships, business, financial condition and operating results.
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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., Latin America and Australia.
−Removed: However, we already have significant operations outside these countries and regions, and we expect to grow our international presence in the future.
−Removed: For instance, in 2024 we completed our acquisition of Acqueon, a real-time revenue execution platform, with operations in India.
−Removed: Our international employees are primarily located in the Philippines, where technical support, training and other professional services are performed, Portugal, where we continue to increase our engineering and operations previously performed in Russia, and India and Australia, where additional portions of engineering and operations are performed.
−Removed: Operating in international markets requires significant resources and management attention and will subject us to regulatory, tax, economic, and political risks that are different from those in the U.S.
+Added: We have not generated significant revenues outside of the U.S., Canada, the U.K., Latin America and Australia, but we have significant operations outside these countries and regions, including operations in India, and we expect to grow our international presence in the future.
+Added: Our international employees are primarily located in the Philippines, where technical support, training and other professional services are performed, India and Portugal, where we continue to increase our engineering and operations, and Australia, where additional portions of engineering and operations are performed.
+Added: Operating in international markets requires significant resources and management attention devoted to different regulatory, tax, economic, and political risks.
In addition, in order to effectively market and sell our solution in international markets, we often must localize our solution, including the language in which our solution is offered, which increases our costs, could result in delays in offering our solution in these markets and may decrease the effectiveness of our sales efforts.
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Violations of laws or key control policies by our employees, contractors, strategic partners or agents could result in delays in revenue recognition, financial reporting misstatements, fines, delays in filing financial reports required as a public company, penalties, prohibitions on selling our solution or harm to our reputation, any of which could harm our business.
−Removed: While we have worked to avoid and mitigate any effects of the Russia-Ukraine conflict on our business, employees and customers, the conflict is ongoing, and its ultimate scope and broader impacts cannot be predicted with certainty.
−Removed: While the conflict has not yet had a negative impact on our employees, business, or operations outside of Russia, it could, and if the conflict or related geopolitical tensions extend to other countries, negative impacts could also expand.
−Removed: Our business and operations could be harmed and our costs could increase if our or our customers’ or other partners’ manufacturing, logistics or other operations, costs or financial performance are disrupted or adversely affected.
−Removed: The Russia-Ukraine conflict has also had an adverse impact on the global economy, including on the inflation rate, and has contributed to significant fluctuation in global stock markets, including The
−Removed: NASDAQ Stock Market, on which our common stock is listed.
−Removed: All of these risks and conditions could harm our future sales, business and operating results.
Sales to customers outside the United States or with international operations and our international sales efforts and operations support expose us to risks inherent in international sales and operations.
−Removed: A key element of our growth strategy is to expand our international sales efforts and develop a worldwide customer base.
+Added: A key element of our growth strategy is to expand our international sales efforts and develop a more global customer base.
Because of our limited experience with international sales, our international expansion may not be successful and may not produce the return on investment we expect.
−Removed: To date, we have realized only a small portion of our revenues from customers outside the United States, with approximately 89% of our revenue for the year ended December 31, 2024 derived from customers with billing addresses in the United States.
+Added: To date, we have realized only a small portion
+Added: of our revenues from customers outside the United States, with approximately 89% of our revenue for the year ended December 31, 2025 derived from customers with billing addresses in the United States.
We have increased and are continuing to increase our sales, marketing and support personnel in both the U.K.
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and Amsterdam and are increasing our use of public cloud solutions in the European Union as well.
−Removed: Operating in international markets requires significant resources and management attention and subjects us to intellectual property, regulatory, tax, economic and political risks that are different from those in the United States.
+Added: Operating in international markets requires significant resources and management attention and subjects us to intellectual property, regulatory, tax, economic and political risks that are different from, and often more stringent than, those in the United States.
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:
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• weaker protection for intellectual property and other legal rights than in the U.S.
−Removed: and practical difficulties in enforcing intellectual property and other rights outside of the U.S.;
+Added: and practical difficulties in enforcing intellectual property and other rights outside of the U.S., leading to increased risk of piracy, counterfeiting and other misappropriation of our intellectual property;
• privacy and data protection laws and regulations that are complex, expensive to comply with and may require that customer data be stored and processed in a designated territory;
−Removed: • increased risk of piracy, counterfeiting and other misappropriation of our intellectual property in our locations outside the U.S.;
−Removed: • new and different sources of competition;
−Removed: • general economic conditions in international markets;
+Added: • new and different sources of competition, including laws and business practices favoring local competitors;
+Added: • general economic conditions in international markets, including increased financial accounting and reporting burdens and complexities and potential adverse tax consequences;
• fluctuations in the value of the U.S.
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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;
−Removed: • increased financial accounting and reporting burdens and complexities;
• restrictions or taxes on the transfer of funds;
−Removed: • adverse tax consequences;
• unstable economic and political conditions and potential accompanying shifts in laws and regulations.
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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.
−Removed: Adverse economic conditions in these markets, including the impact of macroeconomic challenges, including continued inflation, uncertainty regarding consumer spending, high interest rates, fluctuations in currency exchange rates, the impact of the Russia-Ukraine conflict, the impact of conflicts in the Middle East, has and will likely continue to reduce overall demand for our solution, particularly in our installed base.
+Added: Adverse economic conditions in these markets, including the impact of macroeconomic challenges, global tariff increases and potential future increases and announcements regarding same, continued inflation, uncertainty regarding consumer spending, high interest rates, fluctuations in currency exchange rates, and the impact of current and potential global conflicts, has and will likely continue to reduce overall demand for our solution, particularly in our installed base.
These factors could also delay our customers' implementation of our solution, delay or lengthen sales cycles, delay international expansion, lower prices for our solution, and may also lead to longer collection cycles for payments due from our customers, as well as result in an increase in customer bad debt.
While the implications of macroeconomic events on our business, results of operations and overall financial position remain uncertain over the long term, we expect that adverse economic conditions will continue to have an adverse impact on our revenue in future periods.
−Removed: For example, our installed base business, which contributes a significant portion of our annual revenue growth, continues to experience macroeonomic challenges.
+Added: For example, our installed base business, which contributes a significant portion of our annual revenue growth, continues to experience macroeconomic challenges.
