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Item 1A. Risk Factors

2025-12-10 compared with 2024-12-13 · 105 added, 80 removed, 389 unchanged (32% of the section changed)

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The following information should be particularly read in conjunction with Part I, Item I, “Business” and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements and related notes in Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K.

Some of the factors, events and contingencies discussed below may have occurred in the past, but the disclosures below are not representations as to whether or not the factors, events or contingencies have occurred in the past and instead reflect our beliefs and opinions as to the factors, events or contingencies that could materially and adversely affect us in the future.

The risks we describe in this Form 10-K or in our other SEC filings or additional risks and uncertainties not presently known to us or that we currently believe to be immaterial could, in ways we may not be able to accurately predict, recognize or control, have a material adverse effect on our business, reputation, financial position, results of operations, cash flows and stock price, and they could cause our future results to be materially different than we presently anticipate.

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In addition, we need to innovate, develop and execute on evolutionary strategies in a rapidly changing and increasingly hybrid environment, seize on disruptive opportunities and effectively respond to secular trends and shifts in customer preferences.

Our financial performance will depend in part on our ability to remain competitive in offerings geared towards new or emerging market trends, such as artificial intelligence and hybrid consumption.

For example, in fiscal year 2024 we experienced continued demand softness in printing products and solutions and we believe we and others in our industry face continuing secular challenges related to, among other things, decreased demand for printing products and solutions as a result of increased digitization and hybrid work, and increasing competition from generic alternatives.

We also need to ensure our existing offerings in this space, such as managed services and print software, remain sufficiently differentiated.

Our efforts to mitigate the impact of these challenges, such as by seeking to increase our margin and market share and drive demand in subscription services and other recurring-revenue based business models, may not be successful, and shifting to recurring-revenue based business may require us to forego upfront revenue.

Our financial performance will depend in part on our ability to remain competitive in offerings geared towards new or emerging market trends, such as artificial intelligence, hybrid consumption and digital employee experience.

For example, in fiscal year 2025 we experienced challenges from changing customer behaviors and we believe we and others in our industry face continuing secular challenges related to, among other things, decreased demand for printing products and solutions as a result of increased digitization, hybrid work, increasing competition from generic alternatives and customer preferences shifting from traditional disposable ink cartridge printers to refillable big tank printers.

We also seek to ensure our existing offerings in this space, such as managed services and print software, remain sufficiently differentiated and profitable.

Our efforts to mitigate the impact of these challenges, such as by seeking to increase our margin and market share, particularly in big tank printers, and drive demand in software and subscription services or other recurring-revenue based business models, offering higher profitability, may not be successful.

While our big tank printers typically have a higher initial margin than our traditional in cartridge printers, they do not result in follow-on sales of high margin traditional ink cartridges and, as a result, may have lower overall device lifetime profitability.

Also, shifting to recurring-revenue based business may require us to forego upfront revenue and invest in platforms and systems that enable subscription sales.

In addition, we may be unable to successfully execute our strategy, sufficiently invest in, prioritize research and development, market and scale, or accurately project the financial performance of our key growth areas, other strategic growth initiatives and existing offerings, accurately predict technological or business trends or control costs.

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Our industry is subject to rapid and substantial innovation, technological change and customer preferences.

Even if we successfully develop new products, solutions and technologies, future products, solutions and technologies, including those created by our competitors, may eventually supplant ours if we are unable to keep pace with technological advances and end-user requirements and preferences and timely enhancement of our existing products and technologies or develop new ones.

Even if we successfully develop new products, future products, solutions and technologies, including those created by our competitors, may eventually supplant ours if we are unable to keep pace with technological advances and end-user requirements and preferences and timely enhancement of our existing products and technologies or develop new ones.

As a result, we could lose market share and certain of our products, solutions and technologies may be rendered uneconomical or obsolete.

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Any delay in the development, production or marketing of a new product, service or solution could result in us not being among the first to market, which could further harm our competitive position.

Moreover, new products and services may not be profitable, and even if they are profitable, the operating margins may not be as high as the historical or anticipated margins.

Moreover, new products and services may replace or supersede existing offerings and may not be profitable.

Even if they are profitable, the operating margins may not be as high as the historical or anticipated margins.

We expect the proliferation of AI to have a significant impact on our industry and the markets in which we compete, and the development and use of AI presents competitive, reputational, and liability risks.

We believe the proliferation of AI, especially as it relates to our product and solutions offerings, will have a significant impact on customer preferences and market dynamics in our industry, and our ability to effectively compete in this space will be critical to our financial performance.

We believe the proliferation of AI, especially as it relates to our product and solutions offerings, will continue to have a significant impact on customer preferences and market dynamics in our industry, and our ability to effectively compete in this space will be critical to our financial performance.

We also believe that the effective use of AI in our internal operations is important to our long-term success.

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If our AI products fail to operate as anticipated or as well as competing products or otherwise do not meet customer needs or if we are unable to bring AI-enabled products and solutions to market as effectively, or with the same speed or in the same volumes, as our competitors, we may fail to recoup our investments in AI or improve our financial performance, our competitive position may be harmed, and our business and reputation may be adversely impacted.

Moreover, our actions to drive demand to AI products may result in cannibalization of demand for our traditional, non-AI products.

For example, the accelerated rate of innovation of components from our suppliers may result in higher defects or failure of our offerings to perform, which could cause us to incur increased warranty costs, inventory provisions or impairments and could impact future sales.