All of these potential circumstances could lead to slower growth, or even a decline in, our revenues, operating results and cash flows.
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Our solution involves the storage and transmission of our customers’ information, including information about our customers’ customers or other information treated by our customers as confidential.
−Removed: Unauthorized access, unauthorized use of our systems or those of third parties on which we rely or the data stored within those systems, cybersecurity incidents, security breaches or other cyber-attacks could result in the loss of confidentiality, integrity and availability of such information or systems, leading to litigation, governmental investigations and enforcements actions, indemnity obligations, increased expense, and other liability.
+Added: Unauthorized access, unauthorized use of our systems or those of third parties on which we rely or the data stored within those systems, cybersecurity incidents, security breaches or other cyber-attacks could result in the loss of confidentiality, integrity and availability of such information or systems, leading to litigation, regulatory or governmental investigations and enforcement actions, indemnity obligations, increased expense, and other liability.
Such incidents could also cause interruptions to the solutions we provide, degrade the user experience, harm our reputation or cause customers to lose confidence in our solution.
−Removed: We are required to comply with laws and regulations that require us to protect personal data and we may have contractual and other legal obligations to notify customers or other relevant stakeholders of security breaches or other security events.
−Removed: While we have implemented security measures to protect customer and other confidential information and minimize the risk of security breaches and other cyber-attacks, if these measures fail as a result of a cybersecurity incident, cyber-attack, ransomware, denial of service attacks, software vulnerability, other third-party action, employee error, malfeasance or otherwise, and someone unlawfully or without authorization obtains access to our customers’ information, including personal data, 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 protect personal data and we may have contractual and other legal obligations to notify customers, governmental authorities, individuals, or other relevant stakeholders of cybersecurity incidents, security breaches or other security events.
+Added: While we have implemented security measures to protect customer and other confidential information and personal data and minimize the risk of security breaches and other cyber-attacks, if these measures fail as a result of a cybersecurity incident, cyber-attack, ransomware, denial of service attacks, software vulnerability, other third-party action, employee error, malfeasance or otherwise, and someone unlawfully or without authorization obtains access to our customers’ information, including personal data, our reputation could be damaged, our business may suffer and we could incur significant liability.
Cybersecurity threat actors also may attempt to exploit vulnerabilities through software, including software commonly used by companies in cloud-based services and bundled software.
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Moreover, any failure or cybersecurity incidents or similar issues on the part of third parties, including our customers or other hosting or service providers, to maintain appropriate security measures for their own systems could harm our relationships with our customers, result in claims against us for credits or damages, damage our reputation and significantly reduce customer demand for our solution.
−Removed: Any or all of these issues could harm our ability to attract new customers, cause existing customers to cancel, reduce or not renew their subscriptions, result in reputational damage or subject us to third-party lawsuits (including class actions), governmental investigations and enforcement actions, regulatory fines or other action or liability, including orders or consent decrees forcing us to modify our business practices, all of which could materially harm our business, reputation or financial results.
+Added: Any or all of these issues could harm our ability to attract new customers, cause existing customers to cancel, reduce or not renew their subscriptions, result in reputational damage or subject us to third-party lawsuits (including class actions), governmental investigations and enforcement actions, regulatory fines or other action or liability, including orders or
+Added: consent decrees forcing us to modify our business practices, all of which could materially harm our business, reputation or financial results.
+Added: Our increasing leverage of the public cloud infrastructure to deliver our solutions creates different risks from those associated with our use of private data centers.
+Added: For instance, we are dependent on the security and reliability of our third-party cloud providers, and any disruption of their services could harm our business.
+Added: Furthermore, under the shared responsibility model of cloud computing, the provider is responsible for the security of the underlying cloud infrastructure and we are responsible for securing our data and workloads within that infrastructure.
+Added: Misconfigurations or vulnerabilities in our cloud environment could lead to security breaches, data loss, and reputational harm.
If we are unable to attract and retain highly skilled leaders and other employees, our business and results of operations may be adversely affected.
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Competition for these personnel is intense, especially for senior executives, engineers highly experienced in designing and developing cloud software and AI 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, and this difficulty could be further exacerbated by any senior leadership or other key employee transitions we experience.
−Removed: 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.
+Added: We recently hired a new Chief Executive Officer and have made several other changes to our senior leadership team.
+Added: If we are unable to effectively onboard our new Chief Executive Officer or our other new executives, or we are unable to effectively execute new strategies and changes to our business under their direction, or such changes take longer than expected, our business and financial results could be harmed and the price of our common stock could decline.
+Added: We have, from time-to-time, experienced, and we may continue to experience, difficulty in hiring and retaining employees with appropriate qualifications, and this difficulty could be further exacerbated by any senior leadership or other key employee transitions.
We believe that our corporate culture is a critical component to our ability to attract and retain employees.
−Removed: As we grow, we will need to continually enhance our efforts to maintain our corporate culture, which is more difficult due to our policies that continue to allow limited work from home flexibility stemming from the COVID-19 pandemic.
+Added: As we grow, we will need to continually enhance our efforts to maintain our corporate culture, which is more difficult due to a geographically distributed workforce and our policies that allow limited work from home flexibility in jurisdictions where we have offices.
We may experience increased attrition of employees to other opportunities, 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.
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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.
−Removed: For instance, in 2019, we acquired substantially all of the assets of Whendu LLC, or Whendu, including its iPaaS platform, in 2020, we acquired both Virtual Observer and Inference, in 2023, we acquired Aceyus, and in 2024, we acquired Acqueon.
+Added: For instance, in 2023, we acquired Aceyus, and in 2024, we acquired Acqueon.
The pursuit of potential acquisitions may divert the attention of management, and cause us to incur various costs and expenses in identifying, investigating and pursuing acquisitions, whether or not they are consummated.
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To date, the growth in our business has been primarily organic, and we have limited experience in acquiring other businesses.
−Removed: With respect to our recent acquisitions and any future acquisitions, we may not be able to successfully integrate acquired personnel, operations, product features and technologies, or effectively manage the combined business following the acquisition.
+Added: With respect to our recent acquisitions and any future acquisitions, we may not be able to successfully integrate acquired personnel, operations, product features and technologies, or effectively manage the combined business following the acquisition, which may result in our failure to achieve the anticipated benefits from any such acquisition.
We also may not achieve the anticipated benefits from these or any future acquisitions due to a number of factors, including:
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We have a substantial amount of debt.
−Removed: As of December 31, 2024, we had approximately $434.4 million in principal outstanding under our convertible senior notes issued in May and June 2020 that mature on June 1, 2025, and approximately $747.5 million in principal outstanding under our convertible senior notes issued in March 2024 that mature on March 15, 2029.
−Removed: We currently plan to use cash to settle amounts due under our convertible senior notes that mature on June 1, 2025, which will decrease our cash and cash equivalents, could preclude us from making other investments in our business and operations, and could necessitate or accelerate additional fundraising by us.
+Added: As of December 31, 2025, we had approximately $747.5 million in principal outstanding under our convertible senior notes issued in March 2024 that mature on March 15, 2029.
See Note 6 to the consolidated financial statements.
−Removed: Any debt financing obtained by us in the future would cause us to incur additional debt service expenses and could include restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and pursue business opportunities and future debt could be secured by all of our assets.
−Removed: 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.
+Added: Any debt financing obtained by us in the future would cause us to incur additional debt service expense and could include restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and pursue business opportunities, and could be secured by all of our assets.
+Added: 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
+Added: company, and any new equity securities we issue could have rights, preferences and privileges senior to those of holders of our common stock.
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.
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Because of these factors and other specific requirements under U.S.
−Removed: GAAP for revenue recognition, we must have precise terms and conditions in our arrangements in order to recognize revenue when we deliver our solution or perform our professional services.
+Added: GAAP for revenue recognition, we must have precise terms and conditions in our arrangements in order to recognize revenue when we deliver our solution or
+Added: perform our professional services.
Negotiation of mutually acceptable terms and conditions can extend our sales cycle, and we may accept terms and conditions that do not permit revenue recognition at the time of delivery.
+Added: If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our operating results could be adversely affected.
+Added: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements.
+Added: We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in the section titled Item 7.
+Added: Management’s Discussion and Analysis of Financial Condition and Results of Operations.
+Added: Our operating results may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our operating results to fall below the expectations of securities analysts and investors, resulting in a decline in the trading price of our common stock.
Risks Related to Our Intellectual Property
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Our success and ability to compete depend in part upon our intellectual property.
−Removed: As of December 31, 2024, our intellectual property portfolio included nine registered U.S.
−Removed: trademarks, three pending U.S.
−Removed: trademark applications, 23 issued U.S.
−Removed: patents, seven pending U.S.
−Removed: patent applications and one registered U.S.
−Removed: As of December 31, 2024, outside the U.S.
−Removed: we also had 27 trademark registrations, two pending trademark applications, five issued patents and three pending international national phase patent applications.
−Removed: There are no PCT patent applications.
−Removed: The expiration dates of our issued patents range from 2025 to 2043.
We primarily rely on copyright, trade secret and trademark laws, trade secret protection and confidentiality or license agreements with our employees, customers, partners and others to protect our intellectual property rights.
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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.
−Removed: As we expand into additional countries, these risks will be further enhanced.
−Removed: 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.
+Added: As we expand into additional countries, these risks will increase.
+Added: Consequently, we may be unable to prevent our proprietary technology from being infringed or exploited outside the U.S., 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.
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The existence of such a patent, copyright or other protections, or our inability to negotiate a license for any such technology on acceptable terms, could force us to cease using such technology and offering solutions incorporating such technology.
−Removed: Others have claimed, or in the future may claim, that our solution and underlying technology infringe or violate their intellectual property rights.
+Added: Others have claimed, and in the future will likely claim, that our solution and underlying technology infringe or violate their intellectual property rights.
However, we may be unaware of the intellectual property rights that others may claim cover some or all of our technology or solution.
−Removed: Any claims or litigation could cause us to incur significant costs and expenses and, if successfully asserted against us, could require that we pay substantial damages or ongoing royalty payments, require that we refrain from using, manufacturing or selling certain offerings or features or using certain processes, prevent us from offering our solution or certain features thereof, or require that we comply with other unfavorable terms, any of which could harm our business and operating results.
+Added: Any claims or litigation could cause us to incur significant costs and expenses and, if successfully asserted against us, could require that we pay substantial damages
+Added: or ongoing royalty payments, require that we refrain from using, manufacturing or selling certain offerings or features or using certain processes, prevent us from offering our solution or certain features thereof, or require that we comply with other unfavorable terms, any of which could harm our business and operating results.
We may also be obligated to indemnify our customers or business partners and pay substantial settlement costs, including royalty payments, in connection with any such claim or litigation and to obtain licenses, which could be costly.
−Removed: Even if we were to prevail in any such dispute, any litigation regarding our intellectual property could be costly and time consuming and divert the attention of our management and key personnel from our business operations.
+Added: Even if we were to prevail in any such dispute, any litigation regarding our intellectual property could be costly and time consuming and divert the attention of our management and key personnel from our business and operations.
Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement and other losses.
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In addition, integration of the software used in our solution with new third-party offerings 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 conjunction with our solutions, 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.
−Removed: 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.
+Added: To the extent that our solution depends upon the successful operation of third-party software in conjunction with our solutions, 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, harm our reputation and damage our relationships with our customers.
+Added: Our use of additional or alternative third-party software would require us to enter into license agreements with third parties, which could increase our costs, and integrate this new software with our solution.
There can be no assurance that the technology licensed by us will continue to provide competitive features and functionality or that licenses for technology currently utilized by us or other technology that we may seek to license in the future, including to replace current third-party software, will be available to us at a reasonable cost or on commercially reasonable terms, or at all.
−Removed: Third-party licensors may also be acquired or go out of business, which could preclude us from continuing to use such technology.
+Added: Third-party licensors may also be acquired or go out of business, which could preclude us from continuing to use their technology.
The loss of, or inability to maintain, existing licenses could result in lost product features and litigation.
−Removed: The loss of existing licenses could also result in implementation delays or reductions until equivalent technology or suitable alternative solutions could be developed or identified, and licensed and these replacements integrated, and could increase our costs and harm our business.