Moreover, our actions to drive demand to AI products may result in cannibalization of demand for our traditional, non-AI products, which may result in lower net revenues and/or profit margins.

In addition, AI algorithms may be flawed.

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AI models deployed by us or our partners may lead to unexpected or unintended outcomes that could erode trust in our AI products and solutions and potentially cause harm to individuals or society.

These deficiencies and other failures of AI systems could subject us to competitive harm, regulatory action, legal liability, including under new proposed legislation regulating AI in jurisdictions such as the U.S.

These deficiencies and other failures of AI systems, or the use of AI systems, could subject us to competitive harm, regulatory action, legal liability, including under new proposed legislation regulating AI in jurisdictions such as the U.S.

and European Union, new applications of existing data protection, privacy, intellectual property, and other laws, and brand or reputational harm.

Additionally, our obligations to comply with the evolving legal and regulatory landscape could entail significant costs or limit our ability to incorporate certain AI capabilities into our products and solutions.

Proliferating export controls, including controls on certain rare earth elements, designed to limit the diffusion of advanced technology, can impact speed on AI innovation and capabilities by controlling hardware capable of supporting advanced AI technology.

Some AI capabilities also present ethical issues, and we may be unsuccessful in identifying or resolving issues before they arise.

If we enable or offer AI products or solutions or implement AI capabilities in our internal operations that are controversial because of their impact on human rights, the environment, privacy, employment, or other social, economic, or political issues, we may experience brand or reputational harm or greater employee attrition .

If we enable or offer AI products or solutions or implement AI capabilities in our internal operations that are controversial because of their impact on human rights, the environment, competition, privacy, employment, or other social, economic, or political issues, we may experience brand or reputational harm or greater employee attrition .

We are heavily dependent on third-party suppliers and supply chain issues have adversely affected, and could adversely affect in the future, our financial results.

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Given the wide variety of products and services we offer, the large and diverse distribution of our suppliers and contract manufacturers, and the long lead times required to manufacture, assemble and deliver certain components and products, problems have and could continue to arise in production, planning and inventory management.

Third-party suppliers may have limited financial resources to withstand challenging business conditions, particularly as a result of increased interest rates or emerging market volatility, and our business could be negatively impacted if key suppliers are forced to cease or limit their operations.

Third-party suppliers may have limited financial resources to withstand challenging business conditions, particularly as a result of increased interest rates, emerging market volatility or changes in global trade policies, or global pandemics or other public health crises, and our business could be negatively impacted if key suppliers are forced to cease or limit their operations.

Changes or additions to our supply chain require considerable time and resources and involve significant risks and uncertainties.

We also have experienced, and may experience in the future, gross margin declines in certain businesses, reflecting the effect of competitive pricing pressures and increases in component and manufacturing costs resulting from higher labor and material costs borne by our manufacturers and suppliers that we are unable to pass on to our customers.

We also have experienced, and may experience in the future, gross margin declines in certain businesses, reflecting the effect of competitive pricing pressures and increases in component and manufacturing costs, resulting from market dynamics, especially increasing memory and storage costs and potential supply chain constraints in our Personal Systems business, and higher labor and material costs borne by our manufacturers and suppliers that we are unable to pass on to our customers.

Our business may be disrupted if we are unable to obtain equipment, parts or components from our suppliers—and our suppliers from their suppliers—due to the insolvency of key suppliers or the inability of key suppliers to obtain credit, or if any of our distributors lack sufficient financial resources to withstand economic weakness.

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• Component shortages.

We have at times experienced and may in the future experience a shortage of, or a delay in receiving, certain components as a result of strong demand, capacity constraints, supplier financial weaknesses, disputes with suppliers (some of whom are also our customers), disruptions in the operations of component suppliers, supplier ability to demonstrate regulatory compliance, regulatory restrictions on specific components in certain markets, other problems experienced by suppliers or problems we face during the transition to new suppliers.

We have at times experienced and may in the future experience a shortage of, or a delay in receiving, certain components as a result of strong demand, capacity constraints, supplier financial weaknesses, disputes with suppliers (some of whom are also our customers), disruptions in the operations of component suppliers, supplier ability to demonstrate regulatory compliance, regulatory or other trade restrictions on specific components in certain markets, other problems experienced by suppliers or problems we face during the transition to new suppliers.

For example, a market shortage of integrated circuits and panels and other component supply has at times affected, and may affect in the future, lead times, the cost of that supply, and our ability to meet customer demand for our products.

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Our anticipation of these and other supply chain dynamics may result in us purchasing components in greater volumes and on earlier schedules in order to secure an adequate supply, which could adversely affect our working capital and cash flow.

If shortages or delays in component products occur, the price of certain components may increase, we may be exposed to quality issues, or the components may not be available at all.

If shortages or delays in component products occur, the price of certain components may increase, we may be exposed to quality issues, we may be required to change suppliers or the components may not be available at all.

We may not be able to secure enough components at reasonable prices or of acceptable quality to build products or provide services in a timely manner in the quantities needed or according to our specifications.

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We also rely on third-party suppliers for the provision of contingent workers, and our failure to effectively manage this workforce could adversely affect our financial results.

Our ability to manage the costs associated with engaging a contingent workforce may be impacted by evolving local labor rights laws.

Our ability to manage the costs associated with engaging a contingent workforce may be impacted by evolving local labor laws.

• Working conditions, human rights and materials sourcing .

Our brand perception, customer loyalty and legal compliance could be adversely impacted by a supplier’s improper practices or failure to comply with our requirements for environmentally, socially or legally responsible practices and sourcing, including sub-tier sourcing.

Our brand perception, customer loyalty and legal compliance could be adversely impacted by a supplier’s improper practices or failure to comply with our requirements for responsible practices and sourcing, including sub-tier sourcing.

• Single-source suppliers.

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For example, we rely on Canon for certain laser printer engines and laser toner cartridges and certain key suppliers for application specific integrated circuits (“ASICs”).

We also rely on Intel, AMD and NVIDIA to provide us with a sufficient supply of processors for the majority of our PCs and workstations.

We also rely on Intel, AMD, and NVIDIA, or other suppliers to provide us with a sufficient supply of processors for the majority of our PCs and workstations.

Some of those processors may be customized for our products.

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The performance of single-source suppliers under those agreements (and the renewal or extension of those agreements upon similar terms) may affect the quality, quantity and price of our components.

The loss of, deterioration of our relationship with, or limits in allocation by, a single-source supplier, or any unilateral modification to the contractual terms under which we are supplied components by a single-source supplier could adversely affect our business and financial performance.

The loss of, deterioration of our relationship

with, or limits in allocation by, a single-source supplier, or any unilateral modification to the contractual terms under which we are supplied components by a single-source supplier could adversely affect our business and financial performance.

An adverse litigation outcome, including an injunction in an IP litigation, against a single-source supplier, could also significantly impact our ability to make and sell products utilizing that supplier’s components.

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While we are undertaking initiatives to diversify our manufacturing and supply chain footprint, such initiatives require significant investment and time and have been and can continue to be subject to regulatory, continuity, operational, geopolitical and other hurdles, and there can be no assurance that these initiatives will be successful.

• International trade restrictions .

Restrictions on international trade, such as tariffs and other controls on imports or exports of goods, technology or data have and may continue to, materially adversely affect our supply chain.

The impact has been particularly significant for the restrictive measures that apply to countries and regions where we have significant supply chain operations.

Restrictive measures have and may continue to increase the cost of our products and the components and raw materials that go into them, and can require us to take various actions, including changing suppliers, restructuring business relationships and operations, and ceasing to offer and distribute affected products and services.

Changing our business model and supply chain to comply with and seek to offset the impact of new or revised trade restrictions has been, and may continue to be, expensive, time-consuming and disruptive to our business, and may not be successful in offsetting or mitigating these impacts.

The impact of changes we make in this regard will not be immediate, and, even if successful, we expect it will take time for any offsetting impacts to take full effect.

Moreover, such restrictions can be announced with little or no advance notice, which can create additional uncertainty.

Our business and financial performance could suffer if we do not manage the risks associated with our services businesses properly.

The success of our services business (such as our managed print services, digital services, consumer subscriptions and other workforce services in both Printing and Personal Systems) depends to a significant degree on attracting, retaining, and maintaining or increasing the level of revenues from our customers.

The success of our services business (such as our managed print and device services, lifecycle services, digital services, consumer subscriptions and other services and solutions for both Printing and Personal Systems) depends to a significant degree on attracting, retaining, and maintaining or increasing the level of revenues from our customers.

Our standard services agreements are generally renewable at a customer’s option and/or subject to early termination rights.

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In addition, the pricing and other terms of certain services agreements require us to make estimates and assumptions at the time we enter into these contracts that could differ from actual results.

Any increased or unexpected costs or unanticipated delays in connection with the performance of these contracts, which may increase as services become more customized, could make these agreements less profitable or unprofitable.

Certain service-oriented business models, such as the “device as a service” model under which customers rent a hardware device for a periodic fee within a managed solution that provides professional services, software, support, monitoring and other services, may not generate net new sales for customers who previously purchased our hardware transactionally.

Any increased or unexpected costs or unanticipated delays in connection with the performance of these contracts, such as increased costs resulting from new or increased tariffs or other trade restrictions, which may increase as services become more customized, have in the past made, and could in the future make, these agreements less profitable or unprofitable.

Certain service-oriented business models, such as the “device as a service” model under which customers are provided with a hardware device for a periodic fee within a managed solution that provides professional services, software, support, monitoring and other services, may not generate net new sales for customers who previously purchased our hardware transactionally.

The device as a service model also requires the participation of a third-party financing provider, and we may face challenges in finding such providers who are willing to provide financing on acceptable terms or at all.

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Because of the size and scope of our portfolio, we may invest a greater percentage of our revenues, including on research and development, than some of our competitors.

As a result, we may invest less in certain areas of our business than our competitors, and our competitors may have greater financial, technical and marketing resources available for their products and services, compared to the resources allocated to

our competing products and services, or greater economies of scale, which could in turn result in our loss of market share.

As a result, we may invest less in certain areas of our business than our competitors, and our competitors may have

greater financial, technical and marketing resources available for their products and services, compared to the resources allocated to our competing products and services, or greater economies of scale, which could in turn result in our loss of market share.

Our actions to mitigate the impact of these dynamics, such as reducing the size of our product portfolio, may not be successful.

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In the course of conducting our business, we must address quality and security issues associated with our products and services, including potential flaws in our engineering, design and manufacturing processes, unsatisfactory performance under service contracts, and unsatisfactory performance or malicious acts by third-parties.