+Added: The loss of existing licenses could also result in implementation delays or reductions until equivalent technology or suitable alternative solutions could be developed or identified, and licensed and these replacements integrated, and could harm our business through increased costs or the inability to offer competitive features to new or existing customers in a timely fashion, or at all.
Our solution utilizes open source software, and any failure to comply with the terms of one or more of these open source licenses could negatively affect our business.
−Removed: Our solution includes software covered by open source licenses, which may include, for example, free general public use licenses, open source front-end libraries and open source applications.
−Removed: The terms of various open source licenses have not been interpreted by United States courts, and there is a risk that such licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to market our solution.
−Removed: By the terms of certain open source licenses, we could be required to release the source code of our proprietary software, and to make our proprietary software available under open source licenses, if we combine our proprietary software with open source software in a certain manner.
−Removed: In the event that portions of our proprietary software are determined to be subject to an open source license, we could be required to publicly release the affected portions of our source code, re-engineer all or a portion of our technologies, or otherwise be limited in the licensing of our technologies, each of which could reduce or eliminate the value of our intellectual property, technologies and solutions.
−Removed: In addition to risks related to license requirements, usage of open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or controls on the origin of the
−Removed: Given the nature of open source software, there is also a risk that third parties may assert copyright and other intellectual property infringement claims against us based on our use of certain open source software.
−Removed: Many of the risks associated with the usage of open source software cannot be eliminated and could harm our business.
+Added: Our solution includes software covered by open source licenses.
+Added: Few open source licenses have been interpreted by courts, and there is a risk that such licenses could be construed in a manner that imposes unanticipated
+Added: conditions or restrictions on our ability to market our solution.
+Added: Although we have implemented policies to regulate the use of open source software in connection with our products and services, we cannot be certain that we have not used open source software in a manner that is inconsistent with such policies.
+Added: If we fail to comply with open source licenses applicable to us, we could be subject to certain requirements, including requirements that we release the source code of our proprietary software and to make our proprietary software available under open source licenses, if we combine our proprietary software with certain open source software in a certain manner.
+Added: In the event that portions of our proprietary software are determined to be subject to an open source license, we could be required to publicly release the affected portions of our source code, re-engineer all or a portion of our technologies, or otherwise be limited in the commercial licensing of our technologies, each of which could reduce or eliminate the value of our intellectual property, and solutions.
+Added: In addition to risks related to license requirements, usage of open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or controls on the origin of the software.
+Added: Given the nature of open source software, there is also a risk that third parties may assert copyright and other intellectual property infringement claims against us based on our use of that open source software.
+Added: Many of the risks associated with the use of open source software cannot be eliminated and could harm our business.
Risks Related to Regulatory and Tax Matters
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The legal and contractual environment surrounding contacting consumers using voice calls or text messages to their wireless phones is constantly evolving.
−Removed: 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, or placing non-autodialed telemarketing calls to individuals who do not wish to receive such calls.
−Removed: These laws require companies to institute processes and safeguards to comply with these restrictions.
+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, or placing non-autodialed telemarketing calls or text messages to individuals who do not wish to receive such communications.
+Added: These laws require companies to institute processes and safeguards, sometimes including prior written consent requirements, to comply with these restrictions.
The legal interpretation of certain of the requirements of these laws continues 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.
+Added: For example, in 2024, the FCC issued a declaratory ruling in which it concluded that calls which utilize an artificial or prerecorded voice simulated or generated through AI technology are subject to regulation under the TCPA.
Some of these laws, where a violation is established, can be enforced by the FTC, FCC, State Attorneys General, or private party litigants.
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To the extent that our solution is viewed by customers or potential customers as less functional, or more difficult to deploy or use, because of our solution’s compliance features, we may lose market share to competitors that do not include similar compliance safeguards.
−Removed: Our contractual arrangements with our customers who use our solution to place calls also expressly require them to comply with all such laws and to indemnify us for any failure to do so.
+Added: Our contractual arrangements with our customers who use our solution to place calls also expressly require them to
+Added: comply with all such laws and to indemnify us for any failure to do so.
We take numerous steps to reasonably confirm that the use of our services complies with applicable laws.
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Defending such suits can be costly and time-consuming and could result in fines, damages, expenses and losses.
−Removed: Additionally, these laws, and any changes to them or the interpretation thereof, that further restrict calling consumers, including to wireless phone numbers, adverse publicity regarding the alleged or actual failure by companies, including our customers and competitors, to comply with such laws or governmental or private enforcement actions related thereto, could result in a reduction in the use of our solution by our customers and potential customers, which could harm our business, financial condition, results of operations and cash flows.
−Removed: On December 12, 2018, the FCC issued an order concluding that the Short Message Service, or SMS, or text messages, is an information service under federal law and not a telecommunications service.
−Removed: The regulatory
−Removed: significance to us is that the FCC’s decision gives wireless carriers the flexibility to block SMS messages if the carriers identify the messages as unwanted by their wireless customers.
−Removed: More recent FCC decisions also require wireless carriers to block certain calls and text messages.
+Added: Additionally, these laws, and any changes to them or the interpretation thereof, that further restrict calling or texting consumers, including to wireless phone numbers, adverse publicity regarding the alleged or actual failure by companies, including our customers and competitors, to comply with such laws or governmental or private enforcement actions related thereto, could result in a reduction in the use of our solution by our customers and potential customers, which could harm our business, financial condition, results of operations and cash flows.
+Added: In December 2018, the FCC issued an order concluding that the Short Message Service, or SMS, or text messages, is an information service under federal law and not a telecommunications service.
+Added: This means that wireless carriers have the flexibility to block SMS messages if the carriers identify the messages as unwanted by their wireless customers.
Such blocking efforts by carriers may make it more difficult for our customers to use SMS messages that are provided by us as a part of our overall communications and outreach solution for our customers.
−Removed: Further, on December 18, 2023, the FCC revised its mandate that a consumer’s prior written consent must be secured prior to initiating SMS messages to them that are telemarketing in nature.
−Removed: The revised rules require that such consent cannot be shared between multiple sellers or between different product and service lines.