Many of our products and services, including those which incorporate AI capabilities, are dependent on third-party software, including from Microsoft and Google, to function as intended, and product issues also sometimes result from the interaction between our products and third-party products and software.

Our business is also exposed to the risk of defects in third-party components or materials included in our products, including security vulnerabilities.

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Third-party claims of IP infringement are commonplace in our industry and may limit or disrupt our ability to sell our products and services.

We are subject to third party claims that we or customers indemnified by us are infringing upon such parties’ IP rights.

We have seen an increasing trend of patent assertion entities and operating companies with licensing businesses engaging in claims of infringement and assertion of patents to extract settlements to avoid significant business disruption, including the assertion of patents related to standardized technologies, such as Wi-Fi or video.

The patent litigation environment has also become more challenging due to the emergence of venues adopting procedural and substantive rules and practices that make them more favorable for patent asserters, including the availability of preliminary and permanent injunctions for non-competitors.

If we cannot or do not license allegedly infringed IP at all or on reasonable terms, or if we are required to substitute technology from another source, our operations could be adversely affected.

Even if we believe that IP claims are without merit, they can be time-consuming and costly to defend against and may divert management’s attention and resources away from our business.

Claims of IP infringement have and may require us to redesign affected products, enter into costly settlements or license agreements, pay damage awards, or face a temporary or permanent injunction prohibiting us from importing, marketing or selling certain products.

We are subject to third party claims that we or customers indemnified by us are infringing upon IP rights.

We have seen an increasing trend of patent assertion entities and operating companies with licensing businesses engaging in claims of infringement and assertion of patents to extract settlements including the assertion of patents related to standardized technologies, such as Wi-Fi or video.

The patent litigation environment has also become more challenging due to the increasing use of venues with procedural and substantive rules and practices more favorable for patent asserters, including the availability of preliminary and permanent injunctions for non-competitors.

If we cannot or do not license allegedly infringed IP at all or on reasonable terms, or if we are required to substitute technology from another source or disable allegedly IP protected functionality, our operations could be adversely affected.

Even if we believe that IP claims are without merit, they can be time-consuming and costly to defend and may divert management’s attention and resources away from our business.

Claims of IP infringement may require us to redesign affected products, enter into costly settlements or license agreements, pay damage awards, or face an injunction prohibiting us from importing, marketing or selling certain products.

Additionally, claims of IP infringement may adversely impact our brand and reputation and imperil new and existing customer relationships.

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We have experienced and may in the future experience delays or reductions in spending by our customers or potential customers, which could have a material adverse effect on demand for our products and services and could result in a significant decline in net revenue.

For example, we observed continued market uncertainty, cautious commercial spending on information technology hardware, lower discretionary consumer spending, secular declines in demand for certain products or solutions, including printing products and solutions, inflationary pressures, and foreign currency fluctuations.

For example, we observed a competitive pricing environment, variability in commodity costs, demand softness in Print and demand softness in certain geographic regions in Personal Systems, secular declines in demand for certain products or solutions, including printing products and solutions, inflationary pressures, the imposition of new or increased tariffs and other trade restrictions, and foreign currency fluctuations.

We have also observed significant inflationary trends in memory and storage costs.

In addition, net revenue declines in some of our businesses may affect net revenue in our other businesses, as we may lose cross-selling opportunities.

Our gross margins are also subject to volatility and downward pressure due to a variety of factors, including:

continued industry-wide global product pricing pressures and product pricing actions that we may take in response to such pressures;

increased competition;

our ability to effectively stimulate demand for certain of our products and services;

compressed product life cycles;

supply shortages;

potential increases in the cost of components;

our ability to manage product quality and warranty costs effectively;

fluctuations in foreign exchange rates;

inflation and other macroeconomic pressures;

the imposition of new or increased tariffs and other trade restrictions;

and the introduction of new products or services, including new products or services with lower profit margins.

Moreover, newer geographic markets can be relatively less profitable due to our investments associated with entering those markets and local pricing pressures, as well as difficulty establishing and maintaining the operating infrastructure necessary to support the high growth rate associated with some of those markets.

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They may also have difficulty selling our products under new business models.

Many of our significant distributors operate on narrow margins and have been negatively affected by business pressures in the past.

Many of our significant distributors operate on narrow margins and have been negatively affected by business and trade pressures in the past.

Additionally, in certain regions, we rely on a limited number of distributors, which could exacerbate these risks.

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Our financial performance may suffer if we cannot develop, obtain, license or enforce the intellectual property rights on which our businesses depend.

We rely upon patent, copyright, trademark, trade secret and other IP laws in the United States, similar laws in other countries, and agreements with our employees, customers, suppliers and other parties, to establish and maintain IP rights in the products and services we sell, provide or otherwise use in our operations.

services we sell, provide or otherwise use in our operations.

However, our IP rights could be challenged, invalidated, infringed or circumvented, or such IP rights may not be sufficient to permit us to take advantage of current market trends or to otherwise provide competitive advantages, either of which could result in costly product redesign efforts, discontinuance of certain product offerings or other harm to our competitive position.

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It may take considerable time for us to investigate and evaluate the full impact of incidents, particularly for sophisticated attacks.

These factors may inhibit our ability to provide prompt, full, and reliable information about the incident to our customers, partners, regulators, and the public.

These factors may inhibit our

ability to provide prompt, full, and reliable information about the incident to our customers, partners, regulators, and the public.

Remote work and remote access to our systems has increased significantly, which also increases our cybersecurity attack surface.

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Further, such disruptions could adversely impact our ability to fulfill orders and respond to customer requests and interrupt other processes, resulting in delayed sales, lower margins, lost customers or reputational damage.

We may not achieve some or all of the expected benefits of our restructuring plans and our restructuring may adversely affect our business.

We have undertaken and may undertake in the future restructuring plans in order to realign our cost structure and to achieve operating efficiencies that we expect to reduce costs, including the plan announced in November 2022.

Implementation of any restructuring plan may be costly and disruptive to our business, and we may not be able to obtain the anticipated cost savings, operational improvements and estimated workforce reductions within the projected timing or at all.

Additionally, as a result of restructuring initiatives, we may experience a loss of continuity, loss of accumulated knowledge and/or inefficiency, loss of key employees and/or other retention issues during transitional periods.

Restructuring can require a significant amount of time and focus, which may divert attention from operating and growing our business.

We may not achieve some or all of the expected benefits of our restructuring and other plans and such plans may adversely affect our business.

We have undertaken and may undertake in the future restructuring and other plans in order to realign our cost structure, drive customer satisfaction, product innovation and productivity through artificial intelligence, and achieve operating efficiencies that we expect to reduce costs, including the Fiscal 2023 Plan and our Fiscal 2026 Plan.

Implementation of any such plans may be costly and disruptive to our business, and we may not be able to obtain the anticipated cost savings, operational improvements and estimated workforce reductions within the projected timing or at all.

Additionally, as a result of these plans, we may experience a loss of continuity, loss of accumulated knowledge and/or inefficiency, loss of key employees and/or other retention issues during transitional periods.

Restructuring and other plans can require a significant amount of time and focus, which may divert attention from operating and growing our business.

Moreover, projections of any cost savings or other benefits associated with our restructuring plans are based on current business operations and market dynamics, and could be significantly impacted by various factors, including but not limited to our evolving business models, future investment decisions, market environment and technology landscape.

For more information about our restructuring plans, see Note 3, “Restructuring and Other Charges” to our Consolidated Financial Statements in Item 8.

For more information about our restructuring and other plans, see Note 3, “Restructuring and Other Charges” to our Consolidated Financial Statements in Item 8.

We may not be able to execute acquisitions, divestitures and other significant transactions successfully and we may have difficulty or fail to successfully integrate acquired companies.

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Risks associated with these transactions include the following:

• We may not fully realize the anticipated benefits of any particular transaction, in the timeframe we expected or at all, such transaction may be less profitable than anticipated or unprofitable, we may not identify all factors to estimate accurately our costs, timing or other matters, and realizing the benefits of a particular transaction may depend upon competition, market trends, additional costs or investments and the actions of advisors, suppliers or other third parties.

• In certain instances we have not, and we may not in the future, fully realize the anticipated benefits of particular transactions in the timeframe we expected or at all, such transactions may be less profitable than anticipated or unprofitable, we may not identify all factors to estimate accurately our costs, timing or other matters, and realizing the benefits of a particular transaction may depend upon competition, market trends, additional costs or investments and the actions of advisors, suppliers or other third parties.

• Certain transactions have resulted, and in the future may result, in significant costs and expenses, including those related to compensation and benefit costs, goodwill and impairment charges, charges from elimination of duplicative facilities and contracts, inventory adjustments, assumed litigation and other liabilities, advisory fees, and payments to executive officers and key employees under retention plans.

• Our due diligence may fail to identify significant issues with the target’s product quality, financial disclosures, accounting practices or internal controls, including as a result of being dependent on the veracity and completeness of statements and disclosures made or actions taken by third parties, or the assumptions or judgments we make with respect to our due diligence may be incorrect.

• Our due diligence may fail to identify significant issues with the target’s product quality, financial disclosures, accounting

practices or internal controls, including as a result of being dependent on the veracity and completeness of statements and disclosures made or actions taken by third parties, or the assumptions or judgments we make with respect to our due diligence may be incorrect.

• In order to finance a transaction, we may issue common stock (potentially creating dilution) or take on additional debt, which may adversely impact our credit rating.

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and retaining customers and distributors.

Our aspirations and disclosures related to environmental, social and governance (“ESG”) matters expose us to risks that could adversely affect our reputation and performance.

We have established and publicly announced ESG goals, including our commitments to address climate change, human rights, and digital equity.

These statements reflect our current plans and aspirations and are not guarantees that we will be able to achieve them.

Our aspirations and disclosures related to environmental and societal matters expose us to risks that could adversely affect our reputation and performance.

We face increasing attention from the investment community, special interest groups, customers, enforcement authorities and other stakeholders, who may have conflicting views, related to our positions, performance, and disclosures relating to environmental and societal related matters and we are subject to legal and regulatory requirements relating to such positions, performance, and disclosures, which continue to broaden and may be conflicting, both in terms of scope and geography.

We have environmental and societal goals, which reflect our current plans and aspirations and are not guarantees that we will be able to achieve them.

Our failure to adequately update, accomplish or accurately track and report on these goals on a timely basis, or at all, or a decision to amend, retire, or stop reporting on certain goals, or positions we take or do not take on social issues could adversely affect our reputation, financial performance and growth, and expose us to increased scrutiny from the investment community, special interest groups, customers and enforcement authorities.