Thus, although SMS comprises only a very small portion of our revenue base, its future availability as an effective tool for communication and outreach for our customers and their customers is uncertain and could cause our solution to be less valuable to customers and potential customers.
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If states enact new legislation or if taxing and regulatory authorities promulgate new rules or regulations or expand or otherwise alter their interpretations of existing rules and regulations, we could incur additional liabilities or collection obligations.
−Removed: The amount that we are required to pay under certain of these tax and regulatory structures also continues to increase as a percentage of our telecommunications revenues.
+Added: The amount that we are required to pay under certain of these tax and regulatory structures also continues to increase as a percentage of our
+Added: telecommunications revenues.
The collection of additional taxes, fees or surcharges in the future could increase our prices or reduce our profit margins.
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We are subject to assessments for unpaid USF contributions, as well as interest thereon and civil penalties, due to our prior position that we were not subject to regulation as a USF contributor and as an international carrier.
−Removed: We are classified as a telecommunications service provider for regulatory purposes, and we are required to make direct contributions to the USF based on revenue we receive from the resale of interstate and certain
−Removed: international telecommunications services.
+Added: We are classified as a telecommunications service provider for regulatory purposes, and we are required to make direct contributions to the USF based on revenue we receive from the resale of interstate and certain international telecommunications services.
In order to comply with the obligation to make direct contributions, we are registered with the Universal Service Administrative Company, or USAC, which is charged by the FCC with administering the USF, and have been remitting the required contributions to USAC since our registration with USAC in April 2013.
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Our federal contributions and tax obligations may significantly increase in the future, due to new interpretations by governing authorities, governmental budget pressures, changes in our business model or solutions or other factors.
−Removed: If we do not comply with FCC rules and regulations, we could be subject to further FCC enforcement actions, fines, loss of licenses and possibly restrictions on our ability to operate or offer certain of our services.
+Added: If we do not comply with FCC rules and regulations, we could be subject to FCC enforcement actions, fines, loss of licenses and possibly restrictions on our ability to operate or offer certain of our services.
Since our business is regulated by the FCC, we are subject to existing or potential FCC regulations relating to privacy, disability access, access to and porting of numbers, USF contributions and other requirements.
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If we do not comply with any current or future rules or regulations that apply to our business, we could be subject to additional and substantial fines and penalties, we may have to restructure our solution, exit certain markets, accept lower margins or raise the price of our solution, any of which could harm our business and results of operations.
+Added: Compliance with 911 emergency service requirements could result in FCC, state or local enforcement action, including fines and other penalties.
+Added: The FCC’s implementation of KARI’s Law and the RAY BAUM’s Act imposed a requirement on operators of interconnected multiline telephone systems (“MLTS”) to ensure their users can directly dial 911 emergency services and, if technically feasible, automatically convey the caller’s dispatchable location information with the call.
+Added: The 911 service requirement applies to all new MLTS systems installed and MLTS customers activated after February 16, 2020.
+Added: The FCC’s decision also means that MLTS system operators may be subject to state and local fee assessments imposed on telecommunications carriers to support the operation of 911 public safety call centers.
+Added: Our service is arguably analogous with a virtual MLTS system.
+Added: Therefore, we implemented 911 calling capabilities for all of our clients that agreed to receive such services, regardless of whether the client relationship predated February 16, 2020.
+Added: Our 911 service includes the provision of dispatchable location information, but requires contact center agents to register their physical location.
+Added: Although we believe our 911 service implementation is fully compliant with FCC requirements, application of the FCC’s rules to our service required certain interpretive assumptions and a contrary conclusion by the FCC could expose us to FCC enforcement action, including fines and other penalties.
+Added: Further, we have been contacted by regulators in one state regarding possible assessments for 911 support fees to cover the costs of 911 public safety call centers in that state.
+Added: Although such assessments, if imposed on us, are not substantial, they could increase the cost of doing business and potentially make our services less attractive as compared to competing virtual call center service providers that have not implemented 911 service capabilities as a part of their service offerings.
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, 2025, we had federal, state and foreign net operating loss carryforwards due to prior period losses of $344.1 million, $247.1 million and $5.5 million, respectively, available to reduce future income subject to income taxes.
−Removed: If not utilized, various amounts of significant state net operating loss carryforwards will begin to expire in 2028, while the $310.1 million of federal net operating losses, as well as the foreign net operating losses, do not expire.
+Added: If not utilized, various amounts of state net operating loss carryforwards will begin to expire in 2026, while the federal and foreign net operating losses, will not expire.
As of December 31, 2025, we also had gross research credit carryforwards for federal and California state tax purposes of $14.3 million and $8.2 million, respectively, available to reduce future income subject to income taxes.
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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 could impose an additional 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.
−Removed: This could increase and accelerate our liability for income taxes, including by potentially causing those tax attributes to expire unused.
+Added: This could increase and accelerate our liability for income taxes, including by potentially causing those tax
+Added: attributes to expire unused.
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 other tax attributes, such that our profitability could be harmed.
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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.
−Removed: There are also state privacy laws, including the California Consumer Privacy Act, or CCPA, the California Privacy Rights Act, or CPRA, among several other state laws, that set forth comprehensive privacy obligations regarding the processing of personal data, which relevant State Attorney General or other state regulatory bodies can enforce.
+Added: There are also state privacy laws, including the California Consumer Privacy Act, or CCPA, that set forth comprehensive privacy obligations regarding the processing of personal data, which relevant State Attorney General or other state regulatory bodies can enforce.
We expect additional states to enact their own privacy laws.
−Removed: Some states also have enacted privacy laws focusing on particular types of information, such as health or biometric information, and private party litigants are exploring whether state wiretap laws such as the California Invasion of Privacy Act, statutory invasion of privacy, and common law claims may be used to pursue privacy causes of action.
+Added: Some states also have enacted privacy laws focusing on particular types of information, such as health or biometric information, and private party litigants are pursuing private causes of action pursuant to state wiretap laws such as the California Invasion of Privacy Act, statutory invasion of privacy, and common law claims may be used to pursue privacy causes of action.