In addition, there exists certain “anti-ESG” sentiment among some individuals and government institutions, and we may also face scrutiny, reputational risk, lawsuits or market access restrictions from these parties regarding our ESG initiatives.

Our ability to achieve any ESG objective is subject to numerous risks, some of which are outside of our control.

Examples of such risks include the availability and cost of low- or non-carbon-based energy sources, the evolving regulatory requirements affecting product circularity, ESG standards or disclosures, the evolving consumer protection laws applicable to ESG matters, the availability of materials and suppliers that can meet our sustainability, diversity and other ESG goals and the availability of funds to invest in ESG initiatives in times where we are seeking to reduce costs.

Standards for tracking and reporting ESG matters continue to evolve.

Additionally, a failure to adequately meet regulatory expectations may result in the loss of business and reputational impacts, and we periodically are, and in the future could become the target of litigation, investigations or other proceedings initiated by government authorities or private actors alleging that our activities related to environmental and societal matters are anti-competitive, discriminatory or otherwise unlawful.

Moreover, efforts to meet evolving and increasingly divergent stakeholder expectations on environmental and societal and related matters may place a strain on our employees and systems.

Our ability to achieve any environmental and societal objectives is subject to numerous risks, some of which are outside of our control.

Examples of such risks include the availability and cost of low- or non-carbon-based energy sources, evolving regulatory requirements affecting product circularity, environmental or societal standards or disclosures, evolving consumer protection laws, the availability of materials and suppliers that can meet our environmental, societal and other related goals and the availability of funds to invest in environmental and societal initiatives in times where we are seeking to reduce costs.

Standards for tracking and reporting environmental and societal matters continue to evolve.

Our selection of voluntary disclosure frameworks and standards, and the interpretation or application of those frameworks and standards, may change from time to time or differ from those of others.

Methodologies for reporting ESG data may be updated and previously reported ESG data may be adjusted to reflect improvement in availability and quality of third-party data, changing assumptions, changes in the nature and scope of our operations and other changes in circumstances.

Our processes and controls for reporting ESG matters across our operations and supply chain are evolving along with multiple disparate standards for identifying, measuring, and reporting ESG metrics, including ESG-related disclosures that are or may become required by the SEC, European and other regulators (including, but not limited to, the EU Corporate Sustainability Reporting Directive, the EU Corporate Sustainability Due Diligence Directive, the state of California’s new climate change disclosure requirements, and climate-change disclosure requirements from the SEC), and such standards may change over time, which could result in significant revisions to our current goals, reported progress in achieving such goals, or ability to achieve such goals in the future.

If our ESG practices do not meet evolving government, investor or other stakeholder expectations and standards, then our reputation or our attractiveness as an investment, business partner, acquiror, product or service provider or employer could be negatively impacted and we could be subject to litigation or regulatory proceedings.

Methodologies for reporting environmental and societal data may be updated and previously reported data may be adjusted to reflect improvement in availability and quality of third-party data, changing assumptions, changes in the nature and scope of our operations and other changes in circumstances.

Our processes and controls for reporting environmental and societal matters across our operations and supply chain are evolving along with multiple disparate standards for identifying, measuring, and reporting environmental and societal metrics, including sustainability-related disclosures that are or may become required by the SEC, European and other regulators (including, but not limited to, the EU Corporate Sustainability Reporting Directive, the EU Corporate Sustainability Due Diligence Directive and the state of California’s climate change disclosure requirements), and such standards may change over time, which could result in revisions to our current goals, reported progress in achieving such goals, or ability to achieve such goals in the future.

Some anti-takeover provisions contained in our certificate of incorporation and bylaws, as well as provisions of Delaware law, could impair a takeover attempt.

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The impact of certain geopolitical conflicts (including any escalation or expansion thereof), such as the ongoing military conflicts in Ukraine and the Middle East or tensions in the Taiwan Strait and South China Sea, and any broadening of ancillary geopolitical, economic, and other effects could adversely impact these operations and could heighten the other risks identified in this report.

Since April 2025, new, substantial tariffs have been imposed on imports to the United States.

In response, several countries have imposed, or threatened to impose, reciprocal tariffs on imports from the United States and other retaliatory measures.

As a result, during fiscal 2025, we experienced higher commodity and tariff costs, which were not fully mitigated by pricing and other actions enacted during the period.

Should these or other proposed tariffs, including potential retaliatory actions imposed by other countries, be implemented and sustained for an extended period of time, as proposed, enacted or otherwise, they may have a significant adverse impact to our results of operations and cash flows to the extent our efforts do not fully mitigate the effects of such tariffs.

There can be no assurance that we will be able to successfully offset or mitigate these impacts.

Additionally, changing our business model and

supply chain to comply with and offset the impact of new or revised trade restrictions has in the past and could in the future be expensive, time-consuming and disruptive to our business.

Economic weakness and uncertainty is expected to continue to adversely affect demand for our products and services and, as a result, our business and financial performance.

Our business and financial performance depend on worldwide economic conditions and the demand for our products and services.

Ongoing economic weakness, including an economic slowdown or recession, uncertainty in markets throughout the world and other adverse economic conditions, including inflation, changes in monetary policy, increased interest rates, tariffs, exchange rates and an evolving global trade environment, have resulted in, and may continue to result in, decreased demand for our products and services and challenges in managing inventory levels and accurately forecasting revenue, gross margin, cash flows and expenses.