Moreover, data protection laws and regulations outside the United States, including Brazil, Canada, China, Japan, Russia, Singapore, the United Kingdom and particularly in the EU, on certain issues can be more restrictive than those in the United States in regards to data protection, including the extent to which affirmative consent for some types of data processing is required, and when a company must inform data protection authorities and individuals of security breaches that affect their personal data.
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We and many of our customers are subject to the GDPR based upon our processing of personal data collected from EU data subjects, such as our processing of personal data of our customers in the EU and our processing of our EU employees’ personal data.
+Added: Similar obligations apply under the U.K.
+Added: General Data Protection Regulation (UK GDPR).
The GDPR enhances data protection obligations for processors and controllers of personal data, including, for example, expanded disclosures about how personal information is to be used, limitations on retention of information, mandatory data breach notification requirements and onerous new obligations on services providers.
Non-compliance with the GDPR can trigger steep fines of up to €20 million or 4% of total worldwide annual turnover, whichever is higher.
−Removed: The member states of the EU were tasked under the GDPR to enact certain implementing legislation that would add to or further interpret the GDPR requirements, and this additional implementing legislation potentially extends our obligations and potential liability for failing to meet such obligations.
Given the breadth and depth of changes in data protection obligations, our compliance with the GDPR’s requirements will continue to require time, resources and review of the technology and systems we use to satisfy the GDPR’s requirements.
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Jurisdictions outside of the EU are also considering and/or enacting comprehensive data protection legislation.
−Removed: For example, the General Data Protection Law in Brazil, or the LGPD, and the Japanese Act on the Protection of
−Removed: Personal Information, or the APPI, 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: For example, the General Data Protection Law in Brazil, or the LGPD, and the Japanese Act on the Protection of Personal Information, or the APPI, broadly regulate the processing of personal information in a manner comparable to the GDPR, and violators of the LGPD and APPI face substantial penalties.
Most recently, India enacted the Digital Personal Data Protection Act, 2023, which establishes a legal framework regulating the processing of personal data in India and processing outside of India if it is related to offering goods or services to individuals in India.
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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.
−Removed: 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.
+Added: Any inability to adequately address privacy and security concerns, even if unfounded, or comply with applicable privacy and security or data
+Added: security laws, regulations, and policies, could result in additional cost and liability to us, damage our reputation, inhibit sales, and adversely affect our business.
+Added: Similarly, the European Union passed legislation related to artificial intelligence, cybersecurity, and data access, including the EU Artificial Intelligence Act, Regulation (EU) 2024/1689;
+Added: the NIS 2 Directive, Directive (EU) 2022/2555;
+Added: and the Data Act, Regulation (EU) 2023/2854.
+Added: We closely monitor this legislation, along with efforts to update the legislation with the recent Digital Omnibus on AI Regulation and Digital Omnibus Regulation proposals.
+Added: Compliance with these regulations may increase our costs and the costs of our customers with respect to ensuring compliance with these laws.
+Added: If we fail to comply where required to do so, we can face substantial fines and penalties along with commercial and reputational challenges when doing business in the European Economic Area.
state privacy laws could increase our costs and the costs of our customers 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.
State privacy laws in the United States apply to certain entities doing business in their states, and we and our qualifying customers were required to comply with applicable requirements as of the effective dates of the applicable state laws or corresponding regulations.
−Removed: state privacy laws establish a privacy framework for covered businesses by creating an expanded definition of personal data and creating new data privacy rights for eligible residents in those states, including the right to the right to access, delete or correct such data, the right to opt out of sales or use of their personal data for targeted advertising or profiling purposes, the right to request a list of third parties to whom the company sells personal data, the right to limit the use and disclosure of their sensitive personal data and the right to be free from discrimination for exercising their rights.
+Added: state privacy laws establish a privacy framework for covered businesses by creating an expanded definition of personal data and creating new data privacy rights for eligible residents in those states, including the right to the right to access, delete or correct such data, the right to opt out of sales, sharing, or the use of their personal data for targeted advertising or profiling purposes, the right to request a list of third parties to whom the company sells or shares personal data, the right to limit the use and disclosure of their sensitive personal data and the right to be free from discrimination for exercising their rights.
Eligible residents of those states may also appeal any decision or indecision related to the exercise of any of their data privacy rights.
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The effects of the U.S.
−Removed: state privacy laws 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
−Removed: increase our potential exposure to regulatory enforcement and/or litigation.
+Added: state privacy laws 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.
We anticipate that more states may enact their own comprehensive or subject matter specific privacy and AI-focused legislation and provide consumers with new privacy rights and increases the privacy and security obligations of entities handling certain personal data of such consumers.
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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.
+Added: state laws are continuing to evolve in and around regulation of AI technologies.
+Added: States such as California, Colorado, Utah and Texas have enacted new legislation, and additional legislation is expected to be passed during the upcoming 2026 legislative session in additional states.
+Added: The California Privacy Protection Agency has also promulgated new regulations on the use of automated decision-making technologies.
+Added: Although the new state laws and regulations have specific applicability thresholds that do not apply to the vast majority of AI use cases in our industry, we incur costs associated with monitoring and evaluating these laws, and when these laws apply, we incur compliance-related costs.
+Added: We incur costs associated with a fragmented landscape of laws, because there is as yet no federal AI law.
+Added: We could face additional costs if new laws are enacted either at the state or federal level that apply, or could apply, to our products or services, or if current laws are amended to apply to our products or
+Added: In the event that new AI regulation were to be enacted that more heavily scrutinizes or restricts our current AI applications, products, features, or services, we could be required to remove certain products or product features from our solution.
Risks Related to Ownership of Our Convertible Senior Notes
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We may not have sufficient cash flow from our business to pay our indebtedness, and we may not have the ability to raise the funds necessary to settle conversions of the 2029 convertible senior notes in cash or to repurchase the 2029 convertible senior notes for cash upon a fundamental change, which could adversely affect our business and results of operations.
−Removed: In May and June 2020, we issued $747.5 million in aggregate principal amount of the 2025 convertible senior notes in a private offering, $434.4 million of which was outstanding as of December 31, 2024.
−Removed: 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.
−Removed: We currently plan to use cash to settle amounts due under our convertible senior notes that mature on June 1, 2025.