For example, during fiscal year 2024 we observed continued market uncertainty, cautious commercial spending on information technology hardware, including in China, lower discretionary consumer spending, increasing commodity costs, inflationary pressures, and foreign currency fluctuations.

Ongoing economic weakness, including an economic slowdown or recession, uncertainty in markets throughout the world and other adverse economic conditions, including inflation, changes in monetary policy, changes in levels of government spending, increased interest rates, tariffs and other trade restrictions, exchange rates and an evolving global trade environment, have resulted in, and may continue to result in, decreased demand for our products and services and challenges in managing inventory levels and accurately forecasting revenue, gross margin, cash flows and expenses.

For example, during fiscal year 2025 we observed continued market uncertainty, cautious commercial spending on information technology hardware, including in China, lower discretionary consumer spending, increasing commodity costs, inflationary pressures, the implementation of tariffs and other trade restrictions, and foreign currency fluctuations.

Changes in government spending limits may continue to reduce demand for our products and services from governments or organizations that receive government funding.

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Terrorist acts or armed conflicts, for which we are predominantly uninsured, may also disrupt our operations.

Global pandemics, such as COVID-19, or other public health crises may adversely affect, among other things, our supply chain and associated costs;

Global pandemics or other public health crises may adversely affect, among other things, our supply chain and associated costs;

demand for our products and services;

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Global climate change is resulting, and is projected to continue to result, in natural disasters and adverse weather, such as drought, wildfires, storms, sea-level rise, flooding, heat waves, and cold waves, occurring more frequently or with greater intensity.

Such extreme climate related events are driving changes in market dynamics, stakeholder expectations, local, national and international climate change policies and regulations, which could result in disruptions to us, our suppliers, vendors, customers and logistics hubs and impact employees’ abilities to live in certain areas, commute or to work from home effectively.

Such extreme climate related events are driving changes in market dynamics, stakeholder expectations, and local, national and international climate change policies and regulations, which could result in

disruptions to us, our suppliers, vendors, customers and logistics hubs and impact employees’ abilities to live in certain areas, commute or to work from home effectively.

These disruptions could make it more difficult and costly for us to deliver our products and services, obtain components or other supplies through our supply chain, maintain or resume operations or perform other critical corporate functions, and could reduce customer demand for our products and services.

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As a result, we have experienced and expect to continue to experience, increased compliance burdens and costs, increased indirect costs resulting from our suppliers passing on compliance costs to us, and certain of our products may be rendered obsolete, financially unviable or face market access issues.

Further, anti-ESG government initiatives may conflict with other regulatory requirements or our stakeholders’ expectations.

Further, conflicting regulations and a lack of harmonization of legal and regulatory environments across the jurisdictions in which we operate may create enhanced compliance risks and costs.

The impacts of climate change, whether involving physical risks or transition risks, are expected to be widespread and may materially adversely affect our business and financial results.

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Should any of these estimates and assumptions change or prove to have been incorrect, it could adversely affect our results of operations, cash flows and financial condition.

We have identified a material weakness in our internal control over financial reporting that could, if not remediated, result in material misstatements in our financial statements and cause us to fail to meet our reporting and financial obligations.

As more fully disclosed in Item 9A, “Controls and Procedures,” under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures and internal control over financial reporting.

Based on that evaluation, we have concluded that our disclosure controls and procedures were not effective as of October 31, 2024 due to a material weakness in internal control over financial reporting.

A material weakness is a deficiency, or a combination of deficiencies, in our internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

We identified a material weakness in internal control over financial reporting that resulted from undue reliance on information generated from certain software solutions affecting various financial statement accounts without effectively designed and operating IT general controls, specifically around user access, change management and job schedule monitoring IT operations.

This material weakness did not result in any material misstatement of our financial statements.

While this material weakness did not result in a material misstatement of our financial statements, this control deficiency was not remediated as of October 31, 2024 and there is a reasonable possibility that it could have resulted in a material misstatement in the Company's annual or interim consolidated financial statements that would not be detected.

Accordingly, we have determined that this control deficiency constituted a material weakness.

While the Company’s management, under the oversight of the Audit Committee, has taken steps to implement our remediation plan as described more fully in Item 9A, “Controls and Procedures,” the material weakness will not be considered remediated until the enhanced controls operate for a sufficient period of time and management has concluded, through testing, that the related controls are effective.

Furthermore, we can give no assurance that the measures we take will remediate the material weakness.

We can give no assurance that additional material weaknesses will not arise in the future.

Any failure to remediate the material weakness, or the development of new material weaknesses in our internal control over financial reporting, could result in material misstatements in our financial statements and cause us to fail to meet our reporting and financial obligations, which in turn could have a negative impact on our financial condition, results of operations or cash flows, restrict our ability to access the capital markets, require significant resources to correct the material weaknesses or deficiencies, subject us to fines, penalties or judgments, harm our reputation or otherwise cause a decline in investor confidence and cause a decline in the market price of our stock.

Ineffective internal controls could impact our business and operating results.

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Our business is subject to various federal, state, local and foreign laws and regulations that could adversely affect our business and results of operations and cash flows.

We are subject to various federal, state, local and foreign laws and regulations.

We are subject to various, and sometimes conflicting, federal, state, local and foreign laws and regulations.

There can be no assurance that such laws and regulations will not be interpreted and changed in ways that will require us to modify our business models and objectives or affect our returns on investments by restricting existing activities and products, subjecting them to escalating costs or increased restrictions or prohibiting them outright.

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Additionally, the rapid evolution and increased adoption of AI technologies and our obligations to comply with emerging laws and regulations may require us to develop additional AI-specific governance programs, which could entail significant costs or limit our ability to incorporate certain AI capabilities into our products and solutions.

As these new laws, regulations, treaties and similar initiatives and programs are adopted and implemented, we will be required to comply or potentially face market access limitations or restrictions on our products entering certain jurisdictions, sanctions or other penalties, including fines.

Such burdens or costs may result in an adverse effect on our financial condition, results of operations and cash flows.

We could also face significant compliance and operational burdens and incur significant costs in our efforts to comply with or rectify non-compliance with these laws or regulations.

As new laws, regulations, treaties, executive orders, directives, enforcement priorities and similar initiatives and programs are adopted and implemented, we are required to comply or potentially face market access limitations or restrictions on our products entering certain jurisdictions or our ability to provide services within certain jurisdictions, sanctions or other penalties, including fines.

Such burdens or costs have in the past resulted in, and may in the future result in, an adverse effect on our financial condition, results of operations and cash flows.

We also face significant compliance and operational burdens and incur significant costs in our efforts to comply with or rectify non-compliance with these laws or regulations.

Our potential exposure also includes third-party property damage, personal injury claims and clean-up costs.

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There is an increasingly active litigation and regulatory environment, including but not limited to employment and patent-monetization claims in the United States, Germany and Brazil, and litigation and regulatory matters focused on consumer protection, privacy, and competition regulation globally.

Patent monetization campaigns have become increasingly aggressive, including those by patent holders for standardized technology, such as WiFi and video and other standardized technology in PCs, who have sued in venues that allow injunctions despite commitments to license patents on fair and reasonable terms.

Patent monetization campaigns have become increasingly aggressive, including those by patent holders for standardized technology, such as Wi-Fi and video and other standardized technology in PCs, who have sued in venues that allow injunctions despite commitments to license patents on fair and reasonable terms.

If we are unsuccessful in defending against such claims, we may be exposed to exorbitant licensing demands in order to avoid potential disruptions to our business.

As described in Note 14, “Litigation and Contingencies” to the Consolidated Financial Statements in Item 8, we are engaged in a number of litigation and regulatory matters that may have a material adverse impact on our business, financial condition, cash flows or results of operations, if decided adversely to or settled by us.

Litigation and regulatory proceedings are inherently uncertain, and adverse rulings have occurred and may occur, including awards of monetary damages, imposition of fines, issuance of injunctions or cease-and-desist orders directing us to cease engaging in certain business practices, cease manufacturing or selling certain products, requiring the compulsory licensing of patents, or requiring other remedies.

In addition, regardless of the outcome, litigation and regulatory proceedings can be costly, time-consuming, disruptive to our operations, and distracting to management.

Litigation and regulatory proceedings are inherently uncertain, and adverse rulings and settlements have occurred and may occur, including awards of monetary damages, imposition of fines, issuance of injunctions or cease-and-desist orders directing us to cease engaging in certain business practices, cease manufacturing or selling certain products, requiring the compulsory licensing of patents, or requiring other remedies.

In addition, regardless of the outcome, litigation and regulatory proceedings can be costly, time-consuming, disruptive to our operations, distracting to management, and adversely impact our reputation.

We and Hewlett Packard Enterprise entered into a separation and distribution agreement and various other agreements in connection with the separation of the two businesses.

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Our contracts with our customers may include unique and specialized performance requirements.

In particular, our contracts with federal, state, provincial and local governmental customers are subject to procurement regulations, contract provisions and other specific requirements relating to their formation, administration and performance.

In particular, our contracts with federal, state, provincial and local governmental customers are subject to procurement regulations, contract provisions, executive orders and other specific requirements relating to their formation, administration and performance.

In addition, contracts with customers may also include a requirement to comply with customer codes of conduct, which may have terms that conflict with our code of conduct, business policies and strategic objectives.

Any failure by us to comply with the specific provisions in our customer contracts or any violation of government contracting regulations could result in loss of business or the imposition of civil and criminal penalties, which may include termination of contracts, forfeiture of profits, suspension of payments and, in the case of our government contracts, fines and suspension from future government contracting.

Any failure by us to comply with the specific provisions in our customer contracts or any violation of government contracting regulations or applicable law could result in loss of business or the imposition of civil and criminal penalties, which may include termination of contracts, forfeiture of profits, suspension of payments and, in the case of our government contracts, fines and suspension from future government contracting.

Such failures could also cause reputational damage to our business and affect our ability to compete for new contracts.

If our customer contracts are terminated, if we are suspended or disbarred from government work, or if our ability to compete for new contracts is adversely affected, our financial performance could suffer.

Our partner contracts

also contain terms relating to new partner business models and tools creation that could raise issues for which laws or regulations are currently changing or emerging.

Our partner contracts also contain terms relating to new partner business models and tools creation that could raise issues for which laws or regulations are currently changing or emerging.

This could affect us in ways that are not currently fully known or measurable.

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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.

What changed 10-K

Item 1A. Risk Factors