In March 2024, we issued $747.5 million in aggregate principal amount of the 2029 senior notes in a private offering, all of which were outstanding as of December 31, 2025.
The 2029 convertible senior notes mature on March 15, 2029, and the interest rate of the 2029 convertible senior notes is fixed at 1.000% per annum, payable semiannually in arrears on March 15 and September 15 of each year, beginning on September 15, 2024.
−Removed: Our ability to make scheduled payments of principal and interest under our 2025 convertible senior notes and our 2029 convertible senior notes, or to refinance such indebtedness, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control, including those described in this report.
+Added: Our ability to make scheduled payments of principal and interest under our 2029 convertible senior notes, or to refinance such indebtedness, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control, including those described in this report.
Our business may not generate cash flows from operations in the future that are sufficient to service our indebtedness and make necessary capital expenditures.
If we are unable to generate sufficient cash flows, we may be required to pursue one or more alternatives, such as selling assets, restructuring debt or obtaining additional debt financing or equity capital on terms that may be onerous or highly dilutive to existing holders of our common stock.
−Removed: Our ability to obtain additional financing or refinance the 2025 convertible senior notes, the 2029 convertible senior notes or any future indebtedness, will depend on conditions in the capital markets and our financial condition at such time, among other factors.
+Added: Our ability to obtain additional financing or refinance the 2029 convertible senior notes or any future indebtedness, will depend on conditions in the capital markets and our financial condition at such time, among other factors.
We may not be able to engage in any of these activities on favorable terms or at all, which could result in a default on our debt obligations or other material adverse effects on our business and financial condition.
−Removed: Subject to certain conditions, holders of the convertible senior notes have the right to require us to repurchase for cash all or any portion of their convertible senior notes upon the occurrence of a fundamental change (as defined in the indentures governing the 2025 convertible senior notes and the 2029 convertible senior notes) at a fundamental change repurchase price equal to 100% of the principal amount of the convertible senior notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the applicable fundamental change repurchase date.
+Added: Subject to certain conditions, holders of the 2029 convertible senior notes have the right to require us to repurchase for cash all or any portion of their 2029 convertible senior notes upon the occurrence of a fundamental change (as defined in the indenture governing the 2029 convertible senior notes) at a fundamental change repurchase price equal to 100% of the principal amount of the 2029 convertible senior notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the applicable fundamental change repurchase date.
Upon conversion of the 2029 convertible senior notes in accordance with their terms, unless we elect to deliver solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required to settle a portion or all of our conversion obligation through the payment of cash.
We may not have enough available cash or be able to obtain financing at the time we are required to make repurchases in connection with such conversion and our ability to pay may be further limited by law, regulatory authority or agreements governing our future indebtedness.
−Removed: Our failure to repurchase any convertible senior notes at a time when the repurchase is required by the applicable indenture or to pay any cash payable on any future conversions as required by such indenture would constitute a default under such indenture.
−Removed: A default under the applicable indenture would lead to, and the occurrence of the fundamental change itself may also lead to, a default under agreements governing our future indebtedness.
+Added: Our failure to repurchase any 2029 convertible senior notes at a time when the repurchase is required by the indenture or to pay any cash payable on any future conversions as required by such indenture would constitute a default under such indenture.
+Added: A default under the indenture would lead to, and the occurrence of the fundamental change itself may also lead to, a default under agreements governing our future indebtedness.
If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness or repurchase the 2029 convertible senior notes when required, or to make cash payments upon conversions thereof.
If triggered, the conditional conversion features of the 2029 convertible senior notes may adversely affect our financial condition and operating results.
−Removed: If and to the extent the conditional conversion features of either or both series of our convertible senior notes are triggered, holders of such convertible senior notes will be entitled to convert their convertible senior notes at any time during specified periods at their option.
−Removed: During the three months ended December 31, 2024, the conversion features of the 2025 convertible senior notes were not triggered.
−Removed: Accordingly, holders of the 2025 convertible senior notes are not entitled to convert their convertible senior notes from January 1, 2025 to March 31, 2025 under this conditional conversion feature.
−Removed: However, on or after March 1, 2025 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their 2025 convertible senior notes, in multiples of $1,000 principal amount, at the option of the holder regardless of the foregoing circumstances.
+Added: If and to the extent the conditional conversion features of our 2029 convertible senior notes are triggered, holders of such 2029 convertible senior notes will be entitled to convert their 2029 convertible senior notes at any time during specified periods at their option.
During the three months ended December 31, 2025, the conversion features of the 2029 convertible senior notes were not triggered.
−Removed: Accordingly, holders of the 2029 convertible senior notes are not entitled to convert their convertible senior notes from January 1, 2025 to March 31, 2025.
+Added: Accordingly, holders of the 2029 convertible senior notes are not entitled to convert their 2029 convertible senior notes from January 1, 2026 through March 31, 2026.
Whether the 2029 convertible senior notes will be convertible after March 31, 2026 will depend on the satisfaction of the applicable conversion conditions.
−Removed: To the extent that the conditional conversion features of either or both series of our convertible senior notes are triggered in the future, holders of such convertible senior notes will be entitled to convert their convertible senior notes at any time during the specified periods at their option.
−Removed: If one or more holders elect to convert their convertible senior notes during any such specified period, we have the option to pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election.
+Added: To the extent that the conditional conversion features of our 2029 convertible senior notes are triggered in the future, holders of such 2029 convertible senior notes will be entitled to convert their 2029 convertible senior notes at any time during the specified periods at their option.
+Added: If one or more holders elect to convert their 2029 convertible senior notes during any such specified period, we have the option to pay or deliver, as the case may be,
+Added: cash, shares of our common stock or a combination of cash and shares of our common stock, at our election.
Any election to settle conversions of 2029 convertible senior notes with cash could adversely affect our liquidity.
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In addition, we may issue shares of our common stock in connection with repurchases, exchanges or other transactions involving the 2029 convertible senior notes.
−Removed: Historically, we have elected to satisfy our convertible senior note conversion obligations through the payment of cash in certain circumstances, the issuance of shares of common stock in other circumstances, or a combination thereof, to such convertible senior note holders.
+Added: Historically, we have elected to satisfy our prior convertible senior note conversion obligations through the payment of cash in certain circumstances, the issuance of shares of common stock in other circumstances, or a combination thereof, to such prior convertible senior note holders.
Management’s Discussion and Analysis of Financial Condition and Results of Operation-Liquidity and Capital Resources, for further discussion of our elections to satisfy our conversion obligations.
−Removed: In addition, in connection with the issuance of each series of the convertible senior notes, we entered into capped call transactions with certain financial institutions, or the Option Counterparties.
+Added: In addition, in connection with the issuance of the 2029 convertible senior notes, we entered into capped call transactions with certain financial institutions, or the Option Counterparties.
The capped call transactions are expected generally to reduce the potential dilution to holders of our common stock upon any conversion or settlement of the convertible notes and/or offset any cash payments we are required to make in excess of the principal amount of such 2029 convertible senior notes, as the case may be, with such reduction and/or offset subject to a cap under the terms of the capped call transactions.
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• actual or anticipated fluctuations or declines in our operating results;
−Removed: • the impact of adverse economic conditions, including the impact of macroeconomic challenges, including continued inflation, uncertainty regarding consumer spending, high interest rates, fluctuations in currency rates, the impact of the Russia-Ukraine conflict, the impact of conflicts in the Middle East, or other factors;
+Added: • the impact of adverse economic conditions, including the impact of macroeconomic challenges, global tariff increases and potential future increases and announcements regarding same, continued inflation, uncertainty regarding consumer spending, high interest rates, fluctuations in currency rates, the impact of current and potential global conflicts, or other factors;
• loss of customers or a reduction, or slower growth, in subscriptions or features subscribed to by our existing customers;
−Removed: • any major change in our board of directors or management;
• the financial projections we provide to the public, any changes in these projections, our failure to meet these projections, or our failure to exceed these projections by amounts or percentages expected by our investors and analysts;
+Added: • changes in our board of directors or management;
• failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors;
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• 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 continued macroeconomic challenges, including continued inflation, uncertainty regarding consumer spending, high interest rates, fluctuations in currency rates, the Russia-Ukraine conflict and the conflicts in the Middle East.
+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 continued macroeconomic challenges, global tariff increases and potential future increases and announcements regarding same, continued inflation, uncertainty regarding consumer spending, high interest rates, fluctuations in currency rates, and the current and potential global conflicts.
Stock prices of many technology companies have recently declined, including in some cases in a manner unrelated or disproportionate to the operating performance of those companies.
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If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in financial markets or our industry market, which could cause our share price or trading volume to decline.
+Added: We may not realize the anticipated benefits of share repurchase activity.
+Added: In October 2025, our Board of Directors authorized a share repurchase program, or the 2025 Repurchase Program, for the repurchase of shares of our common stock, in an aggregate amount up to $150.0 million, which 2025 Repurchase Program expires on December 31, 2027.
+Added: As part of the 2025 Repurchase Program, in November 2025, we entered into an accelerated share repurchase, or ASR, program under which we repurchased $50.0 million of our common stock.
+Added: This program was completed on February 2, 2026.
+Added: As of December 31, 2025, $100.0 million remained available under the 2025 Repurchase Program.
+Added: There can be no assurances that we will continue to repurchase shares under the current authorization.
+Added: Future share repurchase activity under our current authorization, if any, could cause the price of our common stock to be higher than it otherwise would be and could potentially reduce the market liquidity for our stock.
+Added: Although share repurchases are intended to enhance long-term stockholder value, there is no assurance they will do
+Added: so because the market price of our common stock may decline below the levels at which we repurchased shares and short-term stock price fluctuations could reduce the effectiveness of the repurchases.
+Added: Repurchasing common stock reduces the amount of cash we have available to fund capital expenditures, interest payments, debt retirements, acquisitions, additional share repurchases, investments in strategic initiatives and other operating requirements and we may fail to realize the anticipated benefits of share repurchases.
Substantial future sales of shares of our common stock could cause the market price of our common stock and our 2029 convertible senior notes to decline.
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Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current management and limit the market price of our common stock.
−Removed: Provisions in our amended and restated certificate of incorporation and amended and restated bylaws may have the effect of delaying or preventing a change in control or changes in our management.
+Added: Provisions in our amended and restated certificate of incorporation and amended and restated bylaws may have the effect of delaying or preventing a change in control, changes in our Board or management, and other governance changes.
Our amended and restated certificate of incorporation and amended and restated bylaws:
−Removed: • provide that our board of directors is classified into three classes of directors;
+Added: • provide that our board of directors is classified into three classes of directors (the “classified board provisions”);
• provide that stockholders may remove directors only for cause;
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• provide that special meetings of our stockholders may be called only by the chairman of the board, our chief executive officer or the board of directors pursuant to a resolution adopted by a majority of the total number of authorized directors;
−Removed: • provide that stockholders will be permitted to amend our amended and restated bylaws and certain parts of our amended and restated certificate of incorporation only upon receiving at least 66 2 / 3 % of the votes entitled to be cast by holders of all outstanding shares then entitled to vote generally in the election of directors, voting together as a single class.
−Removed: These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management.
+Added: • provide that stockholders will be permitted to amend our amended and restated bylaws and certain parts of our amended and restated certificate of incorporation only upon receiving at least 66 2 / 3 % of the votes entitled to be cast by holders of all outstanding shares then entitled to vote generally in the election of directors, voting together as a single class (the “supermajority approval provisions”).
+Added: In July 2025, our board of directors announced its intent to approve and recommend to our stockholders that they approve at our 2026 annual meeting of stockholders (i) the phased removal of the classified board provisions (which, upon the completion of such declassification, will also result in our directors being able to be removed
+Added: without cause under Delaware law) and (ii) the removal of the supermajority approval provisions effective at the close of our 2027 annual meeting.
+Added: To the extent that our stockholders vote for the removal of such provisions, and upon the effectiveness of such changes, we would have a decreased ability to delay or prevent a change in control, changes in our Board or other governance changes.
+Added: However, even if such provisions are no longer effective, the remaining provisions described above may frustrate or prevent a change in control, or any attempts by our stockholders to replace or remove our current board or management or change aspects of our corporate governance.
In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder became an “interested” stockholder.
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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.